Tanger Announces the Amendment, Increase and Extension of its Unsecured Lines of Credit
- Increased borrowing capacity by $100 million to $620 million
- Maturity extended to April 2029 with extension options
- Improved pricing grid with a reduction of 15 basis points
- Enhanced flexibility for growth initiatives
- Maintained all financial covenant thresholds
- None.
Insights
Amending and extending credit facilities often signal a company's proactivity in managing its capital structure and debt profile. Tanger's move to increase its unsecured lines of credit from $520 million to $620 million, with an extension to April 2029, is a strategic financial maneuver to bolster liquidity. With the added flexibility of an accordion feature to potentially raise borrowing capacity to $1.2 billion, Tanger is poised to support its expansion initiatives. The improved pricing grid, notably the 15 basis point reduction, is indicative of a strong credit rating and will effectively lower interest expenses, potentially improving net income margins.
The backing from prominent financial institutions like Bank of America Securities and Wells Fargo Securities underscores market confidence in Tanger's financial health. Investors might interpret this news as a sign of financial prudency and strategic planning, potentially influencing stock valuation in a positive manner, provided that the additional liquidity is used for accretive projects that contribute to Tanger's revenue streams and profitability.
The retail sector is highly competitive and sensitive to consumer trends and economic conditions. Tanger's focus on outlet and open-air retail spaces is a strategic move to capitalize on the consumer shift towards discount shopping and experiential retail. By securing a larger unsecured line of credit with favorable terms and maintaining financial covenants, Tanger demonstrates it is maintaining its leverage within acceptable industry norms.
However, the retail landscape is subject to shifts in consumer spending and the broader economic environment. As such, Tanger's financial flexibility will be advantageous in navigating industry headwinds, such as economic downturns or shifts in consumer preferences. For stakeholders, the ability to expand and renovate properties or acquire new centers could drive foot traffic and occupancy rates, which are critical metrics in the retail property sector. However, the benefit is contingent on prudent investment decisions that align with market demands and consumer behavior.
The terms of a credit agreement are reflective of a company's risk profile from a lender's perspective. In Tanger's case, the maintenance of financial covenant thresholds in conjunction with the credit line increase indicates that lenders are comfortable with the company's current risk and ability to meet its financial obligations. It also implies confidence in the company's operational strength and growth prospects.
From a credit risk standpoint, the increase in borrowing capacity must be managed against the backdrop of interest rate trends and economic conditions. Should interest rates rise or the economy falter, Tanger's interest expenses would increase, impacting its cost of capital and potentially affecting profitability. Stakeholders should consider how effectively Tanger can deploy the additional capital towards growth while monitoring its leverage ratios to mitigate potential credit risk exposures.
Capacity Increased by
Maturity Extended to April 2029 including Extension Options
Pricing Grid Improved
"We appreciate the continued strong support from our lender group," commented Stephen Yalof, President and Chief Executive Officer. "With the strength of Tanger's balance sheet and operating platform, the company is well positioned to continue to execute on our long-term growth strategies and unlock additional value for all of our stakeholders."
"Following the addition of three new centers in 2023, this amendment increases Tanger's liquidity, reduces interest expense and extends our maturity, enhancing flexibility to pursue our growth initiatives while maintaining a strong credit profile," added Michael Bilerman, Executive Vice President, Chief Financial Officer and Chief Investment Officer.
Key elements of the amendments are as follows:
- Extended maturity to April 2028, with options to extend for an additional year to April 2029
- Borrowing capacity increased to
$620 million $520 million $1.2 billion - Revised ratings-based pricing grid, including a reduction of 15 basis points at Tanger's current level
- All financial covenant thresholds were maintained
BofA Securities, Inc.; Wells Fargo Securities, LLC; Truist Securities, Inc.; TD Bank, N.A. and
About Tanger®
Tanger Inc. (NYSE: SKT) is a leading owner and operator of outlet and open-air retail shopping destinations, with over 43 years of expertise in the retail and outlet shopping industries. Tanger's portfolio of 38 outlet centers, one adjacent managed center and one open-air lifestyle center comprises over 15 million square feet well positioned across tourist destinations and vibrant markets in 20 U.S. states and
Forward-Looking Statements
Certain statements made in this press release contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe the Company's future plans, strategies, beliefs and expectations, are generally identifiable by use of the words "anticipate," "believe," "can," "continue," "could," "designed," "estimate," "expect," "forecast," "goal," "intend," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "target," "will," "would," or similar expressions, and include the Company's expectations regarding future financial results and assumptions underlying that guidance, long-term growth, uses of and efforts to reduce costs of capital, liquidity, and cash flows.
You should exercise caution in relying on forward-looking statements since they involve known and unknown risks, uncertainties and other important factors which are, in some cases, beyond our control and which could materially affect our actual results, performance or achievements. Other important factors which may cause actual results to differ materially from current expectations include, but are not limited to, the important factors set forth under Item 1A - "Risk Factors" in the Company's and the Operating Partnership's most recently filed Annual Report on Form 10-K, as may be updated or supplemented in the Company's Quarterly Reports on Form 10-Q and the Company's other filings with the Securities and Exchange Commission ("SEC"). Accordingly, there is no assurance that the Company's expectations will be realized. The Company disclaims any intention or obligation to update the forward-looking statements, whether as a result of new information, future events or otherwise. You are advised to refer to any further disclosures the Company makes or related subjects in the Company's Current Reports on Form 8-K that the Company files with the SEC.
Investor Contact Information
Doug McDonald
SVP, Treasurer and Investments
T: (336) 856-6066
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SOURCE Tanger
FAQ
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