The discussion of our results of operations reported in the unaudited, consolidated statements of operations compares the three and nine months ended September 30, 2008 with the three and nine months ended September 30, 2007. The following discussion should be read in conjunction with the unaudited consolidated financial statements appearing elsewhere in this report. Historical results and percentage relationships set forth in the unaudited, consolidated statements of operations, including trends which might appear, are not necessarily indicative of future operations. Unless the context indicates otherwise, the term "Company" refers to Tanger Factory Outlet Centers, Inc. and subsidiaries and the term "Operating Partnership" refers to Tanger Properties Limited Partnership and subsidiaries. The terms "we", "our" and "us" refer to the Company or the Company and the Operating Partnership together, as the text requires.

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 for 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" in our Annual Report on Form 10-K for the year ended December 31, 2007 as well as Part II, Item 1A - "Risk Factors" of this quarterly report on Form 10-Q for the quarter ended September 30, 2008.

General Overview

At September 30, 2008, our consolidated portfolio included 30 wholly owned
outlet centers in 21 states totaling 8.8 million square feet compared to 30
wholly owned outlet centers in 21 states totaling 8.4 million square feet at
September 30, 2007. The changes in the number of outlet centers, square feet and
number of states are due to the following events:

                                No. of  Square Feet
                                Centers     (000's) States
As of September 30, 2007             30       8,363     21
  New development:
    Washington, Pennsylvania          1         371    ---
  Center expansions:
    Barstow, California             ---          62    ---
    Branson, Missouri               ---          25    ---
    Foley, Alabama                  ---          25    ---
    Gonzales, Louisiana             ---          39    ---
    Tilton, New Hampshire           ---          18    ---
  Dispositions:
    Boaz, Alabama                   (1)        (80)    ---
As of September 30, 2008             30       8,823     21

The following table summarizes certain information for our existing outlet centers in which we have an ownership interest as of September 30, 2008. Except as noted, all properties are fee owned.

Location                                Square                 %
Wholly Owned Properties                  Feet               Occupied
Riverhead, New York (1)                729,315                 99
Rehoboth Beach, Delaware (1)           568,869                100
Foley, Alabama                         557,185                 94
San Marcos, Texas                      442,006                 99
Myrtle Beach Hwy 501, South Carolina   426,417                 92
Sevierville, Tennessee (1)             419,038                100
Hilton Head, South Carolina            393,094                 88
Washington, Pennsylvania(2)            370,526                 86
Charleston, South Carolina             352,315                 95
Commerce II, Georgia                   347,025                 98
Howell, Michigan                       324,631                 97
Branson, Missouri                      302,992                100
Park City, Utah                        300,891                 98
Locust Grove, Georgia                  293,868                100
Westbrook, Connecticut                 291,051                 99
Gonzales, Louisiana                    282,403                100
Williamsburg, Iowa                     277,230                100
Lincoln City, Oregon                   270,280                100
Tuscola, Illinois                      256,514                 80
Lancaster, Pennsylvania                255,152                100
Tilton, New Hampshire                  245,563                100
Fort Myers, Florida                    198,950                 92
Commerce I, Georgia                    185,750                 72
Terrell, Texas                         177,800                100
Barstow, California                    171,300                100
West Branch, Michigan                  112,120                100
Blowing Rock, North Carolina           104,235                100
Nags Head, North Carolina               82,178                100
Kittery I, Maine                        59,694                100
Kittery II, Maine                       24,619                100
Totals                               8,823,011                    97(2)

Unconsolidated Joint Ventures
Myrtle Beach Hwy 17, South Carolina (1) 402,442 100 Wisconsin Dells, Wisconsin 264,929 99

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

(2) Excludes the occupancy rate at our Washington, Pennsylvania outlet center which opened during the third quarter of 2008 and has not yet stabilized.

RESULTS OF OPERATIONS

Comparison of the three months ended September 30, 2008 to the three months ended September 30, 2007

Base rentals increased $3.3 million, or 9%, in the 2008 period compared to the 2007 period. Our base rental income increase was due mainly to increases in rental rates on lease renewals and incremental rents from re-tenanting vacant space. In addition, since September 30, 2007 we have added approximately 169,000 square feet of expansion space at existing outlet centers. During the 2008 period, we executed 33 leases totaling 133,000 square feet at an average increase of 30% in base rental rates. This compares to our execution of 76 leases totaling 277,000 square feet at an average increase of 23% in base rental rates during the 2007 period.

Approximately $784,000 of the base rent increase was due to the opening of our outlet center in Washington, Pennsylvania during the 2008 period. In addition, the amount of termination fees recognized in the 2008 period was approximately $430,000 higher when compared to the 2007 period from several tenants that terminated their lease prior to the expiration of its term. Payments received from the early termination of leases are recognized as revenue from the time the payment is receivable until the tenant vacates the space.

The values assigned at the acquisition date to 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 base rental income over the remaining term of the associated lease. For the 2008 period, we recorded additional base rental income of approximately $135,000 for the net amortization of acquired lease values compared with approximately $277,000 of additional base rental income for the 2007 period. If a tenant vacates its space prior to the contractual termination of the lease and no rental payments are being made on the lease, any unamortized balance of the related above or below market lease value will be written off and could materially impact our net income positively or negatively. At September 30, 2008, the net liability representing the amount of unrecognized market lease values totaled approximately $688,000.

Percentage rentals, which represent revenues based on a percentage of tenants' sales volume above predetermined levels (the "breakpoint"), decreased $494,000 or 21% from the 2007 period to the 2008 period. Sales were negatively impacted by the general weakness in the US economy, as well as severe weather and hurricanes during the 2008 period. Also, two outlet centers have been undergoing major reconfiguration projects this year which has severely impacted tenant sales at these outlet centers. Excluding these two centers, reported same-space sales per square foot for the rolling twelve months ended September 30, 2008 were $341 per square foot, as compared to $340 per square foot for the rolling twelve months ended September 30, 2007. 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. In addition, a significant number of tenants that renewed their leases renewed at much higher base rental rates and, accordingly, had increases to their contractual breakpoint levels used in determining their percentage rentals. This essentially transformed a variable rent component into a fixed rent component.

Expense reimbursements, which represent the contractual recovery from tenants of certain common area maintenance, insurance, property tax, promotional, advertising and management expenses, generally fluctuate consistently with the reimbursable property operating expenses to which they relate. Expense reimbursements, expressed as a percentage of property operating expenses, were 88% and 87% in the 2008 and 2007 periods, respectively.

Property operating expenses increased $1.5 million, or 8%, in the 2008 period as compared to the 2007 period. Our Washington, PA center that opened during the period accounted for $894,000 of the increase. The remainder of the increase was due mainly to an increase in common area maintenance projects across the portfolio in the 2008 period and increases in payroll related costs.

General and administrative expenses increased $1.3 million, or 26%, in the 2008 period as compared to the 2007 period. As a percentage of total revenues, general and administrative expenses were 10% and 8% in the 2008 and 2007 periods, respectively. The increase is primarily due to the amortization of share based compensation from restricted shares issued in February 2008. In addition, the bonus accrual for the 2008 period is higher at this point in the year compared to the 2007 period based on an increase in the eligible average bonus percentage for executives.

Depreciation and amortization increased $379,000, or 3%, in the 2008 period compared to the 2007 period. The Washington, PA outlet center, which opened and was placed in service during the 2008 period, accounted for approximately $356,000 of the increase. In addition, the 2008 period includes incremental depreciation from expansion assets placed in service during the fourth quarter of 2007 at several existing outlet centers throughout the portfolio. The 2007 period included the reconfiguration of our outlet center in Foley, Alabama. As a part of that plan, approximately 40,000 square feet of gross leasable area was relocated within the property. The depreciable useful lives of the buildings demolished were shortened to coincide with their demolition dates throughout the first three quarters of 2007 and thus the change in estimated useful life was accounted for as a change in accounting estimate. Approximately 7,500 square feet was demolished during the third quarter of 2007 as scheduled. Accelerated depreciation recognized on the buildings demolished during the third quarter of 2007 totaled $476,000, net of minority interest of approximately $93,000. The effect on diluted earnings per share was a decrease of $.02 per share for the three months ended September 30, 2007.

Interest expense decreased $940,000, or 9%, in the 2008 period compared to the 2007 period. During June of 2008, we entered into a $235.0 million unsecured three year term loan facility. The proceeds from this transaction were used to repay the $170.7 million secured mortgage and amounts outstanding under our unsecured lines of credit. Our unsecured lines of credit had been utilized in February 2008 to repay our $100.0 million, 9.125% unsecured senior notes. The above transactions resulted in a lower weighted average borrowing rate on a comparable basis between the 2008 and 2007 periods, which more than offset the increase in average debt outstanding from our expansion and development activities.

Equity in earnings of unconsolidated joint ventures increased due to increases in rental rates on lease renewals at Myrtle Beach Hwy 17 and lower interest rates at Wisconsin Dells related to its variable interest rate mortgage.

Comparison of the nine months ended September 30, 2008 to the nine months ended September 30, 2007

Base rentals increased $7.8 million, or 7%, in the 2008 period compared to the 2007 period. Our base rental income increase was due mainly to increases in rental rates on lease renewals and incremental rents from re-tenanting vacant space. In addition, since September 30, 2007 we have added approximately 169,000 square feet of expansion space at existing outlet centers. During the 2008 period, we executed 351 leases totaling 1.5 million square feet at an average increase of 26% in base rental rates. This compares to our execution of 414 leases totaling 1.7 million square feet at an average increase of 22% in base rental rates during the 2007 period.

Approximately $784,000 of the base rent increase was due to the opening of our outlet center in Washington, Pennsylvania during the 2008 period. The amount of termination fees recognized in the 2008 period was $493,000 higher when compared to the 2007 period from several tenants that terminated their lease prior to the expiration of its term. Payments received from the early termination of leases are recognized as revenue from the time the payment is receivable until the tenant vacates the space.

The values assigned at the acquisition date to 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 base rental income over the remaining term of the associated lease. For the 2008 period, we recorded additional base rental income of $228,000 for the net amortization of acquired lease values compared with $877,000 of additional base rental income for the 2007 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. During the 2008 period, two specific tenants vacated their space prior to the contractual termination of the leases causing us to record a reduction of base rental income associated with their above market leases of approximately $383,000. At September 30, 2008, the net liability representing the amount of unrecognized market lease values totaled $688,000.

Expense reimbursements, which represent the contractual recovery from tenants of certain common area maintenance, insurance, property tax, promotional, advertising and management expenses, generally fluctuate consistently with the reimbursable property operating expenses to which they relate. Expense reimbursements, expressed as a percentage of property operating expenses, were 90% and 88% in the 2008 and 2007 periods, respectively.

Property operating expenses increased $3.5 million, or 7%, in the 2008 period as compared to the 2007 period. Our Washington, PA center that opened during the period accounted for $894,000 of the increase. The remainder of the increase was due mainly to an increase in common area maintenance projects across the portfolio in the 2008 period. We experienced higher snow removal costs at several of our properties in 2008 versus 2007 and several high performing centers experienced significant property tax increases upon revaluation since September 30, 2007. In addition, mall operation costs increased due to normal payroll related increases.

General and administrative expenses increased $3.1 million, or 22%, in the 2008 period as compared to the 2007 period. As a percentage of total revenues, general and administrative expenses were 10% and 8% in the 2008 and 2007 periods, respectively. The increase is primarily due to the amortization of share based compensation from restricted shares issued in late February 2008 and February 2007. In addition, the bonus accrual for the 2008 period is higher at this point in the year compared to the 2007 period based on an increase in the eligible average bonus percentage for executives.

Depreciation and amortization decreased $3.3 million, or 7%, in the 2008 period compared to the 2007 period. During the first quarter of 2007, our Board of Directors formally approved a plan to reconfigure our center in Foley, Alabama. As a part of this plan, approximately 40,000 square feet of gross leasable area was relocated within the property. The depreciable useful lives of the buildings demolished were shortened to coincide with their demolition dates throughout the first three quarters of 2007 and thus the change in estimated useful life was accounted for as a change in accounting estimate. Accelerated depreciation recognized on the buildings demolished during the first nine months of 2007 totaled $5.0 million, net of minority interest of approximately $977,000, for the nine months ended September 30, 2007. The effect on diluted earnings per share was a decrease of $.16 per share for the nine months ended September 30, 2007. The expected decrease in expense from the 2007 period from the acceleration was partially offset by additional depreciation from expansion assets placed in service during the fourth quarter of 2007 at several existing outlet centers and from the Washington, PA outlet center, which opened during the 2008 period.

Interest expense decreased $2.0 million, or 7%, in the 2008 period compared to the 2007 period. During June of 2008 we entered into a $235.0 million unsecured three year term loan facility. The proceeds from this transaction were used to repay a $170.7 million secured mortgage and amounts outstanding under our unsecured lines of credit. Our unsecured lines of credit had been utilized in February 2008 to repay our $100.0 million, 9.125% unsecured senior notes. The above transactions resulted in a lower weighted average borrowing rate on a comparable basis between the 2008 and 2007 periods, which more than offset the increase in average debt outstanding from our expansion and development activities.

During the second quarter of 2008, we settled two interest rate lock protection agreements which were intended to fix the US Treasury index at an average rate of 4.62% for an aggregate of $200 million of new debt for 10 years from July 2008. We originally entered into these agreements in 2005 in anticipation of a public debt offering during 2008, based on the 10 year US Treasury rate. Upon the closing of the LIBOR based unsecured term loan facility, we determined that we were unlikely to execute such a US Treasury based debt offering. The settlement of the interest rate lock protection agreements, at a total cost of $8.9 million, was reflected as a loss on settlement of US treasury rate locks in our consolidated statements of operations.

Equity in earnings of unconsolidated joint ventures increased due to increases in rental rates on lease renewals at Myrtle Beach Hwy 17 and lower interest rates at Wisconsin Dells related to its variable interest rate mortgage.

LIQUIDITY AND CAPITAL RESOURCES

Operating Activities

Property rental income represents our primary source of net cash provided by operating activities. Rental and occupancy rates are the primary factors that influence property rental income levels. During the past years we have experienced a consistent overall portfolio occupancy level between 95% and 98% with strong base rental rate growth. These factors have led to our growth in net cash provided by operating activities from $68.9 million to $72.1 million for the nine months ended September 30, 2007 compared to the nine months ended September 30, 2008.

Investing Activities

During the 2008 period, we completed construction of our outlet center in Washington, PA near Pittsburgh and had several existing center reconfigurations and renovations underway. These development activities have caused net cash used in investing activities to increase from $59.4 million to $107.5 million for the nine month periods ended September 30, 2007 and 2008, respectively. In addition, we have a development project underway through an unconsolidated joint venture, Deer Park, to develop and own a Tanger Outlet center in Deer Park, New York. Additional capital contributions of $1.6 million were made to the joint venture during the 2008 period by each venture partner. Subsequently, the center's grand opening was held on October 23, 2008.

Financing Activities

Long-term debt is our primary method of financing the projects mentioned in the investing activities section as we derive the majority of our operating cash flows from our operating leases over an average of five years. During 2008, we were successful in closing a $235.0 million, three year, unsecured term loan facility. We also extended and increased our unsecured lines of credit with several major financial institutions. We now have a borrowing capacity under our unsecured lines of credit of $325.0 million. We repaid $100.0 million of 9.125% senior unsecured bonds and a $170.7 million mortgage loan during the first nine months of 2008. The combination of these transactions enabled us to provide $36.7 million of net cash from financing activities in the 2008 period compared to using $15.6 million in the 2007 period. In light of the current financial market environment, we consider the completion of these transactions as an example of our ability to access the capital markets. See "Financing Arrangements" for further discussion of the above transactions.

Current Developments and Dispositions

We intend to continue to grow our portfolio by developing, expanding or acquiring additional outlet centers. In the section below, we describe the new developments that are either currently planned, underway or recently completed. However, you should note that any developments or expansions that we, or a joint venture that we are involved in, have planned or anticipated may not be started or completed as scheduled, or may not result in accretive net income or funds from operations. In addition, we regularly evaluate acquisition or disposition proposals and engage from time to time in negotiations for acquisitions or dispositions of properties. We may also enter into letters of intent for the purchase or sale of properties. Any prospective acquisition or disposition that is being evaluated or which is subject to a letter of intent may not be consummated, or if consummated, may not result in an increase in net income or funds from operations.

WHOLLY OWNED CURRENT DEVELOPMENTS

Washington, Pennsylvania

On August 29, 2008, we held the grand opening of our 371,000 square foot outlet center located south of Pittsburgh in Washington, Pennsylvania. Tenants include Nike, Gap, Old Navy, Banana Republic, Coach and others. The outlet center opened 86% leased.

Based upon the tremendous response by customers at this center's grand opening events, we feel confident tenant interest in the remaining available space will remain high and additional signed leases will be completed during the first year stabilization period.

Expansions at Existing Centers

During the second quarter of 2008, we completed a 62,000 square foot expansion at our center located in Barstow, California. As of September 30, 2008, the center contained a total of approximately 171,000 square feet, including the newly opened expansion space. The outlet center is 100% occupied.

Commitments to complete construction of the Washington, PA development, along with renovations at centers in Myrtle Beach Hwy 501, South Carolina; Lincoln City, Oregon; Park City, Utah and Foley, Alabama and other capital expenditure requirements amounted to approximately $11.4 million at September 30, 2008. Commitments for construction represent only those costs contractually required to be paid by us.

Potential Future Developments

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

During the first quarter of 2008, we announced our plans to build an upscale outlet shopping center in Irving, Texas, our third in the state. The new Tanger outlet center will be strategically located west of Dallas at the North West quadrant of busy State Highway 114 and Loop 12 and will be the first major project planned for the Texas Stadium Redevelopment Area. The site is also adjacent to the upcoming DART light rail line (and station stop) connecting downtown Dallas to the Las Colinas Urban Center, the Irving Convention Center and the Dallas/Fort Worth Airport. We recently entered into a purchase and sale agreement with the University of Dallas for the center's 50 acre site.

At this time, we are in the initial study period on these potential new locations. As such, there can be no assurance that these sites will ultimately be developed.