TANGER REPORTS FIRST QUARTER RESULTS

Rhea-AI Summary

Tanger Factory Outlet Centers (NYSE:SKT) reported strong financial and operational results for Q1 2022, including a net income of $0.19 per share and FFO of $0.45 per share. Occupancy rose to 94.3%, up from 92.0% year-over-year. Blended rent spreads turned positive, with tenant sales increasing 18.1% to $464 per square foot. The company raised its earnings guidance for 2022, estimating diluted net income per share between $0.69 and $0.77, and FFO per share between $1.71 and $1.79. Additionally, a 9.6% increase in the annual dividend was approved.

Positive

• Net income rose to $20.3 million ($0.19 per share) for Q1 2022, up from $3.9 million ($0.04 per share) year-over-year.
• Funds from Operations (FFO) increased to $49.4 million ($0.45 per share), compared to $38.2 million ($0.38 per share) in the previous year.
• Occupancy improved to 94.3%, up from 92.0% in Q1 2021.
• Annual dividend increased by 9.6% from $0.73 to $0.80 per share.
• Same Center NOI grew by 9.9% year-over-year to $78.2 million.

Negative

• Occupancy declined from 95.3% at the end of 2021 to 94.3% in Q1 2022.
• General and administrative expenses projected to rise to between $69 million and $72 million.

Blended Rent Spreads Turn Positive

Occupancy Grows 230 Basis Points Year Over Year

Raises Earnings Guidance

GREENSBORO, N.C., May 5, 2022 /PRNewswire/ -- Tanger Factory Outlet Centers, Inc. (NYSE:SKT), a leading owner and operator of upscale open-air outlet centers, today reported financial results and operating metrics for the three months ended March 31, 2022. 

"Our first quarter 2022 results reflect our strong operating fundamentals that are driving robust NOI growth, positive leasing spreads and increased tenant sales, resulting in our guidance raise and recently announced dividend increase," said Stephen Yalof, President and Chief Executive Officer. "Traffic during the first quarter exceeded prior-year levels, and trailing twelve-month tenant sales remained strong at $464 per square foot, up 18.1% from the pre-pandemic comparable twelve-month period ended March 31, 2019." 

Mr. Yalof continued, "Consumers are demonstrating their desire to shop at Tanger Centers, and retailers are committed to our open-air destinations as evidenced by our leasing momentum and tenants' desire to expand in our portfolio. We remain focused on sustaining our internal growth as we continue to accelerate leasing, commercialize marketing and reshape operations, along with advancing new development and pursuing opportunities to generate new revenue streams and create long-term portfolio value." 

First Quarter Results

• Net income available to common shareholders was $0.19 per share, or $20.3 million, compared to net income available to common shareholders of $0.04 per share, or $3.9 million, for the prior year period.

• FFO available to common shareholders was $0.45 per share, or $49.4 million, compared to $0.38 per share, or $38.2 million, for the prior year period.

• Core FFO available to common shareholders was $0.45 per share, or $49.4 million, compared to $0.40 per share, or $40.6 million, for the prior year period. Core FFO for the first quarter of 2021 excluded general and administrative expense of $2.4 million, or $0.02 per share, for compensation costs related to a voluntary retirement plan and other executive severance costs, which the Company does not consider indicative of its ongoing operating performance. 

FFO and Core FFO are widely accepted supplemental non-GAAP financial measures used in the real estate industry to measure and compare the operating performance of real estate companies. Complete reconciliations containing adjustments from GAAP net income (loss) to FFO and Core FFO, if applicable, are included in this release. Per share amounts for net income (loss), FFO and Core FFO are on a diluted basis.

Operating Metrics

Key portfolio results for the total portfolio, including the Company's pro rata share of unconsolidated joint ventures, were as follows: 

• Occupancy was 94.3% on March 31, 2022, compared to 95.3% on December 31, 2021 and 92.0% on March 31, 2021
• Average tenant sales productivity of $464 per square foot for the twelve months ended March 31, 2022 increased 18.1% from $393 per square foot for the twelve months ended March 31, 2019
• On a same center basis, average tenant sales increased 15.7% compared to the twelve months ended March 31, 2019
• Lease termination fees totaled $2.6 million for the first quarter of 2022 compared to $0.8 million for the first quarter of 2021
• Same center net operating income ("Same Center NOI") increased 9.9% to $78.2 million for the first quarter of 2022 from $71.1 million for the first quarter of 2021, driven by growth in occupancy, variable rents and other revenues in 2022. The current quarter was also impacted by the reversal of revenue reserves of approximately $3.1 million, compared to $1.7 million in the first quarter of the prior year 

Beginning in the fourth quarter of 2021, the Company has revised the presentation of certain metrics to reflect its total portfolio, consisting of the consolidated portfolio and the pro rata share of its unconsolidated joint ventures. Prior period results have been revised to conform with the current period presentation. 

Same Center NOI is a supplemental non-GAAP financial measure of operating performance. A complete definition of Same Center NOI and a reconciliation to the nearest comparable GAAP measure is included in this release.

Leasing Activity

As of April 30, 2022, Tanger had renewals executed or in process for 52.4% of total portfolio space (including the Company's pro rata share of unconsolidated joint ventures) scheduled to expire during 2022 compared to 53.6% of expiring 2021 space as of April 30, 2021.

The following key leasing metrics are presented for the total domestic portfolio, including the Company's pro rata share of domestic unconsolidated joint ventures.

• Total renewed or re-tenanted leases (including leases for both comparable and non-comparable space) executed during the twelve months ended March 31, 2022 included 375 leases, totaling nearly 1.8 million square feet
• Blended average rental rates increased 1.3% on a cash basis for all comparable renewals and re-tenanted leases that were executed during the twelve months ended March 31, 2022, representing a sequential improvement of 190 basis points. Comparable space excludes leases for space that was vacant for more than 12 months (non-comparable space) 

Dividend 

In April 2022, the Company's Board of Directors approved a 9.6% increase in the annual dividend on its common shares from $0.73 to $0.80 per share. Simultaneously, the Board of Directors declared a quarterly cash dividend of $0.20 per share, payable on May 13, 2022 to holders of record on April 29, 2022.

Balance Sheet and Liquidity 

The following balance sheet and liquidity metrics are presented for the total portfolio, including the Company's pro rata share of unconsolidated joint ventures. As of March 31, 2022: 

• Weighted average interest rate was 3.1% and weighted average term to maturity of outstanding debt, including extension options, was approximately 5.3 years

• Approximately 88% of the total portfolio's square footage was unencumbered by mortgages

• Interest coverage ratio (calculated as Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate ("Adjusted EBITDAre") divided by interest expense) was 4.9x times for the first quarter of 2022 and 4.6x for the twelve months ended March 31, 2022

• Net debt to Adjusted EBITDAre (calculated as net debt divided by Adjusted EBITDAre) improved to 5.4x for the twelve months ended March 31, 2022 from 5.5x for the year ended December 31, 2021

• Total outstanding floating rate debt was approximately $107.9 million (principal), representing approximately 7% of total debt outstanding and 3% of total enterprise value

• Funds Available for Distribution ("FAD") payout ratio was 38% for the first quarter of 2022

• No shares were sold under Tanger's at-the-market equity offering program during the first quarter of 2022

Adjusted EBITDAre, Net debt and FAD are supplemental non-GAAP financial measures of operating performance. Definitions of Adjusted EBITDAre, Net debt and FAD and reconciliations to the nearest comparable GAAP measures are included in this release. 

Guidance for 2022

Driven by strong first quarter 2022 results and management's outlook for the remainder of the year, the Company is increasing 2022 full-year net income and FFO guidance as follows:

 

For the year ending December 31, 2022:	Revised		Previous
	Low Range	High Range	Low Range	High Range
Estimated diluted net income per share	$       0.69	$       0.77	$       0.66	$       0.74
Depreciation and amortization of real estate assets - consolidated and the Company's share of unconsolidated joint ventures	1.02	1.02	1.02	1.02
Estimated diluted FFO per share	$      1.71	$      1.79	$      1.68	$      1.76

Tanger's estimates reflect the following key assumptions:

• Same Center NOI growth for total portfolio (including the Company's pro rata share of unconsolidated joint ventures) between 2.5% and 4.5%

• General and administrative expense of between $69 million and $72 million. The year-over-year growth in general and administrative expense reflects Tanger's continued investments in building the team and technology critical to executing its core strategies of reshaping operations, accelerating leasing and growing commercial strategy through digital transformation

• 2022 weighted average diluted common shares of approximately 105.5 million for earnings per share and 110.5 million for FFO per share

• Combined annual recurring capital expenditures and second generation tenant allowances of approximately $55 million

• Does not include the impact of the acquisition or sale of any outparcels, properties or joint venture interests, or any additional financing activity

First Quarter 2022 Conference Call 

Tanger will host a conference call to discuss its first quarter 2022 results for analysts, investors and other interested parties on Friday, May 6, 2022, at 8:30 a.m. Eastern Time. To access the conference call, listeners should dial 1-877-605-1702. Alternatively, a live audio webcast of this call will be available to the public on Tanger's Investor Relations website, investors.tangeroutlets.com. A telephone replay of the call will be available from May 6, 2022 at approximately 11:30 a.m. through May 20, 2022 at 11:59 p.m. by dialing 1-877-660-6853, replay access code #13728075. An online archive of the webcast will also be available through May 20, 2022.

About Tanger Factory Outlet Centers, Inc.

Tanger Factory Outlet Centers, Inc. (NYSE: SKT) is a leading operator of upscale open-air outlet centers that owns, or has an ownership interest in, a portfolio of 36 centers. Tanger's operating properties are located in 20 states and in Canada, totaling approximately 13.6 million square feet, leased to over 2,600 stores operated by more than 600 different brand name companies. The Company has more than 41 years of experience in the outlet industry and is a publicly-traded REIT. Tanger is furnishing a Form 8-K with the Securities and Exchange Commission ("SEC") that includes a supplemental information package for the quarter ended March 31, 2022. For more information on Tanger Outlet Centers, call 1-800-4TANGER or visit the Company's website at www.tangeroutlets.com.

Safe Harbor Statement

This news release contains certain 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 the safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe the Company's future plans, strategies and expectations, are generally identifiable by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project," "will," "forecast" or similar expressions, and include the Company's expectations regarding future financial results and assumptions underlying that guidance, trends in retail traffic and tenant revenues, development initiatives, renewal trends, new revenue streams, its strategy and value proposition to retailers, uses of capital, liquidity, dividend payments and cash flows. 

You should not rely 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. Important factors which may cause actual results to differ materially from current expectations include, but are not limited to: risks related to the impact of the COVID-19 pandemic on our tenants and on our business, financial condition, liquidity, results of operations and compliance with debt covenants; our inability to develop new outlet centers or expand existing outlet centers successfully; risks related to the economic performance and market value of our outlet centers; the relative illiquidity of real property investments; impairment charges affecting our properties; our dispositions of assets may not achieve anticipated results; competition for the acquisition and development of outlet centers, and our inability to complete outlet centers we have identified; environmental regulations affecting our business; risks associated with possible terrorist activity or other acts or threats of violence and threats to public safety; our dependence on rental income from real property; our dependence on the results of operations of our retailers and their bankruptcy, early termination or closing could adversely affect us; the fact that certain of our properties are subject to ownership interests held by third parties, whose interests may conflict with ours; risks related to climate change; costs associated with the increased focus on environmental, sustainability and social initiatives; risks related to uninsured losses; the risk that consumer, travel, shopping and spending habits may change; risks associated with our Canadian investments; risks associated with attracting and retaining key personnel; risks associated with debt financing; risks associated with our guarantees of debt for, or other support we may provide to, joint venture properties; the effectiveness of our interest rate hedging arrangements; uncertainty relating to the potential phasing out of LIBOR; our potential failure to qualify as a REIT; our legal obligation to make distributions to our shareholders; legislative or regulatory actions that could adversely affect our shareholders, including the recent changes in the U.S. federal income taxation of U.S. businesses; our dependence on distributions from the Operating Partnership to meet our financial obligations, including dividends; the risk of a cyber-attack or an act of cyber-terrorism and other important factors set forth under Item 1A - "Risk Factors" in the Company's and the Operating Partnership's Annual Report on Form 10-K for the year ended December 31, 2021, as may be updated or supplemented in the Company's Quarterly Reports on Form 10-Q and the Company's other filings with the 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				Media Contact Information
Doug McDonald		Jim Williams		KWT Global
SVP, Finance and Capital Markets		EVP, CFO and Treasurer		Tanger@kwtglobal.com
336-856-6066		336-834-6800
tangerir@tangeroutlets.com		jim.williams@tangeroutlets.com

                 

 

TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (Unaudited)
	Three months ended
	March 31,
	2022		2021
Revenues:
Rental revenues	$      104,609		$       97,467
Management, leasing and other services	1,527		1,372
Other revenues	2,732		1,855
Total revenues	108,868		100,694
Expenses:
Property operating	36,758		35,311
General and administrative	15,467		16,793
Depreciation and amortization	26,243		28,150
Total expenses	78,468		80,254
Other income (expense):
Interest expense	(11,634)		(14,362)
Other income (expense) (1)	183		(3,505)
Total other income (expense)	(11,451)		(17,867)
Income before equity in earnings of unconsolidated joint ventures	18,949		2,573
Equity in earnings of unconsolidated joint ventures	2,513		1,769
Net income	21,462		4,342
Noncontrolling interests in Operating Partnership	(944)		(209)
Noncontrolling interests in other consolidated partnerships	—		—
Net income attributable to Tanger Factory Outlet Centers, Inc.	20,518		4,133
Allocation of earnings to participating securities	(215)		(207)
Net income available to common shareholders of Tanger Factory Outlet Centers, Inc.	$        20,303		$         3,926
Basic earnings per common share:
Net income	$            0.20		$           0.04
Diluted earnings per common share:
Net income	$            0.19		$           0.04

(1)	The three months ended March 31, 2021 includes a $3.6 million charge related to the foreign currency effect of the sale of the Saint-Sauveur, Quebec property by the RioCan joint venture in March 2021.

 

TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (Unaudited)
	March 31,		December 31,
	2022		2021
Assets
Rental property:
Land	$            268,269		$           268,269
Buildings, improvements and fixtures	2,528,223		2,532,489
Construction in progress	6,175		—
	2,802,667		2,800,758
Accumulated depreciation	(1,166,231)		(1,145,388)
Total rental property, net	1,636,436		1,655,370
Cash and cash equivalents	152,847		161,255
Investments in unconsolidated joint ventures	82,955		82,647
Deferred lease costs and other intangibles, net	69,861		73,720
Operating lease right-of-use assets	79,519		79,807
Prepaids and other assets	112,614		104,585
Total assets	$         2,134,232		$        2,157,384
Liabilities and Equity
Liabilities
Debt:
Senior, unsecured notes, net	$         1,036,635		$        1,036,181
Unsecured term loan, net	298,590		298,421
Mortgages payable, net	61,312		62,474
Unsecured lines of credit	—		—
Total debt	1,396,537		1,397,076
Accounts payable and accrued expenses	58,016		92,995
Operating lease liabilities	88,610		88,874
Other liabilities	80,492		78,650
Total liabilities	1,623,655		1,657,595
Commitments and contingencies
Equity
Tanger Factory Outlet Centers, Inc.:
Common shares, $0.01 par value, 300,000,000 shares authorized, 104,469,061 and 104,084,734 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively	1,044		1,041
Paid in capital	978,734		978,054
Accumulated distributions in excess of net income	(482,206)		(483,409)
Accumulated other comprehensive loss	(9,252)		(17,761)
Equity attributable to Tanger Factory Outlet Centers, Inc.	488,320		477,925
Equity attributable to noncontrolling interests:
Noncontrolling interests in Operating Partnership	22,257		21,864
Noncontrolling interests in other consolidated partnerships	—		—
Total equity	510,577		499,789
Total liabilities and equity	$         2,134,232		$        2,157,384

 

 

TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES CENTER INFORMATION (Unaudited)
		March 31,
		2022		2021
Gross Leasable Area Open at End of Period (in thousands):
Consolidated		11,453		11,456
Partially owned - unconsolidated		2,113		2,113
Total Properties		13,566		13,569
Total Properties including pro rata share of unconsolidated JVs (1)		12,510		12,512
Outlet Centers in Operation at End of Period:
Consolidated		30		30
Partially owned - unconsolidated		6		6
Total Properties		36		36
Ending Occupancy:
Consolidated		94.1 %		91.7 %
Partially owned - unconsolidated		96.1 %		95.3 %
Total Properties including pro rata share of unconsolidated JVs		94.3 %		92.0 %
Total States Operated in at End of Period		20		20

(1) Amounts may not recalculate due to the effect of rounding.

 

NON-GAAP SUPPLEMENTAL MEASURES 

Funds From Operations

Funds From Operations ("FFO") is a widely used measure of the operating performance for real estate companies that supplements net income (loss) determined in accordance with generally accepted accounting principles in the United States ("GAAP"). We determine FFO based on the definition set forth by the National Association of Real Estate Investment Trusts ("NAREIT"), of which we are a member. In December 2018, NAREIT issued "NAREIT Funds From Operations White Paper - 2018 Restatement" which clarifies, where necessary, existing guidance and consolidates alerts and policy bulletins into a single document for ease of use. NAREIT defines FFO as net income (loss) available to the Company's common shareholders computed in accordance with GAAP, excluding (i) depreciation and amortization related to real estate, (ii) gains or losses from sales of certain real estate assets, (iii) gains and losses from change in control, (iv) impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity and (v) after adjustments for unconsolidated partnerships and joint ventures calculated to reflect FFO on the same basis.

FFO is intended to exclude historical cost depreciation of real estate as required by GAAP which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO excludes depreciation and amortization of real estate assets, gains and losses from property dispositions and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income (loss).

We present FFO because we consider it an important supplemental measure of our operating performance. In addition, a portion of cash bonus compensation to certain members of management is based on our FFO or Core FFO, which is described in the section below. We believe it is useful for investors to have enhanced transparency into how we evaluate our performance and that of our management. In addition, FFO is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. FFO is also widely used by us and others in our industry to evaluate and price potential acquisition candidates. We believe that FFO payout ratio, which represents regular distributions to common shareholders and unit holders of the Operating Partnership expressed as a percentage of FFO, is useful to investors because it facilitates the comparison of dividend coverage between REITs. NAREIT has encouraged its member companies to report their FFO as a supplemental, industry-wide standard measure of REIT operating performance.

FFO has significant limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are: 

• FFO does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
• FFO does not reflect changes in, or cash requirements for, our working capital needs; 
• Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and FFO does not reflect any cash requirements for such replacements; and
• Other companies in our industry may calculate FFO differently than we do, limiting its usefulness as a comparative measure. 

Because of these limitations, FFO should not be considered as a measure of discretionary cash available to us to invest in the growth of our business or our dividend paying capacity. We compensate for these limitations by relying primarily on our GAAP results and using FFO only as a supplemental measure. 

Core FFO 

If applicable, we present Core Funds From Operations ("Core FFO") as a supplemental measure of our performance. We define Core FFO as FFO further adjusted to eliminate the impact of certain items that we do not consider indicative of our ongoing operating performance. These further adjustments are itemized in the table below, if applicable. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Core FFO you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Core FFO should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. 

We present Core FFO because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we believe it is useful for investors to have enhanced transparency into how we evaluate management's performance and the effectiveness of our business strategies. We use Core FFO when certain material, unplanned transactions occur as a factor in evaluating management's performance and to evaluate the effectiveness of our business strategies, and may use Core FFO when determining incentive compensation. 

Core FFO has limitations as an analytical tool. Some of these limitations are: 

• Core FFO does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
• Core FFO does not reflect changes in, or cash requirements for, our working capital needs;
• Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Core FFO does not reflect any cash requirements for such replacements;
• Core FFO does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; and
• Other companies in our industry may calculate Core FFO differently than we do, limiting its usefulness as a comparative measure. 

Because of these limitations, Core FFO should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using Core FFO only as a supplemental measure.

Funds Available for Distribution 

Funds Available for Distribution ("FAD") is a non-GAAP financial measure that we define as FFO, excluding corporate depreciation, amortization of finance costs, amortization of net debt discount (premium), amortization of equity-based compensation, straight-line rent amounts, market rent amounts, second generation tenant allowances and lease incentives, recurring capital improvement expenditures, and our share of the items listed above for our unconsolidated joint ventures. Investors, analysts and the Company utilize FAD as an indicator of common dividend potential. The FAD payout ratio, which represents regular distributions to common shareholders and unit holders of the Operating Partnership expressed as a percentage of FAD, facilitates the comparison of dividend coverage between REITs. 

We believe that net income (loss) is the most directly comparable GAAP financial measure to FAD. FAD does not represent cash generated from operating activities in accordance with GAAP and should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of liquidity or our ability to make distributions. Other companies in our industry may calculate FAD differently than we do, limiting its usefulness as a comparative measure.

Portfolio Net Operating Income and Same Center Net Operating Income

We present portfolio net operating income ("Portfolio NOI") and same center net operating income ("Same Center NOI") as supplemental measures of our operating performance. Portfolio NOI represents our property level net operating income which is defined as total operating revenues less property operating expenses and excludes termination fees and non-cash adjustments including straight-line rent, net above and below market rent amortization, impairment charges, loss on early extinguishment of debt and gains or losses on the sale of assets recognized during the periods presented. We define Same Center NOI as Portfolio NOI for the properties that were operational for the entire portion of both comparable reporting periods and which were not acquired, or subject to a material expansion or non-recurring event, such as a natural disaster, during the comparable reporting periods. We present Portfolio NOI and Same Center NOI on both a consolidated and total portfolio, including pro rata share of unconsolidated joint ventures, basis.

We believe Portfolio NOI and Same Center NOI are non-GAAP metrics used by industry analysts, investors and management to measure the operating performance of our properties because they provide performance measures directly related to the revenues and expenses involved in owning and operating real estate assets and provide a perspective not immediately apparent from net income (loss), FFO or Core FFO. Because Same Center NOI excludes properties developed, redeveloped, acquired and sold; as well as non-cash adjustments, gains or losses on the sale of outparcels and termination rents; it highlights operating trends such as occupancy levels, rental rates and operating costs on properties that were operational for both comparable periods. Other REITs may use different methodologies for calculating Portfolio NOI and Same Center NOI, and accordingly, our Portfolio NOI and Same Center NOI may not be comparable to other REITs. 

Portfolio NOI and Same Center NOI should not be considered alternatives to net income (loss) or as an indicator of our financial performance since they do not reflect the entire operations of our portfolio, nor do they reflect the impact of general and administrative expenses, acquisition-related expenses, interest expense, depreciation and amortization costs, other non-property income and losses, the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, or trends in development and construction activities which are significant economic costs and activities that could materially impact our results from operations. Because of these limitations, Portfolio NOI and Same Center NOI should not be viewed in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using Portfolio NOI and Same Center NOI only as supplemental measures.

Adjusted EBITDA, EBITDAre and Adjusted EBITDAre 

We present Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") as adjusted for items described below ("Adjusted EBITDA"), EBITDA for Real Estate ("EBITDAre") and Adjusted EBITDAre, all non-GAAP measures, as supplemental measures of our operating performance. Each of these measures is defined as follows:

We define Adjusted EBITDA as net income (loss) available to the Company's common shareholders computed in accordance with GAAP before interest expense, income taxes (if applicable), depreciation and amortization, gains and losses on sale of operating properties, joint venture properties, outparcels and other assets, impairment write-downs of depreciated property and of investment in unconsolidated joint ventures caused by a decrease in value of depreciated property in the affiliate, compensation related to voluntary retirement plan and other executive severance, casualty gains and losses, gains and losses on extinguishment of debt, net and other items that we do not consider indicative of the Company's ongoing operating performance.

We determine EBITDAre based on the definition set forth by NAREIT, which is defined as net income (loss) available to the Company's common shareholders computed in accordance with GAAP before interest expense, income taxes (if applicable), depreciation and amortization, gains and losses on sale of operating properties, gains and losses on change of control and impairment write-downs of depreciated property and of investment in unconsolidated joint ventures caused by a decrease in value of depreciated property in the affiliate and after adjustments to reflect our share of the EBITDAre of unconsolidated joint ventures.

Adjusted EBITDAre is defined as EBITDAre excluding gains and losses on extinguishment of debt, net, compensation related to voluntary retirement plan and other executive severance, casualty gains and losses, gains and losses on sale of outparcels, and other items that that we do not consider indicative of the Company's ongoing operating performance.

We present Adjusted EBITDA, EBITDAre and Adjusted EBITDAre as we believe they are useful for investors, creditors and rating agencies as they provide additional performance measures that are independent of a Company's existing capital structure to facilitate the evaluation and comparison of the Company's operating performance to other REITs and provide a more consistent metric for comparing the operating performance of the Company's real estate between periods.

Adjusted EBITDA, EBITDAre and Adjusted EBITDAre have significant limitations as analytical tools, including:

• They do not reflect our interest expense;
• They do not reflect gains or losses on sales of operating properties or impairment write-downs of depreciated property and of investment in unconsolidated joint ventures caused by a decrease in value of depreciated property in the affiliate;
• Adjusted EBITDA and Adjusted EBITDAre do not reflect gains and losses on extinguishment of debt and other items that may affect operations; and
• Other companies in our industry may calculate these measures differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, Adjusted EBITDA, EBITDAre and Adjusted EBITDAre should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA, EBITDAre and Adjusted EBITDAre only as supplemental measures.

Net Debt 

We define Net Debt as Total Debt less Cash and Cash Equivalents and present this metric for both the consolidated portfolio and for the total portfolio, including the consolidated portfolio and the Company's pro rata share of unconsolidated joint ventures. Net debt is a component of the Net debt to Adjusted EBITDA ratio, which is defined as Net debt for the respective portfolio divided by Adjusted EBITDA (consolidated portfolio) or Adjusted EBITDAre (total portfolio at pro rata share). We use the Net debt to Adjusted EBITDA and the Net debt to Adjusted EBITDAre ratios to evaluate the Company's leverage. We believe this measure is an important indicator of the Company's ability to service its long-term debt obligations.

 

TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP SUPPLEMENTAL MEASURES (in thousands, except per share) (Unaudited)
Below is a reconciliation of Net Income to FFO and Core FFO:
		Three months ended
		March 31,
		2022		2021
Net income		$   21,462		$     4,342
Adjusted for:
Depreciation and amortization of real estate assets - consolidated		25,661		27,554
Depreciation and amortization of real estate assets - unconsolidated joint ventures		2,754		2,996
Loss on sale of joint venture property, including foreign currency effect (1)		—		3,704
FFO		49,877		38,596
FFO attributable to noncontrolling interests in other consolidated partnerships		—		—
Allocation of earnings to participating securities		(434)		(392)
FFO available to common shareholders (2)		$   49,443		$   38,204
As further adjusted for:
Compensation related to voluntary retirement plan and other executive severance (3)		—		2,418
Impact of above adjustments to the allocation of earnings to participating securities		—		(22)
Core FFO available to common shareholders (2)		$   49,443		$   40,600
FFO available to common shareholders per share - diluted (2)		$       0.45		$       0.38
Core FFO available to common shareholders per share - diluted (2)		$       0.45		$       0.40
Weighted Average Shares:
Basic weighted average common shares		103,520		94,812
Effect of notional units		802		288
Effect of outstanding options		736		717
Diluted weighted average common shares (for earnings per share computations)		105,058		95,817
Exchangeable operating partnership units		4,762		4,794
Diluted weighted average common shares (for FFO and Core FFO per share computations) (2)		109,820		100,611

(1)	Includes a $3.6 million charge related to the foreign currency effect of the sale of the Saint-Sauveur, Quebec property by the RioCan joint venture in March 2021.
(2)	Assumes the Class A common limited partnership units of the Operating Partnership held by the noncontrolling interests are exchanged for common shares of the Company. Each Class A common limited partnership unit is exchangeable for one of the Company's common shares, subject to certain limitations to preserve the Company's REIT status.
(3)	Includes compensation costs related to a voluntary retirement plan offer that required eligible participants to give notice of acceptance by December 1, 2020 for an effective retirement date of March 31, 2021.

 

Below is a reconciliation of FFO to FAD:
		Three months ended
		March 31,
		2022		2021
FFO available to common shareholders		$         49,443		$       38,204
Adjusted for:
Corporate depreciation excluded above		582		596
Amortization of finance costs		759		1,173
Amortization of net debt discount		117		127
Amortization of equity-based compensation		2,708		3,845
Straight-line rent adjustments		1,337		1,043
Market rent adjustments		176		(213)
Second generation tenant allowances and lease  incentives		(1,252)		(778)
Capital improvements		(1,409)		(956)
Adjustments from unconsolidated joint ventures		227		(543)
FAD available to common shareholders (1)		$         52,688		$       42,498
Dividends per share		$         0.1825		$       0.1775
FFO payout ratio		41 %		47 %
FAD payout ratio		38 %		42 %
Diluted weighted average common shares (1)		109,820		100,611

(1)	Assumes the Class A common limited partnership units of the Operating Partnership held by the noncontrolling interests are exchanged for common shares of the Company. Each Class A common limited partnership unit is exchangeable for one of the Company's common shares, subject to certain limitations to preserve the Company's REIT status.

 

Below is a reconciliation of Net Income to Portfolio NOI and Same Center NOI for the consolidated portfolio and total portfolio at pro rata share:
		Three months ended
		March 31,
		2022		2021
Net income		$           21,462		$             4,342
Adjusted to exclude:
Equity in earnings of unconsolidated joint ventures		(2,513)		(1,769)
Interest expense		11,634		14,362
Other (income) expense		(183)		3,505
Depreciation and amortization		26,243		28,150
Other non-property expenses		172		(400)
Corporate general and administrative expenses		15,486		16,770
Non-cash adjustments (1)		1,520		844
Lease termination fees		(2,596)		(673)
Portfolio NOI - Consolidated		71,225		65,131
Non-same center NOI - Consolidated		63		(83)
Same Center NOI - Consolidated  (2)		$           71,288		$           65,048
Portfolio NOI - Consolidated		$           71,225		$           65,131
Pro rata share of unconsolidated joint ventures		6,904		6,419
Portfolio NOI - total portfolio at pro rata share		78,129		71,550
Non-same center NOI - total portfolio at pro rata share		63		(423)
Same Center NOI - total portfolio at pro rata share (2)		$           78,192		$           71,127

(1)	Non-cash items include straight-line rent, above and below market rent amortization, straight-line rent expense on land leases and gains or losses on outparcel sales, as applicable.
(2)	Sold outlet centers excluded from Same Center NOI:

 

Outlet centers sold:
Jeffersonville	January 2021	Consolidated
Saint-Sauveur, Quebec	March 2021	Unconsolidated JV

 

Below are reconciliations of Net Income to Adjusted EBITDA:
		Three months ended
		March 31,
		2022		2021
Net income		$            21,462		$              4,342
Adjusted to exclude:
Interest expense		11,634		14,362
Depreciation and amortization		26,243		28,150
Loss on sale of joint venture property, including foreign currency effect (1)		—		3,704
Compensation related to voluntary retirement plan and other executive severance (2)		—		2,418
Adjusted EBITDA		$            59,339		$            52,976
		Twelve months ended
		March 31,		December 31,
		2022		2021
Net income		$            26,678		$              9,558
Adjusted to exclude:
Interest expense		50,138		52,866
Depreciation and amortization		108,101		110,008
Impairment charges - consolidated (3)		6,989		6,989
Loss on sale of joint venture property, including foreign currency effect (1)		—		3,704
Compensation related to voluntary retirement plan and other executive severance (2)		1,161		3,579
Casualty gain		(969)		(969)
Loss on early extinguishment of debt (4)		47,860		47,860
Adjusted EBITDA		$          239,958		$          233,595

(1)	Includes a $3.6 million charge related to the foreign currency effect of the sale of the Saint-Sauveur, Quebec property by the RioCan joint venture in March 2021.
(2)	Includes compensation costs related to a voluntary retirement plan offer that required eligible participants to give notice of acceptance by December 1, 2020 for an effective retirement date of March 31, 2021, as well as other executive severance costs incurred during the year ended December 31, 2021.
(3)	Includes $563,000 for the twelve months ended December 31, 2021 of impairment loss attributable to the right-of-use asset associated with the ground lease at the Mashantucket (Foxwoods), Connecticut outlet center.
(4)	In April 2021, the Company completed a partial redemption of $150.0 million aggregate principal amount of its $250.0 million 3.875% senior notes due December 2023 (the "2023 Notes") for $163.0 million in cash. In September 2021, the Company completed a redemption of the remaining 2023 Notes, $100.0 million in aggregate principal amount outstanding, and all of its 3.750% senior notes due 2024, $250.0 million in aggregate principal outstanding, for $381.9 million in cash. The loss on extinguishment of debt includes make-whole premiums of $44.9 million for both of these redemptions.

 

Below are reconciliations of Net Income to EBITDAre and Adjusted EBITDAre:
		Three months ended
		March 31,
		2022		2021
Net income		$            21,462		$              4,342
Adjusted to exclude:
Interest expense		11,634		14,362
Depreciation and amortization		26,243		28,150
Loss on sale of joint venture property, including foreign currency effect (1)		—		3,704
Pro rata share of interest expense - unconsolidated joint ventures		1,458		1,472
Pro rata share of depreciation and amortization - unconsolidated joint ventures		2,754		2,996
EBITDAre		$            63,551		$            55,026
Compensation related to voluntary retirement plan and other executive severance (2)		—		2,418
Adjusted EBITDAre		$            63,551		$            57,444
		Twelve months ended
		March 31,		December 31,
		2022		2021
Net income		$            26,678		$              9,558
Adjusted to exclude:
Interest expense		50,138		52,866
Depreciation and amortization		108,101		110,008
Impairment charges - consolidated (3)		6,989		6,989
Loss on sale of joint venture property, including foreign currency effect (1)		—		3,704
Pro-rata share of interest expense - unconsolidated joint ventures		5,844		5,858
Pro-rata share of depreciation and amortization - unconsolidated joint ventures		11,376		11,618
EBITDAre		$          209,126		$          200,601
Compensation related to voluntary retirement plan and other executive severance (2)		1,161		3,579
Casualty gain		(969)		(969)
Loss on early extinguishment of debt (4)		47,860		47,860
Adjusted EBITDAre		$          257,178		$          251,071

(1)	Includes a $3.6 million charge related to the foreign currency effect of the sale of the Saint-Sauveur, Quebec property by the RioCan joint venture in March 2021.
(2)	Includes compensation costs related to a voluntary retirement plan offer that required eligible participants to give notice of acceptance by December 1, 2020 for an effective retirement date of March 31, 2021, as well as other executive severance costs incurred during the year ended December 31, 2021.
(3)	Includes $563,000 for the twelve months ended December 31, 2021 of impairment loss attributable to the right-of-use asset associated with the ground lease at the Mashantucket (Foxwoods), Connecticut outlet center.
(4)	In April 2021, the Company completed a partial redemption of $150.0 million aggregate principal amount of its $250.0 million 3.875% senior notes due December 2023 (the "2023 Notes") for $163.0 million in cash. In September 2021, the Company completed a redemption of the remaining 2023 Notes, $100.0 million in aggregate principal amount outstanding, and all of its 3.750% senior notes due 2024, $250.0 million in aggregate principal outstanding, for $381.9 million in cash. The loss on extinguishment of debt includes make-whole premiums of $44.9 million for both of these redemptions.

 

Below is a reconciliation of Total Debt to Net Debt for the consolidated portfolio and total portfolioat pro rata share:
		March 31, 2022
		Consolidated		Pro Rata Share of Unconsolidated JVs		Total at Pro Rata Share
Total debt		$       1,396,537		$          164,744		$          1,561,281
Less: Cash and cash equivalents		(152,847)		(7,369)		(160,216)
Net debt		$       1,243,690		$          157,375		$          1,401,065
		December 31, 2021
		Consolidated		Pro Rata Share of Unconsolidated JVs		Total at Pro Rata Share
Total debt		$       1,397,076		$          164,730		$          1,561,806
Less: Cash and cash equivalents		(161,255)		(9,515)		(170,770)
Net debt		$       1,235,821		$          155,215		$          1,391,036

 

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SOURCE Tanger Factory Outlet Centers, Inc.

FAQ

What are the financial results for Tanger Factory Outlet Centers for Q1 2022?

Tanger reported a net income of $20.3 million ($0.19 per share) and FFO of $49.4 million ($0.45 per share) for Q1 2022.

How did occupancy rates change for SKT in Q1 2022?

Occupancy for Tanger improved to 94.3% in Q1 2022, up from 92.0% a year earlier.

What is the updated earnings guidance for Tanger Factory Outlet Centers in 2022?

The company raised its earnings guidance to an estimated diluted net income of $0.69 to $0.77 per share and FFO between $1.71 and $1.79 per share.

What was the impact of tenant sales for SKT in the latest report?

Tenant sales increased by 18.1% to $464 per square foot compared to the pre-pandemic period.

What dividend increase did Tanger announce?

Tanger announced a 9.6% increase in the annual dividend, raising it from $0.73 to $0.80 per share.