Who says people aren’t shopping?
At the very least, they’re hitting the outlets, which is apparent judging from the latest financial results from Tanger Factory Outlet Centers Inc., the publicly held real estate investment trust based in Greensboro, N.C.
“We had a great quarter,” Steven B. Tanger, president and chief executive officer, told WWD, following the release of the company’s third-quarter figures.
Aside from increases in traffic, the company gained by buying out some partners that own stakes in a couple of outlet centers, increased rents and low vacancy rates. But Tanger did note that about 20 percent of the portfolio was impacted by severe weather including Hurricane Hermine and flooding in Louisiana.
The company reported net income available to common shareholders for the three months ended Sept. 30 increased 56.5 percent to 72 cents a share, or $68.5 million, from 46 cents a share, or $43.6 million, for the corresponding 2015 period.
Net income last quarter was positively impacted by a $46.3 million gain related to buying out a partner’s interest in Tanger Outlets Savannah.
Adjusted funds from operations for the quarter increased 5.1 percent to 62 cents a share, or $62.3 million, from 59 cents a share, or $59.4 million.
Tanger said the company has experienced 52 consecutive quarters, or 13 years, of consolidated portfolio same center net operating growth.
On the development front, Tanger recently broke ground on two projects seen opening next year and has additional projects in the works. Construction began on an outlet center in Fort Worth, Tex. and on an expansion of a center in Lancaster, Pa. Both are expected to open in 2017. Tanger is also continuing construction of a new center in Daytona Beach, Fla., seen opening in November 2016.
“We are planning to build and deliver one to two new centers a year in each of the next three to five years,” Tanger said. “That’s consistent with our delivery over the past ten years.”
“The outlet centers remain highly occupied and very profitable,” he added. “They’re 97.4 percent occupied at the end of the third quarter, and we gave guidance that we anticipate occupancy will be in the range of 97.5 to 97.7 percent at the end of the year. We are expecting occupancy to be very high and consistent.
“In the 35 years that we have been in business, we never ended a year less than 95 percent occupied. To be able to say that…is a reflection of how popular the outlets are with consumers and how profitable they are with our tenants.’
Tanger also reported that:
- Blended average base rental rates on space renewed and released throughout the consolidated portfolio increased 20 percent during the first nine months of 2016, on top of a 24.5 percent increase for the first nine months of 2015.
- Average tenant sales for the consolidated portfolio were $390 per square foot for the 12 months ended Sept. 30.
- Excluding eight centers negatively impacted by Hurricane Hermine or severe flooding in Louisiana, average tenant sales for the trailing twelve months ended Sept. 30 were stable.