United
      StatesSECURITIES
      AND EXCHANGE COMMISSIONWashington,
      D.C.  20549FORM
      10-K





[X]ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
      EXCHANGE ACT OF 1934For
      the fiscal year ended December 31, 2007OR[  ]TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
      EXCHANGE ACT OF 1934For
      the transition period from _________ to _________Commission
      file numbers:333-136448333-128160-0133-99736-01333-3526-01333-39365-01333-61394-01TANGER
      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)
      292-3010Greensboro,
      NC 27408
            (Registrant’s
      telephone number)(Address
      of principal executive offices)Securities
      registered pursuant to Section 12(b) of the Act: NoneSecurities
      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, a non-accelerated filer or a smaller reporting company. See
the definitions of “large accelerated filer”, “accelerated filer: and “smaller
reporting company” (as defined in Rule 12b-2 of the Securities and Exchange Act
of 1934).   oLarge accelerated
filer  o
Accelerated filer ý
Non-accelerated filer o Smaller reporting
company





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
Company’s Annual Meeting of Shareholders to be held May 16, 2008.








1


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, 2007, we owned 29 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 370 store
brands.  Also, we owned a 50% interest in two outlet centers with a
GLA of approximately 667,000 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, 2007, Tanger GP Trust owned 150,000 common units, Tanger LP Trust
owned 15,514,621 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 Class C 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, 2008, the Company’s management beneficially owned approximately 19%
of all outstanding Company common shares (assuming Tanger Family Limited
Partnership’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.








2


Recent
Developments





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





We
continue the development, construction and leasing of two previously announced
sites located in Washington County, south of Pittsburgh, Pennsylvania and in
Deer Park (Long Island), New York.  In response to strong tenant
demand for space, we increased the size of the initial phase of the Pittsburgh
center from 308,000 square feet to 370,000 square feet, with signed leases for
approximately 63% of the first phase and an additional 20% under negotiation or
out for signature.  We currently expect delivery of the initial phase
in the second quarter of 2008, with stores opening by the end of the third
quarter of 2008.  Upon completion of the project, the outlet center
will total approximately 418,000 square feet.  The Pittsburgh project
is wholly owned by us. Tax incentive financing bonds have been issued related to
the Pittsburgh project, and we expect to receive net proceeds of approximately
$16.8 million as we incur qualifying expenditures during construction of the
center.  As of December 31, 2007 we have received funding for
qualified expenditures submitted totaling $7.6 million.





The Deer
Park project is owned through a joint venture in which we own a 33.3%
interest.  The joint venture currently expects the Deer Park center
will contain over 800,000 square feet upon final build-out.  Site work
and construction continues on an initial phase of approximately 682,000 square
feet.  Deer Park has signed leases for approximately 51% of the
initial phase and an additional 22% under negotiation or out for
signature.  The joint venture currently expects the project will be
delivered in the second quarter of 2008, with stores opening by the end of the
third quarter of 2008.





Potential
Future Developments





We
currently have an option for a new development site located in Mebane, North
Carolina on the highly traveled Interstate 40/85 corridor, which sees over
83,000 cars daily.  The site is located halfway between the Research
Triangle Park area of Raleigh, Durham, and Chapel Hill, and the Triad area of
Greensboro, High Point and Winston-Salem.  The center is currently
expected to be approximately 300,000 square feet.  During the option
period, we will be analyzing the viability of the site and determining whether
to proceed with the development of a center at this location.





We have
also started the initial pre-development and leasing for a site we have under
control in Port St. Lucie, Florida at Exit 118 on Interstate
I-95.  Approximately 64,000 cars utilize this exit each
day.  Port St. Lucie is one of Florida’s fastest growing cities and is
located less than 40 miles north of Palm Beach, Florida and one exit south of
the New York Mets’ spring training facility.  This center is expected
to be approximately 350,000 square feet and initial reaction to the site from
our magnet tenants has been very positive.





At this
time, we are in the initial study period on these potential new
locations.  As such, there can be no assurance that any of these sites
will ultimately be developed.  During the third quarter of 2007 we put
on hold our plans to develop a center in Burlington, New Jersey due to numerous
development and site access issues.





2007
Expansion Projects





During
2007, we completed expansions in three of our outlet centers.





Expansion
            New
      TotalCenter
            GLA
            Center
      GLAGonzales,
      Louisiana
            39,000
            282,000Branson,
      Missouri
            25,000
            303,000Tilton,
      New Hampshire
            18,000
            246,000Total
      expansions
            82,000





A fourth
expansion project, in Barstow, California, is near completion.  Some
stores opened during the fourth quarter of 2007 and the remaining stores will
open during the first two quarters of 2008.  The total expansion in
Barstow of 62,000 square feet will bring the center’s total GLA to 171,300
square feet.





3


Increase
in and extension of unsecured credit facilities





During
the fourth quarter of 2007, we extended the maturity dates on five of our six
unsecured lines of credit from 2009 to June 2011.  During the first
quarter of 2008, we increased the maximum availability under our existing
unsecured credit facilities by $125.0 million, bringing our total availability
to $325.0 million.  The terms of the increases are identical to those
included within the existing unsecured credit facilities with the borrowing rate
ranging from LIBOR plus 75 basis points to LIBOR plus 85 basis
points.





On
February 15, 2008, our $100 million, 9.125% unsecured senior notes
matured.  We repaid these notes in the short term with amounts
available under our unsecured lines of credit.  On July 10, 2008, our
only remaining mortgage loan with a principal balance of $172.7 million and
bearing interest at a coupon rate of 6.59% will become payable at our
option.  Because the mortgage was assumed as part of an acquisition of
a portfolio of outlet centers, the debt was recorded at its fair value and
carries an effective interest rate of 5.18%.  On the optional payment
date, we can decide to repay the loan in full, or we can continue to make
monthly payments on the loan at a revised interest rate of 8.59%.  We
can then repay the loan in full on any monthly payment date without
penalty.  The final maturity date on the loan is July 10,
2028.  We are currently analyzing our various options with respect to
refinancing this mortgage.





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.





4


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 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, 2008, we had a diverse tenant base comprised of approximately 370
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 2007, 2006 and 2005.  As of February
1, 2008, our largest tenant, including all of its store concepts, accounted for
approximately 8.0% 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 90% of our total revenues in 2007.  Revenues from
contingent sources, such as percentage rents, vending income and miscellaneous
income, accounted for approximately 10% of 2007 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
Strategy





The
Operating Partnership has been built on a firm foundation of strong and enduring
business relationships.  We partner with many of the world’s best
known and most respected retailers and manufacturers.  By fostering
and maintaining strong tenant relationships with these successful, high volume
companies, we have been able to solidify our position as a leader in the outlet
industry for more than a quarter century.  The confidence and trust
that we have developed with our retail partners from the very beginning has
allowed us to forge the impressive retail alliances that we enjoy today with
approximately 370 brand name manufacturers.





5


Nothing
takes the place of experience.  We have had a solid track record of
success in the outlet industry for the past 27 years.  In 1993, Tanger
led the way by becoming the industry’s first outlet center company to be
publicly traded.  Our seasoned team of real estate professionals
utilizes the knowledge and experience that we have gained to give us a
competitive advantage and a history of accomplishments in the manufacturers’
outlet business.





We are
proud to report that as of December 31, 2007, our wholly owned outlet centers
were 98% occupied with average tenant sales of $342 per square
foot.  Our properties have had an average occupancy rate of 95% or
greater on December 31st of each year since 1981. The ability to achieve this
level of performance is a testament to our long-standing relationships, industry
experience and our expertise in the development and operation of manufacturers'
outlet centers.





Growth
Strategy





Growth
doesn’t happen by chance.  We build shareholder value with a
comprehensive plan for sustained growth.  We focus our efforts on
increasing rents in our existing centers, renovation and expansion of our mature
centers and reaching new markets through the ground-up development or
acquisition of new outlet centers.





Increasing
Rents at Existing Centers





Our
leasing team implements an ongoing strategy designed to positively impact our
bottom line.  This is accomplished through the aggressive marketing of
available space to maintain our standard for high occupancy
levels.  Leases are negotiated to provide for inflation-based
contractual rent increases or periodic fixed contractual rent increases and
percentage rents.  Due to the overall high performance of our shopping
centers, we are typically able to renew leases at higher base rents per
square-foot and attract stronger, more popular brands to replace under
performing tenants.





Developing
New Centers and Expanding Existing Centers





We
believe that there continues to be significant opportunities to introduce the
Tanger brand in untapped or under-served markets across the United States of
America.  As we search the country looking for new markets, we do our
homework and determine site viability on a timely and cost-effective
basis.  Our 27 years of outlet industry experience, extensive
development expertise and strong retail relationships give us a distinct
competitive advantage.  Our company’s access to capital facilitates
our ability to react quickly when opportunities arise.  Keeping our
shopping centers across the nation vibrant and growing is a key part of our
formula for success.  In order to maintain our reputation as the
premiere outlet shopping destination in the markets that we serve, we have an
ongoing program of renovations and expansions taking place at our outlet centers
coast to coast.  We expect that the development of new centers and the
expansion of existing centers will continue to be a substantial part of our
future growth strategy.





We follow
a general set of guidelines when evaluating opportunities for the development or
acquisition of new centers.  This typically includes seeking locations
within markets that have at least 1 million people residing within a 30 to 40
mile radius with an average household income of at least $65,000 per year,
frontage on a major interstate or roadway that has excellent visibility and a
traffic count of at least 55,000 cars per day.  Leading tourist,
vacation and resort markets that receive at least 5 million visitors annually
are also on our development radar and are closely evaluated.  Although
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, we maintain
the flexibility to vary our minimum requirements based on the unique
characteristics of a site and our prospects for future growth and
success.





In order
to help ensure the viability of proceeding with a project, we gauge the interest
of our retail partners first.  We generally require that at least 50%
of the space in each center is pre-leased 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 stores.  Construction for expansion and renovation
to existing properties typically takes less time, usually between six to nine
months depending on the scope of the project.





Acquiring
Centers





As a
means of creating a presence in key markets and to create shareholder value, we
may selectively choose to acquire individual properties or portfolios of
properties that meet our strategic investment criteria.  We believe
that our extensive experience in the outlet center business, access to capital
markets, familiarity with real estate markets and our management experience will
allow us to evaluate and execute our acquisition strategy successfully. Through
our tenant relationships, our leasing professionals have the ability to
implement a remerchandising strategy when needed to increase occupancy rates and
value.  We believe that our managerial skills, marketing expertise and
overall outlet industry experience will also allow us to add long-term value and
viability to these centers.





Operating
Strategy





Increasing
cash flow to enhance the value of our properties and operations remains a
primary business objective. Through targeted marketing and operational
efficiencies we strive to continue improving sales and profitability for our
tenants and our shopping centers as a whole.  Commanding higher base
and percentage rents and generating additional income from temporary leasing,
vending and other sources also remains an important focus.





Leasing





The
long-standing retailer relationships that we enjoy allow us the ability to
provide our shoppers with a collection of the world’s most popular outlet
stores. Tanger customers shop and save on their favorite brand name merchandise
including men's, women's and children's ready-to-wear, lifestyle apparel,
footwear, jewelry & accessories, tableware, housewares, luggage and domestic
goods.  In order that our centers can perform at a high level, our
leasing professionals continually monitor and evaluate tenant mix, store size,
store location and sales performance.  They also work to assist our
tenants through re-sizing and re-location of retail space within each of our
centers for maximum sales of each retail unit across our portfolio.





Marketing





Our
marketing plans deliver compelling, well-crafted messages or enticing promotions
and events to targeted audiences for tangible, meaningful and measurable
results.  Our plans are based on a basic measure of success – increase
sales and traffic for our retail partners and we will create successful
centers.  Utilizing a strategic mix of print, radio, television,
direct mail, website, internet advertising and public relations, we consistently
reinforce the message that “Tanger is the place to shop for the best brands and
the biggest outlet savings - direct from the manufacturer”.  Our
marketing efforts are also designed to build loyalty with current Tanger
shoppers and create awareness with potential customers.  The majority
of consumer-marketing expenses incurred by us 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.





6


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.  At the Company’s 2007 Annual Shareholders’ Meeting,
shareholders approved an increase in the Company’s authorized common shares from
50.0 million to 150.0 million and added four additional classes of preferred
shares with an authorized number of four million shares each.  All
proceeds from the Company’s common and preferred share issuances are contributed
to the Operating Partnership in exchange for common and preferred
units.  During the third quarter of 2006, we, together with the
Company, updated our joint shelf registration 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 fourth quarter of 2007, we extended the maturity dates on five of our six
unsecured lines of credit from 2009 to June 2011.  During the first
quarter of 2008, we increased the maximum availability under our existing
unsecured credit facilities by $125.0 million, bringing our total availability
to $325.0 million.  The terms of the increases are identical to those
included within the existing unsecured credit facilities with the borrowing rate
ranging from LIBOR plus 75 basis points to LIBOR plus 85 basis
points.





On
February 15, 2008, our $100 million, 9.125% unsecured senior notes
matured.  We repaid these notes in the short term with amounts
available under our unsecured lines of credit.  On July 10, 2008, our
only remaining mortgage loan with a principal balance of $172.7 million and
bearing interest at a coupon rate of 6.59% will become payable at our
option.  Because the mortgage was assumed as part of an acquisition of
a portfolio of outlet centers, the debt was recorded at its fair value and
carries an effective interest rate of 5.18%.  On the optional payment
date, we can decide to repay the loan in full, or we can continue to make
monthly payments on the loan at a revised interest rate of 8.59%.  We
can then repay the loan in full on any monthly payment date without
penalty.  The final maturity date on the loan is July 10,
2028.  We are currently analyzing our various options with respect to
refinancing this mortgage.  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 2008.





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 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.





7


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 29 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, 2008, we had 203 full-time employees, located at our corporate
headquarters in North Carolina, our regional office in New York and our 29
business offices.  At that date, we also employed 226 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.  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.  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.





8


Real
property investments are relatively illiquid.





Our
factory outlet centers represent a substantial portion of our total consolidated
assets.  These assets are relatively illiquid.  As a result,
our ability to sell one or more of our factory outlet centers in response to any
changes in economic or other conditions is limited.  If we want to
sell a factory outlet center, there can be no assurance that we will be able to
dispose of it in the desired time period or that the sales price will exceed the
cost of our investment.





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 its 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.  Further, there is 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.





9


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.





10


Item
1B.                    Unresolved
Staff Comments





There are
no unresolved staff comments from the Securities Exchange
Commission.





Item
2.                      
Properties





As of
February 1, 2008, our wholly owned portfolio consisted of 29 outlet centers
totaling 8.4 million square feet located in 21 states. We own a 50% interest in
each of two outlet centers totaling 667,000 square feet through unconsolidated
joint ventures.  Our centers range in size from 24,619 to 729,315
square feet.  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
Rehoboth Beach, Delaware center is the only property that represented more than
10% of our consolidated total assets as of December 31, 2007. See “Business and
Properties - Significant Property”.





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
29 outlet centers in our wholly owned portfolio, we own the land underlying 26
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.





11


The
initial 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
following table summarizes certain information with respect to our wholly owned
outlet centers as of February 1, 2008.





State
            Number
      of
              Centers
            GLA
              (sq.
      ft.)
            %
              of
      GLASouth
      Carolina
            3
            1,171,826
            14Georgia
            3
            826,643
            10New
      York
            1
            729,315
            9Texas
            2
            620,310
            7Delaware
            1
            568,926
            7Alabama
            1
            557,144
            7Michigan
            2
            436,751
            5Tennessee
            1
            419,038
            5Missouri
            1
            302,992
            4Utah
            1
            300,891
            4Connecticut
            1
            291,051
            4Louisiana
            1
            282,318
            3Iowa
            1
            277,230
            3Oregon
            1
            270,280
            3Illinois
            1
            256,514
            3Pennsylvania
            1
            255,152
            3New
      Hampshire
            1
            245,563
            3Florida
            1
            198,950
            2North
      Carolina
            2
            186,413
            2California
            1
            127,800
            1Maine
            2
            84,313
            1Total
            29
            8,409,420
            100





12


The
following table summarizes certain information with respect to our existing
outlet centers in which we have an ownership interest as of February 1,
2008.  Except as noted, all properties are fee owned.





Location
            GLA
              (sq.
      ft.)
            
            %
              OccupiedWholly
      Owned PropertiesRiverhead,
      New York (1)
            729,315
            
            97Rehoboth,
      Delaware (1)
            568,926
            
            98Foley, Alabama
            557,144
            
            97San
      Marcos, Texas
            442,510
            
            99Myrtle
      Beach Hwy 501, South Carolina
            426,417
            
            93Sevierville,
      Tennessee (1)
            419,038
            
            98Hilton
      Head, South Carolina
            393,094
            
            88Charleston,
      South Carolina
            352,315
            
            92Commerce
      II, Georgia
            347,025
            
            98Howell,
      Michigan
            324,631
            
            95Branson,
      Missouri
            302,992
            
            92Park
      City, Utah
            300,891
            
            98Locust
      Grove, Georgia
            293,868
            
            97Westbrook,
      Connecticut
            291,051
            
            99Gonzales,
      Louisiana
            282,318
            
            95Williamsburg,
      Iowa
            277,230
            
            99Lincoln
      City, Oregon
            270,280
            
            100Tuscola,
      Illinois
            256,514
            
            80Lancaster,
      Pennsylvania
            255,152
            
            96Tilton,
      New Hampshire
            245,563
            
            100Fort
      Meyers, Florida
            198,950
            
            92Commerce
      I, Georgia
            185,750
            
            82Terrell,
      Texas
            177,800
            
            100Barstow,
      California
            127,800
            
            98West
      Branch, Michigan
            112,120
            
            100Blowing
      Rock, North Carolina
            104,235
            
            100Nags
      Head, North Carolina
            82,178
            
            100Kittery
      I, Maine
            59,694
            
            100Kittery
      II, Maine
            24,619
            
            948,409,420
            
            96Unconsolidated
      Joint VenturesMyrtle
      Beach Hwy17, South Carolina (1) (50%
      owned)
            402,013
            
            97Wisconsin
      Dells, Wisconsin (50% owned)
            264,929
            
            100





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





13


The
following table summarizes certain information related to GLA as of February 1,
2008 and debt as of December 31, 2007 with respect to our wholly owned outlet
centers which serve as collateral for an existing mortgage loan.





Lender/Location
            GLA
              (sq.
      ft.)
            Mortgage
      Debt
              (000’s)
      as of
              December
      31, 2007
            Coupon
              Interest
      Rate
            Maturity
              DateCapmarkRehoboth  Beach,
      DE
            568,926Foley,
      AL
            557,144Myrtle
      Beach Hwy 501, SC
            426,417Hilton
      Head, SC
            393,094Park
      City, UT
            300,891Westbrook,
      CT
            291,051Lincoln
      City, OR
            270,280Tuscola,
      IL
            256,514Tilton,
      NH
            245,563$  172,678
            6.590%
      (1)
            7/10/2008
      (2)Debt
      premium
            1,046Totals
            3,309,880
            $  173,724(1)
      Because the Capmark mortgage debt was assumed as part of an acquisition of
      a portfolio of outlet centers, the debt was recorded at its fair value and
      carries an effective interest rate of 5.18%.(2)
      On July 10, 2008, we can decide to repay the loan in full, or we can
      continue to make monthly payments on the loan at a revised interest rate
      of 8.59%.  We can then repay the loan in full on any monthly
      payment date without penalty.  The final maturity date on the
      loan is July 10, 2028.





Lease
Expirations





The
following table sets forth, as of February 1, 2008, scheduled lease expirations
for our wholly owned outlet centers, assuming none of the tenants exercise
renewal options.





Year
            No.
      of
              Leases
              Expiring
            Approx.
              GLA
              (sq.
      ft(1))
            
            Average
              Annualized
              Base
      Rent
              per
      sq. ft
            
            Annualized
              BaseRent
      (2)
            %
      of Gross
              Annualized
              Base
      Rent
              Represented
              by
      Expiring
              Leases2008
            168
            590,000
            
            $
      16.07
            
            $
      9,482,000
            72009
            305
            1,346,000
            
            15.39
            
            20,714,000
            162010
            310
            1,301,000
            
            18.40
            
            23,941,000
            182011
            322
            1,462,000
            
            15.30
            
            22,371,000
            172012
            272
            1,303,000
            
            17.24
            
            22,465,000
            172013
            157
            810,000
            
            16.99
            
            13,764,000
            112014
            28
            157,000
            
            17.03
            
            2,674,000
            22015
            32
            144,000
            
            17.88
            
            2,574,000
            22016
            35
            137,000
            
            19.76
            
            2,707,000
            22017
            59
            258,000
            
            18.16
            
            4,684,000
            42018&thereafter
            35
            202,000
            
            22.16
            
            4,477,000
            41,723
            7,710,000
            
            $16.84
            
            $129,853,000
            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 699,000
      square feet.(2)
            Annualized
      base rent is defined as the minimum monthly payments due as of February 1,
      2008 annualized, excluding periodic contractual fixed increases and rents
      calculated based on a percentage of tenants’
  sales.





14


Rental
and Occupancy Rates





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





Total
      Expiring
            
            Renewed
      by Existing
              TenantsYear
            
            GLA
              (sq.
      ft.)
            
            %
      of
              Total
      Center GLA
            
            GLA
              (sq.
      ft.)
            
            %
      of
              Expiring
      GLA2007
            
            1,572,000
            
            19
            
            1,246,000
            
            792006
            
            1,760,000
            
            21
            
            1,466,000
            
            832005
            
            1,812,000
            
            22
            
            1,525,000
            
            842004
            
            1,790,000
            
            20
            
            1,571,000
            
            882003
            
            1,070,000
            
            12
            
            854,000
            
            80





The
following tables set forth the weighted average base rental rate increases per
square foot on both a cash and straight-line basis for our wholly owned outlet
centers upon re-leasing stores that were turned over or renewed during each of
the last five calendar years.





Cash Basis (excludes periodic,
contractual fixed rent increases)





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
            %
              Increase2007
            1,246,000
            $
      16.11
            $
      17.85
            11
            610,000
            
            $
      17.07
            $
      22.26
            302006
            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
            4





Straight-line Basis (includes
periodic, contractual fixed rent increases)(2)





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
            %
              Increase2007
            1,246,000
            $
      15.94
            $
      18.15
            14
            610,000
            
            $
      16.75
            $
      23.41
            402006
            1,466,000
            $
      15.65
            $
      17.43
            11
            465,000
            
            $
      16.19
            $
      19.90
            23





(1)
            The
      square footage released to new tenants for 2007, 2006, 2005, 2004 and 2003
      contains 164,000, 129,000, 112,000, 94,000 and 49,000 square feet,
      respectively, that was released to new tenants upon expiration of an
      existing lease during the current year.(2)
            Information
      not available prior to 2006.





15


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 Sales2007
            7.72006
            7.42005
            7.52004
            7.32003
            7.4


16


Tenants


The
following table sets forth certain information for our wholly owned centers with
respect to our ten largest tenants and their store concepts as of February 1,
2008.


Tenant
            Number
              of
      Stores
            GLA
              (sq.
      ft.)
            %
      of Total
              GLAThe
      Gap, Inc.:Old
      Navy
            20
            301,344
            3.6GAP
            23
            216,261
            2.6Banana
      Republic
            15
            124,290
            1.5Gap
      Kids
            5
            29,799
            0.363
            671,694
            8.0Phillips-Van
      Heusen Corporation:Bass
      Shoe
            28
            180,618
            2.1Van
      Heusen
            26
            110,847
            1.3Calvin
      Klein, Inc.
            11
            56,561
            0.7Geoffrey
      Beene Co. Store
            13
            48,185
            0.6Izod
            15
            40,052
            0.593
            436,263
            5.2Liz
      Claiborne:Liz
      Claiborne
            23
            241,525
            2.9Liz
      Claiborne Women
            5
            15,084
            0.2Ellen
      Tracy
            3
            12,474
            0.1DKNY
      Jeans
            2
            5,820
            0.1Claiborne
      Mens
            1
            3,100
            0.1Kate
      Spade
            1
            2,500
            *Juicy
      Couture
            1
            2,475
            *Dana
      Buchman
            1
            2,000
            *37
            284,978
            3.4VF
      Factory Outlet:VF
      Factory Outlet, Inc.
            7
            172,541
            2.1Nautica
      Factory Stores
            19
            89,904
            1.1Nautica
      Kids
            2
            5,841
            *Vans
            2
            5,000
            *30
            273,286
            3.2Nike:Nike
            19
            264,185
            3.1Cole-Haan
            2
            6,223
            0.121
            270,408
            3.2Adidas:Reebok
            21
            198,058
            2.3Adidas
            7
            55,572
            0.7Rockport
            3
            9,046
            0.131
            262,676
            3.1Dress
      Barn, Inc.:Dress
      Barn
            24
            190,155
            2.3Maurice’s
            8
            31,157
            0.4Dress
      Barn Petite
            2
            9,570
            0.1Dress
      Barn Woman
            2
            7,470
            0.136
            238,352
            2.9Carter’s:OshKosh
      B”Gosh
            23
            117,988
            1.4Carter’s
            20
            94,233
            1.143
            212,221
            2.5Polo
      Ralph Lauren:Polo
      Ralph Lauren
            20
            180,728
            2.2Polo
      Jeans Outlet
            1
            5,000
            0.1Polo
      Ralph Lauren Children
            1
            3,000
            *22
            188,728
            2.3Jones
      Retail Corporation:Jones
      Retail Corporation
            15
            52,377
            0.6Nine
      West
            20
            51,827
            0.6Easy
      Spirit
            15
            41,336
            0.5Kasper
            10
            24,934
            0.3Anne
      Klein
            6
            14,655
            0.266
            185,129
            2.2Total
      of all tenants listed in table
            442
            3,023,735
            36.0





* Less
than 0.1%.


17





Significant
Property





The
Rehoboth Beach, Delaware outlet center is the only property that comprises more
than 10% of our consolidated gross revenues or consolidated total
assets.  The Rehoboth Beach center, acquired in December 2003,
represented 11% of our consolidated total assets as of December 31,
2007.  The Rehoboth Beach center is 568,926 square feet.





Tenants
at the Rehoboth Beach outlet center principally conduct retail sales
operations.  The following table shows occupancy and certain base
rental information related to this property as of December 31, 2007, 2006 and
2005:





Center
      Occupancy
            2007
            2006
            2005Rehoboth
      Beach, DE
            99%
            99%
            99%Average
      base rental rates per weighted average GLA
            2007
            2006
            2005Rehoboth
      Beach, DE
            $
      21.71
            $
      22.02
            $
      20.04





Depreciation
on the Rehoboth Beach outlet center 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, which improve and/or
extend the useful life of the asset are capitalized and depreciated over their
estimated useful life.  At December 31, 2007, the net federal tax
basis of this center was approximately $114.3 million.  Real estate
taxes assessed on this center during 2007 amounted to $225,000.  Real
estate taxes for 2008 are estimated to be approximately $230,000.





The
following table sets forth, as of February 1, 2008, scheduled lease expirations
at the Rehoboth Beach outlet center 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
              Leases2008
            11
            38,000
            $  23.03
            $   875,000
            82009
            13
            50,000
            21.12
            1,056,000
            102010
            41
            180,000
            20.38
            3,669,000
            332011
            21
            77,000
            23.43
            1,804,000
            162012
            12
            49,000
            17.51
            858,000
            82013
            12
            81,000
            17.48
            1,416,000
            132014
            4
            16,000
            24.06
            385,000
            32015
            3
            15,000
            20.67
            310,000
            32016
            2
            11,000
            21.91
            241,000
            22017
            1
            12,000
            20.75
            249,000
            22018
      and thereafter
            2
            9,000
            20.78
            187,000
            2Total
            122
            538,000
            $  20.54
            $
      11,050,000
            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 31,000 square
  feet.


(2)  Annualized
      base rent is defined as the minimum monthly payments due as of February 1,
      2008, excluding periodic contractual fixed increases and rents calculated
      based on a percentage of tenants’
sales.


18





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, 2007.





19


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
            84
            Founder,
      Chairman of the Board of Directors and Chief Executive
    OfficerSteven
      B Tanger
            59
            Director,
      President and Chief Operating OfficerFrank
      C. Marchisello, Jr.
            49
            Executive
      Vice President – Chief Financial Officer and SecretaryJoseph
      N. Nehmen
            59
            Senior
      Vice President – OperationsCarrie
      A. Warren
            45
            Senior
      Vice President – MarketingKevin
      M. Dillon
            49
            Senior
      Vice President – Construction and DevelopmentLisa
      J. Morrison
            48
            Senior
      Vice President – LeasingJames
      F. Williams
            43
            Senior
      Vice President – ControllerVirginia
      R. Summerell
            49
            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 additionally 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.


20





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.


21


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 or preferred
units.  As of December 31, 2007, the Company’s wholly-owned
subsidiaries, Tanger GP Trust and Tanger LP Trust, owned 15,664,621 common units
and Tanger Family Limited Partnership owned 3,033,305 common units as a limited
partner.  We made distributions per partnership common unit during
2007 and 2006 as follows:





2007
            2006First
      Quarter
            
            $
      .680
            $   .645Second
      Quarter
            
            .720
            .680Third
      Quarter
            
            .720
            .680Fourth
      Quarter
            
            .720
            .680$
      2.840
            $
      2.685








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.  The Company has not made any
repurchases since 1999 and the amount authorized for future repurchases
remaining at December 31, 2007 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.


22


Item
6.  Selected Financial Data





2007        
             2006      
                 
      2005 
      2004               2003(in
      thousands, except per unit and center data)OPERATING
      DATATotal
      revenues
            
            $
            228,765
            
            
            $
            210,962
            
            
            $
            197,949
            
            
            $
            189,651
            
            
            $
            112,748Operating
      income
            
            
            71,565
            
            
            
            68,942
            
            
            
            73,769
            
            
            
            68,961
            
            
            
            39,602Income
      from continuing operations
            
            
            32,972
            
            
            
            29,435
            
            
            
            7,678
            
            
            
            7,742
            
            
            
            12,994Net
      income
            
            
            33,090
            
            
            
            43,633
            
            
            
            6,077
            
            
            
            8,626
            
            
            
            16,399UNIT
      DATABasic:Income
      from continuing operations
            
            $
            1.48
            
            
            $
            1.31
            
            
            $
            .14
            
            
            $
            .47
            
            
            $
            .93Net
      income available to commonunitholders
            
            $
            1.49
            
            
            $
            2.08
            
            
            $
            .32
            
            
            $
            .52
            
            
            $
            1.19Weighted
      average common units
            
            
            18,444
            
            
            
            18,333
            
            
            
            17,223
            
            
            
            16,555
            
            
            
            13,085Diluted:Income
      from continuing operations
            
            $
            1.45
            
            
            $
            1.29
            
            
            $
            .14
            
            
            $
            .47
            
            
            $
            .92Net
      income available to commonunitholders
            
            $
            1.46
            
            
            $
            2.06
            
            
            $
            .32
            
            
            $
            .52
            
            
            $
            1.17Weighted
      average common units
            
            
            18,868
            
            
            
            18,574
            
            
            
            17,341
            
            
            
            16,650
            
            
            
            13,300Common
      distributions paid
            
            $
            2.84
            
            
            $
            2.69
            
            
            $
            2.56
            
            
            $
            2.49
            
            
            $
            2.46BALANCE
      SHEET DATAReal
      estate assets, before depreciation
            
            $
            1,287,137
            
            
            $
            1,216,847
            
            
            $
            1,152,866
            
            
            $
            1,077,393
            
            
            $
            1,078,553Total
      assets
            
            
            1,059,978
            
            
            
            1,040,635
            
            
            
            1,000,363
            
            
            
            936,105
            
            
            
            986,815Debt
            
            
            706,345
            
            
            
            678,579
            
            
            
            663,607
            
            
            
            488,007
            
            
            
            540,319Partners’
      equity
            
            
            282,937
            
            
            
            313,700
            
            
            
            299,581
            
            
            
            196,754
            
            
            
            206,600OTHER
      DATACash
      flows provided by (used in):Operating
      activities
            
            $
            98,609
            
            
            $
            88,354
            
            
            $
            83,912
            
            
            $
            84,774
            
            
            $
            46,593Investing
      activities
            
            $
            (84,803
            )
            
            $
            (63,336
            )
            
            $
            (336,563
            )
            
            $
            2,607
            
            
            $
            (327,068
            )Financing
      activities
            
            $
            (19,826
            )
            
            $
            (19,531
            )
            
            $
            251,488
            
            
            $
            (93,156
            )
            
            $
            289,271Gross
      Leasable Area Open:Wholly-owned
            
            
            8,398
            
            
            
            8,388
            
            
            
            8,261
            
            
            
            5,066
            
            
            
            5,299Partially-owned
      (consolidated)
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            3,271
            
            
            
            3,273Partially-owned
      (unconsolidated)
            
            
            667
            
            
            
            667
            
            
            
            402
            
            
            
            402
            
            
            
            324Managed
            
            
            ---
            
            
            
            293
            
            
            
            64
            
            
            
            105
            
            
            
            434Number
      of outlet centers:Wholly-owned
            
            
            29
            
            
            
            30
            
            
            
            31
            
            
            
            23
            
            
            
            26Partially-owned
      (consolidated)
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            9
            
            
            
            9Partially-owned
      (unconsolidated)
            
            
            2
            
            
            
            2
            
            
            
            1
            
            
            
            1
            
            
            
            1Managed
            
            
            ---
            
            
            
            3
            
            
            
            1
            
            
            
            3
            
            
            
            4


In
      December 2003, COROC Holdings, LLC, or COROC, 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 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 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 our
senior unsecured notes.


23


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





At
December 31, 2007, we had 29 wholly-owned centers in 21 states totaling 8.4
million square feet compared to 30 centers in 21 states totaling 8.4 million
square feet as of December 31, 2006.  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, 2006
            
            
            30
            
            
            
            8,388
            
            
            
            21Center
      expansions:Barstow,
      California
            
            
            ---
            
            
            
            7
            
            
            
            ---Branson,
      Missouri
            
            
            ---
            
            
            
            25
            
            
            
            ---Gonzales,
      Louisiana
            
            
            ---
            
            
            
            39
            
            
            
            ---Tilton,
      New Hampshire
            
            
            ---
            
            
            
            18
            
            
            
            ---Dispositions:Boaz,
      Alabama
            
            
            (1
            )
            
            
            (80
            )
            
            
            ---Other
            
            
            ---
            
            
            
            1
            
            
            
            ---As
      of December 31, 2007
            
            
            29
            
            
            
            8,398
            
            
            
            21





24


Results
of Operations





2007
Compared to 2006





Base
rentals increased $8.7 million, or 6%, in the 2007 period compared to the 2006
period.  Our base rental income increased $5.5 million due to
increases in rental rates on lease renewals and incremental rents from
re-tenanting vacant space.  During 2007, we executed 460 leases
totaling 1.9 million square feet at an average increase of 18%.  This
compares to our execution of 479 leases totaling 1.9 million square feet at an
average increase of 10% during 2006.  Base rentals also increased
approximately $3.7 million related to a full year of operations for our outlet
center in Charleston, South Carolina, which opened in August
2006.  However, decreases were recognized in the net amortization of
above or below market leases totaling $317,000.





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 2007 period, we recorded $1.2 million to rental income
for the net amortization of market lease values compared with $1.5 million for
the 2006 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, 2007, the net liability representing
the amount of unrecognized below market lease values totaled
$916,000.





Percentage
rentals, which represent revenues based on a percentage of tenants' sales volume
above predetermined levels (the "breakpoint"), increased $1.6 million or
22%.  The increase is due partially to the addition of high volume
tenants during the last twelve months that have exceeded their
breakpoints.  Reported same-space sales per square foot for the twelve
months ended December 31, 2007 were $342 per square foot, a 1.2% increase over
the prior year ended December 31, 2006.  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 $7.6 million, or 13%, in the
2007 period versus the 2006 period.  During 2006, we incurred a $1.5
million charge when we wrote off due diligence costs related to an abandoned
potential acquisition.  These costs were included in other property
operating expenses.  The acquisition due diligence costs were incurred
in connection with structuring, performing due diligence 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
abandoned acquisition costs, expense reimbursements, expressed as a percentage
of property operating expenses, were 88% and 87% respectively, in the 2007 and
2006 periods.  The reimbursement percentage increase is due to
decreases during 2007 in miscellaneous non-reimbursable expenses such as state
franchise and excise taxes.





Property
operating expenses increased by $7.6 million, or 11%, in the 2007 period as
compared to the 2006 period, excluding the $1.5 million charge mentioned in the
previous paragraph.  Of this increase, $2.2 million relates
incrementally to our Charleston, South Carolina outlet center which opened in
August 2006.  In addition, our common area maintenance costs increased
as a result of higher snow removal costs and higher costs related to operating
our mall offices at the outlet centers in our portfolio.  Further, our
fiscal 2007 property insurance premiums increased significantly upon renewal and
remained at that level for the fiscal 2008 renewal.  Also, several
high performing centers experienced significant property tax increases upon
revaluation.





General
and administrative expenses increased $2.3 million, or 14%, in the 2007 period
as compared to the 2006 period.  The increase is primarily due to
compensation expense related to restricted shares issued during the 2007 period
as well as an increase in bonus compensation for senior executives in the 2007
period. As a percentage of total revenues, general and administrative expenses
were 8% in both the 2007 and 2006 periods.





25


Depreciation
and amortization increased from $57.0 million in the 2006 period to $63.8
million in the 2007 period.


A full
year of depreciation and amortization related to the assets at our outlet center
in Charleston, South Carolina which opened in August 2006 accounted for $2.0
million of the increase.  Also, during the first quarter of 2007, our
Board of Directors formally approved a plan to reconfigure our center in Foley,
Alabama.  As a part of this plan, approximately 42,000 square feet was
relocated within the property by September 2007.  The depreciable
useful lives of the buildings demolished were shortened to coincide with their
demolition dates throughout the first three quarters of 2007 and the change in
estimated useful life was accounted for as a change in accounting estimate.
Approximately 28,000 relocated square feet had opened as of December 31, 2007
with the remaining 14,000 square feet expected to open in the next two
quarters.  Accelerated depreciation recognized related to the
reconfiguration was $6.0 million for the year ended December 31, 2007. These
increases were offset by a decrease in lease cost amortization of approximately
$2.0 million, primarily related to the amortization of the intangibles from the
COROC acquisitions in 2003 and 2005.





Equity in
earnings of unconsolidated joint ventures increased $205,000, or 16%, in the
2007 period as compared to the 2006 period.  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.  This center was open for all of 2007 which resulted in the
increase in our equity in earnings of unconsolidated joint
ventures.





Discontinued
operations includes the results of operations and gains on sale of real estate
of our Boaz, Alabama;  Pigeon Forge, Tennessee and North Branch,
Minnesota centers, which were sold in 2007 and 2006,
respectively.  The following table summarizes the results of
operations and gains on sale of real estate for the 2007 and 2006
periods:





Summary
      of discontinued operations
            
            2007
            
            2006Operating
      income from discontinued operations
            
            $      112
            
            $       365Gain
      on sale of real estate
            
            6
            
            13,833Discontinued
      operations
            
            $      118
            
            $  14,198





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 $4.5 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 $840,000 or
13%.  Reported same-space sales per square foot for the twelve months
ended December 31, 2006 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.





26


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.  During 2006, we incurred a $1.5
million charge when we wrote off due diligence costs related to an abandoned
potential acquisition.  These costs were included in other property
operating expenses.  The acquisition due diligence costs were incurred
in connection with structuring, performing due diligence 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
abandoned acquisition costs, expense reimbursements, expressed as a percentage
of property operating expenses, were 87% and 89% respectively, in the 2006 and
2005 periods.  The reimbursement percentage decrease is due to
increases during 2006 in miscellaneous non-reimbursable expenses such as state
franchise and excise taxes.





Other
income increased $1.6 million, or 28%, 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 $4.4 million, or 7%, in the 2006 period as
compared to the 2005 period, excluding the $1.5 million charge mentioned in the
previous paragraph.  Of this increase, $1.8 million relates
incrementally to our Charleston, South Carolina outlet center which opened in
August 2006.  Excluding these costs associated with the Charleston,
South Carolina outlet center and the abandoned acquisition 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 $48.0 million in the 2005 period to $57.0
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.





27


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 of our Boaz, Alabama center which
was sold in 2007 and 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
            
            $      365
            
            $  3,089Gain
      on sale of real estate
            
            13,833
            
            ---Discontinued
      operations
            
            $
      14,198
            
            $  3,089





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 $98.6 million, $88.4 million and $83.9
million for the years ended December 31, 2007, 2006 and 2005,
respectively.  The increase in cash provided by operating activities
from 2006 to 2007 is due primarily to higher operating cash flow from the
addition of the Charleston, South Carolina center in August 2006 and higher
renewal and re-tenant base rental rates throughout our portfolio.  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.





Net cash
used in investing activities amounted to $84.8 million, $63.3 million and $336.6
million during 2007, 2006 and 2005, respectively, and reflects the acquisitions,
expansions and dispositions of real estate during each year.  Both
2007 and 2006 included significant construction activities for new projects with
the Charleston, SC outlet center constructed in 2006 and the Pittsburgh,
Pennsylvania outlet center construction on-going in 2007 and several other
outlet center expansions during the year.  Cash used in 2006 was
reduced by proceeds from the sale of our Pigeon Forge, Tennessee and North
Branch, Minnesota outlet centers during the first quarter of 2006.  In
November 2005 we completed the acquisition of the final two-thirds interest of
the COROC joint venture.  We originally purchased a one-third interest
in December 2003.





Net cash
(used in) provided by financing activities amounted to $(19.8) million, $(19.5)
million and $251.5 million in 2007, 2006 and 2005,
respectively.  These periods reflect increases in cash distributions
and units outstanding during 2007, 2006 and 2005.  Tax incentive
proceeds received related to our Pittsburgh, PA project for the year ended
December 31, 2007 of $7.1 million further reduced our 2007 cash outflows from
financing activities.  The 2006 period included net proceeds of $19.4
million from the Company’s sale of 800,000 preferred shares, a significant
portion of which was used to repay amounts outstanding on our unsecured lines of
credit.  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 in Item 6, Selected Financial Data, and to repay
the John Hancock Life Insurance mortgages.





28


Current
Developments and Dispositions





We intend
to continue to grow our portfolio by developing, expanding or acquiring
additional outlet centers.  In the section below, we describe the new
developments that are either currently planned, underway or recently
completed.  However, you should note that 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





Pittsburgh,
Pennsylvania





During
the fourth quarter of 2006, we closed on the acquisition of our development site
located south of Pittsburgh, Pennsylvania in Washington County for $4.8
million.  In response to strong tenant demand for space, we increased
the size of the initial phase of the Pittsburgh center from 308,000 square feet
to 370,000 square feet, with signed leases for approximately 63% of the first
phase and an additional 20% under negotiation or out for
signature.  We currently expect delivery of the initial phase in the
second quarter of 2008, with stores opening by the end of the third quarter of
2008.  Upon completion of the project, the outlet center will total
approximately 418,000 square feet.  The Pittsburgh project is wholly
owned by us. Tax incentive financing bonds have been issued related to the
Pittsburgh project, and we expect to receive net proceeds of approximately $16.8
million as we incur qualifying expenditures during construction of the
center.  As of December 31, 2007 we have received funding for
qualified expenditures submitted totaling $7.6 million.





Potential
Future Developments





We
currently have an option for a new development site located in Mebane, North
Carolina on the highly traveled Interstate 40/85 corridor, which sees over
83,000 cars daily.  The site is located halfway between the Research
Triangle Park area of Raleigh, Durham, and Chapel Hill, and the Triad area of
Greensboro, High Point and Winston-Salem.  The center is currently
expected to be approximately 300,000 square feet.  During the option
period we will be analyzing the viability of the site and determining whether to
proceed with the development of a center at this location.





We have
also started the initial pre-development and leasing for a site we have under
control in Port St. Lucie, Florida at Exit 118 on Interstate
I-95.  Approximately 64,000 cars utilize this exit each
day.  Port St. Lucie is one of Florida’s fastest growing cities and is
located less than 40 miles north of Palm Beach, Florida and one exit south of
the New York Mets’ spring training facility.  This center is expected
to be approximately 350,000 square feet and initial reaction to the site from
our magnet tenants has been very positive.





At this
time, we are in the initial study period on these potential new
locations.  As such, there can be no assurance that any of these sites
will ultimately be developed.  During the third quarter of 2007 we put
on hold our plans to develop a center in Burlington, New Jersey due to numerous
development and site access issues.





Expansions
at Existing Centers





During
2007, we completed expansions in three of our outlet centers.





Expansion
            New
      TotalCenter
            GLA
            Center
      GLAGonzales,
      Louisiana
            39,000
            282,000Branson,
      Missouri
            25,000
            303,000Tilton,
      New Hampshire
            18,000
            246,000Total
      expansions
            82,000





A fourth
expansion project, in Barstow, California, is near completion.  Some
stores opened during the fourth quarter of 2007 and the remaining stores will
open during the first two quarters of 2008.  The total expansion in
Barstow of 62,000 square feet will bring the center’s total GLA to 171,300
square feet.





WHOLLY
OWNED DISPOSITIONS





In
October 2007, we completed the sale of our property in Boaz,
Alabama.  Net proceeds received from the sale of the property were
approximately $2.0 million.  We recorded a gain on sale of real estate
of approximately $6,000.





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, 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 2028.  We can repay
the loan in full without penalty on July 10, 2008, or we can continue to make
monthly payments on the loan at a revised interest rate of 8.59%.  We
can then repay the loan in full on any monthly payment date without
penalty.  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 by the Company of 4.6 million 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 the issuance by the Company of common and preferred shares and our unsecured
senior notes.  The transaction completed the Charter Oak acquisition
and solidified our position in the outlet industry.








29


UNCONSOLIDATED
JOINT VENTURES





The
following table details certain information as of December 31, 2007 about
various unconsolidated real estate joint ventures in which we have an ownership
interest:





Joint
      Venture
            Center
      Location
            Opening
              Date
            Ownership
              %
            Square
              Feet
            Carrying
      Value
              of
      Investment
              (in
      millions)
            Total
      Joint
              Venture
      Debt
              (in
      millions)Myrtle
      Beach Hwy 17
            Myrtle
      Beach, South Carolina
            2002
            50%
            402,013
            $0.9
            $35.8Wisconsin
      Dells
            Wisconsin
      Dells, Wisconsin
            2006
            50%
            264,929
            $6.0
            $25.3Deer
      Park
            Deer
      Park, Long Island NY
            Under
      construction
            33%
            800,000
      estimated
            $3.8
            $87.3


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 Wisconsin Dells and Deer Park as of December 31,
2007.





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.





Myrtle
Beach Hwy 17





The
Myrtle Beach Hwy 17 joint venture, in which we have a 50% ownership interest,
has owned 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, Myrtle Beach Hwy 17 entered into an interest rate swap agreement
with Bank of America with a notional amount of $35 million for five
years.  Under this agreement, the joint venture 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, the joint venture obtained non-recourse, permanent financing to replace
the construction loan debt that was utilized to build the outlet
center.  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, the joint venture 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.





Wisconsin
Dells





In March
2005, we established the Tanger Wisconsin Dells joint venture to construct and
own a Tanger Outlet center in Wisconsin Dells, Wisconsin.  The 264,900
square foot center opened in August 2006. In February 2006, in conjunction with
the construction of the center, the Wisconsin Dells joint venture closed on a
construction loan in the amount of $30.3 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.  During the second quarter of 2007, the Wisconsin Dells joint
venture received $5.0 million in tax incentive financing proceeds which were
used to repay amounts outstanding on the construction loan.  The
construction loan balance as of December 31, 2007 was approximately $25.3
million.





Deer
Park





In
October 2003, we established the Deer Park joint venture to develop and own a
Tanger Outlet center in Deer Park, New York.   Construction has
begun on the initial phase that will contain approximately 682,000 square feet
including a 32,000 square foot Neiman Marcus Last Call store, which will be the
first and only one on Long Island. Other tenants will include Anne Klein, Banana
Republic, BCBG, Christmas Tree Shops, Disney, Eddie Bauer, Reebok, New York
Sports Club and many more.  Regal Cinemas has also leased 71,000
square feet for a 16-screen Cineplex, one of the few state of the art cineplexes
on Long Island.  We currently expect to open the first phase of the
center by the end of the third quarter of 2008.  Upon completion of
the project, the shopping center will contain over 800,000 square
feet.





In May
2007, the joint venture closed on a $284 million construction loan for the
project arranged by Bank of America with a weighted average interest rate of 30
day LIBOR plus 1.49%.  Over the life of the loan, if certain criteria
are met, the weighted average interest rate can decrease to 30 day LIBOR plus
1.23%.  The loan, which had a balance as of December 31, 2007 of $87.3
million, is originally scheduled to mature in May 2010 with a one year extension
option at that date. The loan is collateralized by the property as well as joint
and several guarantees by all three venture partners.  The joint
venture entered into two interest rate swap agreements during June
2007.  The first swap is for a notional amount of $49.0 million and
the second is a forward starting interest rate swap agreement with escalating
notional amounts that totaled $22.3 million as of December 31,
2007.  The notional amount of the forward starting interest rate swap
agreement will total $121.0 million by November 1, 2008.  The
agreements expire on June 1, 2009. These swaps will effectively change the rate
of interest on up to $170.0 million of variable rate mortgage debt to a fixed
rate of 6.75%.  See Note 8, Derivatives, for further discussion
relating to these interest rate swap agreements.


Our
guarantee of the construction loan debt is accounted for under the provisions of
FIN 45.  As construction draws are funded, we record the fair value of
our guarantee of the Deer Park joint venture's debt as an increase to our
investment in Deer Park and an increase to a corresponding guarantee liability.
We have elected to account for the release from the obligation under the
guarantee by the straight-line method over the life of the guarantee. The
current value of the guarantee liability as of December 31, 2007 was
approximately $879,000.





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 $29.0
million, including a 900,000 square foot industrial building, which was then
leased back to the seller under an operating lease agreement. Through May 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 May 2006, net of
applicable expenses, were treated as incidental revenues and were recorded as a
reduction in the basis of the assets.





At the
end of the lease in May 2005, the tenant vacated the building. However, the
tenant did not satisfy all of the conditions necessary to terminate the lease
until May 2006.  Deer Park is currently in litigation to recover from
the tenant its monthly lease payments from June 2005 through May 2006,
approximately $3.4 million, and will continue to do so until
recovered.  Deer Park discontinued the accrual of rental revenues
associated with the sale-leaseback transaction as of May 2006.





Financing
Arrangements





In
February 2006, the Company completed the sale of an additional 800,000 Class C
Preferred Shares with net proceeds of approximately $19.4
million.  The proceeds, which were contributed to us in exchange for
preferred units, were used to repay 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.





30


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 a current
exchange ratio, subject to adjustment if we change our dividend rate in the
future, of 27.6991 shares per $1,000 principal amount of notes (or a current
exchange price of $36.1023 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.





At
December 31, 2007, approximately 75% 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.  At the Company’s 2007 Annual Shareholders’ Meeting,
shareholders approved an increase in the Company’s authorized common shares from
50.0 million to 150.0 million and added four additional classes of Company
preferred shares with an authorized number of four million shares
each.  During the third quarter of 2006, we, together with the
Company, updated our joint shelf registration 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 fourth quarter of 2007, we extended the maturity dates on five of our six
unsecured lines of credit from 2009 to June 2011.  During the first
quarter of 2008, we increased the maximum availability under our existing
unsecured credit facilities by $125.0 million, bringing our total availability
to $325.0 million.  The terms of the increases are identical to those
included within the existing unsecured credit facilities with the borrowing rate
ranging from LIBOR plus 75 basis points to LIBOR plus 85 basis
points.





On
February 15, 2008, our $100 million, 9.125% unsecured senior notes
matured.  We repaid these notes in the short term with amounts
available under our unsecured lines of credit.  On July 10, 2008, our
only remaining mortgage loan with a principal balance of $172.7 million and
bearing interest at a coupon rate of 6.59% will become payable at our
option.  Because the mortgage was assumed as part of an acquisition of
a portfolio of outlet centers, the debt was recorded at its fair value and
carries an effective interest rate of 5.18%.  On the optional payment
date, we can decide to repay the loan in full, or we can continue to make
monthly payments on the loan at a revised interest rate of 8.59%.  We
can then repay the loan in full on any monthly payment date without
penalty.  The final maturity date on the loan is July 10,
2028.  We are currently analyzing our various options with respect to
refinancing this mortgage.  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 2008.





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 as a REIT for 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.





31


Contractual
Obligations and Commercial Commitments





The
following table details our contractual obligations over the next five years and
thereafter as of December 31, 2007 (in thousands):





ContractualObligations
            2008
            2009
            2010
            2011
            2012
            Thereafter
            TotalDebt
      (1)
            $
      272,678
            $      
       ---
            $       
        ---
            $
      33,880
            $        ---
            $
      399,500
            $    706,058Operating
      leases
            4,200
            4,040
            3,695
            3,521
            3,041
            79,258
            97,755Preferred
      unitdistributions
      (2)
            5,625
            5,625
            80,625
            ---
            ---
            ---
            91,875Interest
      payments (3)
            34,134
            22,877
            22,877
            21,929
            20,981
            124,613
            247,411$
      316,637
            $
      32,542
            $
      107,197
            $59,330
            $
      24,022
            $
      603,371
            $
      1,143,099


(1)
            These
      amounts represent total future cash payments related to debt obligations
      outstanding as of December 31,
2007.


(2)
            Preferred
      unit distributions reflect distributions on our preferred units on which
      we pay an annual distribution of $1.875 per unit on 3,000,000 outstanding
      preferred units as of December 31, 2007.  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.


(3)
            These
      amounts represent future interest payments related to our debt obligations
      based on the fixed and variable interest rates specified in the associated
      debt agreements.  Al l of our variable rate agreements are based
      on the 30 day LIBOR rate.  For purposes of calculating future
      interest amounts on variable interest rate debt, the 30 day LIBOR rate as
      of December 31, 2007 was used.





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 spend
approximately $139.7 million in 2008 and $91.0 million in 2009.  The
timing of these expenditures may vary due to delays in construction or
acceleration of the opening date of a particular project.





Also, we
currently have a total of $200.0 million of US Treasury rate lock contracts that
expire in July 2008.  As of December 31, 2007, the amount of funds we
would have to pay to settle these contracts was $8.8 million.  Given
the current interest rate environment, this amount could change significantly by
July 2008 in either a positive or negative manner.  See Item 7A.
Quantitative and Qualitative Disclosures About Market Risk for further
discussion.





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.





Off-Balance
Sheet Arrangements





We are
party to a joint and several guarantee with respect to the construction loan
obtained by the Wisconsin Dells joint venture during the first quarter of 2006,
which currently has a balance of $25.3 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 $87.3 million. See “Joint Ventures” section
above for further discussion of off-balance sheet arrangements and their related
guarantees.  Our pro-rata portion of the Myrtle Beach Hwy 17 mortgage
secured by the center is $17.9 million.  There is no guarantee
provided for the Myrtle Beach Hwy 17 mortgage by us.





32


Related
Party Transactions





As noted
above in “Unconsolidated Joint Ventures”, we are 50% owners of the Myrtle Beach
Hwy 17 and Wisconsin Dells joint ventures.  These joint ventures pay
us management, leasing, marketing and development fees, which we believe
approximate current market rates, for services provided to the joint
ventures.  During 2007, 2006 and 2005, we recognized the following
fees (in thousands):





Year
      Ended
              December
      31,2007
            2006
            2005Fee:Management
            
            $  534
            $  410
            $   327Leasing
            
            26
            188
            6Marketing
            
            108
            86
            66Development
            
            ---
            304
            ---Total
      Fees
            
            $  668
            $  988
            $   399





Tanger
Family Limited Partnership 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 aggregated $8.6 million, $8.1 million and $7.8
million for the years ended December 31, 2007, 2006 and 2005,
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.





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.





Acquisition
of Real Estate





33


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 33.3years.  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 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, 2007.





34


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
receivable until the tenant vacates the space.





New
Accounting Pronouncements





In
September 2006, the FASB issued Statement of Accounting Standards No. 157,
“Fair Value Measurements,” or FAS 157.  FAS 157 defines fair value,
establishes a framework for measuring fair value in accordance with accounting
principles generally accepted in the United States, and expands disclosures
about fair value measurements.  The provisions of this standard apply
to other accounting pronouncements that require or permit fair value
measurements. The FASB has deferred the effective date by one year the
provisions of FAS 157 for non-financial assets and non-financial liabilities
that are recognized or disclosed at fair value in the financial statements on a
nonrecurring basis.  We believe that the adoption of this standard on
January 1, 2008 will not have a material effect on our consolidated financial
statements; however we believe it will likely be required to provide additional
disclosures as a part of future financial statements, beginning with the Form
10-Q for the quarter ended March 31, 2008.





In
February 2007, the FASB, issued Statement of Financial Accounting Standards
No. 159, “The Fair Value Option for Financial Assets and Financial
Liabilities” or FAS 159.  FAS 159 permits entities to choose to
measure many financial instruments and certain other items at fair value that
are not currently required to be measured at fair value.  FAS 159 also
establishes presentation and disclosure requirements designed to facilitate
comparisons between entities that choose different measurement attributes for
similar type of assets and liabilities.  We do not believe the
adoption of FAS 159 on January 1, 2008 will have a material impact on our
consolidated financial statements.





In
December 2007, the FASB issued Statement of Financial Accounting Standards No.
141 (revised 2007) “Business Combinations”, or FAS 141R.  FAS 141R is
effective for fiscal years beginning on or after December 15, 2008, which means
that we will adopt FAS 141R on January 1, 2009.  FAS 141R replaces FAS
141 “Business Combinations” and requires that the acquisition method of
accounting (which FAS 141 called the purchase method) be used for all business
combinations, as well as for an acquirer to be identified for each business
combination.  FAS 141R establishes principles and requirements for how
the acquirer: (i) recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any non-controlling
interest in the acquiree; (ii) recognizes and measures the goodwill acquired in
the business combination or a gain from a bargain purchase; and (iii) determines
what information to disclose to enable users of financial statements to evaluate
the nature and financial affects of the business combination.  We are
currently evaluating the impact of adoption of FAS 141R on our consolidated
financial position, results of operations and cash flows.





In
December 2007, the FASB issued Statement of Financial Accounting Standards No.
160 “Non-controlling Interests in Consolidated Financial Statements, an
amendment of ARB No. 51”, or FAS 160.  FAS 160 is effective for fiscal
years beginning on or after December 15, 2008, which means that we will adopt
FAS 160 on January 1, 2009.  This statement amends ARB 51 to establish
accounting and reporting standards for the non-controlling interest in a
subsidiary and for the deconsolidation of a subsidiary.  FAS 160
changes accounting and reporting for minority interests, which will be
recharacterized as non-controlling interests and classified as a component of
equity in the consolidated financial statements.  FAS 160 requires
retroactive adoption of the presentation and disclosure requirements for
existing minority interests.  All other requirements of SFAS 160 shall
be applied prospectively.  We are currently evaluating the impact of
adoption of FAS 160 on our consolidated financial position, results of
operations and cash flows.





35


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 as required by
Generally Accepted Accounting Principles, or GAAP, which assumes that the value
of real estate assets diminishes 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, many 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 dividend
paying capacity.  We compensate for these limitations by relying
primarily on our GAAP results and using FFO only supplementally.





36


Below is
a reconciliation of net income to FFO for the years ended December 31, 2007,
2006 and 2005 as well as other data for those respective periods (in
thousands):


2007
            
            
            2006
            
            
            2005Funds
      from Operations:Net
      income
            
            $
            33,090
            
            
            $
            43,633
            
            
            $
            6,077Adjusted
      for:Minority
      interest adjustment – consolidated jointventure
            
            
            ---
            
            
            
            ---
            
            
            
            (315
            )Depreciation
      and amortization attributable todiscontinued
      operations
            
            
            145
            
            
            
            307
            
            
            
            911Depreciation
      and amortization uniquely significantto
      real estate – consolidated
            
            
            63,506
            
            
            
            56,747
            
            
            
            47,728Depreciation
      and amortization uniquely significantto
      real estate – unconsolidated joint ventures
            
            
            2,611
            
            
            
            1,825
            
            
            
            1,493(Gain)
      loss on sale of real estate
            
            
            (6
            )
            
            
            (13,833
            )
            
            
            4,690Funds
      from operations (1)
            
            
            99,346
            
            
            
            88,679
            
            
            
            60,584Preferred
      unit distributions
            
            
            (5,625
            )
            
            
            (5,433
            )
            
            
            (538
            )Funds
      from operations available to common unitholders
            
            $
            93,721
            
            
            $
            83,246
            
            
            $
            60,046Weighted
      average units outstanding (2)
            
            
            18,868
            
            
            
            18,574
            
            
            
            17,341


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


(2)
Includes the dilutive effect of options, restricted unit awards and exchangeable
notes.





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
2008, we have approximately 1,340,000 square feet, or 16%, of our wholly-owned
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 79% of the 1,572,000 square feet that came up for renewal in 2007 with
the existing tenants at a 14% increase in the average base rental rate compared
to the expiring rate.  We also re-tenanted 610,000 square feet during
2007 at a 40% increase in the average base rental rate.





37


Existing
tenants’ sales have remained stable and renewals by existing tenants have
remained strong.  The existing tenants have already renewed
approximately 697,000, or 52%, of the square feet scheduled to expire in 2008 as
of February 1, 2008. 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 8% 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
both December 31, 2007 and 2006, occupancy at our wholly owned centers was
98%.  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.





Tanger
Properties Limited Partnership





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, 2007, we would have paid approximately
$8.8 million 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
$24.4 million to do so.  The fair value is based on dealer quotes,
considering current interest rates and remaining term to maturity.  We
currently do not intend to terminate the agreements prior to their maturity
because we plan on entering into the debt transactions as
indicated.  However, this policy may vary based on market conditions
at the time of the forecast transactions.





Myrtle
Beach Hwy 17





During
March 2005, the Myrtle Beach Hwy 17 joint venture 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, the joint venture 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.





38


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, 2007, the joint venture would have paid approximately $644,000 if the
agreement was terminated.  If the 30 day LIBOR index decreased 1% and
the joint venture were to terminate the agreement, it would have to pay $1.4
million to do so.  The fair value is based on dealer quotes,
considering current interest rates and remaining term to
maturity.  The joint venture 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 on the joint venture’s balance sheet; however,
if held to maturity, the value of the swap will be zero at that
time.





Deer
Park





During
June 2007, the Deer Park joint venture entered into two interest rate swap
agreements to hedge the cash flows from the floating rate construction loan
obtained in May 2007 to construct the outlet center in Deer Park, New
York.  The first interest rate swap had a notional amount of $49.0
million.  The second interest rate swap agreement is a forward
starting agreement with escalating notional amounts that totaled $22.3 million
as of December 31, 2007.  The notional amount of the forward starting
interest rate swap agreement will total $121.0 million by November 1,
2008.  Both agreements expire June 1, 2009.  These swaps
will effectively change the rate of interest on $170.0 million of variable rate
construction debt to a fixed rate of 6.75%.





The fair
value of the interest rate swap agreements represents the estimated receipts or
payments that would be made to terminate the agreements.  At December
31, 2007, the Deer Park joint venture would have had to pay approximately $3.4
million if the agreements were terminated.  If the LIBOR index
decreased 1% and the Deer Park joint venture were to terminate the agreements,
it would have to pay $5.2 million to do so.  The fair value is based
on dealer quotes, considering current interest rates and remaining term to
maturity.  The joint venture does not intend to terminate the interest
rate swap agreements prior to their maturity.  The fair value of these
derivatives is currently recorded as a liability on the joint venture’s balance
sheet; however, if held to maturity, the value of the swaps will be zero at that
time.





The
following table summarizes the notional values and fair values of our derivative
financial instruments as of December 31, 2007.





Financial
      Instrument Type
            Notional
              Amount
            Rate
            Maturity
            Fair
      ValueTANGER
      PROPERTIES LIMITED PARTNERSHIPUS
      Treasury Lock
            $100,000,000
            4.526%
            July
      2008
            $(3,659,000
            )US
      Treasury Lock
            $100,000,000
            4.715%
            July
      2008
            $(5,095,000
            )DEER
      PARKLIBOR
      Interest Rate Swap (1)
            $49,000,000
            5.47%
            June
      2009
            $(1,217,000
            )LIBOR
      Interest Rate Swap (2)
            $22,300,000
            5.34%
            June
      2009
            $(2,136,000
            )MYRTLE
      BEACH HWY 17LIBOR
      Interest Rate Swap (3)
            $  35,000,000
            4.59%
            March
      2010
            $   (644,000
            )


(1)
            Amount
      represents the fair value recorded at the Deer Park joint venture, in
      which we have a 33.3% ownership
interest.


(2)
            Derivative
      is a forward starting interest rate swap agreement with escalating
      notional amounts totaling $22.3 million as of December 31,
      2007.  Outstanding amounts under the agreement will total $121.0
      million by November 1, 2008.  Amount represents the fair value
      recorded at the Deer Park joint venture, in which we have a 33.3%
      ownership interest.


(3)
            Amount
      represents the fair value recorded at the Myrtle Beach Hwy 17 joint
      venture, in which we have a 50% ownership
  interest.





39


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, 2007 and 2006 was $723.3 million and $723.5 million, respectively,
and its recorded value was $706.3 million and $678.6 million, respectively. A 1%
increase from prevailing interest rates at December 31, 2007 and 2006 would
result in a decrease in fair value of total long-term debt by approximately
$38.2 million and $46.0 million, respectively.  Fair values were
determined from quoted market prices, where available, using current interest
rates considering credit ratings and the remaining terms to
maturity.





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
      and Assistant Secretary, Frank C. Marchisello, Jr. (Principal Financial
      and Accounting Officer) of Tanger GP Trust, sole general partner of the
      registrant, evaluated the effectiveness of the registrant’s disclosure
      controls and procedures on December 31, 2007 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.





Internal
control over financial reporting, as such term is defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act, is a process designed
by, or under the supervision of, the chief executive officer and chief financial
officer of the Operating Partnership’s general partner, or persons performing
similar functions, and effected by the board of trustees, management and other
personnel, 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 management, with the
participation of the chief executive officer and principal financial and
accounting officer of the Operating Partnership’s general partner, has
established and maintained policies and procedures designed to maintain the
adequacy of the Operating Partnership’s internal control over financial
reporting, and includes those policies and procedures that:





(1)
            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;




(2)
            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 trustees of the Operating Partnership’s general partner;
      and





(3)
            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.





40


The
management of the Operating Partnership’s general partner has evaluated the
effectiveness of the Operating Partnership’s internal control over financial
reporting as of December 31, 2007 based on the criteria established in a report
entitled Internal Control—Integrated Framework, issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO).  Based on
this assessment and those criteria, the management of the Operating
Partnership’s general partner has concluded that the Operating Partnership’s
internal control over financial reporting was effective as of December 31,
2007.





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 or compliance
with the policies or procedures may deteriorate.





The
effectiveness of the Operating Partnership’s internal control over financial
reporting as of December 31, 2007 has been audited by PricewaterhouseCoopers
LLP, an independent registered public accounting firm, as stated in their report
which appears herein.




(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, 2007 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 2007 was reported.







41


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, or 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 16, 2008.





The
information concerning the Company’s executive officers required by this Item is
incorporated herein by reference 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 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 16, 2008.





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 16, 2008.





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 16,
2008.





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 16,
2008.





The
following table provides information as of December 31, 2007 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
            184,078
            $36.70
            865,305Equity
      compensation plans
              not
      approved by security holders
            ---
            ---
            ---Total
            184,078
            $36.70
            865,305





42


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 16,
2008.





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 16,
2008.







PART
IV





Item
15.                      Exhibits
and Financial Statement Schedules





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





1.
            Financial
      Statements


Report of Independent Registered Public Accounting Firm
            F-1Consolidated Balance Sheets-December 31, 2007 and 2006
            F-2Consolidated Statements of Operations-Years Ended December 31, 2007, 2006 and
      2005
            F-3Consolidated Statements of Partners’
      Equity-Years Ended December 31, 2007, 2006 and 2005
            F-4Consolidated Statements of Cash Flows-Years Ended December 31, 2007, 2006 and 2005
            F-5Notes to Consolidated Financial Statements
            F-6
      to F-28




2.           Financial
Statement Schedule


Schedule IIIReal Estate and
      Accumulated Depreciation
            F-29
      to F-30





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.


43


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 5,
      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
            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.)10.16
            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.)




10.17
            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.)10.18
            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.)10.19
            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.)10.20
            Purchase
      Agreement between Tanger Factory Outlet Centers, Inc. and Cohen &
      Steers Capital Management, Inc. relating to a registered direct offering
      of 3,000,000 of the Company’s common shares dated August 30, 2005.
      (Incorporated by reference to the exhibits to the Company’s Current Report
      on Form 8-K dated August 30, 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.





44





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
28, 2008





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
      28, 2008/s/ Steven B.
      Tanger
              Steven
      B. Tanger
            Trustee
      and President
            February
      28, 2008/s/ Frank C.
      Marchisello Jr.
              Frank
      C. Marchisello Jr.
            Vice
      President, Treasurer and Assistant Secretary
              (Principal
      Financial and Accounting Officer)
            February
      28, 2008/s/ Jack
      Africk
              Jack
      Africk
            Trustee
            February
      28, 2008/s/ William G.
      Benton
              William
      G. Benton
            Trustee
            February  28,
      2008Thomas
      E. Robinson
            Trustee
            February
      28, 2008/s/ Allan L.
      Schuman
              Allan
      L. Schuman
            Trustee
            February
      28, 2008








45





Report
of Independent Registered Public Accounting Firm





To the
Partners of Tanger Properties Limited Partnership:





In our
opinion, the consolidated financial statements listed in the index appearing
under Item 15(a)(1) present fairly, in all material respects, the financial
position of Tanger Properties Limited Partnership and its subsidiaries at
December 31, 2007 and 2006, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 2007 in
conformity with accounting principles generally accepted in the United States of
America.  In addition, in our opinion, the financial statement
schedule listed in the index appearing under Item 15(a)(2) presents fairly, in
all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.  Also
in our opinion, the Operating Partnership maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2007,
based on criteria established in Internal Control - Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO).  The Operating Partnership's management is responsible for
these financial statements and financial statement schedule, for maintaining
effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting, included in the
Management's Report on Internal Control Over Financial Reporting included under
Item 9A(b).  Our responsibility is to express opinions on these
financial statements, on the financial statement schedule, and on the Operating
Partnership's internal control over financial reporting based on our integrated
audits.  We conducted our audits in accordance with the standards of
the Public Company Accounting Oversight Board (United States).  Those
standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement and whether effective internal control over financial reporting was
maintained in all material respects.  Our audits of the financial
statements included 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.  Our audit of internal control over
financial reporting included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk.  Our audits also included
performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our
opinions.





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





Greensboro,
North Carolina


February
28, 2008











F-1





TANGER
PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS


(in
thousands)


December
      31,2007
            
            
            2006ASSETSRental
      propertyLand
            
            $
            130,075
            
            
            $
            130,137Buildings,
      improvements and fixtures
            
            
            1,104,459
            
            
            
            1,068,070Construction
      in progress
            
            
            52,603
            
            
            
            18,6401,287,137
            
            
            
            1,216,847Accumulated
      depreciation
            
            
            (312,638
            )
            
            
            (275,372
            )Rental
      property, net
            
            
            974,499
            
            
            
            941,475Cash
      and cash equivalents
            
            
            2,393
            
            
            
            8,413Investments
      in unconsolidated joint ventures
            
            
            10,695
            
            
            
            14,451Deferred
      charges, net
            
            
            44,804
            
            
            
            55,089Other
      assets
            
            
            27,587
            
            
            
            21,207Total
      assets
            
            $
            1,059,978
            
            
            $
            1,040,635LIABILITIES AND PARTNERS’
      EQUITYLiabilitiesDebtSenior,
      unsecured notes (net of discount of $759 and $832,
      respectively)
            
            $
            498,741
            
            
            $
            498,668Mortgages
      payable (including premium of $1,046 and $3,441,
    respectively)
            
            
            173,724
            
            
            
            179,911Unsecured
      lines of credit
            
            
            33,880
            
            
            
            ---Total
      debt
            
            
            706,345
            
            
            
            678,579Construction
      trade payables
            
            
            23,813
            
            
            
            23,504Accounts
      payable and accrued expenses
            
            
            46,883
            
            
            
            24,852Total
      liabilities
            
            
            777,041
            
            
            
            726,935Commitments
      and contingenciesPartners’
      equityGeneral
      partner
            
            
            24
            
            
            
            227Limited
      partners
            
            
            290,430
            
            
            
            309,587Accumulated
      other comprehensive income (loss)
            
            
            (7,517
            )
            
            
            3,886Total
      partners’ equity
            
            
            282,937
            
            
            
            313,700Total
      liabilities and partners’ equity
            
            $
            1,059,978
            
            
            $
            1,040,635





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























F -
2





TANGER
PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF OPERATIONS


(in
thousands, except per unit data)


For the years ended
      December31,2007
            
            
            2006
            
            
            2005REVENUESBase
      rentals
            
            $
            146,824
            
            
            $
            138,101
            
            
            $
            130,625Percentage
      rentals
            
            
            8,757
            
            
            
            7,182
            
            
            
            6,342Expense
      reimbursements
            
            
            65,978
            
            
            
            58,397
            
            
            
            55,286Other
      income
            
            
            7,206
            
            
            
            7,282
            
            
            
            5,696Total
      revenues
            
            
            228,765
            
            
            
            210,962
            
            
            
            197,949EXPENSESProperty
      operating
            
            
            74,383
            
            
            
            68,302
            
            
            
            62,366General
      and administrative
            
            
            19,007
            
            
            
            16,706
            
            
            
            13,838Depreciation
      and amortization
            
            
            63,810
            
            
            
            57,012
            
            
            
            47,976Total
      expenses
            
            
            157,200
            
            
            
            142,020
            
            
            
            124,180Operating
      income
            
            71,565
            
            
            68,942
            
            
            73,769Interest
      expense (including prepayment premium and deferred loan cost write off of
      $917 and $9,866 in 2006 and 2005, respectively)
            
            
            40,066
            
            
            
            40,775
            
            
            
            42,927Income
      before equity in earnings of unconsolidated joint ventures, minority
      interest in consolidated joint venture, discontinued operations and loss
      on sale of real estate
            
            
            31,499
            
            
            
            28,167
            
            
            
            30,842Equity
      in earnings of unconsolidated joint ventures
            
            
            1,473
            
            
            
            1,268
            
            
            
            879Minority
      interest in consolidated joint venture
            
            
            ---
            
            
            
            ---
            
            
            
            (24,043
            )Income
      from continuing operations
            
            
            32,972
            
            
            
            29,435
            
            
            
            7,678Discontinued
      operations
            
            
            118
            
            
            
            14,198
            
            
            
            3,089Income
      before loss on sale of real estate
            
            
            33,090
            
            
            
            43,633
            
            
            
            10,767Loss
      on sale of real estate
            
            
            ---
            
            
            
            ---
            
            
            
            (4,690
            )Net
      income
            
            
            33,090
            
            
            
            43,633
            
            
            
            6,077Less
      applicable preferred unit distributions
            
            
            (5,625
            )
            
            
            (5,433
            )
            
            
            (538
            )Net
      income available to common unitholders
            
            
            27,465
            
            
            
            38,200
            
            
            
            5,539Income
      allocated to limited partners
            
            
            27,242
            
            
            
            37,887
            
            
            
            5,490Income
      allocated to general partner
            
            $
            223
            
            
            $
            313
            
            
            $
            49Basic
      earnings per common unit:Income
      from continuing operations
            
            $
            1.48
            
            
            $
            1.31
            
            
            $
            .14Net
      income
            
            
            1.49
            
            
            
            2.08
            
            
            
            .32Diluted
      earnings per common unit:Income
      from continuing operations
            
            $
            1.45
            
            
            $
            1.29
            
            
            $
            .14Net
      income
            
            
            1.46
            
            
            
            2.06
            
            
            
            .32





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





F -
3





TANGER
PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF PARTNERS’ EQUITY





General
      partner
            Limited
      partners
            Deferred
      compensation
            Accumulated
              other
              comprehensive
              income
      (loss)
            Total
      partners’
              equityBalance,
      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 options
            -
            2,196
            -
            -
            2,196Issuance
      of 2,200,000 preferred units inexchange
      for proceeds from theCompany’s
      preferred share offering
            -
            53,016
            -
            -
            53,016Issuance
      of 1,500,000 common units inexchange
      for proceeds from theCompany’s
      common share offering
            -
            81,098
            -
            -
            81,098Grant
      of options, net of forfeitures,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 options
            -
            2,381
            -
            -
            2,381Issuance
      of 800,000 preferred units in exchangefor
      the proceeds from the Company’spreferred
      share offering
            -
            19,445
            -
            -
            19,445Grant
      of 81,000 restricted unit awards,net
      of forfeitures
            -
            -
            -
            -
            -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
            313,700Comprehensive
      income:Net
      income
            223
            32,867
            -
            -
            33,090Other
      comprehensive (loss)
            -
            -
            -
            (11,403)
            (11,403)Total comprehensive
      income
            223
            32,867
            -
            (7,517)
            21,687Compensation
      under Incentive Award Plan
            -
            4,059
            -
            -
            4,059Issuance
      of 58,953 common units uponexercise
      of options
            -
            2,085
            -
            -
            2,085Grant
      of 85,000 restricted unit awards, net offorfeitures
            -
            -
            -
            -
            -Preferred
      distributions ($1.875 per preferred unit)
            -
            (5,625)
            -
            -
            (5,625)Distributions
      to partners ($2.84 per common unit)
            (426)
            (52,543)
            -
            -
            (52,969)Balance,
      December 31, 2007
            $
      24
            $
      290,430
            $             -
            $   (7,517)
            $  282,937







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


F -
4





TANGER
PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(in
thousands)


For the years ended
      December31,2007
            
            
            2006
            
            
            2005OPERATING
      ACTIVITIES:Net
      income
            
            $
            33,090
            
            
            $
            43,633
            
            
            $
            6,077Adjustments
      to reconcile net income to net cash provided by operating
      activities:Depreciation
      and amortization (including discontinuedoperations)
            
            
            63,954
            
            
            
            57,319
            
            
            
            48,888Amortization
      of deferred financing costs
            
            
            1,738
            
            
            
            1,702
            
            
            
            1,691Equity
      in earnings of unconsolidated joint ventures
            
            
            (1,473
            )
            
            
            (1,268
            )
            
            
            (879
            )Distributions
      received from unconsolidated joint ventures
            
            
            3,220
            
            
            
            2,300
            
            
            
            2,000Consolidated
      joint venture minority interest
            
            
            ---
            
            
            
            ---
            
            
            
            24,043Compensation
      expense related to restricted shares andoptions granted
            
            
            4,059
            
            
            
            2,675
            
            
            
            1,565Amortization
      of debt premiums and discounts, net
            
            
            (2,584
            )
            
            
            (2,507
            )
            
            
            (2,719
            )(Gain)
      loss on sale of real estate
            
            
            (6
            )
            
            
            (13,833
            )
            
            
            4,690Gain
      on sale of outparcels of land
            
            
            ---
            
            
            
            (402
            )
            
            
            (1,554
            )Net
      accretion of market rent rate adjustment
            
            
            (1,147
            )
            
            
            (1,464
            )
            
            
            (741
            )Straight-line
      base rent adjustment
            
            
            (2,868
            )
            
            
            (2,219
            )
            
            
            (1,750
            )Increases
      (decreases) due to changes in:Other
      assets
            
            
            (4,780
            )
            
            
            222
            
            
            
            (4,045
            )Accounts
      payable and accrued expenses
            
            
            5,406
            
            
            
            2,196
            
            
            
            6,646Net cash provided by operating
      activities
            
            
            98,609
            
            
            
            88,354
            
            
            
            83,912INVESTING
      ACTIVITIES:Acquisition
      of interest in COROC joint venture
            
            
            ---
            
            
            
            ---
            
            
            
            (285,974
            )Additions
      of rental properties
            
            
            (85,030
            )
            
            
            (79,434
            )
            
            
            (44,092
            )Additions
      to investments in unconsolidated joint ventures
            
            
            ---
            
            
            
            (2,020
            )
            
            
            (7,090
            )Return
      of equity from unconsolidated joint ventures
            
            
            1,281
            
            
            
            ---
            
            
            
            ---Additions
      to deferred lease costs
            
            
            (3,086
            )
            
            
            (3,260
            )
            
            
            (3,218
            )Net
      proceeds from sales of real estate
            
            
            2,032
            
            
            
            21,378
            
            
            
            3,811Net cash used in investing
      activities
            
            (84,803
            )
            
            
            (63,336
            )
            
            
            (336,563
            )FINANCING
      ACTIVITIES:Cash
      distributions paid
            
            
            (58,594
            )
            
            
            (54,939
            )
            
            
            (44,087
            )Distributions
      to consolidated joint venture minority interest
            
            
            ---
            
            
            
            ---
            
            
            
            (21,386
            )Contributions
      from sole general partner
            
            
            ---
            
            
            
            19,445
            
            
            
            134,114Contributions
      from minority interest partner in consolidatedjoint
venture
            
            
            ---
            
            
            
            ---
            
            
            
            800Proceeds
      from borrowings and issuance of debt
            
            
            152,000
            
            
            
            279,175
            
            
            
            518,027Repayments
      of debt
            
            
            (121,911
            )
            
            
            (261,942
            )
            
            
            (338,865
            )Additions
      to deferred financing costs
            
            
            (534
            )
            
            
            (4,157
            )
            
            
            (2,534
            )Proceeds
      from tax incentive financing
            
            
            7,128
            
            
            
            505
            
            
            
            ---Proceeds
      from settlement of US Treasury rate lock
            
            
            ---
            
            
            
            ---
            
            
            
            3,224Proceeds
      from exercise of options
            
            
            2,085
            
            
            
            2,382
            
            
            
            2,195Net
      cash (used in) provided by financing activities
            
            (19,826
            )
            
            
            (19,531
            )
            
            
            251,488Net
      increase (decrease) in cash and cash equivalents
            
            
            (6,020
            )
            
            
            5,487
            
            
            
            (1,163
            )Cash
      and cash equivalents, beginning of year
            
            
            8,413
            
            
            
            2,926
            
            
            
            4,089Cash
      and cash equivalents, end of year
            
            $
            2,393
            
            
            $
            8,413
            
            
            $
            2,926


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


F -
5


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, 2007, we owned 29 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 370 store brands.  Also, we owned a 50%
interest in two outlet centers with a GLA of approximately 667,000 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, 2007, Tanger GP Trust owned 150,000 common units, Tanger LP Trust
owned 15,514,621 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 Class C 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 Accounting 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 the Deer
Park, Wisconsin Dells and Myrtle Beach Hwy 17 joint ventures, (Note 4) 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 -
6











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 $8.6 million, $8.1
million and $7.8 million for the years ended December 31, 2007, 2006 and 2005,
respectively.





The
nature of our relationships and the related party transactions for our
unconsolidated joint ventures are discussed in Note 4.





Reclassifications- Certain
amounts in the 2006 and 2005 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, which 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 -
7


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
33.3 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 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 intangibles 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 2007, 2006 and 2005 amounted to $1.7 million, $2.2 million
and $665,000, respectively, and development costs capitalized amounted to $1.4
million, $944,000 and $685,000, respectively.  Depreciation expense
related to rental property included in income from continuing operations for
each of the years ended December 31, 2007, 2006 and 2005 was $50.4 million,
$40.2 million and $37.4 million, 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.  Direct costs to acquire assets are
capitalized once the acquisition becomes probable.  These costs are
transferred from other assets to construction in progress 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, 2007
and 2006, respectively, we had cash equivalent investments in highly liquid
money market accounts at major financial institutions of $958,000 and $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 -
8


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 Wisconsin Dells (Note 4) 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 Wisconsin Dells joint venture’s debt as debits to our
investments in Deer Park and Wisconsin Dells and credits to a liability of
approximately $1.4 million 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 remaining values of the
guarantees were $1.0 million and $331,000 at December 31, 2007 and 2006,
respectively.





Captive Insurance –Our
wholly-owned subsidiary, Northline Indemnity, LLC, is responsible for losses up
to certain levels for property damage (including wind damage from hurricanes)
prior to third-party insurance coverage.  Insurance losses are
reflected in property operating expenses and include estimates of costs
incurred, both reported and unreported.  Insurance premiums written
are recognized on a pro-rata basis over the terms of the policies and are
included in other income.





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
group may not be recoverable. In such an event, we compare the estimated future
undiscounted cash flows associated with the asset group to the asset group’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, 2007.





Real
estate assets designated as held for sale are stated at the lower of their
carrying value or their fair value less costs to sell.  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 Directors 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
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 -
9


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
receivable 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
2007, 2006 or 2005.





The
Rehoboth Beach, Delaware center is the only property that comprises more than
10% of our consolidated gross revenues or consolidated total
assets.  The Rehoboth center, acquired in December 2003, represents
11% of our consolidated total assets as of December 31, 2007.  The
Rehoboth center is 568,926 square feet.  The occupancy rate as of
December 31, 2007 for the Rehoboth Beach center was 99%.





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, 2007, 2006 and 2005
amounted to $23.8 million, $23.5 million and $13.5 million,
respectively.  Interest paid, net of interest capitalized, in 2007,
2006 and 2005 was $40.5 million, $40.2 million and $41.5 million,
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 7) 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 7) 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 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
statement, 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 limited partners’ equity interest during
2006.  Compensation expense recognized in 2006 and for future years is
now recorded as an increase to limited partners’ equity interest.





F -
10


New Accounting Pronouncements
- In September 2006, the FASB issued Statement of Accounting Standards
No. 157, “Fair Value Measurements,” or FAS 157.  FAS 157 defines
fair value, establishes a framework for measuring fair value in accordance with
accounting principles generally accepted in the United States, and expands
disclosures about fair value measurements.  The provisions of this
standard apply to other accounting pronouncements that require or permit fair
value measurements.  The FASB has deferred the effective date by one
year the provisions of FAS 157 for non-financial assets and non-financial
liabilities that are recognized or disclosed at fair value in the financial
statements on a nonrecurring basis.  We believe that the adoption of
this standard on January 1, 2008 will not have a material effect on our
consolidated financial statements; however we believe it will likely be required
to provide additional disclosures as a part of future financial statements,
beginning with the Form 10-Q for the quarter ended March 31, 2008.





In
February 2007, the FASB, issued Statement of Financial Accounting Standards
No. 159, “The Fair Value Option for Financial Assets and Financial
Liabilities” or FAS 159.  FAS 159 permits entities to choose to
measure many financial instruments and certain other items at fair value that
are not currently required to be measured at fair value.  FAS 159 also
establishes presentation and disclosure requirements designed to facilitate
comparisons between entities that choose different measurement attributes for
similar type of assets and liabilities.  We do not believe the
adoption of FAS 159 on January 1, 2008 will have a material impact on our
consolidated financial statements.





In
December 2007, the FASB issued Statement of Financial Accounting Standards No.
141 (revised 2007) “Business Combinations”, or FAS 141R.  FAS 141R is
effective for fiscal years beginning on or after December 15, 2008, which means
that we will adopt FAS 141R on January 1, 2009.  FAS 141R replaces FAS
141 “Business Combinations” and requires that the acquisition method of
accounting (which FAS 141 called the purchase method) be used for all business
combinations, as well as for an acquirer to be identified for each business
combination.  FAS 141R establishes principles and requirements for how
the acquirer: (i) recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any non-controlling
interest in the acquiree; (ii) recognizes and measures the goodwill acquired in
the business combination or a gain from a bargain purchase; and (iii) determines
what information to disclose to enable users of financial statements to evaluate
the nature and financial affects of the business combination.  We are
currently evaluating the impact of adoption of FAS 141R on our consolidated
financial position, results of operations and cash flows.





In
December 2007, the FASB issued Statement of Financial Accounting Standards No.
160 “Non-controlling Interests in Consolidated Financial Statements, an
amendment of ARB No. 51”, or FAS 160.  FAS 160 is effective for fiscal
years beginning on or after December 15, 2008, which means that we will adopt
FAS 160 on January 1, 2009.  This statement amends ARB 51 to establish
accounting and reporting standards for the non-controlling interest in a
subsidiary and for the deconsolidation of a subsidiary.  FAS 160
changes accounting and reporting for minority interests, which will be
recharacterized as non-controlling interests and classified as a component of
equity in the consolidated financial statements.  FAS 160 requires
retroactive adoption of the presentation and disclosure requirements for
existing minority interests.  All other requirements of SFAS 160 shall
be applied prospectively.  We are currently evaluating the impact of
adoption of FAS 160 on our consolidated financial position, results of
operations and cash flows.





3.  Development
of Rental Properties





Pittsburgh,
Pennsylvania





During
the fourth quarter of 2006, we closed on the acquisition of our development site
located south of Pittsburgh, Pennsylvania in Washington County for $4.8
million.  In response to strong tenant demand for space, we increased
the size of the initial phase of the Pittsburgh center from 308,000 square feet
to 370,000 square feet, with signed leases for approximately 63% of the first
phase and an additional 20% under negotiation or out for
signature.  We currently expect delivery of the initial phase in the
second quarter of 2008, with stores opening by the end of the third quarter of
2008.  Upon completion of the project, the outlet center will total
approximately 418,000 square feet.  The Pittsburgh project is wholly
owned by us. Tax incentive financing bonds have been issued related to the
Pittsburgh project, and we expect to receive net proceeds of approximately $16.8
million as we incur qualifying expenditures during construction of the
center.  As of December 31, 2007 we have received funding for
qualified expenditures submitted totaling $7.6 million.








Expansions
at Existing Centers





During
2007, we completed expansions in three of our outlet centers.





Expansion
            New
      TotalCenter
            GLA
            Center
      GLAGonzales,
      Louisiana
            39,000
            282,000Branson,
      Missouri
            25,000
            303,000Tilton,
      New Hampshire
            18,000
            246,000Total
      expansions
            82,000





A fourth
expansion project, in Barstow, California, is near completion.  Some
stores opened during the fourth quarter of 2007 and the remaining stores will
open during the first two quarters of 2008.  The total expansion in
Barstow of 62,000 square feet will bring the center’s total GLA to 171,300
square feet.





Commitments
to complete construction of the Pittsburgh, PA development, the expansions and
other capital expenditure requirements amounted to approximately $49.3 million
at December 31, 2007.  Commitments for construction represent only
those costs contractually required to be paid by us.





Change
in Accounting Estimate





During
the first quarter of 2007, the general partner’s Board of Trustees formally
approved a plan to reconfigure our center in Foley, Alabama.  As a
part of this plan, approximately 42,000 square feet was relocated within the
property by September 2007.  The depreciable useful lives of the
buildings demolished were shortened to coincide with their demolition dates
throughout the first three quarters of 2007 and the change in estimated useful
life was accounted for as a change in accounting
estimate.  Approximately 28,000 relocated square feet had opened as of
December 31, 2007 with the remaining 14,000 square feet expected to open in the
next two quarters.    Accelerated depreciation recognized
related to the reconfiguration reduced income from continuing operations and net
income by approximately $6.0 million for the year ended December 31,
2007.  The effect on income from continuing operations per diluted
unit and net income per diluted unit was a decrease of $.32 per unit for the
year ended December 31, 2007.





4.
            Investments
      in Unconsolidated Real Estate Joint
Ventures





Our
investments in unconsolidated joint ventures as of December 31, 2007 and 2006
aggregated $10.7 million and $14.5 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
      %
            Carrying
              Value
      as of
              December
      31, 2007
              (in
      millions)
            Carrying
              Value
      as of
              December
      31, 2006
              (in
      millions)
            Project
      LocationMyrtle
      Beach Hwy 17
            50%
            $0.9
            $2.6
            Myrtle
      Beach, South CarolinaWisconsin
      Dells
            50%
            $6.0
            $6.8
            Wisconsin
      Dells, WisconsinDeer
      Park
            33%
            $3.8
            $5.1
            Deer
      Park, New York





F -
12


Our
Myrtle Beach Hwy 17 and Wisconsin Dells joint ventures are not variable interest
entities.  Our Deer Park joint venture is a variable interest entity
but we are not considered the primary beneficiary.  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 Myrtle Beach Hwy 17 and Wisconsin Dells joint
ventures.  The following management, leasing, marketing and
development fees were recognized from services provided during the years ended
December 31, 2007, 2006 and 2005 (in thousands):





Year
      Ended
              December
      31,2007
            2006
            2005Fee:Management
            
            $  534
            $  410
            $   327Leasing
            
            26
            188
            6Marketing
            
            108
            86
            66Development
            
            ---
            304
            ---Total
      Fees
            
            $  668
            $  988
            $   399





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.





Myrtle
Beach Hwy 17





The
Myrtle Beach Hwy 17 joint venture, in which we have a 50% ownership interest,
has owned 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, Myrtle Beach Hwy 17 entered into an interest rate swap agreement
with Bank of America with a notional amount of $35 million for five
years.  Under this agreement, the joint venture 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, the joint venture obtained non-recourse, permanent financing to replace
the construction loan debt that was utilized to build the outlet
center.  The new mortgage amount is $35.8 million with a rate of 30
day LIBOR + 1.40%.  The note is for a term of five years with payments
of interest only. In April 2010, the joint venture has the option to extend the
maturity date of the loan until 2012.  All debt incurred by this
unconsolidated joint venture is collateralized by its property.





Wisconsin
Dells





In March
2005, we established the Tanger Wisconsin Dells joint venture to construct and
own a Tanger Outlet center in Wisconsin Dells, Wisconsin.  The 264,900
square foot center opened in August 2006. In February 2006, in conjunction with
the construction of the center, the Wisconsin Dells joint venture closed on a
construction loan in the amount of $30.3 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.  During the second quarter of 2007, the Wisconsin Dells joint
venture received $5.0 million in tax incentive financing proceeds which were
used to repay amounts outstanding on the construction loan.  The
construction loan balance as of December 31, 2007 was approximately $25.3
million.





Deer
Park





In
October 2003, we established the Deer Park joint venture to develop and own a
Tanger Outlet center in Deer Park, New York. Construction has begun on the
initial phase that will contain approximately 682,000 square feet including a
32,000 square foot Neiman Marcus Last Call store, which will be the first and
only one on Long Island. Other tenants will include Anne Klein, Banana Republic,
BCBG, Christmas Tree Shops, Disney, Eddie Bauer, Reebok, New York Sports Club
and many more.  Regal Cinemas has also leased 71,000 square feet for a
16-screen Cineplex, one of the few state of the art cineplexes on Long
Island.  We currently expect to open the first phase of the center
during the third quarter of 2008.  Upon completion of the project, the
shopping center will contain over 800,000 square feet.





F -
13


In May
2007, the joint venture closed on a $284 million construction loan for the
project arranged by Bank of America with a weighted average interest rate of 30
day LIBOR plus 1.49%.  Over the life of the loan, if certain criteria
are met, the weighted average interest rate can decrease to 30 day LIBOR plus
1.23%.  The loan, which had a balance as of December 31, 2007 of $87.3
million, is originally scheduled to mature in May 2010 with a one year extension
option at that date. The loan is collateralized by the property as well as joint
and several guarantees by all three venture partners.  The joint
venture entered into two interest rate swap agreements during June
2007.  The first swap is for a notional amount of $49.0 million and
the second is a forward starting interest rate swap agreement with escalating
notional amounts that totaled $22.3 million as of December 31,
2007.  The notional amount of the forward starting interest rate swap
agreement will total $121.0 million by November 1, 2008.  The
agreements expire on June 1, 2009.  These swaps will effectively
change the rate of interest on up to $170.0 million of variable rate
construction debt to a fixed rate of 6.75%.  See Note 8, Derivatives,
for further discussion relating to these interest rate swap
agreements.





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 $29.0
million, including a 900,000 square foot industrial building, which was then
leased back to the seller under an operating lease agreement. Through May 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 May 2006, net of
applicable expenses, were treated as incidental revenues and were recorded as a
reduction in the basis of the assets.





At the
end of the lease in May 2005, the tenant vacated the building. However, the
tenant did not satisfy all of the conditions necessary to terminate the lease
until May 2006.  Deer Park is currently in litigation to recover from
the tenant its monthly lease payments from June 2005 through May 2006,
approximately $3.4 million, and will continue to do so until
recovered.  Deer Park discontinued the accrual of rental revenues
associated with the sale-leaseback transaction as of May 2006.





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





Summary
      Balance Sheets– Unconsolidated Joint Ventures2007
            2006AssetsInvestment
      properties at cost, net
            $    71,022
            $  74,253Construction
      in progress
            103,568
            38,449Cash
      and cash equivalents
            2,282
            6,539Deferred
      charges, net
            2,092
            2,824Other
      assets
            8,425
            15,239Total
      assets
            $  187,389
            $  137,304Liabilities
      and Owners’ EquityMortgage
      payable
            $  148,321
            $  100,138Construction
      trade payables
            13,052
            2,734Accounts
      payable and other liabilities
            6,377
            2,767Total
      liabilities
            167,750
            105,639Owners’
      equity
            19,639
            31,665Total
      liabilities and owners’ equity
            $  187,389
            $  137,304





F -
14


Summary
      Statements of Operations– Unconsolidated Joint Ventures:2007
            2006
            2005Revenues
            $  19,414
            $  14,703
            $
      10,909Expenses:Property
      operating
            6,894
            5,415
            3,979General
      and administrative
            248
            213
            24Depreciation
      and amortization
            5,473
            3,781
            3,102Total
      expenses
            12,615
            9,409
            7,105Operating
      income
            6,799
            5,294
            3,804Interest
      expense
            4,129
            2,907
            2,161Net
      income
            $   2,670
            $   2,387
            $  1,643Tanger
      Properties Limited Partnership share of:Net
      income
            $   1,473
            $      1,268
            $  879Depreciation
      (real estate related)
            $   2,611
            $   1,825
            $  1,493





F -
15


5.       Disposition
of Properties and Properties Held for Sale





2007
Transactions





In
October 2007, we completed the sale of our property in Boaz,
Alabama.  Net proceeds received from the sale of the property were
approximately $2.0 million.  We recorded a gain on sale of real estate
of approximately $6,000. The
results of operations and gain on sale of real estate for the property are
included in discontinued operations under the provisions of FAS
144.  We were not retained for any management or leasing
responsibilities related to this center after the sale was
completed.





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 continued to manage and lease the
property for a fee until December 31, 2007.  Based on the nature and
amounts of the fees received, we determined that our management relationship did
not constitute a significant continuing involvement, and therefore the results
of operations and gain on sale of real estate for the property are included in
discontinued operations under the provisions of FAS 144.





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 continued to manage and
lease this property for a fee until December 31, 2007.  Based on the
nature and amount of the fees received, we determined that our management
relationship did not constitute a significant continuing involvement and
therefore the results of operations and gain on sale of real estate for the
property are included in 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.





F -
16


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:
            2007
            2006
            2005Revenues:Base
      rentals
            $     417
            $   1,043
            $   3,276Percentage
      rentals
            1
            12
            71Expense
      reimbursements
            138
            354
            1,474Other
      income
            18
            37
            1,601Total
      revenues
            574
            1,446
            6,422Expenses:Property
      operating
            317
            774
            2,422Depreciation
      and amortization
            145
            307
            911Total
      expenses
            462
            1,081
            3,333Discontinued
      operations beforegain
      on sale of real estate
            112
            365
            3,089Gain
      on sale of real estate included indiscontinued
      operations
            6
            13,833
            ---Discontinued
      operations
            $       118
            $   14,198
            $    3,089





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, 2007, 2006 and 2005 (in thousands,
except number of outparcels):


2007
            2006
            2005
      (1)Number
      of outparcels
            ---
            4
            1Net
      proceeds
            $     ---
            $  1,150
            $   252Gain
      on sale included in other income
            $     ---
            $     402
            $   127


(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.





6.        Deferred
Charges





Deferred
charges as of December 31, 2007 and 2006 consist of the following (in
thousands):





2007
            
            
            2006Deferred
      lease costs
            
            $
            26,751
            
            
            $
            23,757Net
      below market leases
            
            
            (5,014
            )
            
            
            (5,369
            )Other
      intangibles
            
            
            73,684
            
            
            
            77,423Deferred
      financing costs
            
            
            11,105
            
            
            
            10,571106,526
            
            
            
            106,382Accumulated
      amortization
            
            
            (61,722
            )
            
            
            (51,293
            )$
            44,804
            
            
            $
            55,089





F -
17


Amortization
of deferred lease costs and other intangibles included in income from continuing
operations for the years ended December 31, 2007, 2006 and 2005 was $12.0
million, $15.1 million and $9.6 million, respectively. Amortization of deferred
financing costs, included in interest expense for the years ended December 31,
2007, 2006 and 2005 was $1.7 million in each year, 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
            Amount2008
            $    7,2022009
            7,0522010
            6,2622011
            4,3492012
            2,604Total
            $  27,469





7.   Debt





Debt as
of December 31, 2007 and 2006 consists of the following (in
thousands):


2007
            2006Senior,
      unsecured notes:9.125%
      Senior, unsecured notes, maturing February 2008
            $   100,000
            $   100,0006.15%
      Senior, unsecured notes, maturing November 2015, net ofdiscount
      of $759 and $832, respectively
            249,241
            249,1683.75%
      Senior, unsecured exchangeable notes, maturing August 2026
            149,500
            149,500Mortgage
      notes with fixed interest:6.59%,
      maturing July 2008, including net premium of $1,046 and
      $3,441,respectively
      (1)
            173,724
            179,911Unsecured
      lines of credit with a weighted average interest rates of 5.67%(2)
            33,880
            ---$   706,345
            $   678,579


(1)
            Because
      this mortgage debt was assumed as part of an acquisition of a portfolio of
      outlet centers, the debt was recorded at its fair value and carries an
      effective interest rate of 5.18%.  On July 10, 2008, we can
      decide to repay the loan in full, or we can continue to make monthly
      payments on the loan at a revised interest rate of 8.59%.  We
      can then repay the loan in full on any monthly payment date without
      penalty.  The final maturity date on the loan is July 10,
      2028.


(2)
            Depending
      on our investment grade rating, on $25.0 million of our unsecured lines of
      credit, the interest rate varies from either prime or from LIBOR + .675%
      to LIBOR + 1.70% and expires in June 2009.  On the remaining
      $175.0 million of our unsecured lines of credit, the interest rates vary
      from either prime or from LIBOR + .55% to LIBOR + 1.70% and expire in June
      2011 or later.





Certain
of our properties, which had a net book value of approximately $332.5 million at
December 31, 2007, 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 dividends such that dividends and distributions will not exceed funds
from operations, as defined in the agreements, for the prior fiscal year on an
annual basis or 95% of funds from operations on a cumulative basis. As of
December 31, 2007 we were in compliance with all of our debt
covenants.





F -
18


2007
Transactions





During
the fourth quarter of 2007, we extended the maturity dates on five of our six
unsecured lines of credit from 2009 to June 2011.  During the first
quarter of 2008, we increased the maximum availability under our existing
unsecured credit facilities by $125.0 million, bringing our total availability
to $325.0 million.  The terms of the increases are identical to those
included within the existing unsecured credit facilities with the borrowing rate
ranging from LIBOR plus 75 basis points to LIBOR plus 85 basis
points.





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 a current
exchange ratio, subject to adjustment if we change our dividend rate in the
future, of 27.6991 shares per $1,000 principal amount of notes (or a current
exchange price of $36.1023 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 the option of the Company, 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.





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 in 2005.





F -
19





Maturities
of the existing long-term debt as of December 31, 2007 are as follows (in
thousands):





Year
            Amount2008
            $   272,6782009
            ---2010
            ---2011
            33,8802012
            ---Thereafter
            399,500Subtotal
            706,058Net
      premium
            287Total
            $  706,345








8.   Derivatives
and Fair Value of Financial Instruments





In June
2007, the Deer Park joint venture entered into two interest rate swap agreements
to hedge the interest rate risk associated with the construction loan discussed
in Note 4 above.  The first swap is for a notional amount of $49.0
million and the second is a forward starting interest rate swap agreement with
escalating notional amounts that totaled $22.3 million as of December 31,
2007.  The notional amount of the forward starting interest rate swap
agreement will total $121.0 million by November 1, 2008.  The
agreements expire on June 1, 2009.  These swaps will effectively
change the rate of interest on up to $170.0 million of variable rate mortgage
debt to a fixed rate of 6.75%.  Deer Park’s interest rate swap
agreements have been designated as cash flow hedges and are carried on its
balance sheet at fair value.





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 7 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 unamortized balance
as of December 31, 2007 is $2.7 million.  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, the Myrtle Beach Hwy 17 joint venture 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, the joint venture 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 Myrtle Beach Hwy 17 joint venture’s interest rate swap
agreement has been designated as a cash flow hedge and is carried on its balance
sheet at fair value.











F -
20


In
accordance with our derivatives policy, all derivatives are assessed for
effectiveness at the time the contracts are entered into and are assessed for
effectiveness on an on-going basis at each quarter end.  All of our
derivatives have been designated as cash flow hedges.  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, 2007, 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, 2007.





Financial
      Instrument Type
            Notional
              Amount
            Rate
            Maturity
            Fair
      ValueTANGER
      PROPERTIES LIMITED PARTNERSHIPUS
      Treasury Lock
            $100,000,000
            4.526%
            July
      2008
            $(3,659,000
            )US
      Treasury Lock
            $100,000,000
            4.715%
            July
      2008
            $(5,095,000
            )DEER
      PARKLIBOR
      Interest Rate Swap (1)
            $49,000,000
            5.47%
            June
      2009
            $(1,217,000
            )LIBOR
      Interest Rate Swap (2)
            $22,300,000
            5.34%
            June
      2009
            $(2,136,000
            )MYRTLE
      BEACH HWY 17LIBOR
      Interest Rate Swap (3)
            $  35,000,000
            4.59%
            March
      2010
            $   (644,000
            )


(1)
            Amount
      represents the fair value recorded at the Deer Park joint venture, in
      which we have a 33.3% ownership
interest.


(2)
            Derivative
      is a forward starting interest rate swap agreement with escalating
      notional amounts totaling $22.3 million as of December 31,
      2007.  Outstanding amounts under the agreement will total $121.0
      million by November 1, 2008.  Amount represents the fair value
      recorded at the Deer Park joint venture, in which we have a 33.3%
      ownership interest.


(3)
            Amount
      represents the fair value recorded at the Myrtle Beach Hwy 17 joint
      venture, 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, 2007 and 2006, 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
$723.3 million and $723.5 million, respectively.  The recorded values
were $706.3 million and $678.6 million, respectively, as of December 31, 2007
and 2006.





9.   Partners’
      Equity





In May
2007, the Company’s shareholders voted to approve an amendment to the Company’s
articles of incorporation to increase the number of Company common shares
authorized for issuance from 50.0 million to 150.0 million.  Company
shareholders also approved by vote the creation of four new classes of preferred
shares, each class having 4.0 million shares authorized for issuance with a par
value of $.01 per share.  No preferred shares from the newly created
classes have been issued as of December 31, 2007.  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
February 2006, the Company completed the sale 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.




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 in 2005.  The Company may not redeem the 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 equal distributions from us.  If the Company redeems
any Class C 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.


F -
21


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 pay down amounts outstanding
on our unsecured lines of credit.





At
December 31, 2007 and 2006, the ownership interests of the Operating Partnership
consisted of the following:





2007
            
            2006Preferred
      units:Limited
      partner
            3,000,000
            
            3,000,000Common
      units:General
      partner
            150,000
            
            150,000Limited
      partners
            18,547,926
            
            18,403,973Total
      common units
            18,697,926
            
            18,553,973





10.  Earnings
Per Unit





A
reconciliation of the numerators and denominators in computing earnings per unit
in accordance with FASB Statement No. 128, “Earnings per Share”, for the years
ended December 31, 2007, 2006 and 2005 is set forth as follows (in thousands,
except per unit amounts):





2007
            
            
            2006
            
            
            2005NUMERATORIncome
      from continuing operations
            
            $
            32,972
            
            
            $
            29,435
            
            
            $
            7,678Loss
      on sale of real estate
            
            
            ---
            
            
            
            ---
            
            
            
            (4,690
            )Less
      applicable preferred unit distributions
            
            
            (5,625
            )
            
            
            (5,433
            )
            
            
            (538
            )Income
      from continuing operations availableto
      common unitholders
            
            
            27,347
            
            
            
            24,002
            
            
            
            2,450Discontinued
      operations
            
            
            118
            
            
            
            14,198
            
            
            
            3,089Net
      income available to common unitholders
            
            $
            27,465
            
            
            $
            38,200
            
            
            $
            5,539DENOMINATORBasic
      weighted average common units
            
            
            18,444
            
            
            
            18,333
            
            
            
            17,223Effect
      of exchangeable notes
            
            
            239
            
            
            
            59
            
            
            
            ---Effect
      of outstanding options
            
            
            107
            
            
            
            120
            
            
            
            81Effect
      of unvested restricted unit awards
            
            
            78
            
            
            
            62
            
            
            
            37Diluted
      weighted average common units
            
            
            18,868
            
            
            
            18,574
            
            
            
            17,341Basic
      earnings per common unit:Income
      from continuing operations
            
            $
            1.48
            
            
            $
            1.31
            
            
            $
            .14Discontinued
      operations
            
            
            .01
            
            
            
            .77
            
            
            
            .18Net
      income
            
            $
            1.49
            
            
            $
            2.08
            
            
            $
            .32Diluted
      earnings per common unit:Income
      from continuing operations
            
            $
            1.45
            
            
            $
            1.29
            
            
            $
            .14Discontinued
      operations
            
            
            .01
            
            
            
            .77
            
            
            
            .18Net
      income
            
            $
            1.46
            
            
            $
            2.06
            
            
            $
            .32




F-22




Our
$149.5 million of exchangeable notes are included in the diluted earnings per
common unit computation, if the effect is dilutive, using the treasury stock
method.  In applying the treasury stock method, the effect will be
dilutive if the average market price of the Company’s common shares for at least
20 trading days in the 30 consecutive trading days at the end of each quarter is
higher than the exchange rate.  The exchange rate for 2006 was
$36.1198 per Company common share and was adjusted for 2007 to $36.1023 to
incorporate the May 2007 Company common share dividend rate
increase.




Options
to purchase common units excluded from the computation of diluted earnings per
common unit during 2005 because the exercise price was greater than the average
market price of the common units totaled approximately 750 common
units.  The market price of a common unit is considered to be
equivalent to twice the market price of a common share of the
Company.  No options were excluded from the 2007 or 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 for all years presented.  If the unit based awards were
granted during the period, the units issuable are weighted to reflect the
portion of the period during which the awards were outstanding.





F-23


11.         Unit-Based
Compensation





We have
an equity based compensation plan, the Amended and Restated Incentive Award
Plan, or the Plan, approved by the Company’s shareholders, which covers the
Company’s independent directors and our employees.  We may issue up to
3.0 million common units under the Plan.  Since the inception of the
Plan, we have granted 1,793,570 options, net of options forfeited, and 341,125
restricted unit awards, net of restricted unit awards forfeited.  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 of the Company’s common
shares.  There were no option grants in 2007 and 2006.  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 2005: expected distribution yield 5.3%;
expected life of 7 years; expected volatility of 23%; and risk-free interest
rate 3.79%.





During
2007 and 2006, the Company’s Board of Directors approved the grant of 170,000
and 164,000 restricted Company common shares, respectively, to the Company’s
independent directors and all of the Company’s senior executive
officers.  The Company receives one common unit from the Operating
Partnership for every two restricted shares issued by the
Company.  The Company’s independent directors’ restricted Company
common shares vest ratably over a three year period and the Company’s senior
executive officers’ restricted Company common shares vest ratably over a five
year period.  During 2005, the Company’s Board of Directors approved
the grant of 138,000 restricted Company common shares to the independent
directors and certain executive officers.  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.    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.





We
recorded unit based compensation expense in general and administrative expenses
in the consolidated statements of operations for the years ended December 31,
2007, 2006 and 2005, respectively, as follows (in thousands):


2007
            2006
            2005Restricted
      unit awards
            
            $     3,815
            $   2,210
            $  1,275Options
            
            244
            465
            290Total
      unit based compensation
            
            $     4,059
            $   2,675
            $  1,565





Unit
based compensation expense capitalized as a part of rental property and deferred
lease costs during the years ended December 31, 2007, 2006 and 2005 was $80,000,
$212,000 and $32,000, respectively.





Options
outstanding at December 31, 2007 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
            21,800
            $  19.43
            1.91
            21,800
            $    19.43$38.76
      to $38.83
            158,528
            38.82
            6.30
            61,768
            38.82$47.25
      to $47.92
            3,750
            47.38
            6.95
            1,800
            47.25184,078
            $  36.70
            5.80
            85,368
            $    34.05





F -
24


A summary
of option activity under our Amended and Restated Incentive Award Plan as of
December 31, 2007 and changes during the year then ended is presented below
(aggregate intrinsic value amount in thousands):





Weighted-Weighted-
            
            averageaverage
            
            remaining
            
            Aggregateexercise
            
            contractual
            
            IntrinsicOptions
            
            Units
            
            price
            
            life
      in years
            
            ValueOutstanding
      as of December 31, 2006
            245,650
            
            $  36.40Granted
            
            
            ---
            
            ---Exercised
            
            
            (58,952
            )
            35.36Forfeited
            
            
            (2,620
            )
            38.83Outstanding
      as of December 31, 2007
            184,078
            
            $  36.70
            
            5.80
            
            $  7,127Vested
      and Expected to Vest as ofDecember
      31, 2007
            181,623
            
            $  36.66
            
            5.80
            
            $  7,038Exercisable
      as of December 31, 2007
            85,368
            
            $  34.05
            
            5.18
            
            $    3,532


The
weighted average grant date fair value of options granted during the year ended
December 31, 2005 was $6.62 per unit.  The total intrinsic value of
options exercised during the years ended December 31, 2007, 2006 and 2005 was
$2.7 million, $2.1 million and $2.0 million, respectively.





The
following table summarizes information related to unvested restricted units
outstanding as of December 31, 2007:


Weighted
      averageNumber
      of
            
            
            grant
      dateUnvested
      Restricted Unit Awards
            
            units
            
            
            fair
      valueUnvested
      at December 31, 2006
            
            161,670
            
            
            $  52.73Granted
            
            85,000
            
            
            84.62Vested
            
            (53,868
            )
            
            49.70Forfeited
            
            ---
            
            
            ---Unvested
      at December 31, 2007
            
            192,802
            
            
            $  67.64





The total
value of restricted unit awards vested during the years ended 2007, 2006 and
2005 was $4.2 million, $2.5 million and $1.8 million,
respectively.  As of December 31, 2007, there was $11.3 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.





12.  Employee
Benefit Plans





We have a
qualified retirement plan, with a salary deferral feature designed to qualify
under Section 401 of the Code, or 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 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 2007, 2006 and 2005
were approximately $104,000, $102,000 and $102,000, respectively.





F -
25


13.           Other
Comprehensive Income





Total
comprehensive income for the years ended December 31, 2007, 2006 and 2005 is as
follows (in thousands):





2007
            
            
            2006
            
            
            2005Net
      income
            
            $
            33,090
            
            
            $
            43,633
            
            
            $
            6,077Other
      comprehensive income:Payments
      received (gain) in settlement of $125 million(notional
      amount) of US treasury rate lock
            
            
            ---
            
            
            
            ---
            
            
            
            3,224Reclassification
      adjustment for amortization of gain onsettlement
      of US treasury rate lock included in net income,
            
            
            (261
            )
            
            
            (246
            )
            
            
            (40
            )Change
      in fair value of treasury rate locks
            
            
            (9,497
            )
            
            
            1,055
            
            
            
            (313
            )Change
      in fair value of our portion of our unconsolidated jointventures’
      cash flow hedges
            
            
            (1,645
            )
            
            
            115
            
            
            
            91Other
      comprehensive income (loss)
            
            
            (11,403
            )
            
            
            924
            
            
            
            2,962Total
      comprehensive income
            
            $
            21,687
            
            
            $
            44,557
            
            
            $
            9,039





14.  Supplementary
Income Statement Information





The
following amounts are included in property operating expenses in income from
continuing operations for the years ended December 31, 2007, 2006 and 2005 (in
thousands):





2007
            2006
            2005Advertising
      and promotion
            $  16,652
            $  16,419
            $
      15,773Common
      area maintenance
            32,363
            29,216
            27,671Real
      estate taxes
            13,847
            12,574
            12,443Other
      operating expenses
            11,521
            10,093
            6,479$
      74,383
            $
      68,302
            $
      62,366





15.  Lease
      Agreements





We are
the lessor of over 1,800 stores in our 29 wholly owned factory outlet centers,
under operating leases with initial terms that expire from 2008 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, 2007, excluding the effect of straight-line rent and percentage
rentals, are as follows (in thousands):





2008
            $   132,0392009
            115,9762010
            93,8012011
            69,7322012
            44,734Thereafter
            86,265$   542,547





F -
26


16.
            Commitments
      and Contingencies





Our
non-cancelable operating leases, with initial terms in excess of one year, have
terms that expire from 2008 to 2046.  Annual rental payments for these
leases totaled approximately $3.9 million, $3.2 million and $2.9 million, for
the years ended December 31, 2007, 2006 and 2005,
respectively.  Minimum lease payments for the next five years and
thereafter are as follows (in thousands):





2008
            $   4,2002009
            4,0402010
            3,6952011
            3,5212012
            3,041Thereafter
            79,258$
      97,755





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 -
27


TANGER
PROPERTIES LIMITED PARTNERSHIP and SUBSIDIARIES


SCHEDULE
III - REAL ESTATE AND ACCUMULATED DEPRECIATION


For the Year Ended December 31, 2007(in thousands)


Description
            
            Initial
      cost to Company
            Costs
      Capitalized
              Subsequent
      to Acquisition
              (Improvements)
            Gross
      Amount Carried at Close of Period
              12/31/07
      (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
              StatementBarstow
            Barstow,
      CA
            $         ---
            $    3,281
            $  12,533
            $     ---
            $  16,583
            $     3,281
            $     29,116
            $      32,397
            $      9,440
            1995
            (2)Blowing
      Rock
            Blowing
      Rock, NC
            ---
            1,963
            9,424
            ---
            4,239
            1,963
            13,663
            15,626
            4,724
            1997
      (3)
            (2)Branson
            Branson,
      MO
            ---
            4,407
            25,040
            395
            12,178
            4,802
            37,218
            42,020
            17,729
            1994
            (2)Charleston
            Charleston,
      SC
            ---
            10,353
            48,877
            ---
            299
            10,353
            49,176
            59,529
            3,185
            2006
            (2)Commerce
      I
            Commerce,
      GA
            ---
            755
            3,511
            492
            12,211
            1,247
            15,722
            16,969
            8,892
            1989
            (2)Commerce
      II
            Commerce,
      GA
            ---
            1,262
            14,046
            706
            23,482
            1,968
            37,528
            39,496
            16,464
            1995
            (2)Foley
            Foley,
      AL
            30,219
            4,400
            82,410
            693
            23,620
            5,093
            106,030
            111,123
            12,206
            2003
      (3)
            (2)Gonzales
            Gonzales,
      LA
            ---
            679
            15,895
            ---
            16,124
            679
            32,019
            32,698
            14,823
            1992
            (2)Hilton
      Head
            Bluffton,
      SC
            17,333
            9,900
            41,504
            469
            5,023
            10,369
            46,527
            56,896
            7,260
            2003
      (3)
            (2)Howell
            Howell,
      MI
            ---
            2,250
            35,250
            ---
            3,300
            2,250
            38,550
            40,800
            7,157
            2002
      (3)
            (2)Kittery-I
            Kittery,
      ME
            ---
            1,242
            2,961
            229
            1,600
            1,471
            4,561
            6,032
            3,580
            1986
            (2)Kittery-II
            Kittery,
      ME
            ---
            1,450
            1,835
            ---
            735
            1,450
            2,570
            4,020
            1,740
            1989
            (2)Lancaster
            Lancaster,
      PA
            ---
            3,691
            19,907
            ---
            13,925
            3,691
            33,832
            37,523
            17,249
            1994
      (3)
            (2)Lincoln
      City
            Lincoln
      City, OR
            9,756
            6,500
            28,673
            268
            5,026
            6,768
            33,699
            40,467
            4,851
            2003
      (3)
            (2)Locust
      Grove
            Locust
      Grove, GA
            ---
            2,558
            11,801
            ---
            17,899
            2,558
            29,700
            32,258
            12,026
            1994
            (2)Myrtle
      Beach 501
            Myrtle
      Beach, SC
            21,455
            10,236
            57,094
            ---
            9,991
            10,236
            67,085
            77,321
            9,306
            2003
      (3)
            (2)Nags
      Head
            Nags
      Head, NC
            ---
            1,853
            6,679
            ---
            3,806
            1,853
            10,485
            12,338
            3,800
            1997
      (3)
            (2)Park
      City
            Park
      City, UT
            11,807
            6,900
            33,597
            343
            10,915
            7,243
            44,512
            51,755
            5,583
            2003
      (3)
            (2)Pittsburgh
            Washington,
      PA
            
            5,609
            36,101
            ---
            ---
            5,609
            36,101
            41,710
            ---
            Under
      Const.
            ---Rehoboth
            Rehoboth
      Beach, DE
            36,953
            20,600
            74,209
            1,876
            20,126
            22,476
            94,335
            116,811
            11,686
            2003
      (3)
            (2)Riverhead
            Riverhead,
      NY
            ---
            ---
            36,374
            6,152
            76,783
            6,152
            113,157
            119,309
            47,795
            1993
            (2)San
      Marcos
            San
      Marcos, TX
            ---
            1,801
            9,440
            16
            42,957
            1,817
            52,397
            54,214
            21,350
            1993
            (2)Sanibel
            Sanibel,
      FL
            ---
            4,916
            23,196
            ---
            9,357
            4,916
            32,553
            37,469
            9,846
            1998
      (3)
            (2)Sevierville
            Sevierville,
      TN
            ---
            ---
            18,495
            ---
            35,071
            ---
            53,566
            53,566
            17,868
            1997
      (3)
            (2)Seymour
            Seymour,
      IN
            ---
            1,084
            1,891
            ---
            ---
            1,084
            1,891
            2,975
            1,671
            1994
            (2)Terrell
            Terrell,
      TX
            ---
            523
            13,432
            ---
            8,932
            523
            22,364
            22,887
            11,736
            1994
            (2)Tilton
            Tilton,
      NH
            12,191
            1,800
            24,838
            29
            7,479
            1,829
            32,317
            34,146
            4,140
            2003
      (3)
            (2)Tuscola
            Tuscola,
      IL
            18,934
            1,600
            15,428
            43
            2,084
            1,643
            17,512
            19,155
            2,796
            2003
      (3)
            (2)West
      Branch
            West
      Branch, MI
            ---
            319
            3,428
            120
            8,853
            439
            12,281
            12,720
            5,983
            1991
            (2)Westbrook
            Westbrook,
      CT
            14,030
            6,264
            26,991
            4,233
            2,239
            10,497
            29,230
            39,727
            4,017
            2003
      (3)
            (2)Williamsburg
            Williamsburg,
      IA
            ---
            706
            6,781
            718
            14,975
            1,424
            21,756
            23,180
            13,735
            1991
            (2)$
      172,678
            $
      118,902
            $
      741,641
            $
      16,782
            $
      409,812
            $
      135,684
            $1,151,453
            $
      1,287,137
            $
      312,638


(1)      
Aggregate cost for federal income tax purposes is approximately
$999,017.  Building, improvements & fixtures includes amounts
included in construction in progress on the consolidated balance
sheet.


(2)
            The
      Company 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 $1,046.





F -
28


TANGER
PROPERTIES LIMITED PARTNERSHIP and SUBSIDIARIES


SCHEDULE
III – (Continued)


REAL
ESTATE AND ACCUMULATED DEPRECIATION


For
the Year Ended December 31, 2007


(in
thousands)





The
changes in total real estate for the three years ended December 31, 2007 are as
follows:





2007
            
            
            2006
            
            
            2005Balance,
      beginning of year
            
            $
            1,216,847
            
            
            $
            1,152,866
            
            
            $
            1,077,393Acquisition
      of real estate
            
            
            ---
            
            
            
            ---
            
            
            
            47,369Improvements
            
            
            85,415
            
            
            
            87,045
            
            
            
            45,684Dispositions
      and assets heldfor sale
            
            
            (15,125
            )
            
            
            (23,064
            )
            
            
            (17,580
            )Balance,
      end of year
            
            $
            1,287,137
            
            
            $
            1,216,847
            
            
            $
            1,152,866








The
changes in accumulated depreciation for the three years ended December 31, 2007
are as follows:





2007
            
            
            2006
            
            
            2005Balance,
      beginning of year
            
            $
            275,372
            
            
            $
            253,765
            
            
            $
            224,622Depreciation
      for the period
            
            
            50,508
            
            
            
            40,440
            
            
            
            38,137Dispositions
      and assets heldfor sale
            
            
            (13,242
            )
            
            
            (18,833
            )
            
            
            (8,994
            )Balance,
      end of year
            
            $
            312,638
            
            
            $
            275,372
            
            
            $
            253,765








F -
29