TANGER FACTORY OUTLET CENTERS, INC Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q) - Marketscreener.com

  The discussion of our results of operations reported in the unaudited,  consolidated statements of operations compares the three and nine months ended  September 30, 2022 with the three and nine months ended September 30, 2021. The  results of operations discussion is combined for Tanger Factory Outlet Centers,  Inc. and Tanger Properties Limited Partnership because the results are virtually  the same for both entities. 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 in this Management's Discussion and Analysis of  Financial Condition and Results of Operations below are forward-looking  statements within the meaning of Section 27A of the Securities Act of 1933, as  amended (the "Securities Act"), and Section 21E of the Securities Exchange Act  of 1934, as amended, or the Exchange Act. 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, beliefs and expectations, are generally  identifiable by use of the words "believe", "expect", "intend", "anticipate",  "estimate", "project", or similar expressions. Such forward-looking statements  include, but are not limited to, statements regarding: the expected impact of  the COVID-19 pandemic, rising inflation, supply chain and labor issues, and  rising interest rates on our business, financial results and financial  condition; our ability to raise additional capital, including via future  issuances of equity and debt, and the use of proceeds from such issuances; our  results of operations and financial condition; capital expenditure and working  capital needs and the funding thereof; the repurchase of the Company's common  shares, including the potential use of a 10b5-1 plan to facilitate repurchases;  future dividend payments; the possibility of future asset impairments; potential  developments, expansions, renovations, acquisitions or dispositions of outlet  centers, including our Nashville development; compliance with debt covenants;  renewal and re-lease of leased space; the outlook for the retail environment,  potential bankruptcies, and other store closings; consumer shopping trends and  preferences; the outcome of legal proceedings arising in the normal course of  business; and real estate joint ventures. You should not rely on forward-looking  statements since they involve known and unknown risks, uncertainties and other  important factors which are, in some cases, beyond our control and which could  materially affect our actual results, performance or achievements.    Other important factors which may cause actual results to differ materially from  current expectations include, but are not limited to: risks related to the  economic performance and market value of our outlet centers, including changes  in the national, regional and local economic climate, inflation and rising  interest rates; our inability to develop new outlet centers or expand existing  outlet centers successfully; the relative illiquidity of real property  investments; impairment charges affecting our properties; our dispositions of  assets may not achieve anticipated results; competition for the acquisition and  development of outlet centers, and our inability to complete outlet centers we  have identified; environmental regulations affecting our business; risk  associated with a possible terrorist activity or other acts or threats of  violence, public health crises and threats to public safety; risks related to  the COVID-19 pandemic; risks associated with supply chain disruptions and labor  shortages; our dependence on rental income from real property; our dependence on  the results of operations of our retailers; the fact that certain of our  properties are subject to ownership interests held by third parties, whose  interests may conflict with ours; risks related to climate change; investor and  regulatory focus on environmental, sustainability and social initiatives; risks  related to uninsured losses; risks associated with our Canadian investments;  risks associated with attracting and retaining key personnel; risks associated  with debt financing; risk associated with our guarantees of debt for, or other  support we may provide to, joint venture properties; the effectiveness of our  interest rate hedging arrangements; uncertainty relating to the phasing out of  LIBOR; our potential failure to qualify as a REIT; our legal obligation to make  distributions to our shareholders; legislative or regulatory actions that could  adversely affect our shareholders; our dependence on distributions from the  Operating Partnership to meet our financial obligations, including dividends;  the risk of a cyber-attack or an act of cyber-terrorism and other important  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 the Company's and the Operating Partnership's Annual Report on  Form 10-K for the year ended December 31, 2021.                                         39  --------------------------------------------------------------------------------      This Management's Discussion and Analysis of Financial Condition and Results of  Operations ("MD&A") is intended to provide a reader of our financial statements  with a narrative from the perspective of our management regarding our financial  condition and results of operations, liquidity and certain other factors that  may affect our future results. Our MD&A is presented in the following sections:    •General Overview  •Leasing Activity  •Results of Operations  •Liquidity and Capital Resources of the Company  •Liquidity and Capital Resources of the Operating Partnership  •Critical Accounting Estimates  •Recent Accounting Pronouncements  •Non-GAAP Supplemental Measures  •Economic Conditions and Outlook    

General Overview

    As of September 30, 2022, we had 30 consolidated outlet centers in 18 states  totaling 11.5 million square feet. We also had 6 unconsolidated outlet centers  totaling 2.1 million square feet, including 2 outlet centers in Canada.    The table below details our new developments, expansions and dispositions of  consolidated and unconsolidated outlet centers that significantly impacted our  results of operations and liquidity from January 1, 2021 to September 30, 2022  (square feet in thousands):                                                                                                  Consolidated Outlet Centers                             

Unconsolidated Joint Venture Outlet Centers

                                                                                                                                                                                       Number of Outlet              Outlet Center                      Quarter Opened/Disposed             Square Feet                 Number of Outlet Centers            Square Feet                              Centers    As of January 1, 2021                                                                 11,873                                31                         2,212                                         7  Dispositions:  Jeffersonville                                      First Quarter                       (412)                               (1)                            -                                         -  Saint-Sauveur                                       First Quarter                          -                                 -                           (99)                                       (1)  Other                                                                                     (8)                                -                             -                                         -  As of December 31, 2021                                                               11,453                                30                         2,113                                         6  Other                                                                                      4                                 -                             -                                         -  As of September 30, 2022                                                              11,457                                30                         2,113                                         6                                               40

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The following table summarizes certain information for our existing outlet centers in which we have an ownership interest as of September 30, 2022. Except as noted, all properties are fee owned.

           Consolidated Outlet Centers                Legal              Square               %  Location                                       Ownership %            Feet  

Occupied

  Deer Park, New York                                100               739,148           100.0  Riverhead, New York (1)                            100               729,281            93.9  Foley, Alabama                                     100               554,736            95.8  Rehoboth Beach, Delaware (1)                       100               550,921            96.2  Atlantic City, New Jersey (1) (3)                  100               487,718            84.8  San Marcos, Texas                                  100               471,816            98.7  Sevierville, Tennessee (1)                         100               449,968           100.0  Savannah, Georgia                                  100               429,089            98.6  Myrtle Beach Hwy 501, South Carolina               100               426,523            95.8  Glendale, Arizona (Westgate)                       100               410,753            98.9  Myrtle Beach Hwy 17, South Carolina (1)            100               404,710           100.0  Charleston, South Carolina                         100               386,328           100.0  Lancaster, Pennsylvania                            100               375,883           100.0  Pittsburgh, Pennsylvania                           100               373,863            96.6  Commerce, Georgia                                  100               371,408           100.0  Grand Rapids, Michigan                             100               357,133            89.0  Fort Worth, Texas                                  100               351,741            99.1  Daytona Beach, Florida                             100               351,691            99.7  Branson, Missouri                                  100               329,861           100.0  Southaven, Mississippi (2) (3)                      50               324,801           100.0  Locust Grove, Georgia                              100               321,082           100.0  Gonzales, Louisiana                                100               321,066           100.0  Mebane, North Carolina                             100               319,762            99.0  Howell, Michigan                                   100               314,438            81.5  Mashantucket, Connecticut (Foxwoods) (1)           100               311,229            80.0  Tilton, New Hampshire                              100               250,558            93.3  Hershey, Pennsylvania                              100               249,696            97.2  Hilton Head II, South Carolina                     100               206,564            98.7  Hilton Head I, South Carolina                      100                   181,687        98.8  Blowing Rock, North Carolina                       100               104,009            96.0  Totals                                                            11,457,463            96.4    

(1)These properties or a portion thereof are subject to a ground lease. (2)Based on capital contribution and distribution provisions in the joint venture agreement, we expect our economic interest in the venture's cash flow to be greater than our legal ownership percentage. We currently receive substantially all the economic interest of the property. (3)Property encumbered by mortgage. See Notes 6 and 7 to the consolidated financial statements for further details of our debt obligations.

                                       41  --------------------------------------------------------------------------------         Unconsolidated joint venture properties          Legal             Square            %     Location                                        Ownership %           

Feet Occupied

     Charlotte, North Carolina (1)                        50             398,698            97.8     Ottawa, Ontario                                      50             357,209            95.9     Columbus, Ohio (1)                                   50             355,245            97.2     Texas City, Texas (Galveston/Houston) (1)            50             352,705            95.2     National Harbor, Maryland (1)                        50             341,156            98.4     Cookstown, Ontario                                   50             307,883            96.2     Total                                                             2,112,896            96.8    

(1)Property encumbered by mortgage. See Note 5 to the consolidated financial statements for further details of the joint venture debt obligations.

Leasing Activity

    In the fourth quarter of 2021, we revised our rent spread presentation from a  commenced basis to an executed basis and we are presenting it for comparable and  non-comparable space. Comparable space excludes leases for space that was vacant  for more than 12 months (non-comparable space). We believe that this  presentation provides additional information and improves comparability to other  retail REITs. Prior period results have been revised to conform with the current  period presentation.    The following table provides information for our consolidated outlet centers  related to leases for new stores that opened or renewals that were executed  during the respective trailing twelve month periods ended September 30, 2022 and  2021:                                                            Comparable Space 

for Executed Leases (1) (2)

                                                                            New               Rent          Tenant              Average                                                     Square Feet     Initial Rent             Spread       Allowance         Initial Term                       Leasing Transactions           (in 000's)        (psf) (3)              % (4)       (psf) (5)           (in years)      Total space          2022                    329                1,732       $       30.24                5.6  % $       2.90              3.59          2021                    292                1,320       $       28.02               (3.1) % $       6.26              2.95                                                  Comparable and Non-Comparable

Space for Executed Leases (1) (2)

                                                                            New                             Tenant              Average                                                     Square Feet     Initial Rent                          Allowance         Initial Term                       Leasing Transactions           (in 000's)        (psf) (3)                          (psf) (5)           (in years)      Total space          2022                    379                1,923       $       30.82                       $      10.29              4.04          2021                    342                1,501       $       27.95                       $      15.15              3.31      (1)For consolidated properties owned as of the period-end date. Represents  leases for new stores or renewals that were executed during the respective  trailing 12-month periods and excludes license agreements, seasonal tenants,  month-to-month leases and new developments.  (2)Comparable space excludes leases for space that was vacant for more than 12  months (non-comparable space).  (3)Represents average initial cash rent (base rent and common area maintenance  ("CAM")).  (4)Represents change in average initial and expiring cash rent (base rent and  CAM).  (5)Includes other landlord costs.                                                 42  --------------------------------------------------------------------------------

RESULTS OF OPERATIONS

Comparison of the three months ended September 30, 2022 to the three months ended September 30, 2021

    NET INCOME (LOSS)  Net income increased $35.4 million in the 2022 period to $24.3 million as  compared to a net loss of $11.1 million for the 2021 period. Significant items  impacting the comparability for the two periods include the following:    

•the current period had a higher average portfolio occupancy rate, and •the prior year period included a loss on the early extinguishment of debt of $33.8 million.

    RENTAL REVENUES  Rental revenues decreased $1.7 million in the 2022 period compared to the 2021  period. The following table sets forth the changes in various components of  rental revenues (in thousands):                                                                         2022               2021             Increase/(Decrease)  Rental revenues from existing properties                           $ 105,589          $ 105,491          $                 98    Straight-line rent adjustments                                          (155)               383                          (538)  Lease termination fees                                                   228              1,424                        (1,196)  Amortization of above and below market rent adjustments, net             (93)               (33)                          (60)                                                                     $ 105,569          $ 107,265          $             (1,696)      

Rental revenues decreased primarily because the 2021 period included lease termination fees from a single tenant that vacated multiple locations throughout the portfolio. No such significant terminations occurred in the 2022 period.

Rental revenues at existing properties was positively impacted by higher occupancy between the periods, 96% compared to 94%, but this was offset by lower variable revenues, which are derived from tenant sales.

    MANAGEMENT, LEASING AND OTHER SERVICES  Management, leasing and other services increased $256,000 in the 2022 period  compared to the 2021 period. The following table sets forth the changes in  various components of management, leasing and other services (in thousands):                                                                         2022              2021             Increase/(Decrease)  Management and marketing                                            $    661          $    530          $                131  Leasing and other fees                                                    61                72                           (11)  Expense reimbursements from unconsolidated joint ventures              1,175             1,039                           136                                                                      $  1,897          $  1,641          $                256      

Management fee income increased due to our addition of property management responsibilities during the 2022 period for a center in West Palm Beach, Florida.

    OTHER REVENUES  Other revenues increased $421,000 in the 2022 period as compared to the 2021  period. The following table sets forth the changes in various components of  other revenues (in thousands):                                                 2022         2021        

Increase/(Decrease)

Other revenues from existing properties $ 3,980 $ 3,559 $

             421      Other revenues from existing properties increased in the 2022 period due to an  increase in other revenue streams, such as paid media, sponsorships and onsite  signage, on a local and national level.                                               43  --------------------------------------------------------------------------------    PROPERTY OPERATING EXPENSES  Property operating expenses decreased $1.1 million in the 2022 period compared  to the 2021 period. The following table sets forth the changes in various  components of property operating expenses (in thousands):                                                                           2022              2021             Increase/(Decrease)  Property operating expenses from existing properties                $ 34,433          $ 35,670          $             (1,237)    Expenses related to unconsolidated joint ventures                      1,175             1,039                           136  Other property operating expenses                                        468               477                            (9)                                                                      $ 36,076          $ 37,186          $             (1,110)      

Property operating expenses from existing properties decreased in the 2022 period primarily due to the timing of certain advertising and promotional costs.

    GENERAL AND ADMINISTRATIVE EXPENSES  General and administrative expenses increased $2.6 million in the 2022 period  compared to the 2021 period. The increase was primarily from the hiring of  certain executives and other key employees during the second half of 2021 to  drive operational and growth initiatives.    DEPRECIATION AND AMORTIZATION  Depreciation and amortization costs decreased $1.5 million in the 2022 period  compared to the 2021 period, primarily due to a slow down in the development and  acquisition pipeline in recent years due to COVID-19 and certain assets becoming  fully depreciated.    INTEREST EXPENSE  Interest expense decreased $1.6 million in the 2022 period compared to the 2021  period primarily because during August and September 2021, we completed a public  offering of $400.0 million 2.750% of senior notes and completed the early  redemption of $100.0 million of 3.875% senior notes due in 2023 ("2023 notes")  and $250.0 million of 3.75% senior notes due in 2024 ("2024 notes"), reducing  our average interest rate.    LOSS ON EARLY EXTINGUISHMENT OF DEBT  For the three months ended September 30, 2021, we recorded a make-whole premium  of $31.9 million and the write off of approximately $1.9 million of debt  discount and debt origination costs due to the early redemption of our remaining  2023 notes and all of our 2024 notes.    OTHER INCOME (EXPENSE)  Other income (expense) increased approximately $1.1 million in the 2022 period,  primarily due to higher investment income from opportunities available in the  current rising interest rate environment.      EQUITY IN EARNINGS OF UNCONSOLIDATED JOINT VENTURES  Equity in earnings of unconsolidated joint ventures decreased approximately  $206,000 in the 2022 period compared to the 2021 period. The decrease is  primarily due to the increase in variable interest rates in 2022 that has  negatively impacted two of our joint ventures that have variable rate mortgages.  The Columbus variable interest rate mortgage was refinanced in September 2022  and now has a fixed interest rate of 6.25%.    

Comparison of the nine months ended September 30, 2022 to the nine months ended September 30, 2021

    NET INCOME  Net income increased $70.8 million in the 2022 period to $66.6 million as  compared to a net loss of $4.1 million for the 2021 period. Significant items  impacting the comparability for the two periods include the following:    

•the current period had a higher average portfolio occupancy rate •the 2021 period included a loss on the early extinguishment of debt of $47.9 million related to the redemption of all of our 2023 and 2024 notes,

                                       44  --------------------------------------------------------------------------------    •the 2021 period included a foreign currency loss of approximately $3.6 million  in other income (expense), which had been previously recorded in other  comprehensive income associated with the sale of our RioCan joint venture outlet  center in Saint-Sauveur,  •the current period includes a gain of $2.4 million related to the sale of a  non-real estate asset,  •the 2022 period included $2.4 million of executive severance costs and the 2021  period included $2.4 million of compensation cost related to a voluntary  retirement plan offer which required eligible participants to give notice of  acceptance by December 1, 2020 for an effective retirement date of March 31,  2021 and other executive severance, and  •we sold one operating property in the first quarter of 2021, as discussed  below.    

In the tables below, information set forth for properties disposed includes the Jeffersonville outlet center sold in January 2021.

    RENTAL REVENUES  Rental revenues increased $10.0 million in the 2022 period compared to the 2021  period. The following table sets forth the changes in various components of  rental revenues (in thousands):                                                                           2022               2021             Increase/(Decrease)  Rental revenues from existing properties                           $ 310,151          $ 299,823          $             10,328    Rental revenues from properties disposed                                 (12)               519                          (531)  Straight-line rent adjustments                                        (1,190)            (1,137)                          (53)  Lease termination fees                                                 2,859              2,224                           635  Amortization of above and below market rent adjustments, net            (221)               127                          (348)                                                                     $ 311,587          $ 301,556          $             10,031        Rental revenues increased primarily due to an increase in occupancy rate for the  consolidated portfolio to 96.4% as of September 30, 2022 compared to 94.3% as of  September 30, 2021. Additionally, rental revenues were also impacted by the  reversal of revenue reserves in the 2022 period of approximately $3.7 million,  compared to $2.8 million in the same period of the prior year.                                             45  --------------------------------------------------------------------------------    MANAGEMENT, LEASING AND OTHER SERVICES  Management, leasing and other services increased $488,000 in the 2022 period  compared to the 2021 period. The following table sets forth the changes in  various components of management, leasing and other services (in thousands):                                                                         2022              2021             Increase/(Decrease)  Management and marketing                                            $  1,749          $  1,575          $                174  Leasing and other fees                                                    96               231                          (135)  Expense reimbursements from unconsolidated joint ventures              3,015             2,566                           449  Total Fees                                                          $  4,860          $  4,372          $                488      

Management fee income increased due to our addition of property management responsibilities during the 2022 period for a center in West Palm Beach, Florida. Leasing fee income decreased due to the 2021 period containing more renewal and re-tenant opportunities at our unconsolidated joint ventures.

    OTHER REVENUES  Other revenues increased $1.2 million in the 2022 period as compared to the 2021  period. The following table sets forth the changes in other revenues (in  thousands):                                                   2022         2021        

Increase/(Decrease)

Other revenues from existing properties $ 9,705 $ 8,486 $

1,219

    Other revenues from property disposed              -           18                       (18)                                               $ 9,705      $ 8,504      $              1,201        Other revenues from existing properties increased in the 2022 period due to an  increase in other revenue streams, such as paid media, sponsorships and on-site  signage, on a local and national level.    

PROPERTY OPERATING EXPENSES Property operating expenses increased $1.8 million in the 2022 period as compared to the 2021 period. The following table sets forth the changes in various components of property operating expenses (in thousands):

                                                                            2022               2021             Increase/(Decrease)  Property operating expenses from existing properties                $ 100,884          $ 100,759          $                125    Property operating expenses from property disposed                          -             (1,163)                        1,163  Expenses related to unconsolidated joint ventures                       3,015              2,566                           449  Other property operating expense                                        1,632              1,585                            47                                                                      $ 105,531          $ 103,747          $              1,784        Property operating expenses from existing properties increased in the 2022  period compared to the 2021 period, primarily due to higher property insurance  costs. The 2021 period for properties disposed includes net proceeds received  from the successful appeal of property taxes for tax years prior to disposition.  The 2022 period included no such refunds.    GENERAL AND ADMINISTRATIVE EXPENSES  General and administrative expenses increased $4.9 million in the 2022 period  compared to the 2021 period. The increase is primarily driven by the hiring of  certain executives and other key employees throughout 2021 to drive operational  and growth initiatives. The 2022 period included $2.4 million of executive  severance costs and the 2021 period included $2.4 million of compensation cost  related to employees that accepted a voluntary retirement plan with an effective  retirement date of March 31, 2021 and other executive severance. In addition,  travel costs have increased compared to 2021 with the decrease in restrictions  from COVID-19 and other corporate employee benefit costs have increased as well.                                             46  --------------------------------------------------------------------------------    DEPRECIATION AND AMORTIZATION  Depreciation and amortization costs decreased $4.9 million in the 2022 period  compared to the 2021 period. The following table sets forth the changes in  various components of depreciation and amortization costs from the 2021 period  to the 2022 period (in thousands):                                                                         2022              2021             Increase/(Decrease)  

Depreciation and amortization expenses from existing properties

                                                        $ 77,908          $ 82,788          $             (4,880)    Depreciation and amortization from property disposed                     -                38                           (38)                                                                    $ 77,908          $ 82,826          $             (4,918)      

Depreciation and amortization costs decreased primarily due to a slow down in the development and acquisition pipeline and certain assets becoming fully depreciated.

    INTEREST EXPENSE  Interest expense decreased $6.1 million in the 2022 period compared to the 2021  period for the following reasons:    •During August and September 2021, we completed a public offering of $400.0  million 2.750% of senior notes and completed the early redemption of $250.0  million of the 2023 notes and $250.0 million of the 2024 notes, reducing our  average interest rate.  •During different times in 2021, we paid down approximately $50.0 million of  borrowings under our unsecured term loan. The 2022 period reflects the full  impact of those paydowns.    LOSS ON EARLY EXTINGUISHMENT OF DEBT  For the nine months ended September 30, 2021, we recorded make-whole premiums of  $44.9 million and the write offs of approximately $2.9 million of debt discount  and debt origination costs due to the early redemption of our 2023 and 2024  notes.    OTHER INCOME (EXPENSE)  Other income (expense) increased approximately $6.8 million in the 2022 period  compared to the 2021 period. The increase was primarily due to a $2.4 million  gain on sale of a non-real estate asset, higher investment income in the 2022  period and the inclusion in the 2021 period of a $3.6 million foreign currency  loss from the sale by the RioCan joint venture of its outlet center in  Saint-Sauveur, Quebec in which we had a 50% ownership interest.    

EQUITY IN EARNINGS OF UNCONSOLIDATED JOINT VENTURES Equity in earnings of unconsolidated joint ventures increased approximately $37,000 in the 2022 period compared to the 2021 period. In the table below, information set forth for properties disposed includes the Saint-Sauveur, Quebec outlet center in our Canadian joint venture, which was sold in March 2021.

                                                     2022         2021        

Increase/(Decrease)

Equity in earnings from existing properties $ 6,795 $ 6,568 $

                227    Equity in earnings from property disposed              -          190                      (190)                                                   $ 6,795      $ 6,758      $                 37          

LIQUIDITY AND CAPITAL RESOURCES OF THE COMPANY

    In this "Liquidity and Capital Resources of the Company" section, the term "the  Company" refers only to Tanger Factory Outlet Centers, Inc. on an unconsolidated  basis, excluding the Operating Partnership.                                                   47

--------------------------------------------------------------------------------    The Company's business is operated primarily through the Operating Partnership.  The Company issues public equity from time to time, but does not otherwise  generate any capital itself or conduct any business itself, other than incurring  certain expenses in operating as a public company, which are fully reimbursed by  the Operating Partnership. The Company does not hold any indebtedness, and its  only material asset is its ownership of partnership interests of the Operating  Partnership. The Company's principal funding requirement is the payment of  dividends on its common shares. The Company's principal source of funding for  its dividend payments is distributions it receives from the Operating  Partnership.    Through its status as the sole general partner of the Operating Partnership, the  Company has the full, exclusive and complete responsibility for the Operating  Partnership's day-to-day management and control. The Company causes the  Operating Partnership to distribute all, or such portion as the Company may in  its discretion determine, of its available cash in the manner provided in the  Operating Partnership's partnership agreement. The Company receives proceeds  from equity issuances from time to time, but is required by the Operating  Partnership's partnership agreement to contribute the proceeds from its equity  issuances to the Operating Partnership in exchange for partnership units of the  Operating Partnership.    We are a well-known seasoned issuer (as defined in the Securities Act) with a  shelf registration that expires in February 2024 that allows the Company to  register unspecified various classes of equity securities and the Operating  Partnership to register unspecified, various classes of debt securities. As  circumstances warrant, the Company may issue equity from time to time on an  opportunistic basis, dependent upon market conditions and available pricing. The  Operating Partnership may use the proceeds to repay debt, including borrowings  under its lines of credit, to develop new or existing properties, to make  acquisitions of properties or portfolios of properties, to invest in existing or  newly created joint ventures or for general corporate purposes.    The liquidity of the Company is dependent on the Operating Partnership's ability  to make sufficient distributions to the Company. The Operating Partnership is a  party to loan agreements with various bank lenders that require the Operating  Partnership to comply with various financial and other covenants before it may  make distributions to the Company. The Company also guarantees some of the  Operating Partnership's debt. If the Operating Partnership fails to fulfill its  debt requirements, which trigger the Company's guarantee obligations, then the  Company may be required to fulfill its cash payment commitments under such  guarantees. However, the Company's only material asset is its investment in the  Operating Partnership.    The Company believes the Operating Partnership's sources of working capital,  specifically its cash flow from operations and cash on hand, are adequate for it  to make its distribution payments to the Company and, in turn, for the Company  to make any minimum dividend payments to its shareholders and to finance its  continued operations, growth strategy and additional expenses we expect to incur  for at least the next twelve months. However, there can be no assurance that the  Operating Partnership's sources of capital will continue to be available at all  or in amounts sufficient to meet its needs, including its ability to make  distribution payments to the Company. The unavailability of capital could  adversely affect the Operating Partnership's ability to pay its distributions to  the Company which will, in turn, adversely affect the Company's ability to pay  cash dividends to its shareholders. Our ability to access capital on favorable  terms as well as to use cash from operations to continue to meet our liquidity  needs, all of which are highly uncertain and cannot be predicted, could be  affected by various risks and uncertainties, including, but not limited to, the  effects of the COVID-19 pandemic, macroeconomic conditions, including rising  interest rates and inflation, and other risks detailed in "Risk Factors" section  of our Annual Report on Form 10-K for the year ended December 31, 2021.    For the Company to maintain its qualification as a REIT, it must pay dividends  to its shareholders aggregating annually at least 90% of its taxable income  (excluding capital gains). While historically the Company has satisfied this  distribution requirement by making cash distributions to its shareholders, it  may choose to satisfy this requirement by making distributions of cash or other  property, including, in limited circumstances, the Company's own shares.    As a result of this distribution requirement, the Operating Partnership cannot  rely on retained earnings to fund its on-going operations to the same extent  that other companies whose parent companies are not real estate investment  trusts can. The Company may need to continue to raise capital in the equity  markets to fund the Operating Partnership's working capital needs, as well as  potential new developments, expansions and renovations of existing properties,  acquisitions, or investments in existing or newly created joint ventures.                                           48  --------------------------------------------------------------------------------    The Company currently consolidates the Operating Partnership because it has (1)  the power to direct the activities of the Operating Partnership that most  significantly impact the Operating Partnership's economic performance and (2)  the obligation to absorb losses and the right to receive the residual returns of  the Operating Partnership that could be potentially significant. The Company  does not have significant assets other than its investment in the Operating  Partnership. Therefore, the assets and liabilities and the revenues and expenses  of the Company and the Operating Partnership are the same on their respective  financial statements, except for immaterial differences related to cash, other  assets and accrued liabilities that arise from public company expenses paid by  the Company. However, all debt is held directly or indirectly at the Operating  Partnership level, and the Company has guaranteed some of the Operating  Partnership's unsecured debt as discussed below. Because the Company  consolidates the Operating Partnership, the section entitled "Liquidity and  Capital Resources of the Operating Partnership" should be read in conjunction  with this section to understand the liquidity and capital resources of the  Company on a consolidated basis and how the Company is operated as a whole.    In February 2021, we established an at-the-market share offering program ("ATM  Offering") under our shelf registration statement on Form S-3. We may offer and  sell our common shares, $0.01 par value per share ("Common Shares"), having an  aggregate gross sales price of up to $250.0 million (the "Shares"). We may sell  the Shares in amounts and at times to be determined by us but we have no  obligation to sell any of the Shares. Actual sales, if any, will depend on a  variety of factors to be determined by us from time to time, including, among  other things, market conditions, the trading price of the Common Shares, capital  needs and determinations by us of the appropriate sources of its funding. The  Operating Partnership currently intends to use the net proceeds from the sale of  shares pursuant to the ATM Offering for working capital and general corporate  purposes. As of September 30, 2022, we had approximately $60.1 million remaining  available for sale under the ATM Offering program.    The following table sets forth information regarding settlements under our ATM  Offering program:                                                    Three months ended September 30,           Nine months ended September 30,                                                      2022                 2021                 2022                 2021  Number of common shares settled during  the period                                                -             331,682                    -            10,009,263  Average price per share                        $          -          $    18.85          $         -          $      18.97  Aggregate gross proceeds (in thousands)        $          -          $    6,253          $         -          $    189,868  Aggregate net proceeds after selling  commissions and fees (in thousands)            $          -          $    

6,092 $ - $ 186,969

        In May 2021, the Company's Board of Directors authorized the repurchase of up to  $80.0 million of the Company's outstanding shares through May 31, 2023. This  authorization replaced a previous repurchase authorization for approximately $80  million that expired in May 2021. Repurchases may be made from time to time  through open market, privately-negotiated, structured or derivative transactions  (including accelerated share repurchase transactions), or other methods of  acquiring shares. The Company intends to structure open market purchases to  occur within pricing and volume requirements of Rule 10b-18. The Company may,  from time to time, enter into Rule 10b5-1 plans to facilitate the repurchase of  its shares under this authorization. The Company did not repurchase any shares  for both the three and nine months ended September 30, 2022 and 2021. The  remaining amount authorized to be repurchased under the program as of  September 30, 2022 was approximately $80.0 million.    In July 2022, the Company's Board of Directors declared a $0.20 cash dividend  per common share payable on August 15, 2022 to each shareholder of record on  July 29, 2022, and in its capacity as General Partner of the Operating  Partnership, a $0.20 cash distribution per Operating Partnership unit to the  Operating Partnership's unitholders.    In October 2022, the Company's Board of Directors declared a $0.22 cash dividend  per common share payable on November 15, 2022 to each shareholder of record on  October 29, 2022, and in its capacity as General Partner of the Operating  Partnership a $0.22 cash distribution per Operating Partnership unit to the  Operating Partnership's unitholders.                                           49  -------------------------------------------...