Tanger Outlets(SKT) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Full-year core FFO per share increased by 8.7% year-over-year, reaching $2.13 per share, driven by a 5.1% increase in same center NOI [8][20] - Same center NOI for Q4 increased by 3%, reflecting higher rental revenues due to strong retailer demand and leasing activity [21] - Center occupancy at year-end was 98%, up 70 basis points year-over-year, with same center occupancy at 98.2%, up 90 basis points for the year [10][21] Business Line Data and Key Metrics Changes - Comparable sales for the trailing 12-month period grew approximately 1% year-over-year, reaching$ 444 per square foot on a total portfolio basis [9] - The company completed 473 transactions across 2.1 million square feet, achieving total rent spreads of 50% [11] - New and expanded tenant categories, including restaurants and beauty brands, contributed to the success of the portfolio [9] Market Data and Key Metrics Changes - The company added five centers over the past two years, increasing GLA by approximately 2.2 million square feet and generating over $50 million in first-year NOI [12] - Recent acquisitions include The Promenade at Chenal for$ 73 million and Pinecrest for $167 million, both expected to deliver an approximate 8% return in their first year [22] Company Strategy and Development Direction - The company aims to continue growth through existing and newly acquired centers, focusing on high-quality assets in markets with population and employment growth [16] - The strategy includes targeting dominant open-air specialty retail centers to create additional value through leasing, marketing, and operations [17] - The company remains confident in the outlet channel, emphasizing its value proposition for both retailers and shoppers [17] Management's Comments on Operating Environment and Future Outlook - Management noted strong consumer demand and traffic growth, with retailers planning to expand rather than pull back [44][45] - The company introduced guidance for 2025, projecting core FFO per share growth of 4% to 8% and same-center NOI growth of 2% to 4% [26][27] - Management expressed optimism about leveraging their platform for growth in newly acquired centers, despite some vacancies and re-merchandising opportunities [47] Other Important Information - The company ended the year with low leverage and ample liquidity, with$ 56 million in cash and full availability under $620 million unsecured lines of credit [25] - The annualized cash dividend remains well covered, with a payout ratio of 61% of funds available for distribution [25] Q&A Session Summary Question: Capital needs for this year and acquisition pipeline - Management indicated that the ATM is for future liquidity and that they are actively working on potential deals, with a strong balance sheet to support capital deployment [30][32][33] Question: Changes in demand or spending patterns - Management reported strong consumer performance and retailer confidence, despite weather-related challenges in January [44][45] Question: Lease expiration schedule and renewal conversations - Management stated there are no significant risks regarding retention rates, focusing on replacing weaker retailers with stronger ones [52][53] Question: Future growth from lifestyle centers - Management confirmed ongoing interest in acquiring lifestyle centers, emphasizing the importance of adding value through operations and marketing [56][60] Question: Fixed CAM and its impact on results - Management noted that most tenants are on a fixed CAM basis, contributing to higher rent spreads and overall revenue growth [63][64] Question: Impact of competitors and market dynamics - Management acknowledged competition in every market but expressed confidence in their positioning and growth potential due to surrounding developments [153][155] Question: Acquisitions and pricing strategy - Management emphasized that acquisitions are focused on adding value, with an 8% yield being a target but not the sole criterion for decisions [130][132]