Tanger Outlets(US:SKT)2022-05-09 20:09Part I Item 1. Financial Statements Provides unaudited consolidated financial statements for Q1 2022, detailing the company's financial position, performance, and cash flows Financial Statements of Tanger Factory Outlet Centers, Inc. Q1 2022 saw total revenues of $108.9 million and net income of $20.5 million, with total assets at $2.13 billion and debt at $1.40 billion Consolidated Balance Sheet Highlights (Tanger Factory Outlet Centers, Inc.) | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :--- | :--- | :--- | | Total Assets | $2,134,232 | $2,157,384 | | Total Debt | $1,396,537 | $1,397,076 | | Total Liabilities | $1,623,655 | $1,657,595 | | Total Equity | $510,577 | $499,789 | Consolidated Statements of Operations Highlights (Tanger Factory Outlet Centers, Inc.) | Metric | Q1 2022 (in thousands) | Q1 2021 (in thousands) | | :--- | :--- | :--- | | Total Revenues | $108,868 | $100,694 | | Total Expenses | $78,468 | $80,254 | | Net Income | $21,462 | $4,342 | | Net Income Attributable to Company | $20,518 | $4,133 | | Diluted EPS | $0.19 | $0.04 | Consolidated Cash Flow Highlights (Tanger Factory Outlet Centers, Inc.) | Metric | Q1 2022 (in thousands) | Q1 2021 (in thousands) | | :--- | :--- | :--- | | Net Cash from Operating Activities | $18,854 | $31,276 | | Net Cash from Investing Activities | ($3,340) | $2,717 | | Net Cash from Financing Activities | ($23,914) | $82,956 | | Net (Decrease) / Increase in Cash | ($8,408) | $116,889 | Notes to Consolidated Financial Statements Detailed notes support financial statements, covering property portfolio, $1.4 billion debt, dividends, joint ventures, and accounting policies - As of March 31, 2022, the company owned and operated 30 consolidated outlet centers (11.5 million sq. ft.) and had partial ownership in 6 unconsolidated outlet centers (2.1 million sq. ft.)57 Debt of the Operating Partnership (as of March 31, 2022) | Debt Type | Principal (in thousands) | Book Value (in thousands) | | :--- | :--- | :--- | | Senior, unsecured notes | $1,050,000 | $1,036,635 | | Mortgages payable | $60,612 | $61,312 | | Unsecured term loan | $300,000 | $298,590 | | Total | $1,410,612 | $1,396,537 | - In January 2022, the company declared a cash dividend of $0.1825 per common share99 - As of March 31, 2022, the company had approximately $60.1 million remaining available for sale under its At-the-Market (ATM) share offering program100 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management analyzes Q1 2022 financial performance, highlighting increased net income, strong occupancy, robust liquidity, and growth in key non-GAAP metrics General Overview & Leasing Activity Overview of the company's property portfolio, 94.1% consolidated occupancy, and positive leasing activity with a 1.1% rent spread - As of March 31, 2022, the portfolio consisted of 30 consolidated outlet centers in 18 states and 6 unconsolidated outlet centers141 Leasing Activity (Trailing 12 Months Ended March 31) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Comparable Space | | | | Leasing Transactions | 297 | 228 | | Square Feet (in 000's) | 1,498 | 1,170 | | Rent Spread | 1.1% | (7.9)% | | Total Space (Comparable & Non-Comparable) | | | | Leasing Transactions | 353 | 246 | | Square Feet (in 000's) | 1,713 | 1,230 | Results of Operations Q1 2022 net income increased by $17.1 million to $21.5 million, driven by higher rental revenues, reduced G&A, and lower interest expense - Net income increased by $17.1 million to $21.5 million in Q1 2022, compared to $4.3 million in Q1 2021156 Change in Rental Revenues (Q1 2022 vs Q1 2021) | Component | Increase/(Decrease) (in thousands) | | :--- | :--- | | Rental revenues from existing properties | $6,417 | | Lease termination fees | $1,922 | | Rental revenues from properties disposed | ($515) | | Straight-line rent adjustments | ($294) | | Amortization of rent adjustments, net | ($388) | | Total Increase | $7,142 | - General and administrative expenses decreased by $1.3 million, partly because the 2021 period included $2.4 million in costs related to a voluntary retirement plan and executive severance161 - Interest expense decreased by $2.7 million due to the redemption of higher-rate senior notes in 2021 and a paydown of the unsecured term loan164 Liquidity and Capital Resources Strong liquidity of $672.8 million as of March 31, 2022, with 96% unsecured debt and compliance with all debt covenants - Total liquidity as of March 31, 2022 was approximately $672.8 million, including cash and full undrawn capacity under its $520 million unsecured lines of credit206 - As of March 31, 2022, the company was in compliance with all debt covenants, with Total Debt to Adjusted Total Assets at 41%, below the 60% threshold210211 - The next significant debt maturity is the unsecured term loan due in April 2024207 - In April 2022, the Board of Directors declared a cash dividend of $0.20 per common share, an increase from the previous quarter179 Non-GAAP Supplemental Measures Reconciles non-GAAP metrics, showing Q1 2022 FFO of $49.4 million ($0.45 per share) and 9.6% Same Center NOI growth FFO and Core FFO Reconciliation (Q1 2022 vs Q1 2021) | Metric (in thousands, except per share) | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net Income | $21,462 | $4,342 | | Adjustments (Depreciation, etc.) | $28,415 | $34,254 | | FFO | $49,877 | $38,596 | | FFO available to common shareholders | $49,443 | $38,204 | | Core FFO available to common shareholders | $49,443 | $40,600 | | FFO per share - diluted | $0.45 | $0.38 | | Core FFO per share - diluted | $0.45 | $0.40 | Same Center NOI Growth (Q1 2022 vs Q1 2021) | Metric (in thousands) | Q1 2022 | Q1 2021 | % Change | | :--- | :--- | :--- | :--- | | Same Center NOI - Consolidated | $71,288 | $65,048 | 9.6% | | Same Center NOI - Total Portfolio | $78,192 | $71,127 | 9.9% | Economic Conditions and Outlook Discusses economic conditions, noting improved 94.3% portfolio occupancy, active lease renewals, and challenges from inflation and supply chain issues - Total portfolio occupancy improved to 94.3% as of March 31, 2022, compared to 92.0% as of March 31, 2021252 - As of April 30, 2022, the company had lease renewals executed or in process for 52.4% of the space scheduled to expire during 2022249 - Management acknowledges potential pressures from rising inflation, logistics, and staffing issues on retailers, but notes that sales per square foot for the trailing twelve months were near historical highs250 Item 3. Quantitative and Qualitative Disclosures about Market Risk Details market risks, primarily interest rate and foreign currency, with only 3% of debt at variable rates and minimal impact from LIBOR changes - As of March 31, 2022, 3% of outstanding consolidated debt had variable interest rates, with a 100 basis point change in LIBOR impacting annual interest expense by approximately $401,000255 - The company uses interest rate swap agreements to fix rates on debt with notional amounts totaling $300.0 million254 - The company is exposed to foreign currency risk from its investments in Canadian outlet centers, but generally does not hedge this exposure261 Item 4. Controls and Procedures CEO and CFO confirm effective disclosure controls and procedures as of March 31, 2022, with no material changes to internal controls - Based on an evaluation as of March 31, 2022, the CEO and CFO concluded that the disclosure controls and procedures for both the Company and the Operating Partnership were effective262263 - There were no changes to internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls262263 Part II. Other Information Item 1. Legal Proceedings Discusses routine legal proceedings, which management believes will not materially impact financial condition or results of operations - The Company and Operating Partnership are engaged in routine legal proceedings, which management believes will not have a material adverse effect on financial results265 Item 1A. Risk Factors No material changes to risk factors previously disclosed in the Annual Report on Form 10-K for December 31, 2021 - No material changes have occurred from the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2021266 Item 2. Issuer Purchases of Equity Securities No share repurchases occurred in Q1 2022, with $80.0 million remaining authorized under the program through May 2023 - The company did not repurchase any of its shares during the three months ended March 31, 2022268 - As of March 31, 2022, approximately $80.0 million remained authorized for repurchase under the existing program, which runs through May 31, 2023268 Item 6. Exhibits Lists exhibits filed with Form 10-Q, including certifications from Principal Executive and Financial Officers and XBRL data - The report includes required certifications from the Principal Executive Officer and Principal Financial Officer for both Tanger Factory Outlet Centers, Inc. and Tanger Properties Limited Partnership270