Release Date: August 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tanger Inc (SKT, Financial) reported an 8% increase in Same Center NOI and a 13% rise in FFO per share, indicating strong financial performance.
- The company achieved its 10th consecutive quarter of positive rent spreads, contributing to total rent and NOI growth.
- Tanger Inc (SKT) has a robust leasing activity, executing 2 million square feet of leases over the past 12 months with an average spread of 15%.
- The company ended the quarter with a high occupancy rate of 96.5% and has renewals executed or in process for 66% of the space expiring this year.
- Tanger Inc (SKT) increased its full-year guidance for Core FFO per share and Same Center NOI growth, reflecting confidence in continued strong performance.
Negative Points
- The company faces potential challenges from tenant bankruptcies, as seen with rue21 and Express, although it has managed to mitigate impacts.
- There is a noted deceleration in Same Center NOI growth expected in the second half of the year, partly due to downtime from re-tenanting efforts.
- The company has a high temporary leasing percentage, which may indicate underlying vacancy issues or frictional vacancy.
- Tanger Inc (SKT) is experiencing variable timing impacts on operating expenses, which could affect quarterly financial comparisons.
- The company is facing challenges in maintaining high expense recovery rates, with expectations of a decline in the second half of the year.
Q & A Highlights
Q: Could you discuss the property expense timing benefit in the period and any timing impacts to be aware of in the second half?
A: Michael Bilerman, CFO, explained that operating expenses, including common area maintenance and marketing, can vary throughout the year. In the second quarter, expenses were flat year-over-year, which influenced the same-center NOI expectations. Timing of expenses can affect quarterly comparisons, but overall, the business is performing well.
Q: Guidance suggests a deceleration in Same Center NOI growth in the second half. Is this due to downtime from re-tenanting efforts or other factors?
A: Michael Bilerman noted that while there is some downtime associated with re-tenanting, particularly with rue21 stores reopening, it is not a significant impact. The guidance reflects an annual view, and the business continues to perform well with growth expected to continue.
Q: Can you provide details on the rue21 leases and their impact on the portfolio?
A: Stephen Yalof, CEO, stated that out of 20 rue21 stores, 18 will reopen before the end of the year. Two stores were taken back to replace with higher-paying tenants. The new leadership at rue21 is expected to enhance performance, and the brand remains popular with shoppers.
Q: What is the outlook for acquisitions and the types of centers Tanger is interested in?
A: Michael Bilerman mentioned that Tanger is actively looking at opportunities in both outlet and lifestyle centers where they can add value. The focus is on properties where Tanger's platform can drive value creation, and the company remains disciplined in its approach.
Q: How is Tanger activating peripheral land, and what opportunities does this present?
A: Stephen Yalof explained that over half of Tanger's centers have peripheral land, which is often already approved for retail use. This land is being activated with low capital and high return projects, such as hotels, entertainment venues, and restaurants, to enhance the shopping experience and drive additional traffic.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
