Tanger, fueled by its strategy of tenant diversification and increasingly value-oriented shoppers, posted a healthy third quarter and raised its financial outlook again.
Funds from operations, or FFO, came to 54 cents per common share, or $62.7 million for the third quarter ended Sept. 30, compared with 50 cents per share, or $55.8 million, for the prior-year period. FFO is a key measure of how a real estate investment trust is performing.
Core FFO was 54 cents per common share, or $62.7 million, compared to 50 cents per share, or $55.8 million, for the prior-year period.
Factoring in depreciation and amortization from two acquisitions last year — Bridge Street Town Centre in Huntsville, Ala., and Asheville Outlets in Asheville, N.C. — as well as last year’s launch of Tanger Outlets Nashville — net income was 22 cents per common share, or $24.6 million, compared with 26 cents per share, or $27.2 million, for the prior-year period.
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Based on its solid results year-to-date and trends in the market, the Greensboro, N.C.-based operator of 39 outlet centers and one lifestyle center increased its full-year 2024 guidance again. Net income per diluted share is now expected to be between 88 cents and 92 cents, compared to previous guidance of 85 cents to 92 cents. FFO per share are seen at $2.08 to $2.12, compared to the previous forecast of $2.04 to $2.11. Core FFO per share are seen at $2.09 to $2.13, versus the previous outlook of $2.05 to $2.12.
Tanger already raised its yearly guidance while reporting first- and second-quarter results.
“We are probably better positioned for holiday shopping than most other retail venues because retailers are all talking about how their customer will be seeking value this holiday season,” Stephen Yalof, Tanger’s president and chief executive officer, told WWD Thursday. “We are not discounters. We do not offer commodity at a price. We are branded value, with Adidas, Ralph Lauren, Puma, Nike, Kate Spade, Michael Kors, Tory Burch — really your favorite brands on sale every day.”
For gifts and for self-purchasing, Yalof added, “We fall right into the sweet spot retailers are talking about now.”
Tanger’s stock closed up about 5 percent, or $1.65, to $35.45 on Thursday. Tanger’s third-quarter report was issued after the market closed Wednesday.
Warby Parker, Victoria’s Secret, Ulta, Sephora and Barnes & Noble, as well as restaurant and entertainment concepts Dave & Busters and Texas Roadhouse, are among the brands that have recently opened at certain Tanger open-air outlet centers.
Tanger also opened at its Nashville center a restaurant concept based in Montreal called Eggspecation and a Russo Ristorante Mercato, an Italian restaurant and gourmet market in Tanger Grand Rapids, among other new tenants. “Entertainment uses, whether we are taking them in or they are seeking land very proximate to where our centers are, like the synergy of open air shopping,” Yalof said, citing the addition of a Tiger Woods PopStroke, a sports bar with dining and miniature golf, coming soon to a site adjacent to Tanger Nashville.
Yalof said that Asheville was the only center that shut down for business for a several days due to Hurricane Helene, but the center became a staging area for first responders, including police and Duke Energy linemen working to get electricity restored. “It was almost like a MASH unit. People were camping out on site all night,” Yalof said. However, the Sportsman’s Warehouse store there never closed and provided first responders with apparel, Yalof said.
Overall last quarter, “traffic was pretty flat and sustained,” Yalof said. “Traffic is good.”
The quarter marked some new “local-centric” marketing initiatives, including a guerrilla effort called “Tanger Around Town” involving Tanger team members who get out into the towns to remind people of Tanger activities and events, such as its “Day of Beauty” promotions.
Yalof said beauty was among the best-performing categories last quarter, but he also cited footwear and “a big movement” toward buying wear to work fashion among men.
For holiday, “We are very optimistic,” Yalof said. “Value is going be really important to a majority of consumers. Retailers are well aware there are five fewer days between Thanksgiving and Christmas. Holiday decor started very early. We are doing Black Friday every day,” he said, referring to the daily Black Friday deals that began at Tanger centers Nov. 1.
Now that the presidential election has been decided, Yalof said retailers could see some benefit. “I think the fact there is some certainty now gives some confidence to the marketplace. Uncertainty is definitely a disruptor.”
In other Tanger results, occupancy was 97.4 percent as of Sept. 30, compared to 96.5 percent on June 30 and 98 percent on Sept. 30, 2023.
Average tenant sales per square foot was $438 for the 12 months ended Sept. 30, compared to $439 for the year ended June 30 and $437 for the year ended Sept. 30, 2023.
On a same-center basis, average tenant sales per square foot was $435 for the 12 months ended Sept. 30 compared to $436 for the 12 months ended June 30 and $437 for the 12 months ended Sept. 30, 2023.
In his prepared statement, Yalof said, “Our team remains focused on elevating our shopper experience and attracting in-demand retailer brands and a diversified tenant mix, along with more food and beverage and experiential destinations. Our strategy is driving total rents, including our eleventh consecutive quarter of positive leasing spreads, and we will continue leveraging our platform to realize additional growth. With our strong balance sheet and liquidity, including no significant maturities until late 2026, we have the flexibility to remain opportunistic and are well-positioned to unlock additional value for all our stakeholders.”
