GREENSBORO, N.C., April 29, 2014 /PRNewswire/ -- Tanger Factory Outlet Centers, Inc. (NYSE: SKT) today reported its financial results for the three months ended March 31, 2014.  Funds from operations ("FFO") available to common shareholders, a widely accepted supplemental measure of REIT performance, increased 4.5% to $42.8 million, or $0.43 per share, for the three months ended March 31, 2014, compared to FFO of $41.0 million, or $0.42 per share for the three months ended March 31, 2013.  Adjusted funds from operations ("AFFO") increased 7.1% to $0.45 per share for the three months ended March 31, 2014, compared to $0.42 per share for the three months ended March 31, 2013.  

"For the first quarter of 2014, weather-related outlet center closures within our consolidated portfolio were nearly five times greater than in the first quarter of last year.  Snow removal expense for the same period was more than double the prior year.  In spite of these extraordinary headwinds, our diversified portfolio generated same center net operating income growth of 3.3%.  AFFO per share for the quarter was in line with our internal expectations, and represented a healthy 7.1% increase.  The primary drivers were related to the properties developed and acquired during 2013, and same center net operating income growth," commented Steven B. Tanger, President & Chief Executive Officer.  "AFFO growth creates incremental cash flow that we intend to continue to reinvest in our business.  From 2010 to 2013, the excess cash flow above our common dividend increased at a compounded annual growth rate of 35.5%.  Our excess cash flow last year was over $100 million, which represents substantial growth compared to a decade prior, when it was only a little more than $1 million per month.  Our low cost of occupancy and the long-term nature of our leases, which are not impacted by short-term fluctuations in tenant sales, allow us to continue to grow our cash flow," he added.

 

 

As adjusted for the charges above, net income available to common shareholders for the three months ended March 31, 2014 increased 0.8% to $15.8 million, or $0.16 per share, as compared to net income of $15.6 million, or $0.16 per share for the three months ended March 31, 2013. 

Net income, FFO and AFFO per share are on a diluted basis.  FFO and AFFO are supplemental non-GAAP financial measures used in the real estate industry to measure and compare the operating performance of real estate companies.  Complete reconciliations containing adjustments from GAAP net income to FFO and to AFFO are included in this release.

First Quarter Highlights

• Same center net operating income increased 3.3%
• Blended increase in average base rental rates on space renewed and released throughout the consolidated portfolio of 22.8%, up from 21.2% last year
• Period-end consolidated portfolio occupancy rate of 97.2% at March 31, 2014
• Comparable tenant sales for the consolidated portfolio increased 1.2% to $387 per square foot for the rolling twelve months ended March 31, 2014
• Total market capitalization increased to $4.9 billion at March 31, 2014
• Debt-to-total market capitalization ratio of 27.8% as of March 31, 2014
• Raised common share cash dividend by 6.7%, marking the 21st consecutive year of increased cash dividends
• Interest coverage ratio of 3.76 times
• Announced plans to develop Tanger Outlets Savannah in Pooler, Georgia through a joint venture agreement
• Announced plans to develop a new Tanger Outlet Center in the greater Hartford market in Cheshire, Connecticut through a joint venture agreement

Cash Dividend Increased

On April 10, 2014, Tanger announced that its Board of Directors approved a 6.7% increase in the annual cash dividend on its common shares from $0.90 per share to $0.96 per share.  Simultaneously, the Board of Directors declared a quarterly dividend of $0.24 per share for the first quarter ended March 31, 2014, which will be payable May 15, 2014 to holders of record on April 30, 2014.  The company has paid cash dividends each quarter and has raised its dividend each year since becoming a public company in May 1993.

North American Portfolio Drives Operating Results

During the three months ended March 31, 2014, Tanger executed 259 leases totaling 1,143,000 square feet throughout its consolidated portfolio.  Lease renewals accounted for 870,000 square feet, which generated a 17.9% increase in average base rental rates and represents 52.4% of the space originally scheduled to expire in 2014.  Base rental rate increases on space re-tenanted during the three months ended March 31, 2014 averaged 35.9% and accounted for the remaining 273,000 square feet. 

Consolidated portfolio same center net operating income increased 3.3% during the three months ended March 31, 2014.  For the twelve months ended March 31, 2014, consolidated portfolio comparable tenant sales increased 1.2% to $387 per square foot. 

Investment Activities Provide Potential Future Growth

By the end of 2014, Tanger expects to complete three of the five projects currently under construction.  The company and its 50/50 joint venture partner expect to open a new upscale outlet center in time for the back to school shopping season in the Charlotte, North Carolina market, approximately eight miles southwest of uptown Charlotte at the interchange of I-485 and Steele Creek Road.  The approximately 400,000 square foot project will feature about 90 brand name and designer stores when complete.  Grand opening is currently scheduled for July 31, 2014.

Tanger and its 50/50 Canadian co-owner expect to complete and open two development projects in time for the 2014 holiday shopping season.  The first ground up development of a Tanger Outlet Center in Canada, Tanger Outlets Ottawa, is located in suburban Kanata off the TransCanada Highway.  The approximately 303,000 square foot center will feature about 80 brand name and designer outlet stores when complete.  Originally acquired by the co-owners in December 2011, Tanger Outlets Cookstown is located on the northern end of the Greater Toronto Area directly off Highway 400 at Highway 89, the gateway to Southern Ontario's cottage country, known for its high concentration of vacation homes.  The property is currently undergoing a major expansion and renovation project that will expand the approximately 155,000 square foot property, to approximately 310,000 square feet when complete.  The expansion will add about 35 new brand name and designer outlet stores, while creating an updated exterior for the existing space consistent with that of the expansion.

In addition, Tanger intends to expand Tanger Outlets Westgate in Glendale, Arizona by approximately 65,000 square feet, Tanger Outlets Branson by approximately 25,000 square feet, and Tanger Outlets Park City by approximately 21,000 square feet.  Each of these expansions is currently expected to open in time for the 2014 holiday season.

The company intends to complete the two other projects currently under construction, Tanger Outlets Savannah and Tanger Outlets at Foxwoods, in the first half of 2015.  Other previously announced projects with planned 2015 openings include new developments in Columbus, Ohio and Grand Rapids, Michigan.  The company's most recently announced pre-development site is in the Hartford market in Cheshire, Connecticut.

During the quarter, the company decided to abandon pre-development projects in Clarksburg, Maryland and Scottsdale, Arizona.  As a result of Tanger no longer pursuing these projects, the company recorded a $1.6 million charge in the first quarter of 2014, representing the cumulative related costs.

Balance Sheet Summary

As of March 31, 2014, Tanger had a total market capitalization of approximately $4.9 billion including $1.4 billion of debt outstanding, equating to a 27.8% debt-to-total market capitalization ratio.  The company had $46.9 million outstanding on its $520.0 million in available unsecured lines of credit and 77.6% of Tanger's debt was at fixed rates. For the three months ended March 31, 2014, Tanger maintained an interest coverage ratio of 3.76 times.

Tanger Expects Solid FFO Per Share In 2014

Based on Tanger's internal budgeting process, the company's view on current market conditions, and the strength and stability of its core portfolio, management currently believes its net income available to common shareholders, funds from operations, and adjusted funds from operations for 2014 will be as follows:

 

 

The company's earnings estimates reflect the incremental interest expense of approximately $0.07 per share related to the company's November 2013 Senior Notes offering, a projected increase in same-center net operating income of approximately 3%, and average general and administrative expense of approximately $10.5 million to $11.0 million per quarter.  The company's estimates do not include the impact of any additional rent termination fees, any potential refinancing transactions, the sale of any out parcels of land, or the sale or acquisition of any properties. 

First Conference Call

Tanger will host a conference call to discuss its first quarter results for analysts, investors and other interested parties on Wednesday, April 30, 2014, at 10 a.m. Eastern Time.  To access the conference call, listeners should dial 1-877-277-5113 and provide conference ID # 34699249 to be connected to the Tanger Factory Outlet Centers First Quarter 2014 Financial Results call.  Alternatively, the call will be web cast by SNL IR Solutions and can be accessed at Tanger Factory Outlet Centers, Inc.'s web site by clicking the Investor Relations link at www.tangeroutlet.com.  A telephone replay of the call will be available from April 30, 2014 at 1:00 p.m. through 11:59 p.m., May 15, 2014 by dialing 1-855-859-2056, conference ID # 34699249.  An online archive of the broadcast will also be available through May 15, 2014.

About Tanger Factory Outlet Centers

Tanger Factory Outlet Centers, Inc. (NYSE: SKT), is a publicly-traded REIT headquartered in Greensboro, North Carolina that presently operates and owns, or has an ownership interest in, a portfolio of 44 upscale outlet shopping centers in 26 states coast to coast and in Canada, totaling approximately 13.3 million square feet leased to over 2,700 stores operated by more than 440 different brand name companies.  More than 180 million shoppers visit Tanger Factory Outlet Centers, Inc. annually.  Tanger is filing a Form 8-K with the Securities and Exchange Commission that includes a supplemental information package for the quarter ended March 31, 2014.  For more information on Tanger Outlet Centers, call 1-800-4TANGER or visit the company's web site at www.tangeroutlet.com.

This news release contains forward-looking statements within the meaning of federal securities laws. These statements include, but are not limited to, estimates of future net income per share, FFO and AFFO per share, same center net operating income and general and administrative expenses, as well as other statements regarding plans for new developments and expansions, plans regarding reinvestment of incremental cash flow, the expected timing of the commencement of construction and the openings of the current and new developments, the renewal and re-tenanting of space, tenant sales and sales trends, plans, estimates, intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts.

These forward-looking statements are subject to risks and uncertainties. Actual results could differ materially from those projected due to various factors including, but not limited to, the risks associated with general economic and real estate conditions in the United States and Canada, the company's ability to meet its obligations on existing indebtedness or refinance existing indebtedness on favorable terms, the availability and cost of capital, whether projects in our pipeline convert into successful developments, the company's ability to lease its properties, the company's ability to implement its plans and strategies for joint venture properties that it does not fully control, the company's inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise, and competition. For a more detailed discussion of the factors that affect our operating results, interested parties should review the Tanger Factory Outlet Centers, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

 

 

 

 

           

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