Tanger Outlets(US:SKT)2022-05-06 15:45Financial Data and Key Metrics Changes - The company reported core FFO of $0.45 per share, a 12.5% increase compared to the prior year [25] - Same-center NOI increased by 9.9% year-over-year to $78.2 million, driven by occupancy growth and revenue reversals [25][26] - The net debt to adjusted EBITDAre improved to 5.4x from 6.8x a year ago, with a weighted average interest rate of 3.1% [26] Business Line Data and Key Metrics Changes - Total portfolio occupancy reached 94.3%, up 230 basis points from the previous year [11] - Leasing spreads turned positive with blended average rental rates up 1.3% for all comparable renewed and re-tenanted leases [12] - Tenant sales were strong at $464 per square foot, nearly a 20% increase from the pre-pandemic period in 2019 [11] Market Data and Key Metrics Changes - Traffic in Q1 was up about 1% compared to the same period last year, with April traffic returning despite inflationary pressures [10] - The company executed 1.8 million square feet of leases across 375 transactions, representing a 39% increase in space and a 42% increase in transactions from the prior year [16] Company Strategy and Development Direction - The company is focused on three strategic priorities: accelerating leasing, commercializing marketing, and reshaping operations [13] - New brands have been added to the portfolio, including Wolford, St. John, Ulta, and Regatta, with a focus on non-apparel and footwear tenants [15][16] - The company is investing in sustainability initiatives, including expanding its renewable energy footprint and EV charging stations [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about leasing activity and the ability to convert temporary tenants to permanent leases [31][75] - The company is prepared for potential recessionary pressures, having strengthened its balance sheet and converted variable rent to fixed rent [72] - Retailers are pivoting from casual to fashion products, which is driving traffic and sales at the shopping centers [70] Other Important Information - The Board approved a 9.6% increase in the annual dividend, reflecting confidence in the company's performance [27] - The company is on track to break ground on a national project later this quarter, with grand openings scheduled for fall 2023 [23] Q&A Session Summary Question: About the sequential decrease in occupancy - Management noted that some occupancy loss was seasonal and due to portfolio shuffles, but expressed optimism about future leasing activity [30][31] Question: Update on temporary and seasonal tenants - Management confirmed that over 10% of occupancy is related to temporary tenants and emphasized the focus on converting them to permanent leases [36] Question: Strategy for low-occupancy assets - Management stated that all identified low-occupancy assets are cash-flow positive and highlighted ongoing efforts to fill vacancies [40][42] Question: Guidance increase details - Management explained that the guidance increase was driven by prior period rent collections and termination fees, with minimal reserves expected for the remainder of the year [83] Question: Development funding and construction costs - Management confirmed they have sufficient cash and credit facilities to fund developments, despite rising construction costs [87] Question: Customer acquisition strategies - Management discussed initiatives like the TangerStyle program to attract new customers and enhance the value proposition for TangerClub members [96][97]