Tanger Outlets(US:SKT)2023-02-27 14:09Portfolio Overview - As of December 31, 2022, the consolidated portfolio consisted of 29 outlet centers with a total gross leasable area of approximately 11.4 million square feet, 97% occupied, containing over 2,200 stores representing approximately 600 store brands[27] - As of December 31, 2022, the consolidated portfolio consists of 29 outlet centers totaling 11.4 million square feet located in 18 states, with an additional center under construction[142] - The company owns interests in six other outlet centers totaling approximately 2.1 million square feet through unconsolidated joint ventures, including two in Canada[142] - The outlet center in Deer Park, New York is the only property that comprises 10% or more of the consolidated total assets as of December 31, 2022[143] Financial Performance - For the year ended December 31, 2022, total rental revenues were $421.4 million, comprising $319.2 million in fixed rental revenues and $102.2 million in variable rental revenues[46] - Net income for 2022 increased to $85.8 million, up $76.3 million from $9.5 million in 2021[217] - Rental revenues rose by $13.7 million in 2022, totaling $421.4 million compared to $407.8 million in 2021, driven by increased occupancy from 93% to 95%[218] - Management, leasing, and other services revenue increased by $746,000 in 2022, totaling $7.2 million compared to $6.4 million in 2021[220] - Property operating expenses increased by $3.2 million in 2022, totaling $143.9 million, primarily due to higher property insurance and taxes[223] - General and administrative expenses rose by $5.7 million in 2022, influenced by higher compensation costs and executive severance costs totaling $2.4 million[225] - The company collected 99% of the deferred rents from tenants due to COVID-19 by December 31, 2022[215] Development and Expansion - The Company broke ground on its 37th center in Nashville, Tennessee, expected to open in Q3 2023, with an estimated total cost of $142.0 million to $150.0 million and a projected stabilized yield of 7.0% to 7.5%[32] - The company is developing a new outlet center in Nashville, Tennessee, as part of its expansion strategy[94] - The company has an ongoing strategy of acquiring, developing, and expanding outlet centers[144] - The company intends to continue evaluating potential developments, expansions, and acquisitions of outlet centers, including a project in Nashville[204] Tenant and Lease Management - The Company has a diverse tenant base, with no single tenant accounting for more than 7% of leasable square feet or 6% of combined rental revenues as of December 31, 2022[46] - The company has a diverse tenant mix, with significant contributions from brands like SPARC Group and Premium Apparel, LLC[167] - The company is actively managing lease expirations to maintain revenue stability and tenant relationships[173] - Leases with outlet center tenants typically have an initial term ranging from 5 to 10 years, with fixed monthly rent and potential upward adjustments based on tenant sales volume[145] - The average initial rent for new leases in 2022 was $31.58 per square foot, reflecting a 10.1% increase compared to 2021[212] - In 2022, renewals of existing leases covered 1,693,000 square feet with an initial rent of $30.72 per square foot, while new tenants occupied 122,000 square feet at $43.47 per square foot[163] Market and Economic Conditions - The company’s financial results for 2020 were materially adversely impacted by COVID-19, but metrics such as traffic to centers and sales reported by tenants returned to near or above pre-pandemic levels in 2021 and 2022[107] - Average overall occupancy rates increased from 95% at the end of 2021 to 97% at the end of 2022, indicating a recovery in tenant performance post-COVID-19[111] - Approximately 47% of the square footage of the consolidated portfolio is located in coastal areas at risk of storm intensity, and 16% is in areas at risk of rising sea levels, which could impact demand for retail space[115] - The company faces competition for the acquisition and development of outlet centers, which may affect its ability to complete identified acquisitions[101] - The company’s operations are significantly dependent on the performance of retail tenants, with potential adverse effects from tenant bankruptcies or early lease terminations[110] Capital and Liquidity Management - The company aims to maintain a conservative leverage position while pursuing new development, expansion, and acquisition opportunities[62] - The company plans to utilize cash from operations, cash equivalents, and existing lines of credit to fund capital expenditures in 2023[63] - The company anticipates sufficient cash flow to cover operating expenses, debt service obligations, and dividend payments in both the short and long term[64] - The company is focused on strengthening its capital and liquidity position by controlling construction and overhead costs and generating positive cash flows[67] - The company is subject to risks associated with debt financing, including potential insufficiency of cash from operating activities to meet required payments[124] Corporate Governance and Social Responsibility - The company integrates ESG practices into its business, focusing on community involvement, energy efficiency, and climate change[84] - The company has a Diversity, Equity, and Inclusion Council, with 82% of field employees identifying as female and 26% of the total workforce being racial minorities[81] - The company is subject to various federal, state, and local regulations, and believes it complies with applicable statutes affecting environmental issues and workplace safety[90] Shareholder Information - The company paid dividends of $0.7150 per share in 2021 and $0.8025 per share in 2022, with a quarterly dividend of $0.22 declared on January 19, 2023, to be paid on February 15, 2023[192] - As of December 31, 2022, the company had approximately $80.0 million remaining under its share repurchase authorization, with no shares repurchased since the plan's authorization[190] - The company operates as a REIT and is required to distribute at least 90% of its taxable income to shareholders, complying with REIT taxable income distribution requirements for the 2022 tax year[192] - The company’s total distributions per common unit for 2022 amounted to $0.8025, with quarterly distributions increasing throughout the year[201] - The company has 346 common shareholders of record as of February 1, 2023[189] - The company’s common shares are traded on the New York Stock Exchange under the ticker symbol "SKT" since May 28, 1993[188] Risks and Challenges - The company may face increased costs and reputational harm due to the growing focus on environmental, sustainability, and social initiatives[116] - The company may face adverse consequences from litigation that could negatively impact financial condition and cash flows[123] - Cybersecurity risks are a concern, as attacks could disrupt business operations and result in the loss of sensitive information[137] - The success of the company significantly depends on its ability to attract and retain key personnel, with potential adverse effects from the loss of key management[122] - The company recorded an impairment charge related to long-lived assets and investments in consolidated joint ventures, with one outlet center having a carrying value of approximately $113.0 million, but no impairment charge was recorded as the carrying amount is deemed recoverable[99] - There were no impairment charges recorded in 2022, following a $7.0 million charge in 2021 related to the Foxwoods outlet center[226]