The discussion of our results of operations reported in the unaudited, consolidated statements of operations compares the three and six months ended June 30, 2008 with the three and six months ended June 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. There have been no material changes to the risk factors listed there through June 30, 2008.

General Overview

At June 30, 2008, our consolidated portfolio included 29 wholly owned outlet
centers in 21 states totaling 8.5 million square feet compared to 30 wholly
owned outlet centers in 21 states totaling 8.4 million square feet at June 30,
2007. The changes in the number of outlet centers and square feet are due to the
following events:

                             No. of  Square Feet
                             Centers     (000's) States
As of June 30, 2007               30       8,354     21
  Center expansions:
    Barstow, California          ---          62    ---
    Branson, Missouri            ---          25    ---
    Foley, Alabama               ---          35    ---
    Gonzales, Louisiana          ---          39    ---
    Tilton, New Hampshire        ---          18    ---
  Dispositions:
    Boaz, Alabama                (1)        (80)    ---
As of June 30, 2008               29       8,453     21

The following table summarizes certain information for our existing outlet centers in which we have an ownership interest as of June 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          99
Foley, Alabama                         557,185          93
San Marcos, Texas                      442,510          97
Myrtle Beach Hwy 501, South Carolina   426,417          96
Sevierville, Tennessee (1)             419,038         100
Hilton Head, South Carolina            393,094          88
Charleston, South Carolina             352,315          95
Commerce II, Georgia                   347,025          98
Howell, Michigan                       324,631          97
Branson, Missouri                      302,992          98
Park City, Utah                        300,891          92
Locust Grove, Georgia                  293,868         100
Westbrook, Connecticut                 291,051          99
Gonzales, Louisiana                    282,403         100
Williamsburg, Iowa                     277,230          99
Lincoln City, Oregon                   270,280          99
Tuscola, Illinois                      256,514          82
Lancaster, Pennsylvania                255,152          98
Tilton, New Hampshire                  245,563         100
Fort Myers, Florida                    198,950          93
Commerce I, Georgia                    185,750          72
Terrell, Texas                         177,800         100
Barstow, California                    171,300          99
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                               8,452,989          96

Unconsolidated Joint Ventures
Myrtle Beach Hwy 17, South Carolina (1) 402,013 99 Wisconsin Dells, Wisconsin 264,929 100

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

RESULTS OF OPERATIONS

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

Base rentals increased $2.3 million, or 6%, in the 2008 period compared to the 2007 period. Our overall occupancy rates were comparable from period to period at 96%. Our base rental income increased $2.5 million due to increases in rental rates on lease renewals and incremental rents from re-tenanting vacant space. In addition, since June 30, 2007 we have added approximately 179,000 square feet of expansion space at existing outlet centers. During the 2008 period, we executed 79 leases totaling 308,000 square feet at an average increase of 31% in base rental rates. This compares to our execution of 93 leases totaling 384,000 square feet at an average increase of 25% in base rental rates during the 2007 period.

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 base rental income over the remaining term of the associated lease. For the 2008 period, we recorded additional base rental income of approximately $198,000 for the net amortization of acquired lease values compared with approximately $236,000 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 June 30, 2008, the net liability representing the amount of unrecognized below market lease values totaled approximately $823,000.

Percentage rentals, which represent revenues based on a percentage of tenants' sales volume above predetermined levels (the "breakpoint"), decreased $542,000 or 33% from the 2007 period to the 2008 period. A significant number of tenants that renewed their leases renewed at much higher base rental rates and, accordingly, had increases to their predetermined breakpoint levels used in determining their percentage rentals. This essentially transformed a variable rent component into a fixed rent component. Reported same-space sales per square foot for the rolling twelve months ended June 30, 2008 were $340 per square foot. 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.

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. The increase in expense reimbursements expressed as a percentage of property operating expense is due to a decrease in miscellaneous non-reimbursable expenses during the 2008 period.

Property operating expenses decreased $297,000, or 2%, in the 2008 period as compared to the 2007 period. The decrease is due to lower advertising and marketing expenses as the Easter holiday occurred in the first quarter in 2008 versus the second quarter in 2007. This decrease was offset by slight increases from several high performing centers which experienced significant property tax increases upon revaluation since June 30, 2007 and increased mall operation costs due to normal payroll related increases.

General and administrative expenses increased $774,000, or 16%, in the 2008 period as compared to the 2007 period. The increase is primarily due to additional restricted shares issued in late February 2008. As a percentage of total revenues, general and administrative expenses were 10% and 9% in the 2008 and 2007 periods, respectively.

Depreciation and amortization decreased $800,000, or 5%, 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. Approximately 17,900 square feet was demolished during the second quarter of 2007 with the remainder being demolished during the third quarter of 2007. Accelerated depreciation recognized on the buildings demolished during the second quarter of 2007 and buildings to be demolished during the remainder of 2007 totaled $1.3 million for the three months ended June 30, 2007. The effect on diluted earnings per share was a decrease of $.03 per share for the three months ended June 30, 2007. The amount of buildings, fixtures and improvements related to the demolition which was fully depreciated and written off during the three months ended June 30, 2007 totaled $2.6 million. This decrease from the 2007 period was partially offset by additional depreciation from expansion assets placed in service during the fourth quarter of 2007 at several existing outlet centers.

Interest expense decreased $576,000, or 6%, in the 2008 period compared to the 2007 period. During February 2008, we repaid at maturity our $100.0 million, 9.125% unsecured senior notes. We repaid these notes with amounts available under our unsecured lines of credit which have significantly lower interest rates than the bonds. This interest rate savings was offset by higher outstanding debt levels related to the expansion and development activities since June 30, 2007 and a prepayment premium of approximately $406,000 associated with the repayment of an outstanding mortgage loan in June 2008.

During the second quarter of 2008, we settled 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 close 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 and debt outstanding at Wisconsin Dells related to its variable interest rate mortgage.

Comparison of the six months ended June 30, 2008 to the six months ended June 30, 2007

Base rentals increased $4.4 million, or 6%, in the 2008 period compared to the 2007 period. Our overall occupancy rates were comparable from period to period at 96%. Our base rental income increased $4.9 million due to increases in rental rates on lease renewals and incremental rents from re-tenanting vacant space. In addition, since June 30, 2007 we have added approximately 179,000 square feet of expansion space at existing outlet centers. During the 2008 period, we executed 318 leases totaling 1.4 million square feet at an average increase of 26% in base rental rates. This compares to our execution of 338 leases totaling 1.4 million square feet at an average increase of 22% in base rental rates during the 2007 period.

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 base rental income over the remaining term of the associated lease. For the 2008 period, we recorded additional base rental income of $93,000 for the net amortization of acquired lease values compared with $600,000 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 June 30, 2008, the net liability representing the amount of unrecognized below market lease values totaled $823,000.

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 89% in the 2008 and 2007 periods, respectively. The increase in expense reimbursements expressed as a percentage of property operating expense is due to a decrease in miscellaneous non-reimbursable expenses during the 2008 period.

Property operating expenses increased $2.0 million, or 6%, in the 2008 period as compared to the 2007 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 June 30, 2007. In addition, mall operation costs increased due to normal payroll related increases.

General and administrative expenses increased $1.8 million, or 19%, in the 2008 period as compared to the 2007 period. The increase is primarily due to share based compensation amortization from restricted shares issued in late February 2008 and February 2007. As a percentage of total revenues, general and administrative expenses were 10% and 8% in the 2008 and 2007 periods, respectively.

Depreciation and amortization decreased $3.7 million, or 11%, 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. Approximately 34,700 square feet was demolished as of June 30, 2007 with the remainder being demolished during the third quarter of 2007. Accelerated depreciation recognized on the buildings demolished during the first six months of 2007 and buildings to be demolished during the remainder of 2007 totaled $5.4 million for the six months ended June 30, 2007. The effect on diluted earnings per share was a decrease of $.14 per share for the six months ended June 30, 2007. The amount of buildings, fixtures and improvements related to the demolition which was fully depreciated and written off during the six months ended June 30, 2007 totaled $5.3 million.

Interest expense decreased $1.1 million, or 5%, in the 2008 period compared to the 2007 period. During February 2008, we repaid at maturity our $100.0 million, 9.125% unsecured senior notes. We repaid these notes with amounts available under our unsecured lines of credit which have significantly lower interest rates than the bonds. This interest rate savings was offset by higher outstanding debt levels related to the expansion and development activities since June 30, 2007 and a prepayment premium of approximately $406,000 associated with the repayment of an outstanding mortgage loan in June 2008.

During the second quarter of 2008, we settled 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 close 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 and debt outstanding at Wisconsin Dells related to its variable interest rate mortgage.

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, excluding a one-time payment for the settlement of US treasury rate locks of $8.9 million, from $42.9 million to $45.1 million for the six months ended June 30, 2007 compared to the six months ended June 30, 2008.

Investing Activities

During the 2008 period, we had one wholly-owned new development near Pittsburgh, Pennsylvania under construction and several existing center reconfigurations and renovations underway. These development activities have caused the increase in net cash used in investing activities to increase from $30.8 million to $65.2 million for the six month periods ended June 30, 2007 and 2008, respectively. In addition, we have an additional development project underway through an unconsolidated joint venture, Deer Park, to develop and own a Tanger Outlet center in Deer Park, New York. The project is nearing completion with an expected opening in the fourth quarter of 2008. Additional capital contributions were made to the project of $1.5 million during the 2008 period.

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 six months of 2008. The combination of these transactions enabled us to provide $27.6 million of net cash from financing activities in the 2008 period compared to using $19.3 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 County, Pennsylvania

During the second quarter of 2008, we continued the development, construction and leasing of our site located south of Pittsburgh, Pennsylvania in Washington County. We currently expect the grand opening of the first phase of the outlet center to be August 29, 2008. Tenants in the center will include Nike, Gap, Old Navy, Banana Republic, Coach and others. The first phase of the center will contain approximately 370,000 square feet.

Expansions at Existing Centers

During the second quarter of 2008, we completed our expansion at the center located in Barstow, California. As of June 30, 2008, the center contained a total of approximately 171,000 square feet, including 62,000 square feet of newly opened expansion space.

Commitments to complete construction of the Washington County development, along with renovations at centers in Myrtle Beach Hwy 501, South Carolina; Gonzales, Louisiana and Foley, Alabama and other capital expenditure requirements amounted to approximately $32.5 million at June 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. The center is currently expected to be approximately 300,000 square feet. During the option period we will be analyzing the viability of the site and determining whether to proceed with the development of a center at this location.

We have also started the initial pre-development and leasing for a site we have under option in Port St. Lucie, Florida at Exit 118 on Interstate I-95. Approximately 64,000 cars utilize this exit each day. Port St. Lucie is one of Florida's fastest growing cities and is located less than 40 miles north of Palm Beach, Florida and is one exit south of the New York Mets' spring training facility. This center is expected to be approximately 300,000 square feet and initial reaction to the site from our magnet tenants has been very positive.

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, 380,000 square foot 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. We are currently scheduled to break ground in 2009 and open in 2010.

In July 2008, we announced our plans to build an upscale outlet shopping center in a western suburb of Phoenix, Arizona. Strategically located at the South West quadrant of the 101 Loop & Camelback Road, the new, 330,000 square foot, 80 store, Tanger Outlet Center will be positioned in one of the fastest growing sections of the Phoenix market and only 30 minutes from some of the highest household incomes in the Phoenix Metropolitan area. We entered into a purchase and sale agreement with HWWCC Development, LLC for the center's more than 30 acre site. We are currently scheduled to break ground in 2009 and open in 2010.

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

UNCONSOLIDATED JOINT VENTURES

The following table details certain information as of June 30, 2008 about
various unconsolidated real estate joint ventures in which we have an ownership
interest:

                                                                 Carrying   Total Joint
                                 Opening    Ownership  Square    Value of  Venture Debt
   Joint Venture      Center       Date         %       Feet    Investment (in millions)
                     Location                                      (in
. . .