Tanger Factory: 3.5% Yield, Margin Of Safety, Moderate FFO Multiple

Core Viewpoint - Tanger Inc. is a growing shopping center-focused real estate investment trust (REIT) with strong core funds from operations (FFO) and a low dividend payout ratio, indicating potential for future dividend increases [3][18][19] Financial Performance - In the second quarter, Tanger earned $60.9 million in core FFO, representing a 16% year-over-year increase [7] - The REIT's core FFO per share was $0.53, which comfortably covered the raised dividend payout of $27.50 per share [10] - Tanger revised its 2024 FFO guidance upward to a range of $2.05 to $2.12 per share [13] Dividend Policy - The company maintains a dividend payout ratio of approximately 50% of its core FFO, having raised its dividend twice in the past year [10][19] - The anticipated dividend hikes are supported by a low payout ratio, which provides a margin of safety for passive income investors [11][19] Portfolio Overview - Tanger owns about 15.6 million square feet across 40 properties in North America, with a high occupancy rate of 97.1% in its same-store portfolio [5][6] - The portfolio is primarily open-air shopping centers located in large metropolitan areas, attracting major brands like Nike and The Gap [5] Market Valuation - The stock is currently trading at a 15.0x FFO multiple, which is competitive compared to peers like Kimco Realty and Realty Income [13][19] - There is potential for Tanger to achieve a higher valuation multiple of 16x FFO, suggesting an intrinsic value of $33.30 per share [14] Growth Drivers - The company benefits from re-tenanting its properties, with new leases generating higher rents than previous ones, driving organic FFO growth [8] - Strong lease metrics and positive leasing activity have contributed to the growth in same-store net operating income [4]