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Tanger Factory Outlet Centers Inc., impacted by early retirement of debt, reported a net loss in the third quarter but saw improvement across several operating metrics, including increases in occupancy rates, rents, traffic and sales by tenants.
“We are pleased to report strong quarterly results. Our leasing efforts pushed occupancy to 94.3 percent as of Sept. 30, 2021, up 130 basis points since June 30, and 140 basis points over the last 12 months,” said Stephen Yalof, president and chief executive officer of Tanger, on Monday afternoon.
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“Our rent spreads improved by 240 basis points sequentially on a cash basis,” Yalof added. “We also benefited from significant percentage rental growth, which was more than two and a half times the comparable 2019 period during the third quarter. Tenant sales at our open-air centers are accelerating, reaching an all-time high of $448 per square foot for the consolidated portfolio during the 12 months ended Sept. 30, 2021, an increase of more than 13 percent over the comparable 2019 period.”
On the bottom line, however, the third quarter saw a net loss of $0.11 per share, or $11 million, compared to net income of $0.14 per share, or $12.9 million, for the prior-year period.
Yalof said “traffic has remained strong, representing approximately 99 percent of third-quarter 2019 levels. Furthermore, we are seeing continued traction in monetizing the non-store elements of our centers, particularly paid media and marketing partnerships. These trends demonstrate retailers’ commitment to the outlet distribution channel, and we believe sustaining this momentum will drive cash flow and increase the value of our real estate.” Tanger, based in Greensboro, N.C., operates and owns or has an ownership stake in 36 open-air outlet centers in North America.
Yalof also said that activity in the capital markets, whether issuing bonds or redemptions, “has resulted in low leverage and a strong liquidity position. As of quarter end, leverage was below our target of six times net debt to EBITDA, and with significant cash flow generation and undrawn lines of credit, our balance sheet is well-positioned to deliver long-term growth.”
The bottom line was impacted by early extinguishment of $33.8 million in debt, or $0.31 per share. The prior-year period was heavily impacted by the COVID-19 pandemic and also included a $2.3 million, or $0.02 per share, gain on the sale of a non-core outlet center.
In other third-quarter metrics, funds from operations available to common shareholders was $0.16 per share, or $17.8 million, compared to $0.44 per share, or $42.6 million, for the prior year period.
Core funds from operations, which excludes the loss on early extinguishment of debt, was $0.47 per share, or $51.8 million, compared to $0.44 per share, or $42.6 million, for the prior-year period.
Same center net operating income was $73.8 million for the third quarter versus $66.1 million for the year-ago quarter.
Through Oct. 29, Tanger collected 98 percent of 2020 deferred rents due to be repaid during the nine months ended Sept. 30.
Also, 329 leases in the 12 months ended Sept. 30 were renewed or re-leased, totaling nearly 1.6 million square feet.
Tanger recaptured about 135,000 square feet during the first nine months of 2021 related to bankruptcies and restructurings, including 55,000 square feet in the third quarter, compared to about 586,000 square feet during the first nine months of 2020, including 206,000 square feet during the 2020 third quarter.
Tanger raised 2021 guidance on its estimated diluted core funds from operations to $1.67 to $1.71 per share from previous guidance of $1.52 to $1.59. The 2021 guidance on diluted net income per share was lowered to between $0.04 and $0.08 a share, from $0.20 to $0.27.