Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tanger Inc (SKT, Financial) reported a strong quarter with an 8% increase in Core FFO per share, reaching $0.54.
- Same-center NOI increased by 4.3%, driven by higher rental revenues and lower operating expenses.
- Occupancy rates improved to 97.4%, with 543 leases executed over the trailing 12 months.
- The company achieved its 11th consecutive quarter of positive rent spreads, with a blended increase of 14%.
- Tanger Inc (SKT) raised its full-year guidance, reflecting confidence in its strategic initiatives and operational execution.
Negative Points
- The company faced temporary closures due to hurricanes, impacting operations at some centers.
- Despite strong leasing activity, some centers experienced frictional vacancy due to retenanting efforts.
- High construction costs limit new development opportunities, focusing the company on acquisitions instead.
- The retail market faces uncertainties, such as tariffs and lower US consumption, which could impact future performance.
- Expense recoveries, while strong, are influenced by both increased base rents and operating expenses, which may fluctuate.
Q & A Highlights
Q: Given the market's concerns about tariffs and lower US consumption, how do you see Tanger positioned in the current retail environment?
A: Stephen Yalof, President and CEO, mentioned that despite the cyclical nature of the business, Tanger is well-positioned to benefit from the discount channel's expected contribution to sales. The early holiday shopping trends indicate strong consumer interest, and Tanger's focus on offering great brands at great value aligns well with current consumer preferences.
Q: Can you elaborate on the progress of retenanting efforts and the introduction of aspirational brands in 2024?
A: Stephen Yalof highlighted the success of bringing in brands like Sephora, which attract a younger and aspirational customer base. This strategy has been effective in increasing traffic and diversifying the tenant mix, with plans to continue this approach into 2025.
Q: What are your expectations for leasing spreads in 2025, and can you maintain the current pace?
A: Michael Bilerman, CFO, stated that Tanger expects to continue seeing positive leasing spreads due to low occupancy costs and the opportunity to grow rents to low double digits, reflecting the under-market rates of current tenants.
Q: How is Tanger approaching acquisitions, and are there more opportunities in the pipeline?
A: Michael Bilerman noted that Tanger is actively evaluating both outlet and open-air lifestyle centers, focusing on assets where they can add value through their leasing and marketing platforms. The acquisition environment remains competitive, but Tanger is pursuing both marketed and off-market transactions.
Q: With the recent hurricanes, should we expect any impact on financials for the fourth quarter?
A: Stephen Yalof confirmed that there were no significant impacts from the hurricanes, as most stores reopened quickly and continued to pay rent. Therefore, there should be no notable effect on the financials for the fourth quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
