Tanger Factory Outlet Centers ((SKT)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The recent earnings call of Tanger Factory Outlet Centers reflected a generally positive sentiment, showcasing strong financial performance, high occupancy rates, and successful acquisitions. However, there were some concerns over tenant credit issues and potential increased competition in certain markets.
Strong Fourth Quarter Performance
Tanger Factory Outlet Centers delivered an impressive fourth quarter, with the full-year core Funds From Operations (FFO) per share rising by 8.7% compared to the previous year. This growth was largely driven by a 5.1% increase in same-center Net Operating Income (NOI). Both traffic and comparable sales showed growth for the quarter and the entire year.
High Occupancy Rates
The company reported a high occupancy rate of 98%, marking an increase of 70 basis points year-over-year and 60 basis points for the quarter. Same-center occupancy also saw an increase, reaching 98.2%, which is up 90 basis points for the year and 80 basis points for the quarter.
Successful Acquisitions
Tanger made strategic acquisitions by purchasing The Promenade at Chenal in Little Rock and Pinecrest in Cleveland. These acquisitions added approximately 910,000 square feet to Tanger’s portfolio, with an expected 8% return in the first year. These purchases were made using cash on hand and available liquidity.
Positive Rent Spreads
The company reported positive rent spreads for 12 consecutive quarters, with total rent spreads reaching 50% for the year. This included a 38% spread on re-tenanted space and a 13% spread on renewed space.
SWAP Maturities Impact
Despite the positive financial results, SWAP maturities earlier in the year had an offsetting effect on the overall performance.
Potential Tenant Credit Concerns
There are concerns regarding tenant credit, with specific attention on Forever 21, which has nine stores in Tanger’s portfolio. This situation indicates potential future vacancies.
Competitive Market in Nashville
Tanger faces potential increased competition in Nashville, as Simon is planning a development close to Tanger’s existing center, which may challenge their market share.
Guidance
Looking forward, Tanger provided guidance for fiscal year 2025, projecting core FFO per share growth between 4% and 8%, within a range of $2.22 to $2.30. The guidance includes the recent acquisitions, which are expected to deliver around 8% returns in their first year. Same-center NOI growth is anticipated to be between 2% and 4%. The company maintains a strong balance sheet, with low leverage and ample liquidity.
In conclusion, Tanger Factory Outlet Centers presented an optimistic outlook during their earnings call, with strong financial performance and strategic acquisitions leading the way. While there are some concerns regarding tenant credit and potential competition, the overall sentiment remains positive with a robust guidance for the upcoming fiscal year.
