Tanger Outlets(US:SKT)2024-02-16 17:34Financial Data and Key Metrics Changes - Core FFO for Q4 2023 was $0.52 per share, up from $0.47 per share in Q4 2022, with full-year Core FFO at $1.96 compared to $1.83 in the prior year, reflecting a 7.1% increase [23][36] - Same center NOI increased by 5.4% for the quarter and 6.2% for the year, driven by gains in occupancy and strong rent spreads [36][48] - The company maintained a net debt to adjusted EBITDA ratio of 5.8 times, which is expected to improve to between 5.2 and 5.3 times with a full year of EBITDA from new acquisitions [25][26] Business Line Data and Key Metrics Changes - Year-end occupancy was 97.3%, up from 97% at year-end 2022, but down 70 basis points from the previous quarter due to recent acquisitions [8] - The company executed 544 leases totaling over 2.3 million square feet in 2023, a 9% increase from 2022, with blended average rental rates up 13.3% year-over-year [41][40] Market Data and Key Metrics Changes - The company reported positive trends in leasing activity, with eight consecutive quarters of positive leasing spreads, indicating strong demand from retailers [40][41] - Retailers in categories such as athletic and family apparel saw continued gains, while discretionary categories faced challenges [19] Company Strategy and Development Direction - The company is focused on diversifying and enhancing the shopping experience by investing in dominant open-air retail centers in high-growth markets [12][21] - Future strategies include proactive re-tenanting to replace less productive retailers with more productive ones, which may impact near-term renewal metrics but is expected to drive long-term rent growth [18][79] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued sales and traffic growth into 2024, supported by the launch of the Tanger Digital Loyalty app [44][46] - The company anticipates recurring CapEx in the range of $50 million to $60 million for 2024, reflecting a higher re-tenanting rate and ongoing portfolio investments [28] Other Important Information - The company acquired three new centers in Q4 2023, investing over $400 million, with nearly $300 million deployed during the quarter [24][12] - The company has a largely fixed-rate balance sheet, with 95% of its debt fixed and no significant maturities until late 2026 [27] Q&A Session Summary Question: Can you provide more details on the criteria for future acquisitions? - Management indicated they are looking for dominant centers in markets with strong residential and tourism growth, leveraging their best-in-class leasing and marketing platforms [31][56] Question: What is the outlook for tenant sales productivity with the new leasing strategy? - Management stated they are focused on replacing less productive retailers with more productive ones, which is expected to enhance overall sales productivity [70][79] Question: How does the company plan to manage bad debt in the current environment? - Management noted that they have maintained a reserve for bad debt under 50 basis points and are in constant communication with tenants to manage risks [76][119] Question: What is the expected impact of re-tenanting on same-store NOI? - Management acknowledged that while re-tenanting may cause some short-term downtime, it is expected to lead to higher rents and improved NOI in the long term [102][84] Question: How does the company view the balance between outlet and lifestyle center acquisitions? - Management expressed confidence in both outlet and lifestyle center opportunities, noting synergies between the two and a strategic focus on enhancing the shopping experience [108][124]