**United
      States**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549




**FORM
      10-K**





[X]  ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES
      EXCHANGE ACT OF 1934


**For
      the fiscal year ended December 31, 2005**


OR


[
      ]  TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES
      EXCHANGE ACT OF 1934


For
      the
      transition period from _________ to _________




Commission
      file numbers:


333-128160-01


33-99736-01


333-3526-01


333-39365-01


333-61394-01








**TANGER
      PROPERTIES LIMITED PARTNERSHIP**


(Exact
      name of Registrant as specified in its charter)





**North
                Carolina**
            **56-1822494**(State
                or other jurisdiction of
            (I.R.S.
                Employer Identification No.)Incorporation
                or organization)**3200
                Northline Avenue, Suite 360, Greensboro, NC
                27408**(Address
                of principal executive offices and zip code)(336)
                292-3010(Registrant’s
                telephone number, including area
                code





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





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





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


Yes o No ý





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


Yes o No ý





Indicate
      by check mark whether the Registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the Registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days. Yes ý No o





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





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





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





**Documents
      Incorporated By Reference**


Part
      III
      incorporates certain information by reference from the definitive proxy
      statement of Tanger Factory Outlet Centers, Inc. to be filed with respect to
      the
      Annual Meeting of Shareholders to be held May 12, 2006.





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. Since entering the factory outlet
      center business 25 years ago, we have become one of the largest owners and
      operators of factory outlet centers in the United States. As of December 31,
      2005, we owned 31 centers, with a total gross leasable area, or GLA, of
      approximately 8.3 million square feet. These factory outlet centers were 97%
      occupied and contained over 1,800 stores, representing approximately 370 store
      brands. Also, we owned a 50% interest in one center with a GLA of approximately
      402,000 square feet and managed for a fee one center with a GLA of approximately
      64,000 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 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
      Tanger family, through its ownership of the Tanger Family Limited Partnership,
      which we refer to as TFLP, holds the remaining units as a limited partner.
      Stanley K. Tanger, our 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, 2005, Tanger GP Trust owned 150,000 units, Tanger LP Trust owned
      15,224,358 units and TFLP owned the remaining 3,033,305 units. Each of TFLP's
      units is exchangeable for two of the Company's common shares, subject to certain
      limitations to preserve the Company’s status as a REIT. As of February 1, 2006,
      our Company's management beneficially owned approximately 19% of all outstanding
      common shares (assuming TFLP's units are exchanged for the Company’s common
      shares but without giving effect to the exercise of any outstanding share and
      partnership unit options).





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 7.5% Class C Cumulative Preferred Shares, which
      we refer to as the 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***





*Acquisition
      of Joint Venture Partner Interest in COROC Holdings, LLC*





In
      November 2005 we completed the acquisition of the final two-thirds interest
      of
      the Charter Oak Partners' portfolio of nine factory outlet centers totaling
      approximately 3.3 million square feet in which we originally purchased a
      one-third interest in December 2003. We and an affiliate of Blackstone Real
      Estate Advisors, or Blackstone, originally acquired the portfolio through a
      joint venture in the form of a limited liability company, COROC Holdings, LLC,
      which we refer to as COROC. From December 2003 to November 2005, COROC was
      consolidated for financial reporting purposes under the provisions of FASB
      Interpretation No. 46 (Revised 2003): “Consolidation of Variable Interest
      Entities: An Interpretation of ARB No. 51”, or FIN 46R. The purchase price for
      the final two-thirds interest of COROC was $286.0 million, including closing
      and
      acquisition costs of $3.5 million.





During
      2005, we raised approximately $381.3 million in debt and equity capital, the
      proceeds of which were used to prepay certain mortgage debt, and an associated
      prepayment premium, as well as to fund the acquisition of the remaining
      two-thirds interest in the Charter Oak portfolio, which we refer to as the
      COROC
      acquisition.





All
      proceeds from common and preferred share issuances by the Company are
      contributed to the Operating Partnership in exchange for common and preferred
      Operating Partnership units.





*3,000,000
      Common Share Offering*





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





*Mortgage
      Repayments*





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
      $500,000.


*Debt
      Rating Upgrade*





In
      October 2005, following the early repayment of the John Hancock mortgage debt,
      Standard & Poor’s Ratings Service announced an upgrade of our senior
      unsecured debt rating to an investment grade rating of BBB-, citing our progress
      in unencumbering a number of our properties resulting in over half of our fully
      consolidated net operating income being generated by unencumbered properties.
      Moody’s Investors Services had previously announced in June 2005 their upgrade
      of our senior unsecured debt rating to an investment grade rating of
      Baa3.





*$250
      Million Senior Unsecured Note Offering*





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


3





*2,200,000
      Preferred Share Offering*





Also
      in
      November 2005, the Company completed the issuance of 2,200,000 Class C Preferred
      Shares, receiving net proceeds of approximately $53.0 million. The proceeds
      were
      used to fund a portion of the COROC acquisition described above.





*Locust
      Grove, Georgia Center Expansion*





During
      September 2005, we completed the construction of a 46,400 square foot expansion
      at our center located in Locust Grove, Georgia. Tenants within the expansion
      include Polo/Ralph Lauren, Sketchers, Children's Place and others. The Locust
      Grove center now totals approximately 294,000 square feet.





*Foley,
      Alabama Center Expansion*





During
      December 2005, we completed the construction of a 21,300 square foot expansion
      at our center located in Foley, Alabama. Tenants within the expansion include
      Ann Taylor, Skechers, Tommy Hilfiger and others. The Foley center now totals
      approximately 557,000 square feet.





*Development
      Projects: Charleston, South Carolina; Wisconsin Dells, Wisconsin; Pittsburgh,
      Pennsylvania and Deer Park (Long Island), New York*





In
      the
      fourth quarter of 2005, we met our internal minimum pre-leasing requirement
      of
      50% and closed on the acquisition of the land for a center located near
      Charleston, South Carolina. Construction is currently taking place and we expect
      the center to be approximately 350,000 square feet upon total build out with
      a
      scheduled opening date in late 2006.





In
      March
      2005, we established Tanger Wisconsin Dells, LLC, which we refer to as Wisconsin
      Dells, a joint venture in which we have a 50% ownership interest, to construct
      and operate a Tanger Outlet center in Wisconsin Dells, Wisconsin. Construction
      of the outlet center, which is currently expected to be approximately
      2 65,000
      square feet upon total build out, began during the fourth quarter of 2005 upon
      meeting our internal minimum pre-leasing requirement of 50% with a scheduled
      opening in the fourth quarter of 2006.





We
      continue our pre-development and leasing of two previously announced sites
      located in Pittsburgh, Pennsylvania and Deer Park, New York with expected
      deliveries in late 2007.





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





As
      of
      February 1, 2006, 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, Polo Ralph Lauren, Reebok, Tommy Hilfiger, Nautica, Coach
      Leatherware, Brooks Brothers 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 2005, 2004 and 2003. As of February 1, 2006,
      our largest tenant, including all of its store concepts, accounted for
      approximately 7.0% 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 89% of our total revenues in 2005. Revenues from contingent
      sources, such as percentage rents, vending income and miscellaneous income,
      accounted for approximately 11% of 2005 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,
      the Company completed its initial public offering, making Tanger Factory Outlet
      Centers, Inc. the first publicly traded outlet center company. Since the
      Company’s 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.





5


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





BUSINESS
      STRATEGY





We
      maintain strong tenant relationships with high volume manufacturers and
      retailers that have a selective presence in the outlet industry, such as Liz
      Claiborne, GAP, Banana Republic, Old Navy, Tommy Hilfiger, Polo Ralph Lauren,
      Nautica, Coach Leatherware, Eddie Bauer, Brooks Brothers, Zales, Nike and
      others. These relationships help solidify our position in the manufacturer
      outlet business.





We
      are a
      very experienced company within the outlet industry with over 25 years of
      experience in the sector and over 12 years as a public company. We have a
      seasoned team of real estate professionals, averaging over 17 years of
      experience in the outlet industry. We believe our competitive advantage in
      the
      manufacturers' outlet business is a result of our experience in the business,
      long-standing relationships with tenants and expertise in the development and
      operation of manufacturers' outlet centers.





As
      of
      December 31, 2005, our 31 wholly owned properties were 97% occupied with average
      tenant sales of $320 per square foot. Our properties have had an occupancy
      rate
      on December 31 st of 95%
      or greater for the last 25 years. The ability to achieve such a goal is a
      testament to our tenant relationships and the quality of our centers.





GROWTH
      STRATEGY





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





*Increasing
      Rents at Existing Centers*





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





*Developing
      New Centers and Expanding Existing Centers*





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





We
      typically seek opportunities to develop or acquire new centers in locations
      that
      have at least 1 million people residing within an hours drive, an average
      household income within a 30-mile radius of at least $50,000 per year and access
      to frontage on a major or interstate highway with a traffic count of at least
      45,000 cars per day. Our current goal is to target sites that are large enough
      to support centers with approximately 75 stores totaling at least 300,000 square
      feet of GLA. We will vary our minimum conditions based on the particular
      characteristics of a site, especially if the site is located at or near a
      tourist destination.





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





6


*Acquiring
      Centers*





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





OPERATING
      STRATEGY





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





*Leasing*





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





*Marketing*




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





We
      intend
      to retain the ability to raise additional capital, including public debt or
      equity, to pursue attractive investment opportunities that may arise and to
      otherwise act in a manner that we believe to be in our unitholders’ best
      interests. During the third quarter of 2005, we, together with the Company,
      replenished our shelf registration to allow us to issue up to $600 million
      in
      either all debt or all equity of the Company or any combination thereof. In
      November 2005, we drew on the shelf registration to finance the COROC
      acquisition previously discussed using offerings of the Company’s preferred
      shares and our unsecured debt. As of December 31, 2005, capacity under our
      shelf
      registration was approximately $295.0 million. To generate capital for
      reinvestment into other attractive investment opportunities, we may also
      consider the use of additional operational and developmental joint ventures,
      selling certain properties that do not meet our long-term investment criteria
      as
      well as outparcels on existing properties.





We
      maintain unsecured, revolving lines of credit that provide for unsecured
      borrowings up to $150 million at December 31, 2005, an increase of $25 million
      in capacity from December 31, 2004. We have extended the maturity of our four
      lines of credit to June 30, 2008. 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 2006.




7


***Competition***





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





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





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





***Corporate
      and Regional Headquarters***





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





We
      maintain offices and employ on-site managers at 30 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. 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, 2006, we had 189 full-time employees, located at our corporate
      headquarters in North Carolina, our regional office in New York and our 30
      business offices. At that date, we also employed 178 part-time employees at
      various locations.





8


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





**Risks
      Related to our Business**





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





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





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





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





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





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





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





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





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





9


**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 and the risk that we will not be able to
      repay or refinance existing indebtedness or that the terms of any refinancing
      will not be as favorable as the terms of exiting indebtedness. If we are unable
      to refinance our indebtedness on acceptable terms, we might be forced to dispose
      of properties on disadvantageous terms, which might result in
      losses.





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





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







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





•
            higher
                than
                projected construciton costs;




•
              shortage
                  of
                  construction material 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.





10


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





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





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





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





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





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





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





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





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





As
      of
      February 1, 2006, our wholly owned portfolio consisted of 30 centers totaling
      8.2 million square feet of GLA located in 22 states. We own a 50% interest
      in
      one 402,000 square foot center through an unconsolidated joint venture. Also,
      we
      have two centers that we manage for a fee with a total GLA of approximately
      159,000 square feet. Our centers range in size from 24,619 to 729,315 square
      feet of GLA. These centers are typically strip shopping centers that enable
      customers to view all of the stores from the parking lot, minimizing the time
      needed to shop. The centers are generally located near tourist destinations
      or
      along major interstate highways to provide visibility and accessibility to
      potential customers.





We
      believe that the centers are well diversified geographically and by tenant
      and
      that we are not dependent upon any single property or tenant. Our Riverhead,
      New
      York center is the only property that represented more than 10% of our 2005
      annual consolidated gross revenues. Our Foley, Alabama and Rehoboth Beach,
      Delaware centers each represented more than 10% of our consolidated total assets
      as of December 31, 2005. See “Business and Properties - Significant
      Properties”.





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





11


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





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





The
      table
      set forth below summarizes certain information with respect to our wholly owned
      centers as of February 1, 2006 .





State
            
            
            Number
                of
              Centers
            
            
            GLA
              (sq.
                ft.
            )
            
            %
              of
                GLASouth
                Carolina
            
            
            2
            
            
            820,511
            
            
            10Georgia
            
            
            3
            
            
            820,274
            
            
            10New
                York
            
            
            1
            
            
            729,315
            
            
            9Alabama
            
            
            2
            
            
            636,668
            
            
            8Texas
            
            
            2
            
            
            620,000
            
            
            8Delaware
            
            
            1
            
            
            568,873
            
            
            7Michigan
            
            
            2
            
            
            436,751
            
            
            5Tennessee
            
            
            1
            
            
            419,038
            
            
            5Utah
            
            
            1
            
            
            300,602
            
            
            4Connecticut
            
            
            1
            
            
            291,051
            
            
            4Missouri
            
            
            1
            
            
            277,883
            
            
            3Iowa
            
            
            1
            
            
            277,230
            
            
            3Oregon
            
            
            1
            
            
            270,280
            
            
            3Illinois
            
            
            1
            
            
            256,514
            
            
            3Pennsylvania
            
            
            1
            
            
            255,152
            
            
            3Louisiana
            
            
            1
            
            
            243,499
            
            
            3New
                Hampshire
            
            
            1
            
            
            227,998
            
            
            3Florida
            
            
            1
            
            
            198,924
            
            
            3North
                Carolina
            
            
            2
            
            
            186,458
            
            
            2Minnesota
            
            
            1
            
            
            134,480
            
            
            2California
            
            
            1
            
            
            108,950
            
            
            1Maine
            
            
            2
            
            
            84,313
            
            
            1Total
            
            
            30
            
            
            8,164,764
            
            
            100





12





The
      table
      set forth below summarizes certain information with respect to our wholly owned
      centers as of February 1, 2006. Except as noted, all properties are fee
      owned.


Location
            GLA
              (sq.
                ft.)
            
            %
              Occupied**Wholly
                Owned Properties**Riverhead,
                NY (1)
            729,315
            
            99Rehoboth,
                DE (1)
            568,873
            
            99Foley,
                AL
            557,093
            
            95San
                Marcos, TX
            442,510
            
            98Myrtle
                Beach 501, SC
            427,417
            
            92Sevierville,
                TN (1)
            419,038
            
            100Hilton
                Head, SC
            393,094
            
            84Commerce
                II, GA
            340,656
            
            98Howell,
                MI
            324,631
            
            98Park
                City, UT
            300,602
            
            100Locust
                Grove, GA
            293,868
            
            97Westbrook,
                CT
            291,051
            
            94Branson,
                MO
            277,883
            
            100Williamsburg,
                IA
            277,230
            
            99Lincoln
                City, OR
            270,280
            
            95Tuscola,
                IL
            256,514
            
            75Lancaster,
                PA
            255,152
            
            100Gonzales,
                LA
            243,499
            
            98Tilton,
                NH
            227,998
            
            100Fort
                Meyers, FL
            198,924
            
            95Commerce
                I, GA
            185,750
            
            86Terrell,
                TX
            177,490
            
            99North
                Branch, MN
            134,480
            
            100West
                Branch, MI
            112,120
            
            100Barstow,
                CA
            108,950
            
            82Blowing
                Rock, NC
            104,280
            
            100Nags
                Head, NC
            82,178
            
            98Boaz,
                AL
            79,575
            
            95Kittery
                I, ME
            59,694
            
            100Kittery
                II, ME
            24,619
            
            1008,164,764
            
            96





**Unconsolidated
                Joint Ventures**Myrtle
                Beach 17, SC (1) (50% owned)
            401,992
            
            100





**Managed
                Properties**Pigeon
                Forge, TN
            94,694Burlington,
                NC
            64,288





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





13


The
      table
      set forth below summarizes certain information related to GLA
      as of
      February 1, 2006 and debt as of December 31, 2005 with respect to our wholly
      owned centers.





Lender/Location
            GLA
              (sq.
                ft.)
            Mortgage
                Debt (000’s) as of December 31, 2005
            Interest
                Rate
            Maturity
                Date**Woodmen
                of the World**Blowing
                Rock, NC
            104,280Nags
                Head, NC
            82,178Subtotal
            186,458
            $15,445
            8.86%
            9/01/2010**GMAC**Rehoboth
                Beach, DE
            568,873Foley, AL
            557,093Myrtle Beach Hwy 501, SC
            427,417Hilton
                Head, SC
            393,094Park City, UT
            300,602Westbrook,
                CT
            291,051Lincoln
                City, OR
            270,280Tuscola,
                IL
            256,514Tilton,
                NH
            227,9983,292,922
            180,017
            6.590%
            7/10/2008Debt
                premium
            5,771Subtotal
            185,788**Totals**
            3,479,380
            $201,233


***Lease
      Expirations***





The
      following table sets forth, as of February 1, 2006, scheduled lease expirations,
      assuming none of the tenants exercise renewal options for our wholly owned
      centers. Most leases are renewable for five year terms at the tenant’s
      option.


Year
              No.
                  of
                Leases
                Expiring(1)
              Approx.
                GLA
                (sq.
                  ft.)(1)
              Average
                Annualized
                Base
                  Rent
                per
                  sq. ft.
              Annualized
                Base
                  Rent(2)
              %
                  of Gross
                Annualized
                Base
                  Rent
                Represented
                by
                  Expiring
                Leases2006
              223
              860,000
              $
                  14.34
              $
                  12,332,000
              111112007
              347
              1,488,000
              14.64
              21,791,000
              192008
              282
              1,256,000
              15.89
              19,956,000
              172009
              295
              1,348,000
              15.24
              20,546,000
              182010
              287
              1,200,000
              18.27
              21,924,000
              192011
              143
              716,000
              15.31
              10,960,000
              92012
              29
              189,000
              12.32
              2,329,000
              22013
              14
              77,000
              18.97
              1,461,000
              12014
              15
              65,000
              19.43
              1,263,000
              12015
              30
              120,000
              19.78
              2,373,000
              22016
                  & thereafter
              17
              92,000
              12.50
              1,150,000
              1Total
              1,682
              7,411,000
              $
                  15.66
              $
                  116,085,000
              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 754,000
                square feet.**(2)*
            *Annualized
                b**ase
                rent is defined as the minimum monthly payments due as of February
                1, 2006
                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 during
      each
      of the last five calendar years for our wholly owned centers.





Total
                Expiring
            
            Renewed
                by Existing
              Tenants
            
            Re-leased
                to
              New
                TenantsYear
            
            GLA
              (sq.
                ft.)
            
            %
                of
              Total
                Center GLA
            
            GLA
              (sq.
                ft.)
            
            %
                of
              Expiring
                GLA
            
            GLA
              (sq.
                ft.)
            
            %
                of
              Expiring
              GLA2005
            
            1,812,000
            
            22
            
            1,525,000
            
            84
            
            112,000
            
            62004
            
            1,790,000
            
            20
            
            1,571,000
            
            88
            
            94,000
            
            52003
            
            1,070,000
            
            12
            
            854,000
            
            80
            
            49,000
            
            52002
            
            935,000
            
            16
            
            819,000
            
            88
            
            56,000
            
            62001
            
            684,000
            
            13
            
            560,000
            
            82
            
            55,000
            
            8





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




Renewals
                of Existing Leases
            
            Stores
                Re-leased to New Tenants(1)Average
                Annualized Base Rents
            
            
            
            Average
                Annualized Base Rents($
                per sq. ft.)
            
            
            
            ($
                per sq. ft.)Year
            GLA
              (sq.
                ft.)
            Expiring
            New
            %
              Increase
            
            GLA
              (sq.
                ft.)
            
            Expiring
            
            New
            %
                Increase2005
            1,525,000
            $15.44
            $16.37
            6
            419,000
            
            $16.56
            $17.74
            72004
            1,571,000
            13.63
            14.40
            6
            427,000
            
            16.43
            17.27
            52003
            854,000
            13.29
            13.32
            --
            272,000
            
            16.47
            17.13
            42002
            819,000
            14.86
            15.02
            1
            229,000
            
            15.14
            15.74
            42001
            560,000
            14.08
            14.89
            6
            269,000
            
            14.90
            16.43
            10




*(1)*
            *The
                square footage released to new tenants for 2005, 2004, 2003, 2002
                and 2001
                contains 112,000, 94,000, 49,000, 56,000 and 55,000 square feet,
                respectively, that was released to new tenants upon expiration of
                an
                existing lease during the current
                year.*





***Occupancy
      Costs***





We
      believe that our ratio of average tenant occupancy cost (which includes base
      rent, common area maintenance, real estate taxes, insurance, advertising and
      promotions) to average sales per square foot is low relative to other forms
      of
      retail distribution. The following table sets forth, for 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 Sales2005
            7.52004
            7.32003
            7.42002
            7.22001
            7.1





15


***Tenants***





The
      following table sets forth certain information with respect to our ten largest
      tenants and their store concepts as of February 1, 2006 for our wholly owned
      centers.





Tenant
            Number
              of
                Stores
            GLA
              (sq. ft.)
            %
                of Total
              GLA**The
                Gap, Inc.:**Old
                Navy
            16
            236,591
            2.9GAP
            24
            209,666
            2.6Banana
                Republic
            14
            112,405
            1.4Gap
                Kids
            2
            6,892
            0.1Baby
                Gap
            1
            3,885
            ---57
            569,439
            7.0**Phillips-Van
                Heusen Corporation:**Bass
                Shoe
            28
            185,118
            2.3Van
                Heusen
            27
            117,747
            1.4Geoffrey
                Beene Co. Store
            14
            53,640
            0.7Calvin
                Klein, Inc.
            9
            49,494
            0.6Izod
            14
            36,740
            0.492
            442,739
            5.4**Liz
                Claiborne:**Liz
                Claiborne
            25
            273,014
            3.4Liz
                Claiborne Women
            7
            24,284
            0.3Ellen
                Tracy
            3
            10,436
            0.1Dana
                Buchman
            3
            6,975
            0.1DKNY
                Jeans
            2
            5,820
            0.1Claiborne
                Mens
            1
            3,100
            ---41
            323,629
            4.0**Adidas:**Reebok
            23
            207,456
            2.5Adidas
            5
            39,169
            0.5Rockport
            4
            12,046
            0.2Greg
                Norman
            1
            3,000
            ---33
            261,671
            3.2**VF
                Factory Outlet:**VF
                Factory Outlet, Inc
            6
            157,122
            1.9Nautica
                Factory Stores
            21
            91,730
            1.1Nautica
                Kids
            2
            5,841
            0.1Vans
            2
            4,915
            0.1Earl
                Jeans Retail
            1
            1,200
            ---32
            260,808
            3.2**Carter’s:**OshKosh
                B”Gosh
            25
            125,988
            1.5Carter’s
            21
            98,205
            1.246
            224,193
            2.7**Dress
                Barn, Inc.:**Dress
                Barn
            23
            183,155
            2.2Dress
                Barn Petite
            2
            9,570
            0.1Maurice’s
            2
            7,785
            0.1Dress
                Barn Woman
            2
            7,470
            0.129
            207,980
            2.5**Polo
                Ralph Lauren:**Polo
                Ralph Lauren
            20
            177,128
            2.2Polo
                Jeans Outlet
            2
            8,500
            0.1Polo
                Ralph Lauren Children
            1
            3,000
            ---23
            188,628
            2.3**Jones
                Retail Corporation:**Jones
                Retail Corporation
            15
            52,144
            0.6Nine
                West
            19
            49,477
            0.6Easy
                Spirit
            13
            37,096
            0.5Kasper
            10
            25,869
            0.3Anne
                Klein
            4
            9,755
            0.2Treza
            2
            5,000
            ---63
            179,341
            2.2**Brown
                Group Retail, Inc:**Factory
                Brand Shoe
            21
            120,919
            1.5Naturalizer
            15
            39,749
            0.5Etienne
                Aigner
            3
            7,670
            0.139
            168,338
            2.1Total
                of all tenants listed in table
            455
            2,826,766
            34.6





16


***Significant
      Property***





The
      Riverhead, New York; Foley, Alabama and Rehoboth Beach, Delaware centers, or
      the
      Significant Properties, are the only properties that comprise more than 10%
      of
      our consolidated gross revenues or consolidated total assets. The center in
      Riverhead, New York is our only center that comprises more than 10% of our
      consolidated gross revenues for the year ended December 31, 2005. The Riverhead
      center, which was originally constructed in 1994 and now totals 729,315 square
      feet, represented 13% of our consolidated gross revenue for the year ended
      December 31, 2005. The Foley and Rehoboth centers, acquired in December 2003,
      represent 11% and 12% respectively of our consolidated total assets as of
      December 31, 2005. The Foley and Rehoboth centers are 557,093 and 568,873 square
      feet, respectively.





Tenants
      at the Significant Properties principally conduct retail sales operations.
      The
      following table shows occupancy and certain base rental information related
      to
      these properties as of December 31, 2005, 2004 and 2003:





**Center
                Occupancy**
            2005
            2004
            2003Riverhead,
                NY
            99%
            99%
            100%Foley,
                AL
            97%
            99%
            99%Rehoboth
                Beach, DE
            99%
            99%
            99%**Average
                base rental rates per weighted average GLA**
            2005
            2004
            2003Riverhead,
                NY
            $22.73
            $21.39
            $20.90Foley,
                AL
            $17.96
            $18.63
            *(1)Rehoboth
                Beach, DE
            $20.04
            $19.56
            *(1)


(1)
      Centers acquired in December 2003 therefore annual rental rates not
      applicable.





Depreciation
      on the Significant Properties is computed on the straight-line basis over the
      estimated useful lives of the assets. We generally use estimated lives ranging
      from 25 to 33 years for buildings, 15 years for land improvements and seven
      years for equipment. Expenditures for ordinary maintenance and repairs are
      charged to operations as incurred while significant renovations and
      improvements, including tenant finishing allowances that improve and/or extend
      the useful life of the asset are capitalized and depreciated over their
      estimated useful life. At December 31, 2005, the net federal tax basis of these
      centers was approximately $298.1 million.





The
      following table sets forth, as of February 1, 2006, scheduled lease expirations
      at the Significant Properties assuming that none of the tenants exercise renewal
      options:


Year
            No.
                of
              Leases
              Expiring(1)
            GLA
              (sq.
                ft.)(1)
            Annualized
              Base
                Rent
              per
                sq. ft.
            Annualized
              Base Rent(2)
            %
                of Gross
              Annualized
              Base
                Rent
              Represented
              by
                Expiring
              Leases2006
            37
            109,000
            $
                23.50
            $
                2,561,000
            72007
            79
            336,000
            19.09
            6,413,000
            192008
            69
            347,000
            18.30
            6,349,000
            182009
            70
            304,000
            19.35
            5,883,000
            172010
            86
            370,000
            21.35
            7,899,000
            232011
            25
            126,000
            20.01
            2,521,000
            72012
            7
            41,000
            11.93
            489,000
            12013
            4
            39,000
            19.69
            768,000
            22014
            7
            25,000
            21.88
            547,000
            22015
            11
            46,000
            22.76
            1,047,000
            32016
                and thereafter
            2
            9,000
            26.33
            237,000
            1Total
            397
            1,752,000
            $
                19.81
            $
                34,714,000
            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 103,000 square feet.*


*(2)* *Annualized
      base rent is defined as the minimum monthly payments due as of February 1,
      2006
      annualized, excluding periodic contractual fixed increases and rents calculated
      based on a percentage of tenants’ sales.*


17





**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, 2005.







18


**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**
            **POSITION**Stanley
                K. Tanger
            82
            Founder,
                Chairman of the Board of Directors and Chief Executive
                OfficerSteven
                B. Tanger
            57
            Director,
                President and Chief Operating OfficerFrank
                C. Marchisello, Jr.
            47
            Executive
                Vice President - Chief Financial Officer and SecretaryWillard
                A. Chafin, Jr.
            68
            Executive
                Vice President - Leasing, Site Selection, Operations and
                MarketingJoseph
                H. Nehmen
            57
            Senior
                Vice President - OperationsCarrie
                A. Warren
            43
            Senior
                Vice President - MarketingKevin
                M. Dillon
            47
            Senior
                Vice President - Construction and DevelopmentLisa
                J. Morrison
            46
            Senior
                Vice President - LeasingJames
                F. Williams
            41
            Senior
                Vice President - ControllerVirginia
                R. Summerell
            47
            Vice
                President -Treasurer and Assistant
                Secretary





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





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





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





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





*Willard
      A. Chafin, Jr.* Mr.
      Chafin was named Executive Vice President - Leasing, Site Selection, Operations
      and Marketing of the Company in January 1999. Mr. Chafin previously held the
      position of Senior Vice President - Leasing, Site Selection, Operations and
      Marketing since October 1995. He joined the Company in April 1990, and since
      has
      held various executive positions where his major responsibilities included
      supervising the Marketing, Leasing and Property Management Departments, and
      leading the Asset Management Team. Prior to joining the Company, Mr. Chafin
      was
      the Director of Store Development for the Sara Lee Corporation, where he spent
      21 years. Before joining Sara Lee, Mr. Chafin was employed by Sears Roebuck
      & Co. for nine years in advertising/sales promotion, inventory control and
      merchandising.


19




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





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





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





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




*James
      F. Williams* .
      Mr.
      Williams was named Senior Vice President and Controller in February 2006.
      Previously, he held the position of Vice President and Controller from April
      2004 to 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. 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.











20


**PART
      II**





**Item
                5.**
            **Market
                For Registrant’s Common Equity and Related Shareholder
                Matters**





(a)
      There
      is no established public trading market for our units. As of December 31, 2005,
      the Company’s wholly owned subsidiaries owned 15,374,358 units and TFLP owned
      3,033,305 units as a limited partner. We made distributions per partnership
      unit
      during 2005 and 2004 as follows:





2005
            2004First
                Quarter
            $
                .625
            $
                .615Second
                Quarter
            .645
            .625Third
                Quarter
            .645
            .625Fourth
                Quarter
            .645
            .625$
                2.560
            $
                2.490








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
      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. The Company depends upon distributions or payments from us to make
      distributions to its common and preferred shareholders. Certain of our debt
      agreements limit the payment of distributions such that distributions shall
      not
      exceed funds from operations, which we refer to as FFO, as defined in the
      agreements, for the prior fiscal year on an annual basis or 95% of FFO on a
      cumulative basis. Based on continuing favorable operations and available FFO,
      we
      intend to continue to pay regular quarterly distributions.





(b) 
       Not applicable.





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





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








21


**Item
      6.**  **Selected
      Financial Data**


2005   2004
                
                2003
                
                
                2002
                
                
                2001(In
                    thousands, except per unit and center data)**OPERATING
                    DATA**Total
                    revenues
                
                $
                202,799
                $
                193,040
                
                $
                116,313
                
                $
                104,584
                
                $
                99,032Operating
                    income
                
                76,215
                
                70,038
                
                
                40,528
                
                
                35,706
                
                
                33,706Income
                    from continuing operations
                
                10,124
                
                8,819
                
                
                13,920
                
                
                7,638
                
                
                3,257Net
                    income
                
                6,077
                
                8,626
                
                
                16,399
                
                
                14,280
                
                
                9,154**UNIT
                    DATA**Basic:Income
                    from continuing operations
                
                $
                .28
                $
                .53
                
                $
                1.00
                
                $
                .52
                
                $
                .14Net
                    income
                
                $
                .32
                $
                .52
                
                $
                1.19
                
                $
                1.11
                
                $
                .67Weighted
                    average common units
                
                17,223
                
                16,555
                
                
                13,085
                
                
                11,356
                
                
                10,959Diluted:Income
                    from continuing operations
                
                $
                .28
                $
                .53
                
                $
                .99
                
                $
                .51
                
                $
                .14Net
                    income
                
                $
                .32
                $
                .52
                
                $
                1.17
                
                $
                1.08
                
                $
                .67Weighted
                    average common units
                
                17,341
                
                16,650
                
                
                13,300
                
                
                11,539
                
                
                10,979Common
                    distributions paid
                
                $
                2.56
                $
                2.49
                
                $
                2.46
                
                $
                2.45
                
                $
                2.44**BALANCE
                    SHEET DATA**Real
                    estate assets, before depreciation
                
                $
                1,152,866
                $
                1,077,393
                
                $
                1,078,553
                
                $
                622,399
                
                $
                599,266Total
                    assets
                
                1,000,363
                
                936,105
                
                
                986,815
                
                
                477,380
                
                
                476,079Debt
                
                663,607
                
                488,007
                
                
                540,319
                
                
                345,005
                
                
                358,195Partners’
                    equity
                
                299,581
                
                196,754
                
                
                206,600
                
                
                114,265
                
                
                97,877**OTHER
                    DATA**Cash
                    flows provided by (used in):Operating
                    activities
                
                $
                83,911
                $
                84,774
                
                $
                46,593
                
                $
                39,695
                
                $
                44,616Investing
                    activities
                
                $
                (336,562)
                $
                2,607
                
                $
                (327,068
                )
                $
                (26,883
                )
                $
                (23,269
                )Financing
                    activities
                
                $
                251,488
                $
                (93,156
                )
                $
                289,271
                
                $
                (12,247
                )
                $
                (21,476
                )Gross
                    Leasable Area Open:Wholly-owned
                
                8,261
                
                5,066
                
                
                5,299
                
                
                5,469
                
                
                5,332Partially-owned
                    (consolidated)
                
                ---
                
                3,271
                
                
                3,273
                
                
                ---
                
                
                ---Partially-owned
                    (unconsolidated)
                
                402
                
                402
                
                
                324
                
                
                260
                
                
                ---Managed
                
                64
                
                105
                
                
                434
                
                
                457
                
                
                105Number
                    of centers:Wholly-owned
                
                31
                
                23
                
                
                26
                
                
                28
                
                
                29Partially-owned
                    (consolidated)
                
                ---
                
                9
                
                
                9
                
                
                ---
                
                
                ---Partially-owned
                    (unconsolidated)
                
                1
                
                1
                
                
                1
                
                
                1
                
                
                ---Managed
                
                1
                
                3
                
                
                4
                
                
                5
                
                
                3




(1)
      In
      December 2003, COROC, a joint venture in which we initially had a one-third
      ownership interest and have consolidated for financial reporting purposes under
      the provisions of FIN 46R, purchased the 3.3 million square foot Charter Oak
      portfolio of outlet center properties for $491.0 million, including the
      assumption of $186.4 million of cross-collateralized debt which has a stated,
      fixed interest rate of 6.59% and matures in July 2008. We recorded the debt
      at
      its fair value of $198.3 million, with an effective interest rate of 4.97%.
      Accordingly, a debt premium of $11.9 million was recorded and is being amortized
      over the life of the debt. We funded the majority of our share of the equity
      required for the transaction through the issuance of 4.6 million 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 common and preferred shares and senior unsecured notes.





22


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





***Cautionary
      Statements***





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





The
      following discussion should be read in conjunction with the consolidated
      financial statements appearing elsewhere in this report. Historical results
      and
      percentage relationships set forth in the consolidated statements of operations,
      including trends which might appear, are not necessarily indicative of future
      operations.





***General
      Overview***





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





At
      December 31, 2005, we had 31 wholly-owned centers in 22 states totaling 8.3
      million square feet of GLA compared to 3 2
      centers
      in 23 states totaling 8.3 million square feet of GLA as of December 31, 2004.
      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, 2004
            
            
            32
            
            
            8,337
            
            
            23New
                development expansion:Locust
                Grove, Georgia
            
            
            ---
            
            
            46
            
            
            ---Foley,
                Alabama
            
            
            ---
            
            
            21
            
            
            ---Dispositions:Seymour,
                Indiana
            
            
            (1
            )
            
            (141
            )
            
            (1
            )Other
            
            
            ---
            
            
            (2
            )
            
            ---As
                of December 31, 2005
            
            
            31
            
            
            8,261
            
            
            22





23


***Results
      of Operations***





**2005
      Compared to 2004**





Base
      rentals increased $4.0 million, or 3%, in the 2005 period compared to the 2004
      period. Our overall occupancy rates were comparable from year to year at 97%.
      Our base rental income increased $4.3 million due to increases in rental rates
      on lease renewals and incremental rents from re-tenanting vacant space. During
      2005, we executed 460 leases totaling 1.9 million square feet at an average
      increase of 6.3%. This compares to our execution of 471 leases totaling 2.0
      million square feet at an average increase of 5.5% during 2004. Base rentals
      also increased approximately $400,000 due to the expansions of our Locust Grove,
      Georgia and Foley, Alabama centers which both occurred late in the fourth
      quarter of 2005. The impact of these increases was offset by decreases in the
      amortization of above or below market leases totaling $324,000 and decreases
      in
      termination fees received of $432,000.





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





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





Expense
      reimbursements, which represent the contractual recovery from tenants of certain
      common area maintenance, insurance, property tax, promotional, advertising
      and
      management expenses generally fluctuates consistently with the related
      reimbursable property operating expenses to which it relates. Expense
      reimbursements increased $4.2 million, or 8%, in the 2005 period versus the
      2004
      period. Expense reimbursements, expressed as a percentage of property operating
      expenses, were 88% in both the 2005 and 2004 periods.





Other
      income increased $550,000, or 8%, in 2005 compared to 2004 primarily due to
      an
      increase in interest income from proceeds from debt and equity offerings, which
      were temporarily invested in short-term investments until the acquisition of
      COROC was completed as
      well
      as increases in vending income. These increases were offset to some extent
      by
      decreases in management and leasing fees from a center that we no longer managed
      in 2005.





Property
      operating expenses increased by $5.1 million, or 9%, in the 2005 period as
      compared to the 2004 period. Property operating expenses increased due to
      portfolio wide increases in advertising and common area maintenance projects.
      Real estate taxes, which are also a part of property operating expenses,
      increased due to the COROC portfolio property values being revalued in several
      jurisdictions at the 2003 purchase price value.


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





Depreciation
      and amortization decreased from $51.2 million in the 2004 period to $48.6
      million in the 2005 period. This was due principally to the accelerated
      depreciation and amortization of certain assets in the acquisition of the COROC
      properties in December 2003 accounted for under FAS 141 for tenants that
      terminated their leases during the 2004 period.





24


Interest
      expense increased $7.8 million, or 22%, during the 2005 period as compared
      to
      the 2004 period due primarily to the $9.4 million prepayment premium and the
      write off of deferred loan costs totaling $500,000 incurred in the fourth
      quarter of 2005 relating to the early extinguishment of the $77.4 million John
      Hancock Life Insurance Company mortgages. The increase in interest expense
      caused by this charge was partially offset by lower borrowings throughout the
      year prior to the acquisition of our interest in COROC in November 2005 and
      the
      related $250 million senior unsecured note issuance.





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





In
      accordance with FAS 144, our Pigeon Forge, Tennessee property was classified
      as
      an asset held for sale as of December 31, 2005 and therefore its results of
      operations amounting to $643,000 for the year were reclassified into
      discontinued operations. The 2004 period includes the results of the Pigeon
      Forge center as well as a loss on sale of the Dalton, Georgia property in the
      2004 period of approximately $3.5 million. This loss was partially offset by
      the
      gain on sale of the Clover and LL Bean, New Hampshire properties of
      approximately $2. 1
      million
      in the 2004 period.





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.





**2004
      Compared to 2003**





Base
      rentals increased $51.8 million, or 67%, in the 2004 period when compared to
      the
      same period in 2003. The increase is primarily due to the December 2003
      acquisition of the COROC portfolio of nine outlet center properties. In
      addition, the overall portfolio occupancy at December 31, 2004 increased 1%
      from
      96% to 97% compared to December 31, 2003. Also, base rent is impacted by the
      amortization of above or below market rate lease values recorded as part of
      the
      required purchase price allocation associated with the acquisition of the COROC
      portfolio. 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 2004 period, we recorded $1.1
      million of rental income for net amortization of market leases compared to
      $37,000 for the 2003 period of 13 days that we owned the COROC portfolio. 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/below market lease value will be written off and could materially
      impact our net income positively or negatively.





Percentage
      rentals, which represent revenues based on a percentage of tenants' sales volume
      above predetermined levels (the "breakpoint"), increased $2.2 million or 68%.
      Reported same-space sales per square foot for the twelve months ended December
      31, 2004 were $310 per square foot, a 3.2% increase over the prior year ended
      December 31, 2003. Same-space sales is defined as the weighted average sales
      per
      square foot reported in space open for the full duration of each comparison
      period. Our ability to attract high volume tenants to many of our outlet centers
      continues to improve the average sales per square foot throughout our portfolio.





Expense
      reimbursements, which represent the contractual recovery from tenants of certain
      common area maintenance, insurance, property tax, promotional, advertising
      and
      management expenses generally fluctuates consistently with the reimbursable
      property operating expenses to which it relates. Expense reimbursements,
      expressed as a percentage of property operating expenses, were 88% and 85%
      in
      the 2004 and 2003 periods, respectively. The increase in this percentage is
      due
      to higher reimbursement rates at the COROC portfolio.





Other
      income increased $3.2 million, or 93%, in 2004 compared to 2003 primarily due
      to
      an increase in gains on sales of outparcels of land of $1.5 million in 2004.
      Also, there were increases in vending and other miscellaneous income and an
      increase in fees from managed properties.





25


Property
      operating expenses increased by $20.7 million, or 54%, in the 2004 period as
      compared to the 2003 period. The increase is the result of the additional
      operating costs of the COROC portfolio in the 2004 period.





General
      and administrative expenses increased $3.3 million, or 34%, in the 2004 period
      as compared to the 2003 period. The increase is primarily due to the additional
      employees hired as a result of the acquisition of the COROC portfolio. However,
      as a percentage of total revenues, general and administrative expenses decreased
      from 8% in the 2003 period to 7% in the 2004 period.





Depreciation
      and amortization increased from $27.9 million in the 2003 period to
      $5 1.2
      million in the 2004 period. In the acquisition of the COROC portfolio in
      December 2003, accounted for under SFAS 141 “Business Combinations”, or FAS 141,
      significant amounts were allocated to deferred lease costs and other intangible
      assets which are amortized over shorter lives than building costs.





Interest
      expense increased $8.6 million, or 33%, during the 2004 period as compared
      to
      the 2003 period due primarily to the assumption of $186.4 million of
      cross-collateralized debt in the fourth quarter of 2003 related to the
      acquisition of the COROC portfolio. The increase was offset by the retirement
      of
      $47.5 million of senior unsecured notes, which matured in October 2004 at an
      interest rate of 7.875%, with proceeds from our property and land parcel sales
      and amounts available under our unsecured lines of credit.





Equity
      in
      earnings from unconsolidated joint ventures increased $223,000 in the 2004
      period compared to the 2003 period due to the expansions during the summers
      of
      2003 and 2004 at TWMB Associates, LLC, or TWMB, outlet center in Myrtle Beach,
      South Carolina of approximately 64,000 and 78,000 square feet respectively.
      The
      total square footage of the center is now approximately 402,000 square
      feet.





In
      December 2003, we and Blackstone originally acquired the COROC portfolio through
      the formation of the joint venture COROC which was consolidated under the
      provisions of FIN46R. Therefore, consolidated joint venture minority interest
      increased $26.2 million due a full year of allocation of earnings to our joint
      venture partner in 2004. The allocation of earnings to our joint venture partner
      is based on a preferred return on investment as opposed to their ownership
      percentage and accordingly has a significant impact on our
      earnings.





Earnings
      allocated to the minority interest in the Operating Partnership decreased $1.4
      million in direct correlation to the changes in the earnings from the Operating
      Partnership as described in the preceding paragraphs.





Discontinued
      operations resulted in a loss of approximately $193,000 due mainly to the loss
      on sale of the Dalton, Georgia property in the 2004 period of approximately
      $3.5
      million. This loss was partially offset by the gain on sale of the Clover and
      LL
      Bean, New Hampshire properties of approximately $2.1 million in the 2004 period
      and the operating income from the Pigeon Forge, Tennessee property included
      in
      discontinued operations. Also, included in the 2003 period is the sale of the
      Martinsburg, West Virginia center and the Casa Grande, Arizona center which
      resulted in a net gain of approximately $147,000.





***Liquidity
      and Capital Resources***





Net
      cash
      provided by operating activities was $83.9, $84.8 and $46.6 million for the
      years ended December 31, 2005, 2004 and 2003, respectively. The decrease from
      2004 to 2005 is due to a prepayment penalty of $9.4 million associated with
      the
      early extinguishment of the John Hancock Life Insurance Company mortgages in
      October 2005 offset by the changes in accounts payable and accrued expenses.
      The
      increase in cash provided from operating activities from 2003 to 2004 is
      primarily due to the incremental income from the COROC acquisition in December
      2003.





Net
      cash
      provided by (used in) investing activities amounted to $(336.6), $2.6 and
      $(327.1) million during 2005, 2004 and 2003, respectively, and reflects the
      acquisitions, expansions and dispositions of real estate during each year.
      In
      November 2005 we completed the acquisition of the final two-thirds interest
      of
      the Charter Oak Partners' portfolio of nine factory outlet centers totaling
      approximately 3.3 million square feet. We originally purchased a one-third
      interest in December 2003.


26





Net
      cash
      provided by (used in) financing activities of $251.5, $(93.2) and $289.3 million
      in 2005, 2004 and 2003, respectively, has fluctuated consistently with the
      capital needed to fund the current development and acquisition activity and
      reflects increases in distributions paid during 2005, 2004 and 2003. During
      2005
      we raised approximately $381.3 million in the public debt and equity markets
      in
      order to fund the acquisition described above and to repay the John Hancock
      Life
      Insurance mortgages. 2004 reflects an increase in cash used related to $22.6
      million of distributions to our venture partner in the COROC joint venture
      which
      was created in December 2003. Cash provided in 2003 is due primarily to the
      contribution by Blackstone related to the COROC acquisition and the net proceeds
      from the issuance of 2.3 million units.





**Current
      Developments and Dispositions** ****





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





WHOLLY
      OWNED CURRENT DEVELOPMENTS





During
      September 2005, we completed the construction of a 46,400 square foot expansion
      at our center located in Locust Grove, Georgia. Tenants within the expansion
      include Polo/Ralph Lauren, Sketchers, Children's Place and others. The Locust
      Grove center now totals approximately 294,000 square feet.





During
      December 2005, we completed the construction of a 21,300 square foot expansion
      at our center located in Foley, Alabama. Tenants
      within the expansion include Ann Taylor, Skechers, Tommy Hilfiger and others.
      The Foley center now totals approximately 557,000 square feet.





In
      the
      fourth quarter of 2005, we met our internal minimum pre-leasing requirement
      of
      50% and closed on the acquisition of the land for a center located near
      Charleston, South Carolina. Construction is currently taking place and we expect
      the center to be approximately 350,000 square feet upon total build out with
      a
      scheduled opening date in late 2006.





We
      have
      an option to purchase land and have begun the early development and leasing
      of a
      site located approximately 30 miles south of Pittsburgh, Pennsylvania. We
      currently expect the center to be approximately 420,000 square feet upon total
      build out with the initial phase scheduled to open in late 2007.





WHOLLY
      OWNED DISPOSITIONS





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


27





In
      June
      and September 2004, we completed the sale of two non-core properties located
      in
      North Conway, New Hampshire and in Dalton, Georgia, respectively. Net proceeds
      received from the sales of these properties were approximately $17.5 million.
      We
      recorded a gain on sale of the North Conway, New Hampshire properties of
      approximately $2.1 million during the second quarter of 2004 and recorded a
      loss
      on the sale of the Dalton, Georgia property of approximately $3.5 million during
      the third quarter of 2004, resulting in a net loss for the year ended December
      31, 2005 of $1.5 million which is included in discontinued
      operations.





In
      May
      and October 2003, we completed the sale of properties located in Martinsburg,
      West Virginia and Casa Grande, Arizona, respectively. Net proceeds received
      from
      the sales of these properties were approximately $8.7 million. We recorded
      a
      loss on sale of real estate of approximately $147,000 in discontinued operations
      for the year ended December 31, 2003.





CONSOLIDATED
      JOINT VENTURES





*COROC
      Holdings, LLC*





In
      December 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 2008. We recorded the debt
      at
      its fair value of $198.3 million, with an effective interest rate of 4.97%.
      Accordingly, a debt premium of $11.9 million was recorded and is being amortized
      over the life of the debt. We funded the majority of our share of the equity
      required for the transaction through the issuance of 4.6 million 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 19, 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 common shares, preferred
      shares and unsecured senior notes. The transaction completes the Charter Oak
      acquisition which solidifies our position in the outlet industry. In addition,
      the centers acquired provide an excellent geographic fit, a diversified tenant
      portfolio and are in line with our strategy of creating an increased presence
      in
      high-end resort locations.





UNCONSOLIDATED
      JOINT VENTURES





*TWMB
      Associates, LLC*





In
      September 2001, we established TWMB, a joint venture in which we have a 50%
      ownership interest, to construct and operate the Tanger Outlet Center in Myrtle
      Beach, South Carolina. We and our joint venture partner each contributed $4.3
      million in cash for a total initial equity in TWMB of $8.6 million. In June
      2002
      the first phase opened with approximately 260,000 square feet. Since 2002 we
      have opened two additional phases with the final one opening in the summer
      of
      2004. Total additional equity contributions for the second and third phases
      were
      $2.8 million by each partner. The Myrtle Beach center now consists of
      approximately 402,000 square feet and has over 90 name brand tenants. The center
      cost approximately $51.1 million to construct.





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





28


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





Either
      partner in TWMB has the right to initiate the sale or purchase of the other
      party’s interest at certain times. If such action is initiated, one member would
      determine the fair market value purchase price of the venture and the other
      would determine whether they would take the role of seller or purchaser. The
      members’ roles in this transaction would be determined by the tossing of a coin,
      commonly known as a Russian roulette provision. If either partner enacts this
      provision and depending on our role in the transaction as either seller or
      purchaser, we could potentially incur a cash outflow for the purchase of our
      partner’s interest. However, we do not expect this event to occur in the near
      future based on the positive results and expectations of developing and
      operating an outlet center in the Myrtle Beach, South Carolina area.





*Tanger
      Wisconsin Dells, LLC*





In
      March
      2005, we established Wisconsin Dells, a joint venture in which we have a 50%
      ownership interest, to construct and operate a Tanger Outlet center in Wisconsin
      Dells, Wisconsin. We and our venture
      partner each made an initial capital contribution of $50,000 to the joint
      venture in June 2005. During the fourth quarter of 2005, our venture partner
      contributed land to Wisconsin Dells with a value of approximately $5.7 million
      and we made an equal capital contribution to Wisconsin Dells of approximately
      $5.7 million in cash. Construction of the outlet center, which is currently
      expected to be approximately 265,000 square feet upon total build out, began
      during the fourth quarter of 2005 with a scheduled opening in the fourth quarter
      of 2006.





In
      conjunction with the construction of the center during the first quarter of
      2006, Wisconsin Dells closed on a construction loan in the amount of $30.25
      million with Wells Fargo Bank, NA due in February 2009. The loan requires
      monthly payments of interest only 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.





*Deer
      Park Enterprise, LLC*





In
      October 2003, Deer Park Enterprise, LLC, which we refer to as Deer Park, a
      joint
      venture in which we have a one-third ownership interest, entered into a
      sale-leaseback transaction for the location on which it ultimately will develop
      a shopping center that will contain both outlet and big box retail tenants
      in
      Deer Park, New York.





In
      conjunction with the real estate purchase, Deer Park closed on a loan with
      Bank
      of America in the amount of $19 million due in October 2005 and a purchase
      money
      mortgage note with the seller in the amount of $7 million. In October 2005,
      Bank
      of America extended the maturity of the loan until October 2006. The loan with
      Bank of America incurs interest at a floating interest rate equal to LIBOR
      plus
      2.00% and is collateralized by the property as well as joint and several
      guarantees by all three venture partners. The purchase money mortgage note
      bears
      no interest. However, interest has been imputed for financial statement purposes
      at a rate which approximates fair value.





The
      agreement consisted of the sale of the property to Deer Park for $29 million
      which was being leased back to the seller under an operating lease agreement.
      At
      the end of the lease in May 2005, the tenant vacated the property. However,
      the
      tenant did not satisfy all of the conditions necessary to terminate the lease
      and Deer Park is currently in litigation to recover from the tenant its on-going
      monthly lease payments and will continue to do so until recovered. Annual rents
      due from the tenant are $3.4 million. Deer Park intends to demolish the building
      and begin construction of the shopping center as soon as these conditions are
      satisfied and Deer Park’s internal minimum pre-leasing requirements are met.
      During 2005, we made additional equity contributions totaling $1.4 million
      to
      Deer Park. Both of the other venture partners made equity contributions equal
      to
      ours during the periods described above.





29


Under
      the
      provisions of FASB Statement No. 67 “Accounting for Costs and Initial Rental
      Operations of Real Estate Projects”, current rents received from this project,
      net of applicable expenses, are treated as incidental revenues and will be
      recognized as a reduction in the basis of the assets, as opposed to rental
      revenues over the life of the lease, until such time that the current project
      is
      demolished and the intended assets are constructed.





**Preferred
      Share Redemption**





In
      June
      2003, the Company redeemed all of its outstanding Series A Cumulative
      Convertible Redeemable Preferred Shares, which we refer to as Series A Preferred
      Shares, held by the Preferred Stock Depositary in the form of Depositary Shares,
      each representing 1/10th of a Series A Preferred Share. Since preferred units
      held by the Company’s majority owned subsidiary, Tanger LP Trust, are to be
      redeemed by the us to the extent any Series A Preferred Share of the Company
      are
      redeemed, proceeds required to redeem the Company’s Series A Preferred Shares
      were funded by us in exchange for the preferred units held by the Company.
      The
      redemption price was $250 per Series A Preferred Share ($25 per Depositary
      Share), plus accrued and unpaid dividends, if any, to, but not including, the
      redemption date. In total, 787,008 of the Depositary Shares were converted
      into
      1,418,156 of the Company’s common shares and the Company redeemed the remaining
      14,889 Depositary Shares for $25 per share, plus accrued and unpaid dividends.
      We funded the redemption, totaling approximately $372,000, from cash flows
      from
      operations.





**Financing
      Arrangements**





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
      $500,000.





In
      October 2005, following the early repayment of the John Hancock mortgage debt,
      Standard & Poor’s Ratings Service announced an upgrade of our senior
      unsecured debt rating to an investment grade rating of BBB-, citing our progress
      in unencumbering a number of our properties resulting in over half of our fully
      consolidated net operating income being generated by unencumbered properties.
      Moody’s Investors Services had previously announced in June 2005 their upgrade
      of our senior unsecured debt rating to an investment grade rating of
      Baa3.





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





During
      2004, we retired $47.5 million, 7.875% senior unsecured notes which matured
      on
      October 24, 2004 with proceeds from our property and land parcel sales and
      amounts available under our unsecured lines of credit. We also obtained the
      release of two properties which had been securing $53.5 million in mortgage
      loans with Wells Fargo Bank, thus creating an unsecured note with Wells Fargo
      Bank for the same face amount.





As
      part
      of the COROC acquisition, we assumed $186.4 million of cross-collateralized
      debt
      which has a stated, fixed interest rate of 6.59% and matures in July 2008.
      We
      initially recorded the debt at its fair value of $198.3 million with an
      effective interest rate of 4.97%. Accordingly, a debt premium of $11.9 million
      was recorded and is being amortized over the life of the debt. When the
      remainder of the portfolio was acquired in November 2005, we recorded a debt
      discount of $883,000 with an effective interest rate of 5.25%. The net premium
      had a recorded value of $5.8 and $9.3 million as of December 31, 2005 and 2004,
      respectively.





30


During
      2005, we obtained an additional $25 million unsecured line of credit from Wells
      Fargo Bank, bringing the total committed unsecured lines of credit to $150
      million. In addition, we completed the extension of the maturity dates on all
      four of our unsecured lines of credit with Bank of America, Wachovia
      Corporation, Citigroup and Wells Fargo Bank until June of 2008. Amounts
      available under these facilities at December 31, 2005 totaled $90.2 million.
      Interest is payable based on alternative interest rate bases at our option.
      Certain of our properties, which had a net book value of approximately $506.6
      million at December 31, 2005, serve as collateral for the fixed rate
      mortgages.





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 with REIT
      requirements in both the short and long term. Although we receive most of our
      rental payments on a monthly basis, distributions to unitholders are made
      quarterly and interest payments on the senior, unsecured notes are made
      semi-annually. Amounts accumulated for such payments will be used in the interim
      to reduce the outstanding borrowings under the existing lines of credit or
      invested in short-term money market or other suitable instruments.




**Contractual
      Obligations and Commercial Commitments**





The
      following table details our contractual obligations over the next five years
      and
      thereafter as of December 31, 2005 (in thousands):





**Contractual****Obligations**
            
            
            2006
            
            
            2007
            
            
            2008
            
            
            2009
            
            
            2010
            
            
            Thereafter
            
            
            TotalDebt
            
            $
            3,849
            
            $
            4,121
            
            $
            386,314
            
            $
            394
            
            $
            14,059
            
            $
            250,000
            
            $
            658,737Operating
                leases
            
            
            3,115
            
            
            2,988
            
            
            2,659
            
            
            2,271
            
            
            2,024
            
            
            83,420
            
            
            96,477Preferred
                unitdistributions(2)
            
            
            4,125
            
            
            4,125
            
            
            4,125
            
            
            4,125
            
            
            59,125
            
            
            ---
            
            
            75,625Interest
                payments(1)
            
            
            43,718
            
            
            43,446
            
            
            34,760
            
            
            21,202
            
            
            17,225
            
            
            76,875
            
            
            237,226$
            54,807
            
            $
            54,680
            
            $
            427,858
            
            $
            27,992
            
            $
            92,433
            
            $
            410,295
            
            $
            1,068,065


(1)
            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. All of our variable rate agreements are based on
                the
                30-day LIBOR rate. For calculating future interest amounts on variable
                interest rate debt, the rate at December 31, 2005 was
                used.





(2)
            Preferred
                unit distributions reflect cumulative distributions on our Class
                C
                Preferred Units on which we pay an annual distribution of $1.875
                per unit
                on 2,200,000 outstanding units as of December 31, 2005. The Class
                C
                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.





Our
      debt
      agreements require the maintenance of certain ratios, including debt service
      coverage and leverage, and limit the payment of distributions such that
      distributions will not exceed funds from operations, as defined in the
      agreements, for the prior fiscal year on an annual basis or 95% on a cumulative
      basis. We have historically been and currently are in compliance with all of
      our
      debt covenants. We expect to remain in compliance with all our existing debt
      covenants; however, should circumstances arise that would cause us to be in
      default, the various lenders would have the ability to accelerate the maturity
      on our outstanding debt.





We
      currently maintain four unsecured, revolving credit facilities with major
      national banking institutions, totaling $150 million. As of December 31, 2005,
      amounts outstanding under these credit facilities totaled $59.8 million. As
      of
      February 1, 2006, all four credit facilities will expire in June
      2008.





The
      following table details our commercial commitments as of December 31, 2005
      (in
      thousands):





**Commercial
                Commitments**
            2006Construction
                commitments
            $
                34,431Unconsolidated
                joint venture debt guarantees
            18,191$
                52,622





31





Construction
      commitments presented in the table represent new developments, renovations
      and
      expansions that we have committed to the completion of construction. The timing
      of these expenditures may vary due to delays in construction or acceleration
      of
      the opening date of a particular project. The amount includes our share of
      committed costs for joint venture developments.





**Off-Balance
      Sheet Arrangements**





We
      are
      party to a joint and several guarantee with respect to the $30.25 million
      construction loan obtained by Wisconsin Dells during the first quarter of 2006.
      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 $18.2 million. See “Joint
      Ventures” section above for further discussion of off-balance sheet arrangements
      and their related guarantees. Our pro-rata portion of the TWMB mortgage secured
      by the center is $17.9 million. There is no guarantee provided for the TWMB
      mortgage by us.





***Related
      Party Transactions***





As
      noted
      above in “Unconsolidated Joint Ventures”, we are 50% owners of the TWMB and
      Wisconsin Dells joint ventures. TWMB and Wisconsin Dells pay us management,
      leasing and development fees ,
      which
      we believe approximates current market rates, for services provided to the
      joint
      venture. During 2005, 2004 and 2003, we recognized approximately $327,000,
      $288,000 and $174,000 in management fees, $6,000, $212,000 and $214,000 in
      leasing fees and $0, $28,000 and $9,000 in development fees,
      respectively.





TFLP
      is a
      related party which holds a limited partnership interest in and is the minority
      owner of the Operating Partnership. Stanley K. Tanger, the Company’s Chairman of
      the Board and Chief Executive Officer, is the sole general partner of TFLP.
      The
      only material related party transaction with TFLP is the payment of quarterly
      distributions of earnings which were $7.8, $7.6 and $7.5 million for the years
      ended December 31, 2005, 2004 and 2003, respectively.








***Critical
      Accounting Policies***





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





**Principles
      of Consolidation**





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





In
      2003,
      the FASB issued FIN 46R which clarifies the application of existing accounting
      pronouncements to certain entities in which equity investors do not have the
      characteristics of a controlling financial interest or do not have sufficient
      equity at risk for the entity to finance its activities without additional
      subordinated financial support from other parties. The provisions of FIN 46R
      were effective for all variable interests in variable interest entities in
      2004
      and thereafter. We have evaluated Deer Park, Wisconsin Dells and TWMB (Note
      5)
      and have determined that under the current facts and circumstances we are not
      required to consolidate these entities under the provisions of FIN 46R.





32


**Acquisition
      of Real Estate**





In
      accordance with Statement of Financial Accounting Standards No. 141
“Business Combinations”, or FAS 141, we allocate the purchase price of
      acquisitions based on the fair value of land, building, tenant improvements,
      debt and deferred lease costs and other intangibles, such as the value of leases
      with above or below market rents, origination costs associated with the in-place
      leases, and the value of in-place leases and tenant relationships, if any.
      We
      depreciate the amount allocated to building, deferred lease costs and other
      intangible assets over their estimated useful lives, which generally range
      from
      three to 40 years. The values of the above and below market leases are
      amortized and recorded as either an increase (in the case of below market
      leases) or a decrease (in the case of above market leases) to rental income
      over
      the remaining term of the associated lease. The 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 will be 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 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 initiate operating leases, including certain general and overhead
      costs, as deferred charges. The amount of general and overhead costs we
      capitalized 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, our financial condition
      and results of operations could be adversely affected.





**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,
      2005.





33


**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 over the
      remaining lease term, as adjusted to reflect the early termination date.





***New
      Accounting Pronouncements***





In
      December 2004, the FASB issued SFAS No. 123R (Revised), “Share-Based Payment”,
      or FAS 123R. FAS 123R is a revision of FAS No. 123, “Accounting for Stock Based
      Compensation”, and supersedes APB 25. Among other items, FAS 123R eliminates the
      use of APB 25 and the intrinsic value method of accounting and requires
      companies to recognize the cost of employee services received in exchange for
      awards of equity instruments, based on the grant date fair value of those
      awards, in the financial statements. We adopted FAS 123R effective January
      1,
      2006 using a modified prospective application. FAS 123R, which provides certain
      changes to the method for valuing share-based compensation among other changes,
      will apply to new awards and to awards that are outstanding on the effective
      date and subsequently modified or cancelled. Compensation expense for
      outstanding awards for which the requisite service had not been rendered as
      of
      the effective date and which are ultimately expected to vest will be recognized
      over the remaining service period using the compensation cost calculated under
      FAS 123, which we adopted on January 1, 2003. We will incur additional expense
      during 2006 related to new awards granted during 2006 that cannot yet be
      quantified. We are in the process of determining how the guidance regarding
      valuing share-based compensation as prescribed in FAS 123R will be applied
      to
      valuing share-based awards granted after the effective date and the impact
      that
      the recognition of compensation expense related to such awards will have on
      our
      financial statements.





In
      March
      2005, the FASB issued Interpretation No. 47, “Accounting for Conditional
      Asset Retirement Obligations, an interpretation of FASB Statement No. 143”,
      which we refer to as FIN 47. FIN 47 refers to a legal obligation to perform
      an
      asset retirement activity in which the timing and/or method of settlement are
      conditional on a future event that may or may not be within the control of
      the
      entity. An entity is required to recognize a liability for the fair value of
      a
      conditional asset retirement obligation if the fair value of the liability
      can
      be reasonably estimated. The fair value of a liability for the conditional
      asset
      retirement obligation should be recognized when incurred, generally upon
      acquisition, construction, or development and through the normal operation
      of
      the asset. This interpretation is effective no later than the end of fiscal
      years ending after December 31, 2005. Adoption did not have a material
      effect on our consolidated financial statements.





In
      June
      2005, the FASB ratified the EITF’s consensus on Issue No. 04-5 “Determining
      Whether a General Partner, or the General Partners as a Group, Controls a
      Limited Partnership or Similar Entity When the Limited Partners Have Certain
      Rights”. This consensus establishes the presumption that general partners in a
      limited partnership control that limited partnership regardless of the extent
      of
      the general partner’s ownership interest in the limited partnership. The
      consensus further establishes that the rights of the limited partners can
      overcome the presumption of control by the general partners, if the limited
      partners have either (a) the substantive ability to dissolve (liquidate) the
      limited partnership or otherwise remove the general partners without cause
      or
      (b) substantive participating rights. Whether the presumption of control is
      overcome is a matter of judgment based on the facts and circumstances, for
      which
      the consensus provides additional guidance. This consensus is currently
      applicable to us for new or modified partnerships, and will otherwise be
      applicable to existing partnerships in 2006. This consensus applies to limited
      partnerships or similar entities, such as limited liability companies that
      have
      governing provisions that are the functional equivalent of a limited
      partnership. We believe this consensus will have no impact on the accounting
      treatment currently applied to our joint ventures.





34


***Funds
      from Operations***





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





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





35


Below
      is
      a reconciliation of FFO to net income for the years ended December 31, 2005,
      2004 and 2003 as well as other data for those respective periods (in
      thousands):


2005
            
            
            2004
            
            
            2003**Funds
                from Operations:**Net
                income
            
            $
            6,077
            
            $
            8,626
            
            $
            16,399Adjusted
                for:Minority
                interest adjustment - consolidated joint venture
            
            
            (315
            )
            
            (180
            )
            
            (33
            )Depreciation
                and amortizationattributable
                to discontinued operations
            
            
            244
            
            
            799
            
            
            1,802Depreciation
                and amortization uniquely significantto
                real estate - consolidated
            
            
            48,395
            
            
            50,979
            
            
            27,623Depreciation
                and amortization uniquely significant
              to
                real estate - unconsolidated joint venture
            
            
            1,493
            
            
            1,334
            
            
            1,101Loss
                on sale of real estate
            
            
            4,690
            
            
            1,460
            
            
            147Funds
                from operations(1)
            
            
            60,584
            
            
            63,018
            
            
            47,039Preferred
                unit distributions
            
            
            (538
            )
            
            ---
            
            
            ---Funds
                from operations available to common unitholders
            
            $
            60,046
            
            $
            63,018
            
            $
            47,039Weighted
                average units outstanding(2)
            
            
            17,341
            
            
            16,650
            
            
            13,625


*(1)
      The years ended December 31, 2005 and 2004 include gains on sales of outparcels
      of land of $1,554 and $1.510, respectively.*


*(2)
      Assumes the convertible preferred* *units
      of the Company and share and unit options are converted to common limited
      partnership units.*


36





***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
      2006, we have approximately 1,820,000 square feet, or 22%, of our portfolio
      coming up for renewal. If we were unable to successfully renew or release a
      significant amount of this space on favorable economic terms, the loss in rent
      could have a material adverse effect on our results of operations.





We
      renewed 84% of the 1,812,000 square feet that came up for renewal in 2005 with
      the existing tenants at a 6% increase in the average base rental rate compared
      to the expiring rate. We also re-tenanted 419,000 square feet during 2005 at
      a
      7% increase in the average base rental rate.





Existing
      tenants’ sales have remained stable and renewals by existing tenants have
      remained strong. The existing tenants have already renewed approximately
      848,000, or 47%, of the square feet scheduled to expire in 2006 as of February
      1, 2006. In addition, we continue to attract and retain additional tenants.
      Our
      factory outlet centers typically include well-known, national, brand name
      companies. By maintaining a broad base of creditworthy tenants and a
      geographically diverse portfolio of properties located across the United States,
      we reduce our operating and leasing risks. No one tenant (including affiliates)
      accounts for more than 6.2% 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, 2005 and 2004, occupancy at our wholly owned centers was 97%.
      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.





Sales
      at
      our outlet centers along the Gulf of Mexico were adversely affected by the
      hurricanes during 2005 and 2004. Fortunately, the structural damage caused
      by
      the hurricanes was minimal and our property insurance will cover the vast
      majority of the repair work that is being completed as well as lost revenues
      during the days the centers were closed. We do not expect this to have a
      material impact on our financial results.




37


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





***Market
      Risk***





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





In
      September 2005, we entered into two forward starting interest rate lock
      protection agreements to hedge risks related to anticipated future financings
      in
      2005 and 2008. The 2005 agreement locked the US Treasury index rate at 4.279%
      on
      a notional amount of $125 million for 10 years from such date in December 2005.
      This lock was unwound in the fourth quarter of 2005 in conjunction with the
      issuance of the $250 million senior unsecured notes due in 2015 discussed in
      Note 8 and, as a result, we received a cash payment of $3.2 million. The gain
      was recorded in other comprehensive income and is being amortized into earnings
      using the effective interest method over a 10 year period that coincides with
      the interest payments associated with the 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, 2005, we would have paid approximately $313,000 if we terminated the
      agreements. A 1% decrease in the US Treasury rate index would increase the
      amount we would pay if the agreements were terminated by $15.5 million. The
      fair
      value is based on dealer quotes, considering current interest rates and
      remaining term to maturity. We do not intend to terminate the agreements prior
      to their maturity because we plan on entering into the debt transactions as
      indicated.





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


****


The
      fair
      value of the interest rate swap agreement represents the estimated receipts
      or
      payments that would be made to terminate the agreement. At December 31, 2005,
      TWMB would have received approximately $181,000 if the agreement was terminated.
      A 1% decrease in the 30 day LIBOR index would decrease the amount received
      by
      TWMB by $1.3 million. The fair value is based on dealer quotes, considering
      current interest rates and remaining term to maturity. TWMB does not intend
      to
      terminate the interest rate swap agreement prior to its maturity. The fair
      value
      of this derivative is currently recorded as a liability in TWMB’s balance sheet;
      however, if held to maturity, the value of the swap will be zero at that
      time.





The
      fair
      market value of long-term fixed interest rate debt is subject to market risk.
      Generally, the fair market value of fixed interest rate debt will increase
      as
      interest rates fall and decrease as interest rates rise. The estimated fair
      value of our total long-term debt at December 31, 2005 was $670.0 million and
      its recorded value was $663.6 million. A 1% increase from prevailing interest
      rates at December 31, 2005 would result in a decrease in fair value of total
      long-term debt by approximately $25.9 million. Fair values were determined
      from
      quoted market prices, where available, using current interest rates considering
      credit ratings and the remaining terms to maturity.


38


**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., of Tanger GP Trust,
                sole general partner of the registrant, evaluated the effectiveness
                of the
                registrant’s disclosure controls and procedures on December 31, 2005 and
                concluded that, as of that date, the registrant’s disclosure controls and
                procedures were effective to ensure that the information the registrant
                is
                required to disclose in its filings with the Securities and Exchange
                Commission under the Securities and Exchange Act of 1934 is recorded,
                processed, summarized and reported, within the time periods specified
                in
                the Commission’s rules and forms, and to ensure that information required
                to be disclosed by the registrant in the reports that it files under
                the
                Exchange Act is accumulated and communicated to the registrant’s
                management, including its principal executive officer and principal
                financial officer, as appropriate to allow timely decisions regarding
                required disclosure.




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




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





(c)
            There
                were no changes in our internal control over financial reporting
                identified in connection with the evaluation required by paragraph
                (d) of
                Exchange Act Rules 13a-15 or 15d-15 that occurred during our last
                fiscal
                quarter ended December 31, 2005 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 2005 was reported.


39








**PART
      III**





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





**Item
                10.**
            **Directors
                and Executive Officers of the
                Registrant**





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 12,
      2006.





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





The
      information regarding compliance with Section 16 of the Securities and Exchange
      Act of 1934 is incorporated herein 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 12, 2006.





The
      information concerning our 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 12, 2006.




**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 12,
      2006.





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





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 12,
      2006.





The
      following table provides information as of December 31, 2005 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****Reflecteding
                Column (a))**Equity
                compensation plans approved by security holders
            
            
            316,120
            
            $
            36.16
            
            
            1,023,525Equity
                compensation plans not approved by security holders
            
            
            ---
            
            
            ---
            
            
            ---Total
            
            
            316,120
            
            $
            36.16
            
            
            1,023,525





**Item
                13.**
            **Certain
                Relationships and Related
                Transactions**





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 12, 2006.





40


**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 12,
      2006.





**PART
      IV**





**Item
      15.**  **Exhibits,
      Financial Statements Schedules, and Reports on Form 8-K**





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





1.
            Financial
                Statements


Management’s
                Report on Internal Control over Financial Reporting
            F-1Report
                of Independent Registered Public Accounting Firm
            F-2Consolidated
                Balance Sheets-December 31, 2005 and 2004
            F-4Consolidated
                Statements of Operations-Years
                Ended December 31, 2005, 2004 and 2003
            F-5Consolidated
                Statements of Partners’ Equity-Years
                Ended December 31, 2005, 2004 and 2003
            F-6Consolidated
                Statements of Cash Flows-Years
                Ended December 31, 2005, 2004 and 2003
            F-7Notes
                to Consolidated Financial Statements
            F-8
                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.


41


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.)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 Willard Albea Chafin, Jr.,
                  as of
                  January 1, 2005. (Incorporated by reference to the exhibits to
                  the
                  Operating Partnership’s Quarterly Report on Form 10-Q for the quarter
                  ended March 31, 2005.)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.)
  42


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.)10.12
            Agreement
                Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K. (Incorporated
                by
                reference to the exhibits to the Company’s Registration Statement on Form
                S-11 filed May 27, 1993, as amended.)10.13
            Assignment
                and Assumption Agreement among Stanley K. Tanger, Stanley K. Tanger
&
                Company, the Tanger Family Limited Partnership, the Operating Partnership
                and the Company. (Incorporated by reference to the exhibits to the
                Company’s Registration Statement on Form S-11 filed May 27, 1993, as
                amended.)10.14
            Promissory
                Notes by and between the Operating Partnership and John Hancock Mutual
                Life Insurance Company aggregating $66,500,000. (Incorporated by
                reference
                to the exhibits to the Company’s Quarterly Report on Form 10-Q for the
                quarter ended March 31, 1999.)10.15
            Form
                of Senior Indenture. (Incorporated by reference to the exhibits to
                the
                Company’s Current Report on Form 8-K dated March 6,
                1996.)10.16
            Form
                of First Supplemental Indenture (to Senior Indenture). (Incorporated
                by
                reference to the exhibits to the Company’s Current Report on Form 8-K
                dated March 6, 1996.)10.16A
            Form
                of Second Supplemental Indenture (to Senior Indenture) dated October
                24,
                1997 among Tanger Properties Limited Partnership, Tanger Factory
                Outlet
                Centers, Inc. and State Street Bank & Trust Company. (Incorporated by
                reference to the exhibits to the Company’s Current Report on Form 8-K
                dated October 24, 1997.)10.16B
            Form
                of Third Supplemental Indenture (to Senior Indenture) dated February
                15,
                2001. (Incorporated by reference to the exhibits to the Company’s Current
                Report on Form 8-K dated February 16, 2001.)10.17
            COROC
                Holdings, LLC Limited Liability Company Agreement dated October 3,
                2003.
                (Incorporated by reference to the exhibits to the Company’s Current Report
                on Form 8-K dated December 8, 2003.)10.18
            Form
                of Shopping Center Management Agreement between owners of COROC Holdings,
                LLC and Tanger Properties Limited Partnership. (Incorporated by reference
                to the exhibits to the Company’s Current Report on Form 8-K dated December
                8, 2003.)10.19
            Form
                of Restricted Share Agreement between the Company and certain Officers.
                (Incorporated by reference to the exhibits to the Operating Partnership’s
                Quarterly Report on Form 10-Q for the quarter ended March 31,
                2005.)10.20
            Form
                of Restricted Share Agreement between the Company and certain Officers
                with certain performance criteria vesting. (Incorporated by reference
                to
                the exhibits to the Operating Partnership’s Quarterly Report on Form 10-Q
                for the quarter ended March 31,
                2005.)




43


10.21
            Form
                of Restricted Share Agreement between the Company and certain Directors.
                (Incorporated by reference to the exhibits to the Operating Partnership’s
                Quarterly Report on Form 10-Q for the quarter ended March 31,
                2005.)21.1
            List
                of Subsidiaries.23.1
            Consent
                of PricewaterhouseCoopers LLP.31.1
            Principal
                Executive Officer Certification Pursuant to 18 U.S.C. Section 1350,
                as
                Adopted Pursuant to Section 302 of the Sarbanes - Oxley Act of
                2002.31.2
            Principal
                Financial Officer Certification Pursuant to 18 U.S.C. Section 1350,
                as
                Adopted Pursuant to Section 302 of the Sarbanes - Oxley Act of
                200232.1
            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





March
      3,
      2006





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)
            March
                3, 2006/s/
                Steven B. Tanger
              Steven
                B. Tanger
            Trustee
                and President
            March
                3, 2006/s/
                Frank C. Marchisello, Jr.
              Frank
                C. Marchisello Jr.
            Vice
                President, Treasurer & Assistant Secretary
              (Principal
                Financial and Accounting Officer)
            March
                3, 2006/s/
                Jack Africk
              Jack
                Africk
            Trustee
            March
                3, 2006/s/
                William G. Benton
              William
                G. Benton
            Trustee
            March
                3, 2006/s/
                Thomas E. Robinson
              Thomas
                E. Robinson
            Trustee
            March
                3, 2006/s/
                Allan L. Schuman
              Allan
                L. Schuman
            Trustee
            March
                3, 2006







45


MANAGEMENT’S
      REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING





Management
      is responsible for establishing and maintaining adequate internal control over
      financial reporting, and for performing an assessment of the effectiveness
      of
      internal control over financial reporting as of December 31, 2005. Internal
      control over financial reporting is a process designed to provide reasonable
      assurance regarding the reliability of financial reporting and the preparation
      of financial statements for external purposes in accordance with generally
      accepted accounting principles. The Operating Partnership’s internal control
      over financial reporting includes those policies and procedures that (i) pertain
      to the maintenance of records that, in reasonable detail, accurately and fairly
      reflect the transactions and dispositions of the assets of the 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 trustees
      of
      the Operating Partnership; and (iii) provide reasonable assurance regarding
      prevention or timely detection of unauthorized acquisition, use, or disposition
      of the Operating Partnership’s assets that could have a material effect on the
      financial statements.





Management
      performed an assessment of the effectiveness of the Operating Partnership’s
      internal control over financial reporting as of December 31, 2005 based upon
      criteria in Internal Control - Integrated Framework issued by the Committee
      of
      Sponsoring Organizations of the Treadway Commission (“COSO”). Based on our
      assessment, management determined that the Company’s internal control over
      financial reporting was effective as of December 31, 2005 based on the criteria
      in Internal Control-Integrated Framework issued by COSO.





Our
      management’s assessment of the effectiveness of the Operating Partnership’s
      internal control over financial reporting as of December 31, 2005 has been
      audited by PricewaterhouseCoopers LLP, an independent registered public
      accounting firm, as stated in their report which appears herein.





March
      3,
      2006





/s/
      Stanley K. Tanger


Stanley
      K. Tanger


Chairman
      of the Board of Trustees and Chief Executive Officer





/s/
      Frank C. Marchisello Jr.


Frank
      C.
      Marchisello Jr.


Vice
      President - Treasurer and Assistant Secretary






































































F
          -
          1





REPORT
      OF
      INDEPENDENT REGISTER PUBLIC ACCOUNTING FIRM





To
      the
      Partners of Tanger Properties Limited Partnership:





We
      have
      completed integrated audits of Tanger Properties Limited Partnership 2005 and
      2004
      consolidated financial statements and of its internal control over financial reporting as
      of
      December 31, 2005, and an audit of its 2003 consolidated financial statements
      in
      accordance with the standards of the Public Company Accounting Oversight Board
      (United States). Our opinions, based on our audits, are presented
      below .





Consolidated
      f inancial
      statements and financial statement schedule





In
      our
      opinion, the consolidated financial statements listed in
      the accompanying
      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, 2005 and 2004, and the results of their operations and their cash
      flows for each of the three years in the period ended December 31,
      2005 **** 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 accompanying 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. These financial statements and financial statement schedule are
      the
      responsibility of the Operating Partnership’s management. Our responsibility is
      to express an opinion on these financial statements and financial statement schedule **** based on our
      audits. We conducted our audits of these statements in accordance with the
      standards of the Public Company Accounting Oversight Board (United States).
      Those standards require that we plan and perform the audit to obtain reasonable
      assurance about whether the financial statements are free of material
      misstatement. An audit of financial statements includes examining, on a test
      basis, evidence supporting the amounts and disclosures in the financial
      statements, assessing the accounting principles used and significant estimates
      made by management, and evaluating the overall financial statement presentation.
      We believe that our audits provide a reasonable basis for our
      opinion.





Internal
      control over financial reporting





Also,
      in
      our opinion, management’s assessment, included in the accompanying Management's
      Report on Internal Controls Over Financial Reporting appearing under Item 9A,
      that the Operating Partnership maintained effective internal control over
      financial reporting as of December 31, 2005  based
      on
      criteria established in *Internal
      Control - Integrated Framework* issued
      by the Committee of Sponsoring Organizations of the Treadway Commission (COSO),
      is fairly stated, in all material respects, based on those criteria.
      Furthermore, in our opinion, the Operating Partnership maintained, in all
      material respects, effective internal control over financial reporting as of
      December 31, 2005, based on criteria established in *Internal
      Control - Integrated Framework* issued
      by the COSO. The Operating Partnership’s management is responsible for
      maintaining effective internal control over financial reporting and for its
      assessment of the effectiveness of internal control over financial reporting.
      Our responsibility is to express opinions on management’s assessment and on
      the effectiveness of the Operating Partnership’s internal control over financial
      reporting based on our audit. We conducted our audit of internal control over
      financial reporting in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether effective
      internal control over financial reporting was maintained in all material
      respects. An audit of internal control over financial reporting includes
      obtaining an understanding of internal control over financial reporting,
      evaluating management’s assessment, testing and evaluating the design and
      operating effectiveness of internal control, and performing such other
      procedures as we consider necessary in the circumstances. We believe that our
      audit provides a reasonable basis for our opinions.


F
          -
          2





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





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





/s/
      PricewaterhouseCoopers LLP


Raleigh,
      North Carolina


March
      3,
      2006











F
            -
            3


**TANGER
      PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES**


**CONSOLIDATED
      BALANCE SHEETS**


(In
      thousands)


**December
                31,****2005**
            
            
            **2004****ASSETS**Rental
                propertyLand
            
            $
            120,715
            
            
            $
            113,830Buildings,
                improvements and fixtures
            
            
            1,004,545
            
            
            
            963,563Construction
                in progress
            
            
            27,606
            
            
            
            ---1,152,866
            
            
            
            1,077,393Accumulated
                depreciation
            
            
            (253,765
            )
            
            
            (224,622
            )Rental
                property, net
            
            
            899,101
            
            
            
            852,771Cash
                and cash equivalents
            
            
            2,926
            
            
            
            4,089Assets
                held for sale
            
            
            2,637
            
            
            
            ---Investments
                in unconsolidated joint ventures
            
            
            13,020
            
            
            
            6,700Deferred
                charges, net
            
            
            64,555
            
            
            
            58,851Other
                assets
            
            
            18,124
            
            
            
            13,694**Total
                assets**
            
            $
            1,000,363
            
            
            $
            936,105**LIABILITIES,
                MINORITY INTEREST AND PARTNERS’ EQUITY****Liabilities**DebtSenior,
                unsecured notes (net of discount of $901 and $0,
                respectively)
            
            $
            349,099
            
            
            $
            100,000Mortgages
                payable (including premium of $5,771 and $9,346,
                respectively)
            
            
            201,233
            
            
            
            308,342Unsecured
                note
            
            
            53,500
            
            
            
            53,500Unsecured
                lines of credit
            
            
            59,775
            
            
            
            26,165Total
                debt
            
            
            663,607
            
            
            
            488,007Construction
                trade payables
            
            
            13,464
            
            
            
            11,918Accounts
                payable and accrued expenses
            
            
            23,711
            
            
            
            16,753**Total
                liabilities**
            
            
            700,782
            
            
            
            516,678Commitments
                and contingencies**Minority
                interest in consolidated joint venture**
            
            
            ---
            
            
            
            222,673**Partners’
                equity**General
                partner
            
            
            317
            
            
            
            653Limited
                partner
            
            
            301,803
            
            
            
            200,076Deferred
                compensation
            
            
            (5,501
            )
            
            
            (3,975
            )Accumulated
                other comprehensive income
            
            
            2,962
            
            
            
            ---**Total
                partners’ equity**
            
            
            299,581
            
            
            
            196,754**Total
                liabilities, minority interest and partners’
                equity**
            
            $
            1,000,363
            
            
            $
            936,105





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























F
          -
          4





**TANGER
      PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


(in
      thousands, except per unit data)


**For
                the years ended December 31,****2005**
            **2004       **2003******REVENUES**Base
                rentals
            
            
            $
            132,826
            
            
            $
            128,841
            
            
            $
            77,085Percentage
                rentals
            
            
            
            6,412
            
            
            
            5,338
            
            
            
            3,171Expense
                reimbursements
            
            
            
            56,303
            
            
            
            52,153
            
            
            
            32,586Other
                income
            
            
            
            7,258
            
            
            
            6,708
            
            
            
            3,471Total
                revenues
            
            
            
            202,799
            
            
            
            193,040
            
            
            
            116,313**EXPENSES**Property
                operating
            
            
            
            64,092
            
            
            
            58,973
            
            
            
            38,322General
                and administrative
            
            
            
            13,848
            
            
            
            12,828
            
            
            
            9,568Depreciation
                and amortization
            
            
            
            48,644
            
            
            
            51,201
            
            
            
            27,895Total
                expenses
            
            
            
            126,584
            
            
            
            123,002
            
            
            
            75,785**Operating
                income**
            
            76,215
            
            
            70,038
            40,528Interest
                expense (including prepayment premiumand
                deferred loan cost write off of $9,866 in 2005)
            
            
            
            42,927
            
            
            
            35,117
            
            
            
            26,486**Income
                before equity in earnings of unconsolidated****joint
                ventures, minority interest, discontinued****operations
                and loss on sale of real estate**
            
            
            
            33,288
            
            
            
            34,921
            
            
            
            14,042Equity
                in earnings of unconsolidated joint ventures
            
            
            
            879
            
            
            
            1,042
            
            
            
            819Minority
                interest in consolidated joint venture
            
            
            
            (24,043
            )
            
            
            (27,144
            )
            
            
            (941
            )**Income
                from continuing operations**
            
            
            
            10,124
            
            
            
            8,819
            
            
            
            13,920Discontinued
                operations
            
            
            
            643
            
            
            
            (193
            )
            
            
            2,479**Income
                before loss on sale of real estate**
            
            
            
            10,767
            
            
            
            8,626
            
            
            
            16,399Loss
                on sale of real estate
            
            
            
            (4,690
            )
            
            
            ---
            
            
            
            ---**Net
                income**
            
            
            
            6,077
            
            
            
            8,626
            
            
            
            16,399Less
                applicable preferred unit distributions
            
            
            
            (538
            )
            
            
            ---
            
            
            
            (806
            )**Net
                income available to common unitholders**
            
            
            
            5,539
            
            
            
            8,626
            
            
            
            15,593Income
              allocated to limited partner
            
            
            $
            5,490
            
            
            $
            8,548
            
            
            $
            15,417Income
              allocated to general partner
            
            
            $
            49
            
            
            $
            78
            
            
            $
            176**Basic
                earnings per common unit:**Income
                from continuing operations
            
            
            $
            .28
            
            
            $
            .53
            
            
            $
            1.00Net
                income
            
            
            
            .32
            
            
            
            .52
            
            
            
            1.19**Diluted
                earnings per unit:**Income
                from continuing operations
            
            
            $
            .28
            
            
            $
            .53
            
            
            $
            .99Net
                income
            
            
            
            .32
            
            
            
            .52
            
            
            
            1.17





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





F
          -
          5





**TANGER
      PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF PARTNERS’ EQUITY**


(in
      thousands, except unit and per unit data)


General
              Partner
            
            Limited
                Partner
            
            Deferred
                Compensation
            
            Accumulated
                Other Comprehensive Income
            
            Total
                Partners’ Equity**Balance,
                December 31, 2002**
            $
            1,141
            $
            113,361
            $
            -
            $
            (237
            ) $
            114,265Comprehensive
                income:Net
                income
            
            176
            
            16,223
            
            -
            
            -
            
            16,399Other
                comprehensive income
            
            -
            
            -
            
            -
            
            155
            
            155Total
                comprehensive income
            
            176
            
            16,223
            
            -
            
            155
            
            16,554Conversion
                of 78,101 preferred units into709,078
                partnership units
            
            -
            
            -
            
            -
            
            -
            
            -Redemption
                of 1,489 preferred units
            
            -
            
            (372
            )
            -
            
            -
            
            (372
            )Compensation
                under Unit Option Plan
            
            -
            
            102
            
            -
            
            -
            
            102Issuance
                of 890,540 units uponexercise
                of share and unit options
            
            -
            
            20,613
            
            -
            
            -
            
            20,613Issuance
                of 2.3 million units in exchange forproceeds
                from common share offeringof
                the general partner’s sole shareholder
            
            -
            
            87,992
            
            -
            
            -
            
            87,992Preferred
                distributions ($13.21 per unit)
            
            -
            
            (890
            )
            -
            
            -
            
            (890
            )Distributions
                to partners ($2.46 per unit)
            
            (368
            )
            (31,296
            )
            -
            
            -
            
            (31,664
            )**Balance,
                December 31, 2003**
            
            949
            
            205,733
            
            -
            
            (82
            )
            206,600Comprehensive
                income:Net
                income
            
            78
            
            8,548
            
            -
            
            -
            
            8,626Other
                comprehensive income
            
            -
            
            -
            
            -
            
            82
            
            82Total
                comprehensive
                income
            
            78
            
            8,548
            
            -
            
            -
            
            8,708Compensation
                under Incentive Award Plan
            
            -
            
            54
            
            1,422
            
            -
            
            1,476Issuance
                of 619,480 units uponexercise
                of share and unit options
            
            -
            
            8,166
            
            -
            
            -
            
            8,166Issuance
                of 690,000 units in exchange forproceeds
                from common share offeringof
                the general partner’s sole shareholder
            
            -
            
            13,173
            
            -
            
            -
            
            13,173Grant
                of share and unit options, net offorfeitures,
                and 212,250 restricted shares
            
            -
            
            5,397
            
            (5,397
            )
            -
            
            -Distributions
                to partners ($2.49 per unit)
            
            (374
            )
            (40,995
            )
            -
            
            -
            
            (41,369
            )**Balance,
                December 31, 2004**
            
            653
            
            200,076
            
            (3,975
            )
            -
            
            196,754Comprehensive
                income:Net
                income
            
            49
            
            6,028
            
            -
            
            -
            
            6,077Other
                comprehensive income
            
            -
            
            -
            
            -
            
            2,962
            
            2,962Total
                comprehensive
                income
            
            49
            
            6,028
            
            -
            
            2,962
            
            9,039Compensation
                under Incentive Award Plan
            
            -
            
            10
            
            1,555
            
            -
            
            1,565Issuance
                of 83,850 units uponexercise
                of share and unit options
            
            -
            
            2,196
            
            -
            
            -
            
            2,196Issuance
                of 2,200,000 7.5% Class C preferredunits
                in exchange for proceedsfrom
                preferred share offering of thegeneral
                partner’s sole shareholder
            
            -
            
            53,016
            
            -
            
            -
            
            53,016Issuance
                of 1,500,000 units in exchange forproceeds
                from common share offeringof
                the general partner’s sole shareholder
            
            -
            
            81,098
            
            -
            
            -
            
            81,098Grant
                of share an unit options, net offorfeitures,
                and 138,000 restricted shares
            
            -
            
            3,081
            
            (3,081
            )
            -Distributions
                to partners ($2.56 per unit)
            
            (385
            )
            (43,702
            )
            -
            
            -
            
            (44,087
            )**Balance,
                December 31, 2005**
            $
            317
            $
            301,803
            $
            (5,501
            )  $
            2,962
            $
            299,581





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


F
          -
          6





**TANGER
      PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


(in
      thousands)


**For
                the years ended December 31,****2005**
            
            
            **2004**
            
            
            **2003****OPERATING
                ACTIVITIES:**Net
                income
            
            $
            6,077
            
            
            $
            8,626
            
            
            $
            16,399Adjustments
                to reconcile net income to net cash provided by operating
                activities:Depreciation
                and amortization (including discontinuedoperations)
            
            
            48,888
            
            
            
            51,999
            
            
            
            29,697Amortization
                of deferred financing costs
            
            
            1,691
            
            
            
            1,454
            
            
            
            1,304Equity
                in earnings of unconsolidated joint ventures
            
            
            (879
            )
            
            
            (1,042
            )
            
            
            (819
            )Distributions
                received from unconsolidated joint ventures
            
            
            2,000
            
            
            
            1,975
            
            
            
            1,775Consolidated
                joint venture minority interest
            
            
            24,043
            
            
            
            27,144
            
            
            
            941Compensation
                expense related to restricted shares andshare
                options granted
            
            
            1,565
            
            
            
            1,476
            
            
            
            102Amortization
                of debt premiums and discounts, net
            
            
            (2,719
            )
            
            
            (2,506
            )
            
            
            (149
            )Loss
                on sale of real estate
            
            
            4,690
            
            
            
            1,460
            
            
            
            147Gain
                on sale of outparcels of land
            
            
            (1,554
            )
            
            
            (1,510
            )
            
            
            ---Net
                accretion of market rent rate adjustment
            
            
            (741
            )
            
            
            (1,065
            )
            
            
            (37
            )Straight-line
                base rent adjustment
            
            
            (1,750
            )
            
            
            (389
            )
            
            
            149Increases
                (decreases) due to changes in:Other
                assets
            
            
            (4,045
            )
            
            
            (2,280
            )
            
            
            (5,835
            )Accounts
                payable and accrued expenses
            
            
            6,645
            
            
            
            (568
            )
            
            
            2,919**Net
                cash provided by operating activities**
            
            
            83,911
            
            
            
            84,774
            
            
            
            46,593**INVESTING
                ACTIVITIES:**Acquisition
                of rental properties
            
            
            ---
            
            
            
            ---
            
            
            
            (324,557
            )Acquisition
                of interest in COROC joint venture
            
            
            (285,974
            )
            
            
            ---
            
            
            
            ---Additions
                of rental properties
            
            
            (44,092
            )
            
            
            (15,836
            )
            
            
            (9,342
            )Additions
                to investments in unconsolidated joint ventures
            
            
            (7,090
            )
            
            
            ---
            
            
            
            (4,270
            )Additions
                to deferred lease costs
            
            
            (3,218
            )
            
            
            (1,973
            )
            
            
            (1,576
            )Net
                proceeds from sales of real estate
            
            
            3,811
            
            
            
            20,416
            
            
            
            8,671Increase
                in escrow from rental property sale
            
            
            ---
            
            
            
            ---
            
            
            
            4,008Other
            
            
            1
            
            
            
            ---
            
            
            
            (2
            )**Net
                cash (used in) provided by investing activities**
            
            (336,562
            )
            
            
            2,607
            
            
            
            (327,068
            )**FINANCING
                ACTIVITIES:**Cash
                distributions paid
            
            
            (44,087
            )
            
            
            (41,369
            )
            
            
            (32,554
            )Distributions
                to consolidated joint venture minority interest
            
            
            (21,386
            )
            
            
            (22,619
            )
            
            
            ---Contributions
                from sole shareholder of general partner
            
            
            134,114
            
            
            
            13,173
            
            
            
            87,992Contributions
                from minority interest partner in consolidatedjoint
                venture
            
            
            800
            
            
            
            ---
            
            
            
            217,207Proceeds
                from issuance of debt
            
            
            518,027
            
            
            
            88,600
            
            
            
            133,631Repayments
                of debt
            
            
            (338,865
            )
            
            
            (138,406
            )
            
            
            (136,574
            )Additions
                to deferred financing costs
            
            
            (2,534
            )
            
            
            (701
            )
            
            
            (672
            )Payments
                for redemption of preferred shares
            
            
            ---
            
            
            
            ---
            
            
            
            (372
            )Proceeds
                from settlement of US Treasury rate lock
            
            
            3,224
            
            
            
            ---
            
            
            
            ---Proceeds
                from exercise of share and unit options
            
            
            2,195
            
            
            
            8,166
            
            
            
            20,613**Net
                cash provided by (used in) financing activities**
            
            251,488
            
            
            
            (93,156
            )
            
            
            289,271Net
                (decrease) increase in cash and cash equivalents
            
            
            (1,163
            )
            
            
            (5,775
            )
            
            
            8,796**Cash
                and cash equivalents, beginning of year**
            
            
            4,089
            
            
            
            9,864
            
            
            
            1,068**Cash
                and cash equivalents, end of year**
            
            $
            2,926
            
            
            $
            4,089
            
            
            $
            9,864


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


F
          -
          7





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





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





Tanger
      Properties Limited Partnership and subsidiaries, a North Carolina limited
      partnership, focuses exclusively on developing, acquiring, owning, operating
      and
      managing factory outlet shopping centers. Since entering the factory outlet
      center business 25 years ago, we have become one of the largest owners and
      operators of factory outlet centers in the United States. As of December 31,
      2005, we owned 31 centers, with a total gross leasable area, or GLA, of
      approximately 8.3 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 97% occupied and contained over
      1,800 stores, representing approximately 370 store brands. Also, we owned a
      50%
      interest in one center with a GLA of approximately 402,000 square feet and
      managed for a fee one center with a GLA of approximately 64,000 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 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
      Tanger family, through its ownership of the Tanger Family Limited Partnership,
      which we refer to as TFLP, holds the remaining units as a limited partner.
      Stanley K. Tanger, Chairman of the Board and Chief Executive Officer of our
      general partner, is also 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, 2005, Tanger GP Trust owned 150,000 units, Tanger LP Trust owned
      15,224,358 units and TFLP owned the remaining 3,033,305 units. Each of TFLP's
      units is exchangeable for two of the Company's common shares, subject to certain
      limitations to preserve the Company’s status as a REIT.





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





*Minority
      Interest* -
“Minority interest consolidated joint venture” reflects our partner’s ownership
      interest through November 2005 in the COROC joint venture which was consolidated
      under the provisions of FIN 46R. We purchased the interest owned by the minority
      interest partner in the COROC joint venture in November 2005 and therefore
      there
      is no consolidated joint venture minority interest remaining at December 31,
      2005.


F
          -
          8





*Related
      Parties* - We
      account for related party transactions under the guidance of FASB 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 $7.8, $7.6 and $7.5 million for the years ended December
      31,
      2005, 2004 and 2003, respectively.





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





*Reclassifications* -
      Certain
      amounts in the 2004 and 2003 consolidated statements of operations have been
      reclassified to the caption “discontinued operations” as required by FAS 144.
      Also, certain amounts in the 2004 consolidated balance sheet have been
      reclassified from other assets to the caption “investments in unconsolidated
      joint ventures”.





*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, 15
      years for land improvements and seven years for equipment. Expenditures for
      ordinary maintenance and repairs are charged to operations as incurred while
      significant renovations and improvements, including tenant finishing allowances
      that improve and/or extend the useful life of the asset are capitalized and
      depreciated over their estimated useful life. Interest costs are capitalized
      during periods of active construction for qualified expenditures based upon
      interest rates in place during the construction period until construction is
      substantially complete. Capitalized interest costs are amortized over lives
      which are consistent with the constructed assets.





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, the value of in-place leases and tenant relationships, if any. We
      depreciate the amount allocated to building, deferred lease costs and other
      intangible assets over their estimated useful lives, which generally range
      from
      three to 40 years. The values of the above and below market leases are
      amortized and recorded as either an increase (in the case of below market
      leases) or a decrease (in the case of above market leases) to rental income
      over
      the remaining term of the associated lease. The 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 will be 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.


F
          -
          9


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
      2005, 2004 and 2003 amounted to $665,000, $201,000 and $141,000, respectively
      and development costs capitalized amounted to $685,000, $684,000 and $479,000,
      respectively. Depreciation expense for each of the years ended December 31,
      2005, 2004 and 2003 was $38,137,000, $38,968,000 and $27,211,000, respectively.





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





*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 initiate operating leases and are amortized over the average minimum
      lease term. 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.





*Guarantees
      of Indebtedness* - In
      November 2002, the Financial Accounting Standards Board, or 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 guarantee of indebtedness by us in Deer Park (Note
      5) is 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 that 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 guarantee of the Deer Park joint venture’s debt
      as a debit to our investment in Deer Park and a credit to a liability of
      approximately $121,000. We have elected to account for the release from
      obligation under the guarantee by the straight-line amortization method over
      the
      life of the guarantee. The initial guarantee expired in October 2005; however,
      the loan that the guarantee related to was extended for an additional year.
      Therefore, we recorded the fair value of the guarantee of $61,000 for the one
      year period in October 2005 and are also amortizing the release from obligation
      utilizing the straight-line amortization method. The recorded value of the
      guarantees was $46,000 and $48,000 at December 31, 2005 and 2004, respectively.




*Impairment
      of Long-Lived Assets* -
      Rental
      property held and used by us is reviewed for impairment in the event that facts
      and circumstances indicate the carrying amount of an asset may not be
      recoverable. In such an event, we compare the estimated future undiscounted
      cash
      flows associated with the asset to the asset’s carrying amount, and if less,
      recognize an impairment loss in an amount by which the carrying amount exceeds
      its fair value which is calculated as estimated, discounted future cash flows
      associated with the asset. We believe that no impairment existed at December
      31,
      2005.





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




F
          - 10


*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 Statement of Financial Accounting Standards 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.





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





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





We
      provide management, leasing and development services for a fee for certain
      properties that are not owned by us or that we partially owned 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 2005, 2004 or 2003.





The
      Riverhead, New York; Foley, Alabama and Rehoboth Beach, Delaware centers are
      the
      only properties that comprise more than 10% of our consolidated gross revenues
      or consolidated total assets. The center in Riverhead, New York is our only
      center that comprises more than 10% of our consolidated gross revenues for
      the
      year ended December 31, 2005. The Riverhead center, which was originally
      constructed in 1994 and now totals 729,315 square feet, represented 13% of
      our
      consolidated gross revenue for the year ended December 31, 2005. The Foley
      and
      Rehoboth centers, acquired in December 2003, represent 11% and 12% respectively
      of our consolidated total assets as of December 31, 2005. The Foley and Rehoboth
      centers are 557,093 and 568,873 square feet, respectively. The occupancy rates
      as of December 31, 2005 for the Riverhead, Rehoboth Beach and Foley centers
      were
      99%, 99% and 97%, respectively.





*Supplemental
      Cash Flow Information -* We
      purchase capital equipment and incur costs relating to construction of new
      facilities, including tenant finishing allowances. Expenditures included in
      construction trade payables as of December 31, 2005, 2004 and 2003 amounted
      to
      $13,464,000, $11,918,000 and $4,345,000, respectively. Interest paid, net of
      interest capitalized, in 2005, 2004 and 2003 was $50,968,000, $36,735,000 and
      $24,906,000, respectively. Interest paid for 2005 includes a prepayment premium
      for the early extinguishment of the John Hancock mortgage debt (Note 8) of
      approximately $9.4 million which was included in interest expense.








F
          - 11


Non
      cash
      financing activities that occurred during 2003 included the assumption of
      mortgage debt in the amount of $198,258,000, including a premium of $11,852,000
      related to the acquisition of the Charter Oak portfolio by COROC. In association
      with the acquisition in 2005 of the final two-thirds interest in COROC, we
      recorded a reduction in the fair value of debt of $883,000 related to the
      mortgage assumed in the original COROC transaction. Also, in 2003 and as
      discussed in Note 10, we converted 78,701 of Series A Preferred Shares into
      709,078 limited partnership units.





*Accounting
      for Stock Based Compensation* -
      The
      Company may issue non-qualified share options and other share-based awards
      under
      the Amended and Restated Incentive Award Plan, or the Incentive Award Plan.
      The
      Operating Partnership will issue one common unit to the Company for every two
      common shares issued by the Company. Effective January 1, 2003, we adopted
      the
      fair value recognition provisions of Statement of Financial Accounting Standards
      No. 123, “Accounting for Stock-Based Compensation”, or FAS 123. Under the
      modified prospective method of adoption selected by us under the provisions
      of
      Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based
      Compensation-Transition and Disclosure - An Amendment of FAS 123”, or FAS 148,
      compensation cost recognized in 2003 is the same as that which would have been
      recognized had the recognition provisions of FAS 123 been applied from its
      original effective date. In accordance with this adoption method under FAS
      148,
      results for prior periods have not been restated.





*New
      Accounting Pronouncements* - In
      December 2004, the FASB issued SFAS No. 123R (Revised), “Share-Based Payment”
(“FAS 123R”). FAS 123R is a revision of FAS No. 123, “Accounting for Stock Based
      Compensation”, and supersedes APB 25. Among other items, FAS 123R eliminates the
      use of APB 25 and the intrinsic value method of accounting and requires
      companies to recognize the cost of employee services received in exchange for
      awards of equity instruments, based on the grant date fair value of those
      awards, in the financial statements. We adopted FAS 123R effective January
      1,
      2006 using a modified prospective application. FAS 123R, which provides certain
      changes to the method for valuing share-based compensation among other changes,
      will apply to new awards and to awards that are outstanding on the effective
      date and subsequently modified or cancelled. Compensation expense for
      outstanding awards for which the requisite service had not been rendered as
      of
      the effective date and which are ultimately expected to vest will be recognized
      over the remaining service period using the compensation cost calculated under
      FAS 123, which we adopted on January 1, 2003. We will incur additional expense
      during 2006 related to new awards granted during 2006 that cannot yet be
      quantified. We are in the process of determining how the guidance regarding
      valuing share-based compensation as prescribed in FAS 123R will be applied
      to
      valuing share-based awards granted after the effective date and the impact
      that
      the recognition of compensation expense related to such awards will have on
      our
      financial statements.





In
      March
      2005, the FASB issued Interpretation No. 47, “Accounting for Conditional
      Asset Retirement Obligations, an interpretation of FASB Statement No. 143”,
      which we refer to as FIN 47. FIN 47 refers to a legal obligation to perform
      an
      asset retirement activity in which the timing and/or method of settlement are
      conditional on a future event that may or may not be within the control of
      the
      entity. An entity is required to recognize a liability for the fair value of
      a
      conditional asset retirement obligation if the fair value of the liability
      can
      be reasonably estimated. The fair value of a liability for the conditional
      asset
      retirement obligation should be recognized when incurred, generally upon
      acquisition, construction, or development and through the normal operation
      of
      the asset. This interpretation is effective no later than the end of fiscal
      years ending December 31, 2005. Adoption did not have any effect on our
      consolidated financial statements.





In
      June
      2005, the FASB ratified the EITF’s consensus on Issue No. 04-5 “Determining
      Whether a General Partner, or the General Partners as a Group, Controls a
      Limited Partnership or Similar Entity When the Limited Partners Have Certain
      Rights”. This consensus establishes the presumption that general partners in a
      limited partnership control that limited partnership regardless of the extent
      of
      the general partners ownership interest in the limited partnership. The
      consensus further establishes that the rights of the limited partners can
      overcome the presumption of control by the general partners, if the limited
      partners have either (a) the substantive ability to dissolve (liquidate) the
      limited partnership or otherwise remove the general partners without cause
      or
      (b) substantive participating rights. Whether the presumption of control is
      overcome is a matter of judgment based on the facts and circumstances, for
      which
      the consensus provides additional guidance. This consensus is currently
      applicable to us for new or modified partnerships, and will otherwise be
      applicable to existing partnerships in 2006. This consensus applies to limited
      partnerships or similar entities, such as limited liability companies that
      have
      governing provisions that are the functional equivalent of a limited
      partnership. We believe this consensus will have no impact on the accounting
      treatment currently applied to our joint ventures.





F
          - 12


**3.**  **Acquisitions**





***COROC
      Holdings, LLC***




In
      December 2003, COROC, a joint venture in which we initially had a one-third
      ownership interest and have consolidated for financial reporting purposes under
      the provisions of FIN 46R, purchased the 3.3 million square foot Charter Oak
      portfolio of outlet center properties for $491.0 million, including the
      assumption of $186.4 million of cross-collateralized debt which has a stated,
      fixed interest rate of 6.59% and matures in July 2008. We recorded the debt
      at
      its fair value of $198.3 million, with an effective interest rate of 4.97%.
      Accordingly, a debt premium of $11.9 million was recorded and is being amortized
      over the life of the debt. We funded the majority of our share of the equity
      required for the transaction through the issuance of 4.6 million 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 19, 2003.





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





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


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





F
          -
          13


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





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





The
      following condensed pro forma (unaudited) information assumes the acquisition
      of
      the remaining two-thirds interest in COROC had occurred as of the beginning
      of
      each respective period and that the issuance of 3.0 million of the Company’s
      common shares, 2.2 million of the Company’s 7.5% Class C Cumulative Redeemable
      Preferred Shares, which we refer to as Class C Preferred Shares, and $250
      million of 6.15% senior unsecured notes also occurred as of the beginning of
      each respective period (in thousands except per unit data):





For
                the Year EndedDecember
                31,2005
            
            
            2004Revenues
            
            $
            203,753
            
            $
            195,791Net
                income
            
            $
            17,977
            
            $
            21,018**Basic
                earnings per unit:**Net
                income
            
            $
            .76
            
            $
            .94Weighted
                average common units outstanding
            
            
            18,226
            
            
            18,055**Diluted
                earnings per unit:**Net
                income
            
            $
            .76
            
            $
            .93Weighted
                average common units outstanding
            
            
            18,344
            
            
            18,150





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





***Locust
      Grove, Georgia***





During
      2005, we completed the construction of a 46,400 square foot expansion at our
      center located in Locust Grove, Georgia. Tenants include Polo/Ralph Lauren,
      Sketchers, Children's Place and others. Our Locust Grove center now totals
      approximately 294,000 square feet.





***Foley,
      Alabama***





During
      2005, we completed the construction of a 21,300 square foot expansion at our
      center located in Foley, Alabama. Tenants include Ann Taylor, Skechers, Tommy
      Hilfiger and others. The Foley center now totals approximately 557,000 square
      feet.





F
          - 14


***Charleston,
      South Carolina***





We
      have
      met our internal minimum pre-leasing requirements of 50% and closed on the
      acquisition of the land for a center located near Charleston, South Carolina.
      Construction is currently taking place and we expect the center to be
      approximately 350,000 square feet upon total build out with a scheduled opening
      date in late 2006.





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





Our
      investment in unconsolidated joint ventures as of December 31, 2005 and 2004
      was
      $13.0 million and $6.7 million, respectively. We have evaluated the accounting
      treatment for each of the joint ventures under the guidance of FIN 46(R) and
      have concluded based on the current facts and circumstances that the equity
      method of accounting should be used to account for the individual joint
      ventures. We are members of the following unconsolidated real estate joint
      ventures:





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





These
      investments are recorded initially at cost and subsequently adjusted for our
      net
      equity in the venture’s income (loss) and cash contributions and distributions.
      Our investments in real estate joint ventures are reduced by 50% of the profits
      earned for leasing and development services we provided to TWMB and Wisconsin
      Dells. The following management, leasing and development fees were recognized
      from services provided to TWMB and Wisconsin Dells during the year s
      ended
      December 31, 2005, 2004 and 2003 (in thousands):





Year
                Ended
              December
                31,2005
            2004
            2003Fee:Management
            
            $
                327
            $
                288
            $
                174Leasing
            
            6
            212
            214Development
            
            ---
            28
            9Total
                Fees
            
            $
                333
            $
                528
            $
                397





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 included in our
      investment in unconsolidated joint ventures and are amortized over the various
      useful lives of the related assets.





***TWMB
      Associates, LLC***





In
      September 2001, we established TWMB, a joint venture in which we have a 50%
      ownership interest, to construct and operate the Tanger Outlet Center in Myrtle
      Beach, South Carolina. We and our venture partner each contributed $4.3 million
      in cash for a total initial equity in TWMB of $8.6 million. In June 2002 the
      first phase opened with approximately 260,000 square feet. Since 2002 we have
      opened two additional phases with the final one opening in the summer of 2004.
      Total additional equity contributions for the second and third phases aggregated
      $2.8 million by each partner. The Myrtle Beach center now consists of
      approximately 402,000 square feet and has over 90 name brand tenants. The center
      cost approximately $51.1 million to construct.





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







F
          - 15


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





***Tanger
      Wisconsin Dells, LLC***





In
      March
      2005, we established Wisconsin Dells, a joint venture in which we have a 50%
      ownership interest, to construct and operate a Tanger Outlet center in Wisconsin
      Dells, Wisconsin. We and our venture partner each made an initial capital
      contribution of $50,000 to the joint venture in June 2005. During the fourth
      quarter of 2005, our venture partner contributed land to Wisconsin Dells with
      a
      value of approximately $5.7 million and we made an equal capital contribution
      to
      Wisconsin Dells of approximately $5.7 million in cash. Construction of the
      outlet center, which is currently expected to be approximately 265,000 square
      feet upon total build out, began during the fourth quarter of 2005 with a
      scheduled opening in the fourth quarter of 2006.





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





***Deer
      Park Enterprise, LLC***





In
      October 2003, Deer Park, a joint venture in which we have a one-third ownership
      interest, entered into a sale-leaseback transaction for the location on which
      it
      ultimately will develop a shopping center that will contain both outlet and
      big
      box retail tenants in Deer Park, New York.





In
      conjunction with the real estate purchase, Deer Park closed on a loan in the
      amount of $19 million due in October 2005 and a purchase money mortgage note
      with the seller in the amount of $7 million. In October 2005, Bank of America
      extended the maturity of the loan until October 2006. The loan with Bank of
      America incurs interest at a floating interest rate equal to LIBOR plus 2.00%
      and is collateralized by the property as well as joint and several guarantees
      by
      all three venture partners. The purchase money mortgage note bears no interest.
      However, interest has been imputed for financial statement purposes at a rate
      which approximates fair value.





The
      sale-leaseback transaction consisted of the sale of the property to Deer Park
      for $29 million which was being leased back to the seller under an operating
      lease agreement. At the end of the lease in May 2005, the tenant vacated the
      property. However, the tenant did not satisfy all of the conditions necessary
      to
      terminate the lease and Deer Park is currently in litigation to recover from
      the
      tenant its on-going monthly lease payments and will continue to do so until
      recovered. Annual rents due from the tenant are $3.4 million. Deer Park intends
      to demolish the building and begin construction of the shopping center as soon
      as these conditions are satisfied and Deer Park’s internal minimum pre-leasing
      requirements are met. During 2005, we made additional equity contributions
      totaling $1.4 million to Deer Park. Both of the other venture partners made
      equity contributions equal to ours during the periods described above.





Under
      the
      provisions of FASB Statement No. 67 “Accounting for Costs and Initial Rental
      Operations of Real Estate Projects”, current rents received from this project,
      net of applicable expenses, are treated as incidental revenues and will be
      recognized as a reduction in the basis of the assets, as opposed to rental
      revenues over the life of the lease, until such time that the current project
      is
      demolished and the intended assets are constructed.





F
          -
          16





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





**Summary
                Balance Sheets- Unconsolidated Joint Ventures**2005
            
            
            2004**Assets**Investment
                properties at cost, net
            
            $
            64,915
            
            $
            69,865Construction
                in progress
            
            
            15,734
            
            
            ---Cash
                and cash equivalents
            
            
            6,355
            
            
            2,449Deferred
                charges, net
            
            
            1,548
            
            
            1,973Other
                assets
            
            
            6,690
            
            
            2,826Total
                assets
            
            $
            95,242
            
            $
            77,113**Liabilities
                and Owners’ Equity**Mortgage
                payable
            
            $
            61,081
            
            $
            59,708Construction
                trade payables
            
            
            6,588
            
            
            578Accounts
                payable and other liabilities
            
            
            1,177
            
            
            702Total
                liabilities
            
            
            68,846
            
            
            60,988Owners’
                equity
            
            
            26,396
            
            
            16,125Total
                liabilities and owners’ equity
            
            $
            95,242
            
            $
            77,113








**Summary
                Statements of Operations- Unconsolidated Joint
                Ventures**2005
            2004
            2003**Revenues**
            $
                10,909
            $
                9,821
            $
                8,178**Expenses:**Property
                operating
            3,979
            3,539
            2,972General
                and administrative
            24
            31
            47Depreciation
                and amortization
            3,102
            2,742
            2,292Total
                expenses
            7,105
            6,312
            5,311**Operating
                income**
            3,804
            3,509
            2,867Interest
                expense
            2,161
            1,532
            1,371**Net
                income**
            $
                1,643
            $
                1,977
            $
                1,496**Tanger
                Properties Limited Partnership share of:**Net
                income
            $
                879
            $
                1,042
            $
                819Depreciation
                (real estate related)
            $
                1,493
            $
                1,334
            $
                1,101





F
          -
          17





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





***2006
      Transactions***





In
      December 2005, we reclassified as held for sale the assets of our property
      in
      Pigeon Forge, Tennessee which was sold in January 2006. 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 will continue
      to
      manage and lease the property for a fee. Based on the nature and amounts of
      the
      fees to be received, we have determined that our management relationship does
      not constitute a significant continuing involvement, and therefore we have
      shown
      the results of operations for all periods presented in discontinued
      operations.





The
      composition of the assets held for sale line item at December 31, 2005 consisted
      of $1.9 million of rental property, net; $687,000 of other assets and $73,000
      of
      deferred charges, net.





***2005
      Transactions***





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





***2004
      Transactions***





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





***2003
      Transactions***





In
      May
      and October 2003, we completed the sale of properties located in Martinsburg,
      West Virginia and Casa Grande, Arizona, respectively. Net proceeds received
      from
      the sales of these properties were approximately $8.7 million. We recorded
      a
      loss on sale of real estate of approximately $147,000 in discontinued
      operations.


F
          -
          18





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





**Summary
                Statements of Operations - Disposed Properties and Assets Held for
                Sale:**
            
            
            2005
            
            
            2004
            
            
            2003**Revenues:**Base
                rentals
            
            $
            1,075
            
            $
            2,495
            
            $
            4,997Percentage
                rentals
            
            
            1
            
            
            4
            
            
            36Expense
                reimbursements
            
            
            457
            
            
            1,050
            
            
            2,035Other
                income
            
            
            39
            
            
            66
            
            
            146Total
                revenues
            
            
            1,572
            
            
            3,615
            
            
            7,214**Expenses:**Property
                operating
            
            
            688
            
            
            1,549
            
            
            2,791General
                and administrative
            
            
            (3
            )
            
            ---
            
            
            (5
            )Depreciation
                and amortization
            
            
            244
            
            
            799
            
            
            1,802Total
                expenses
            
            
            929
            
            
            2,348
            
            
            4,588**Discontinued
                operations before****loss
                on sale of real estate**
            
            
            643
            
            
            1,267
            
            
            2,626Loss
                on sale of real estate included indiscontinued
                operations
            
            
            ---
            
            
            (1,460
            )
            
            (147
            )**Discontinued
                operations**
            
            
            643
            
            
            (193
            )
            
            2,479





***Outparcel
      Sales***





Gains
      on
      sale of outparcels are included in other income in the consolidated statements
      of operations. Cost is allocated to the outparcels based on the relative market
      value method. Below is a summary of outparcel sales that we completed during
      the
      years ended December 31, 2005 and 2004 (note there were no outparcel sales
      in
      2003) (in thousands, except number of outparcels):





2005
            2004Number
                of outparcels
            2
            5Net
                proceeds
            $1,853
            $2,897Gain
                on sale included in other income
            $1,554
            $1,510





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





Deferred
      charges as of December 31, 2005 and 2004 consists of the following (in
      thousands):





2005
            
            
            2004Deferred
                lease costs
            
            $
            21,246
            
            $
            18,731Below
                market leases
            
            
            (5,568
            )
            
            (879
            )Other
                intangibles
            
            
            77,142
            
            
            60,861Deferred
                financing costs
            
            
            7,505
            
            
            9,728100,325
            
            
            88,441Accumulated
                amortization
            
            
            (35,770
            )
            
            (29,590
            )$
            64,555
            
            $
            58,851





Amortization
      of deferred lease costs and other intangibles for the years ended December
      31,
      2005, 2004 and 2003 was $9,382,000, $11,700,000 and $2,162,000, respectively.
      Amortization of deferred financing costs, included in interest expense in the
      accompanying Consolidated Statements of Operations, for the years ended December
      31, 2005, 2004 and 2003 was $1,691,000, $1,454,000 and $1,304,000, respectively.




F
          -
          19





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





Year
            Amount2006
            $
                10,5282007
            8,1842008
            7,8932009
            7,7312010
            6,906Total
            $41,242





**8.
      Long-Term Debt**





Long-term
      debt at December 31, 2005 and 2004 consists of the following (in
      thousands):


2005
            2004Senior,
                unsecured notes:9.125%
                Senior, unsecured notes, maturing February 2008
            $
                100,000
            $
                100,0006.150%
                Senior, unsecured notes, maturing November 2015,net ofdiscount
                of $901
            249,099
            ---Unsecured
                note:Variable
                rate of LIBOR + .85%, maturing March 2008(1)
            53,500
            53,500Mortgage
                notes with fixed interest:9.77%,
                maturing April 2005
            ---
            13,8079.125%,
                maturing September 2005
            ---
            7,2914.97%,
                maturing July 2008, including net premium of $5,771 and $9,346,respectively
            185,788
            192,6817.875%,
                scheduled maturity April 2009, repaid in October 2005
            ---
            60,4087.98%,
                scheduled maturity April 2009, repaid in October 2005
            ---
            18,4338.86%,
                maturing September 2010
            15,445
            15,722Revolving
                lines of credit with variable interest rates of LIBOR +.85%, maturingJune
                2008(1)
            59,775
            26,165$
                663,607
            $
                488,007


(1)
            Depending
                on our investment grade rating, our revolving lines of credit variable
                interest rates can vary from either prime to prime + .50% or from
                LIBOR +
                .55% to LIBOR + 1.70% and our unsecured note from LIBOR + .65% to
                LIBOR +
                1.50%.





Certain
      of our properties, which had a net book value of approximately $506.6 million
      at
      December 31, 2005, serve as collateral for the fixed rate
      mortgages.





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





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





During
      2004, we retired $47.5 million of 7.875% unsecured notes which matured in
      October 2004 with proceeds from our property and land parcel sales and amounts
      available under our unsecured lines of credit. We also obtained the release
      of
      two properties which had been securing $53.5 million in mortgage loans with
      Wells Fargo Bank, thus creating an unsecured note with Wells Fargo Bank for
      the
      same face amount.





F
          - 20


As
      part
      of the COROC acquisition, we assumed $186.4 million of cross-collateralized
      debt
      which has a stated, fixed interest rate of 6.59% and matures in July 2008.
      We
      initially recorded the debt at its fair value of $198.3 million with an
      effective interest rate of 4.97%. Accordingly, a debt premium of $11.9 million
      was recorded and is being amortized over the life of the debt. When
      the
      remainder of the portfolio was acquired in November 2005, we recorded a debt
      discount of $883,000 with an effective interest rate of 5.25% to reflect the
      fair value of the debt deemed to have been acquired in the acquisition. The
      net
      premium had a recorded value of $5.8 million and $9.3 million as of December
      31,
      2005 and 2004, respectively.





During
      2005, we obtained an additional $25 million unsecured line of credit from Wells
      Fargo Bank, bringing the total committed unsecured lines of credit to $150
      million. In addition, we completed the extension of the maturity dates on all
      four of our unsecured lines of credit with Bank of America, Wachovia
      Corporation, Citigroup and Wells Fargo Bank until June of 2008. Amounts
      available under these facilities at December 31, 2005 totaled $90.2 million.
      Interest is payable based on alternative interest rate bases at our option.





The
      lines
      of credit 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, 2005 we were in compliance
      with all of our debt covenants.





Maturities
      of the existing long-term debt are as follows ($ in thousands):





Year
            
            
            Amount2006
            
            $
            3,8492007
            
            
            4,1212008
            
            
            386,3142009
            
            
            3942010
            
            
            14,059Thereafter
            
            
            250,000Subtotal
            
            
            658,737Net
                premium
            
            
            4,870Total
            
            $
            663,607





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





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





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





F
          - 21


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





In
      January 2003, an interest rate swap agreement with a notional amount of $25
      million, designated as a cash flow hedge in accordance with the provisions
      of
      FAS 133, expired as scheduled.





In
      accordance with our derivatives policy, these derivatives were designated as
      cash flow hedges and assessed for effectiveness at the time the contract was
      entered into and will be assessed for effectiveness on an on-going basis at
      each
      quarter end. Unrealized gains and losses related to the effective portion of
      our
      derivatives are recognized in other comprehensive income and gains or losses
      related to ineffective portions are recognized in the income statement. At
      December 31, 2005, 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, 2005. As of December 31, 2004, we
      did
      not hold any derivative financial instruments.




**Financial
                Instrument Type**
            Notional
                Value
            Rate
            Maturity
            
            Fair
                Value**TANGER
                PROPERTIES LIMITED PARTNERSHIP**US
                Treasury Lock
            $100,000,000
            4.526%
            July
                2008
            
            $ 
                358,0000US
                Treasury Lock
            $100,000,000
            4.715%
            July
                2008
            
            $
                (671,0000
            )**TWMB,
                ASSOCIATES, LLC**LIBOR
                Interest Rate Swap
            $35,000,000
            4.59%
            March
                2010
            
            $
                 181,0000





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, 2005 and 2004, 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 $670.0
      million and $508.5 million, respectively. The recorded values were $663.6
      million and $488.0 million, respectively, as of December 31, 2005 and
      2004.





**10.
      Partners’ Equity**





All
      proceeds from common and preferred share issuances by the Company are
      contributed to the Operating Partnership in exchange for common and preferred
      Operating Partnership units.





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





Also
      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 Class C Preferred Units to the Company in exchange for the proceeds.
      The proceeds were used to fund a portion of the COROC acquisition discussed
      in
      Note 4. The Company may not redeem its 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 its other securities. The Company
      pays annual dividends equal to $1.875 per share. If the Company redeems any
      Preferred Shares, the Operating Partnership will redeem an equivalent number
      of
      Preferred Units for the liquidation preference value of the Company’s Class C
      Preferred Shares.





F
          - 22


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





In
      June
      2003, the Company redeemed all of its outstanding Series A Preferred Shares
      held
      by the Preferred Stock Depositary in the form of Depositary Shares, each
      representing 1/10th of a Preferred Share. Since preferred units held by the
      Company’s majority owned subsidiary, Tanger LP Trust, are to be redeemed by us
      to the extent any Series A Preferred Shares are redeemed, proceeds required
      to
      redeem the Company’s Series A Preferred Shares were funded by us in exchange for
      the preferred units held by the Company. Likewise, preferred units were
      automatically converted to limited partnership units to the extent of any
      conversion of the Company’s Series A Preferred Shares into common shares. The
      redemption price was $250 per Preferred Share ($25 per Depositary Share), plus
      accrued and unpaid dividends, if any, to, but not including, the redemption
      date.





In
      lieu
      of receiving the cash redemption price, holders of the Depositary Shares, at
      their option, could exercise their right to convert each Depositary Share into
      1.802 common shares by following the instructions for, and completing the Notice
      of Conversion located on the back of their Depositary Share certificates. Those
      Depositary Shares, and the corresponding Series A Preferred Shares, that were
      converted to Company common shares did not receive accrued and unpaid dividends,
      if any, but were entitled to receive Company common dividends declared after
      the
      date on which the Depositary Shares were converted to Company common
      shares.




On
      or
      after the redemption date, the Depositary Shares, and the corresponding Series
      A
      Preferred Shares, were no longer deemed to be outstanding, dividends on the
      Depositary Shares, and the corresponding Series A Preferred Shares, ceased
      to
      accrue, and all rights of the holders of the Depositary Shares, and the
      corresponding Series A Preferred Shares, ceased, except for the right to receive
      the redemption price and accrued and unpaid dividends, without interest thereon,
      upon surrender of certificates representing the Depositary Shares, and the
      corresponding Series A Preferred Shares.





In
      total,
      787,008 of the Depositary Shares were converted into 1,418,156 common shares
      and
      the Company redeemed the remaining 14,889 Depositary Shares for $25 per share,
      plus accrued and unpaid dividends. Likewise, 78,101 preferred units were
      converted into 709,078 limited partnership units and we redeemed the remaining
      14,889 preferred units. We funded the redemption, totaling approximately
      $372,000, from cash flows from operations.  F
            -
            23




At
      December 31, 2005 and December 31, 2004, the ownership interests of the
      Operating Partnership consisted of the following:





2005
            2004Preferred
                units:Limited
                partner
            2,200,000
            ---Common
                units:General
                partner
            150,000
            150,000Limited
                partners
            18,257,663
            16,604,813******Total**
            18,407,663
            16,754,813





**11.
      Earnings Per Unit**





A
      reconciliation of the numerators and denominators in computing earnings per
      unit
      in accordance with Statement of Financial Accounting Standards No. 128,
“Earnings per Share”, for the years ended December 31, 2005, 2004 and 2003 is
      set forth as follows (in thousands, except per share amounts):





2005
            
            
            2004
            
            
            2003**NUMERATOR:**Income
                from continuing operations
            
            $
            10,124
            
            $
            8,819
            
            $
            13,920Loss
                on sale of real estate
            
            
            (4,690
            )
            
            ---
            
            
            ---Less
                applicable preferred unit distributions
            
            
            (538
            )
            
            ---
            
            
            (806
            )Income
                from continuing operations availableto
                common unitholders
            
            
            4,896
            
            
            8,819
            
            
            13,114Discontinued
                operations
            
            
            643
            
            
            (193
            )
            
            2,479Net
                income available to common unitholders
            
            $
            5,539
            
            $
            8,626
            
            $
            15,593**DENOMINATOR:**Basic
                weighted average common units
            
            
            17,223
            
            
            16,555
            
            
            13,085Effect
                of outstanding unit options
            
            
            81
            
            
            80
            
            
            215Effect
                of unvested restricted share awards
            
            
            37
            
            
            15
            
            
            ---Diluted
                weighted average common units
            
            
            17,341
            
            
            16,650
            
            
            13,300**Basic
                earnings per common unit:**Income
                from continuing operations
            
            $
            .28
            
            $
            .53
            
            $
            1.00Discontinued
                operations
            
            
            .04
            
            
            (.01
            )
            
            .19Net
                income
            
            $
            .32
            
            $
            .52
            
            $
            1.19**Diluted
                earnings per common unit:**Income
                from continuing operations
            
            $
            .28
            
            $
            .53
            
            $
            .99Discontinued
                operations
            
            
            .04
            
            
            (.01
            )
            
            .18Net
                income
            
            $
            .32
            
            $
            .52
            
            $
            1.17





Options
      to purchase units excluded from the computation of diluted earnings per unit
      during 2005 and 2004 because the exercise price was greater than the average
      market price of the Company’s common shares totaled approximately 750 and 119
      units, respectively. During 2003 there were no options excluded from the
      computation. The assumed conversion of the Series A Preferred Shares as of
      the
      beginning of 2003 year would have been anti-dilutive.





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


F
          -
          24





**12.
      Employee Benefit Plans**





During
      the second quarter of 2004, the Company’s Board of Directors approved amendments
      to the Company’s Share Option Plan to add restricted shares and other
      share-based grants to the Plan, to merge the Operating Partnership’s Unit Option
      Plan into the Share Option Plan and to rename the Plan as the Amended and
      Restated Incentive Award Plan, which we refer to as the Incentive Award Plan.
      The Incentive Award Plan was approved by a vote of shareholders at the Company’s
      Annual Shareholders’ Meeting. The Company’s Board of Directors approved the
      grant of 212,250 restricted Company common shares to the independent directors
      and certain executive officers of the Company in April 2004 which vests ratably
      over 3 years in the case of independent directors and over 6 years in the case
      of certain executive officers. The Company receives one unit from the Operating
      Partnership for every two restricted shares issued by the Company. As a result
      of the granting of the restricted Company common shares, we recorded deferred
      compensation of $4.1 million in the partners’ equity section of the consolidated
      balance sheet.





In
      March
      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 of the Company. As a result of the granting of the restricted common
      shares, we recorded deferred compensation of $3.1 million in the partners’
equity section of the consolidated balance sheet. Compensation expense related
      to the amortization of the deferred compensation amount is being recognized
      in
      accordance with the vesting schedule of the restricted shares. The independent
      directors’ restricted common shares vest ratably over a three year period. The
      executive officer’s restricted common shares vest over a five year period with
      50% of the award vesting ratably over that period and 50% vesting based on
      the
      attainment of certain market performance criteria.





We
      may
      issue up to 3.0 million units under the Incentive Award Plan. We have granted
      1,801,350 unit options, net of options forfeited, and 175,125 restricted unit
      awards through December 31, 2005. Under the plan, the option exercise price
      is
      determined by the Share and Unit Option Committee of the Board of Directors.
      Non-qualified share and unit options granted 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. Each unit received upon exercise
      of
      unit options is exchangeable for two common shares of the Company. For the
      years
      ended December 31, 2005, 2004 and 2003 total compensation expense recognized
      in
      the consolidated statements of operations for share and unit-based employee
      compensation awards was $1.6 million, $1.5 million and $102,000,
      respectively.





The
      fair
      value of each option grant is estimated on the date of grant using the
      Black-Scholes option pricing model with the following weighted-average
      assumptions used for the grants in 2004 and 2005: expected dividend yield
      ranging from 5.3% to 6.5%; expected life of 7 years; expected volatility of
      23%;
      and risk-free interest rates ranging from 3.71% to 3.99%. There were no option
      grants in 2003.





Options
      outstanding at December 31, 2005 had the following exercise prices, weighted
      average exercise prices and weighted average remaining contractual
      lives:





Options
                Outstanding
            Options
                ExercisableWeighted
                averageWeighted
                average
            remaining
                contractual
            
            Weighted
                averageRange
                of exercise prices
            Options
            exercise
                price
            life
                in years
            Options
            exercise
                price$18.625
                to $24.25
            39,040
            $
                19.90
            3.65
            39,040
            $
                19.90$30.125
                to $38.76
            31,000
            34.30
            5.07
            19,000
            31.49$38.83
                to $47.92
            246,080
            38.98
            8.33
            41,950
            38.95316,120
            $36.16
            7.43
            99,990
            $30.09




F
          -
          25


A
      summary
      of the status of the plan at December 31, 2005, 2004 and 2003 and changes during
      the years then ended is presented in the table and narrative below:


**2005**
              
              **2004**
              
              **2003**Wtd
                  Avg
              
              
              
              Wtd
                  Avg
              
              
              
              Wtd
                  AvgUnits
              
              Ex.
                  Price
              
              Units
              
              Ex.
                  Price
              
              Units
              
              Ex.
                  PriceOutstanding
                  at beginning of year
              409,060
              
              $34.38
              
              427,560
              
              $25.44
              
              1,318,700
              
              $23.90Grant
              1,250
              
              47.92
              
              302,700
              
              38.90
              
              ---
              
              ---Exercised
              (83,850
              )
              27.28
              
              (309,740
              )
              26.36
              
              (890,540
              )
              23.16Forfeited
              (10,340
              )
              38.84
              
              (11,460
              )
              37.38
              
              (600
              )
              18.64Outstanding
                  at end of year
              316,120
              
              $36.16
              
              409,060
              
              $34.38
              
              427,560
              
              $25.44Exercisable
                  at end of year
              99,990
              
              $30.10
              
              72,460
              
              $25.76
              
              293,060
              
              $28.04Weighted
                  average fair valueof
                  options granted
              
              
              $6.62
              
              
              
              $4.36
              
              
              
              $---


We
      have a
      qualified retirement plan, with a salary deferral feature designed to qualify
      under Section 401 of the Code (the “401(k) Plan”), which covers substantially
      all of our officers and employees. The 401(k) Plan permits our employees, in
      accordance with the provisions of Section 401(k) of the Code, to defer up to
      20%
      of their eligible compensation on a pre-tax basis subject to certain maximum
      amounts. Employee contributions are fully vested and are matched by us at a
      rate
      of compensation deferred to be determined annually at our discretion. The
      matching contribution is subject to vesting under a schedule providing for
      20%
      annual vesting starting with the second year of employment and 100% vesting
      after six years of employment. The employer matching contribution expense for
      the years ended 2005, 2004 and 2003 were approximately $102,000, $87,000 and
      $76,000, respectively.





**13.**  **Other
      Comprehensive Income**





Total
      comprehensive income for the years ended December 31, 2005, 2004 and 2003 is
      as
      follows (in thousands):





2005
            
            
            2004
            
            
            2003Net
                income
            
            $
            6,077
            
            $
            8,626
            
            $
            16,399Other
                comprehensive income:Payments
                received (gain) in settlement of $125 million(notional
                amount) of US treasury rate lock
            
            
            3,224
            
            
            ---
            
            
            ---Reclassification
                adjustment for amortization of gain onsettlement
                of US treasury rate lock included in net income
            
            
            (40
            )
            
            ---
            
            
            ---Change
                in fair value of treasury rate locks,
            
            
            (313
            )
            
            ---
            
            
            ---Change
                in fair value of our portion of TWMB cash flow hedge
            
            
            91
            
            
            82
            
            
            57Change
                in fair value of cash flow hedge
            
            
            ---
            
            
            ---
            
            
            98Other
                comprehensive income
            
            
            2,962
            
            
            82
            
            
            155Total
                comprehensive income
            
            $
            9,039
            
            $
            8,708
            
            $
            16,554





**14.
      Supplementary Income Statement Information**





The
      following amounts are included in property operating expenses for the years
      ended December 31, 2005, 2004 and 2003 (in thousands):





2005
            2004
            2003Advertising
                and promotion
            $
                16,211
            $
                15,287
            $
                9,834Common
                area maintenance
            28,404
            25,071
            14,765Real
                estate taxes
            12,930
            12,454
            8,969Other
                operating expenses
            6,547
            6,161
            4,754$
                64,092
            $
                58,973
            $
                38,322


F
          -
          26





**15.
      Lease Agreements**





We
      are
      the lessor of over 1,800 stores in our 31 wholly owned factory outlet centers,
      under operating leases with initial terms that expire from 2006 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, 2005 are
      as
      follows (in thousands):





2006
            $
                115,2792007
            96,5492008
            74,8672009
            56,0992010
            34,422Thereafter
            42,878$
                420,094




F
          - 27


**16.**  **Commitments
      and Contingencies**





We
      purchased the rights to lease land on which two of the outlet centers are
      situated for $1.5 million. These leasehold rights are being amortized on a
      straight-line basis over 30 and 40 year periods, respectively. Accumulated
      amortization was $860,000 and $811,000 at December 31, 2005 and 2004,
      respectively.





Our
      non-cancelable operating leases, with initial terms in excess of one year,
      have
      terms that expire from 2006 to 2085. Annual rental payments for these leases
      totaled approximately $2,949,000, $2,927,000 and $2,572,000, for the years
      ended
      December 31, 2005, 2004 and 2003, respectively. Minimum lease payments for
      the
      next five years and thereafter are as follows (in thousands):





2006
            $
                3,1152007
            2,9882008
            2,6592009
            2,2712010
            2,024Thereafter
            83,420$
                96,477





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.





Commitments
      to complete construction of properties and other capital expenditure
      requirements amounted to approximately $34.4 million at December 31, 2005.
      Commitments for construction represent only those costs contractually required
      to be paid by us.





**17.
      Subsequent Events**





In
      January 2006, we completed the sale of our property located 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. The property was classified as assets held for
      sale
      as of December 31, 2005 and its results of operations included in discontinued
      operations.





In
      February 2006, we received the net proceeds from the Company’s completed sale of
      an additional 800,000 Class C Preferred Shares at a price of $24.51 per share.
      The net proceeds were approximately $19.5 million and were used to repay amounts
      outstanding on our unsecured lines of credit.


F
          -
          28


**TANGER
      PROPERTIES LIMITED PARTNERSHIP and SUBSIDIARIES**


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


**For
      the Year Ended December 31, 2005** (In
      thousands)


**Description**
            
            **Initial
                cost to Company**
            **Costs
                Capitalized**
              **Subsequent
                to Acquisition**
              **(Improvements)**
            **Gross
                Amount Carried at Close of Period**
              **12/31/05
                (1)****Outlet
                Center Name**
            **Location**
            **Encum-brances**
              **(4)**
            **Land**
            **Buildings,**
              **Improve-ments
                & Fixtures**
            **Land**
            **Buildings**
              **Improve-ments**
              **&
                Fixtures**
            **Land**
            **Buildings,**
              **Improve-ments
                & Fixtures**
            **Total**
            **Accumulated**
              **Depreciation**
            **Date
                of**
              **Construction**
            **Life
                Used to**
              **Compute**
              **Depreciation**
              **in
                Income**
              **Statement****Barstow**
            **Barstow,
                CA**
            **$
                ---**
            **$
                3,672**
            **$
                12,533**
            **$
                ---**
            **$6,286**
            **$3,672**
            **$18,819**
            **$22,491**
            **$8,028**
            **1995**
            **(2)****Blowing
                Rock**
            **Blowing
                Rock, NC**
            **9,201**
            **1,963**
            **9,424**
            **---**
            **3,118**
            **1,963**
            **12,542**
            **14,505**
            **3,615**
            **1997
                (3)**
            **(2)****Boaz**
            **Boaz,
                AL**
            **---**
            **616**
            **2,195**
            **---**
            **2,350**
            **616**
            **4,545**
            **5,161**
            **3,009**
            **1988**
            **(2)****Branson**
            **Branson,
                MO**
            **---**
            **4,407**
            **25,040**
            **---**
            **9,275**
            **4,407**
            **34,315**
            **38,722**
            **17,466**
            **1994**
            **(2)****Charleston**
            **Charleston,
                SC**
            **---**
            **9,987**
            **13,436**
            **---**
            **---**
            **9,987**
            **13,436**
            **23,423**
            **---**
            **Under
                const.**
            **--****Commerce
                I**
            **Commerce,
                GA**
            **---**
            **755**
            **3,511**
            **492**
            **12,533**
            **1,247**
            **16,044**
            **17,291**
            **7,732**
            **1989**
            **(2)****Commerce
                II**
            **Commerce,
                GA**
            **---**
            **1,262**
            **14,046**
            **541**
            **21,626**
            **1,803**
            **35,672**
            **37,475**
            **13,873**
            **1995**
            **(2)****Foley**
            **Foley,
                AL**
            **31,503**
            **4,400**
            **82,410**
            **693**
            **15,503**
            **5,093**
            **97,913**
            **103,006**
            **5,801**
            **2003
                (3)**
            **(2)****Gonzales**
            **Gonzales,
                LA**
            **---**
            **679**
            **15,895**
            **---**
            **6,332**
            **679**
            **22,227**
            **22,906**
            **13,334**
            **1992**
            **(2)****Hilton
                Head**
            **Blufton,
                SC**
            **18,069**
            **9,900**
            **41,504**
            **469**
            **1,832**
            **10,369**
            **43,336**
            **53,705**
            **3,327**
            **2003
                (3)**
            **(2)****Howell**
            **Howell,
                MI**
            **---**
            **2,250**
            **35,250**
            **---**
            **1,457**
            **2,250**
            **36,707**
            **38,957**
            **4,153**
            **2002
                (3)**
            **(2)****Kittery-I**
            **Kittery,
                ME**
            **---**
            **1,242**
            **2,961**
            **229**
            **1,671**
            **1,471**
            **4,632**
            **6,103**
            **3,308**
            **1986**
            **(2)****Kittery-II**
            **Kittery,
                ME**
            **---**
            **1,450**
            **1,835**
            **---**
            **726**
            **1,450**
            **2,561**
            **4,011**
            **1,551**
            **1989**
            **(2)****Lancaster**
            **Lancaster,
                PA**
            **---**
            **3,691**
            **19,907**
            **---**
            **13,333**
            **3,691**
            **33,240**
            **36,931**
            **14,887**
            **1994
                (3)**
            **(2)****Lincoln
                City**
            **Lincoln
                City, OR**
            **10,171**
            **6,500**
            **28,673**
            **268**
            **1,473**
            **6,768**
            **30,146**
            **36,914**
            **2,266**
            **2003
                (3)**
            **(2)****Locust
                Grove**
            **Locust
                Grove, GA**
            **---**
            **2,558**
            **11,801**
            **---**
            **15,353**
            **2,558**
            **27,154**
            **29,712**
            **10,211**
            **1994**
            **(2)****Myrtle
                Beach 501**
            **Myrtle
                Beach, SC**
            **22,367**
            **10,236**
            **57,094**
            **---**
            **8,424**
            **10,236**
            **65,518**
            **75,754**
            **4,110**
            **2003
                (3)**
            **(2)****Nags
                Head**
            **Nags
                Head, NC**
            **6,244**
            **1,853**
            **6,679**
            **---**
            **3,046**
            **1,853**
            **9,725**
            **11,578**
            **3,210**
            **1997
                (3)**
            **(2)****North
                Branch**
            **North
                Branch, MN**
            **---**
            **243**
            **5,644**
            **88**
            **4,170**
            **331**
            **9,814**
            **10,145**
            **6,383**
            **1992**
            **(2)****Park
                City**
            **Park
                City, UT**
            **12,309**
            **6,900**
            **33,597**
            **343**
            **7,436**
            **7,243**
            **41,033**
            **48,276**
            **2,512**
            **2003
                (3)**
            **(2)****Rehoboth**
            **Rehoboth
                Beach, DE**
            **38,524**
            **20,600**
            **74,209**
            **1,876**
            **17,795**
            **22,476**
            **92,004**
            **114,480**
            **5,240**
            **2003
                (3)**
            **(2)****Riverhead**
            **Riverhead,
                NY**
            **---**
            **---**
            **36,374**
            **6,152**
            **75,781**
            **6,152**
            **112,155**
            **118,307**
            **42,526**
            **1993**
            **(2)****San
                Marcos**
            **San
                Marcos, TX**
            **---**
            **1,801**
            **9,440**
            **16**
            **39,246**
            **1,817**
            **48,686**
            **50,503**
            **18,579**
            **1993**
            **(2)****Sanibel**
            **Sanibel,
                FL**
            **---**
            **4,916**
            **23,196**
            **---**
            **6,847**
            **4,916**
            **30,043**
            **34,959**
            **6,988**
            **1998
                (3)**
            **(2)****Sevierville**
            **Sevierville,
                TN**
            **---**
            **---**
            **18,495**
            **---**
            **35,107**
            **---**
            **53,602**
            **53,602**
            **15,376**
            **1997
                (3)**
            **(2)****Seymour**
            **Seymour,
                IN**
            **---**
            **1,114**
            **2,143**
            **---**
            **---**
            **1,114**
            **2,143**
            **3,257**
            **1,554**
            **1994**
            **(2)****Terrell**
            **Terrell,
                TX**
            **---**
            **708**
            **13,432**
            **---**
            **6,621**
            **708**
            **20,053**
            **20,761**
            **10,800**
            **1994**
            **(2)****Tilton**
            **Tilton,
                NH**
            **12,709**
            **1,800**
            **24,838**
            **29**
            **2,198**
            **1,829**
            **27,036**
            **28,865**
            **1,835**
            **2003
                (3)**
            **(2)****Tuscola**
            **Tuscola,
                IL**
            **19,739**
            **1,600**
            **15,428**
            **43**
            **38**
            **1,643**
            **15,466**
            **17,109**
            **1,336**
            **2003
                (3)**
            **(2)****West
                Branch**
            **West
                Branch, MI**
            **---**
            **319**
            **3,428**
            **120**
            **8,083**
            **439**
            **11,511**
            **11,950**
            **5,349**
            **1991**
            **(2)****Westbrook**
            **Westbrook,
                CT**
            **14,626**
            **6,264**
            **26,991**
            **4,233**
            **1,127**
            **10,497**
            **28,118**
            **38,615**
            **2,419**
            **2003
                (3)**
            **(2)****Williamsburg**
            **Williamsburg,
                IA**
            **---**
            **706**
            **6,781**
            **718**
            **15,187**
            **1,424**
            **21,968**
            **23,392**
            **12,987**
            **1991**
            **(2)****$
                195,462**
            **$114,392**
            **$678,190**
            **$16,310**
            **$343,974**
            **$130,702**
            **$1,022,164**
            **$1,152,866**
            **$253,765**


(1)  Aggregate cost for federal income tax purposes is approximately $934,645. Land,
      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 $5,771.







F
            -
            29


**TANGER
      PROPERITES LIMITED PARTNERSHIP and SUBSIDIARIES**


**SCHEDULE
      III - (Continued)**


**REAL
      ESTATE AND ACCUMULATED DEPRECIATION**


**For
      the Year Ended December 31, 2005**


**(In
      Thousands)**





The
      changes in total real estate for the three years ended December 31, 2005 are
      as
      follows:





2005
            
            
            2004
            
            
            2003Balance,
                beginning of year
            
            $
            1,077,393
            
            $
            1,078,553
            
            $
            622,399Acquisition
                of real estate
            
            
            47,369
            
            
            ---
            
            
            463,875Improvements
            
            
            45,684
            
            
            23,420
            
            
            9,342Dispositions
                and assets held for sale
            
            
            (17,580
            )
            
            (24,580
            )
            
            (17,063
            )Balance,
                end of year
            
            $
            1,152,866
            
            $
            1,077,393
            
            $
            1,078,553








The
      changes in accumulated depreciation for the three years ended December 31,
      2005
      are as follows:





2005
            
            
            2004
            
            
            2003Balance,
                beginning of year
            
            $
            224,622
            
            $
            192,698
            
            $
            174,199Depreciation
                for the period
            
            
            38,137
            
            
            38,968
            
            
            27,211Dispositions
                and assets held for sale
            
            
            (8,994
            )
            
            (7,044
            )
            
            (8,712
            )Balance,
                end of year
            
            $
            253,765
            
            $
            224,622
            
            $
            192,698






F
      -
      30