Tanger Outlets(US:SKT)2021-11-02 16:20Financial Data and Key Metrics Changes - Core FFO available to common shareholders for Q3 2021 was $0.47 per share, up from $0.44 per share in Q3 2020 [25] - Same-center NOI for the consolidated portfolio increased by 11.5% to $73.8 million, driven by a rebound in variable rents and other revenues [26] - Net debt to adjusted EBITDA improved to 5.3 times as of September 30, compared to 7.2 times for the same period last year [29] - Guidance for core FFO was increased to a range of $1.67 to $1.71 per share, reflecting a 9% increase at the midpoint [31] Business Line Data and Key Metrics Changes - Portfolio occupancy returned to pre-pandemic levels at 94.3%, up 140 basis points year-over-year [12] - Blended average rent spreads improved by 240 basis points on a cash basis compared to the previous quarter [13] - Tenant sales reached an all-time high of $448 per square foot, representing a 13% increase over the comparable 2019 period [17] - Non-rental revenues doubled compared to 2020 and increased by 38% over 2019 [20] Market Data and Key Metrics Changes - Traffic for the quarter was approximately 99% of the same period in 2019, with a return to pre-pandemic levels in September [17] - The company is focusing on growing its non-apparel and footwear tenant base, adding new brands in furniture, home goods, wellness, and beauty [18] Company Strategy and Development Direction - The company is executing a strategic plan focused on maximizing NOI and converting short-term leases into permanent deals [23] - There is a strong emphasis on enhancing the customer experience through new tenant categories and marketing partnerships [19] - The company is optimistic about the holiday shopping season and is proactively addressing potential logistics and staffing issues [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about sales growth and the ability to navigate challenges in the retail environment [33][37] - The company is seeing strong leasing momentum and is encouraged by the addition of new brands and categories [23] - Management is focused on maintaining a strong financial position while exploring growth opportunities [30] Other Important Information - The company has a strong pipeline of leasing activity, with a focus on home products and food and beverage categories [45] - The company is exploring acquisition opportunities and has established a peripheral land team to capitalize on un-monetized land [53][55] Q&A Session Summary Question: Outlook on percentage rent contribution - Management noted that variable rent numbers have been strong and expressed optimism about sales growth going into the fourth quarter [33] Question: Contribution of new tenant categories - Management highlighted significant deals in the home category and noted improved weekday traffic benefiting food retailers [34] Question: Fourth quarter guidance details - Management indicated that lower expectations for overage rents and higher operating expenses are primary drivers for conservative guidance [37] Question: Leasing pipeline and occupancy outlook - Management reported strong leasing momentum and a focus on home products, which are expected to drive traffic [44] Question: Growth of other revenues - Management discussed the potential for growth in marketing partnerships and onsite events, which have proven profitable [46] Question: Development plans for national projects - Management confirmed they are on track to start development in early 2022 [51] Question: Opportunities for redeployment of excess cash - Management indicated there are active acquisition opportunities and plans for peripheral land development [53] Question: Entertainment concepts in non-apparel growth - Management mentioned ongoing negotiations for entertainment concepts that will enhance customer engagement [60] Question: Supply chain concerns for outlet stores - Management expressed confidence in retailers' preparedness for the holiday season despite potential supply chain issues [61] Question: Dynamics of percentage rent deals - Management explained the strategy of trading base rent for variable rent components, which has proven beneficial [81] Question: Occupancy costs and conversion of leases - Management stated that they are successfully converting short-term leases into long-term deals, enhancing cash flow [87]