Tanger Outlets(US:SKT)2024-05-01 16:02Financial Data and Key Metrics Changes - In Q1 2024, core FFO per share increased to $0.52 from $0.46 in the same quarter last year, reflecting solid operating growth and contributions from new centers [21] - Same center NOI grew by 5.2% in Q1 2024, driven by robust leasing and positive rent spreads [22] - The company increased its core FFO per share guidance for 2024 by $0.01 to a range of $2.03 to $2.11, indicating a growth of 4% to 8% over 2023 [28] Business Line Data and Key Metrics Changes - The company leased over 2.3 million square feet of GLA over the trailing 12 months, with rent spreads of 36% for re-tenanted space and 11% for renewals [14][15] - Portfolio occupancy remained stable at 96.5%, with the same center portfolio up 60 basis points [9] Market Data and Key Metrics Changes - Traffic in Q1 2024 was slightly up compared to last year, with sales per square foot increasing to $437, showing sequential improvement [11] - The company is benefiting from demographic, travel, and migration trends that are driving demand for its centers [10] Company Strategy and Development Direction - The company is focused on enhancing its portfolio through leasing, operating, and marketing efforts, as well as selectively pursuing external growth opportunities [7] - There is a strategic emphasis on re-tenanting and right-sizing stores to improve the overall merchandising mix and shopper experience [16] - The company aims to attract both tourist and local shoppers by diversifying its tenant mix, including adding food and beverage options and entertainment [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about sales growth, driven by the replacement of older brands with more productive retailers and a balanced marketing approach targeting both tourists and local customers [85] - The company anticipates that its strategic initiatives will lead to continued occupancy and NOI growth, despite potential fluctuations in renewal rates [41][56] Other Important Information - The company amended its lines of credit, increasing liquidity and reducing borrowing costs, which enhances its ability to pursue growth initiatives [25][26] - A 5.8% increase in the annualized dividend to $1.10 per share was approved, maintaining a low payout ratio of 54% [27][80] Q&A Session Summary Question: Can you elaborate on enhancing the merchandising mix? - Management indicated that they are successfully bringing in new brands and diversifying tenant offerings, including sit-down restaurants and new categories [33][34] Question: What is the expected trend for tenant retention and occupancy? - Management expects some decline in renewal rates as they focus on re-tenanting, but they believe this strategy will enhance overall portfolio productivity [41][42] Question: How is the digital strategy impacting customer engagement? - The company is using digital tools to communicate offers and drive traffic, although they do not rely on digital data to value real estate [44][45] Question: What is the outlook for renewal spreads given current sales trends? - Management believes they can maintain positive renewal spreads by replacing underperforming tenants with more productive retailers [102][110] Question: How does retailer inventory strategy affect outlet demand? - Management noted that many brands use outlets to clear excess inventory, and they have implemented a pop-up strategy to accommodate this need [110]