Tanger: Building Wealth With Consistent Returns And Growth

Core Insights - Tanger Inc. (NYSE:SKT) is positioned as a strong investment opportunity due to its unique business model and consistent performance in the retail sector [1][6] - The company has demonstrated robust same-store NOI growth and high occupancy rates, which contribute to its appeal for income-focused investors [2][6] Company Overview - Tanger Inc. is the largest pure-play owner of open-air outlet centers in the U.S. and Canada, with a portfolio of 40 strategically located retail centers [2] - The outlet model has proven resilient against the retail apocalypse, attracting bargain-seeking customers and maintaining a simple, low-maintenance business structure [2] Financial Performance - In Q2 2024, Tanger achieved 8% year-over-year same-store NOI growth, driven by strong retailer demand and a 15% average rent spread on new and renewal leases [2][3] - The company reported a 13% year-over-year growth in FFO per share, reaching $0.53, supported by the addition of three new centers [2][3] Guidance and Future Prospects - Management raised guidance for full-year Core FFO per share growth to 6.5%, with a midpoint target of $2.07, and increased same-store NOI growth expectations to 4.0% [3] - The company is actively attracting popular brands, including six new Sephora stores, enhancing its portfolio and consumer appeal [3] Risk Management - Despite potential risks from higher interest rates and retail sector challenges, Tanger is well-prepared to manage tenant issues and maintain occupancy rates [3] - The company has a strong balance sheet with a net debt to EBITDAre ratio of 5.4x, below the safe threshold for REITs, and expects to reduce leverage further [3] Dividend and Valuation - Tanger offers a 3.6% dividend yield, with a payout ratio of 51%, allowing for retained capital for growth and future dividend increases [4] - The stock's forward P/FFO is 14.6, slightly below its historical average, indicating reasonable valuation for potential investors [4][5] Investment Appeal - Tanger presents a quality opportunity for income-focused investors, combining stability and growth potential through its strong portfolio and consistent financial performance [6] - The current valuation, alongside a reasonable dividend yield and expected FFO growth, makes it an attractive option in the current market [5][6]