Tanger Factory Outlet Centers reported a strong fourth quarter, marked by gains across most metrics, record high productivity and healthy traffic and sales.
The operator of outlet centers said net income available to common shareholders was $0.12 a share, or $13 million, compared to net income of zero cents a share, or $300,000, for the 2020 period.
Same-center operating income rose to $82.8 million for the quarter ended Dec. 31, up from $78.4 million in the fourth quarter of 2020, and $73.8 million in the third quarter last year.
The 2021 period includes non-cash impairment charges of $21.6 million, or $0.06 a share related to Tanger’s center inside the Foxwoods resort in Mashantucket, Conn., which was hampered by the pandemic, and the sale of the Jeffersonville, Ohio, property in January 2021.
Funds from operations were $0.45 a share, or $49.7 million, compared to $0.54 a share, or $52.7 million, for the 2020 period.
Occupancy grew to 95.3 percent, representing increases of 90 basis points sequentially and 310 basis points year-over-year. Occupancy at the end of September 2021 was 94.4 percent.
“The highlight was that our sales hit $468 a square foot. It was the highest number in Tanger history,” Stephen Yalof, Tanger’s president and chief executive officer, told WWD. “Our sales kicked up 17.6 percent,” from $398 million in 2019. “It’s a great number for us. It speaks to our strategy and how we are executing. We are going after more elevated retailers. We are going after a more diverse retail base. We are going after more food and beverage. The sum of those parts means we are getting a younger customer in addition to our core customer. People are staying longer with us because there is a lot more to do. A more diverse portfolio of tenants just makes the shopping experience that much more fun and adventurous for a lot of retailers to get onto our properties.
“We have better food and beverage options than we have ever had before. It gives the customer the opportunity to enjoy a quick serve or sit-down meal and go back and shop,” Yalof added. “The extended dwell time is also building bigger baskets, and ultimately more sales per shopper visit.”
Among new tenants are Ulta, the beauty chain, which opened a store (not an outlet) in the Tanger center in Rehoboth, Del.
Other recent entries to Tanger Outlets include Crate & Barrel, Mitchell Gold + Bob Williams furniture, Hugo Boss, Tory Burch and Moose Knuckles.
Asked if Ulta would open a second store at a Tanger center, Yalof said, “We never stop at one. We are aggressively pushing more deals with all these great names.”
He said retailers and brands have a lot of “open-to-buy” to launch outlets for the first time or to expand their network of outlets.
Asked about the impact of inflation and lower consumer confidence, Yalof said, “Inflation favored the outlet channel. We have the brands that people want at everyday value pricing in an environment they like to shop, which is that open-air environment.”
He said many of the outlets last quarter stuck to their “pricing game” and enjoyed higher margins and sales, though there was some price inflation evident.
“We didn’t see those additional levels of promotion that had typically been done in years past to drive sales and traffic,” Yalof observed. “There was less pricing resistance.”
Consumer concerns that there would be a scarcity of goods brought a lot of customers into the stores a little bit faster, Yalof said, “We were very pleasantly surprised with the level of inventory we saw in the stores throughout the holiday season. It’s still pretty consistent. We haven’t seen across our channels any significant deterioration in in-store inventory.”
In other Tanger news, it’s a go for Tanger Outlets Nashville. Yalof said the 300,000-square-foot outlet center will begin construction in the second quarter of 2022 and is scheduled to open in fall 2023. Before Tanger commits on constructing a project, it requires 60 percent of the space to be leased. “We are getting a great mix,” Yalof said, noting that tenants for Nashville will be revealed at a later date. Nashville will be Tanger’s 37th center.
“As we look ahead, we remain optimistic about our ability to drive NOI growth at our centers, through a combination of occupancy gains, improving rent spreads and increasing revenues from non-store sources such as on-site media and marketing partnerships,” Yalof said in a statement. “We also remain focused on continuing to broaden our tenant mix with highly productive, desirable brands and other uses new to our platform.”
For the full year, net income was $0.08 a share, or $8.3 million, compared to net loss of $0.40 a share, or $37 million, for 2020 which was heavily impacted by the pandemic.
Funds from operations available to common shareholders were $1.29 a share, or $138.1 million, compared to $1.58 a share, or $154.1 million, for 2020.
Core FFO was $1.76 a share, or $188.4 million, compared to $1.57 a share, or $153.7 million, for 2020.
For all of 2021, net income available to common shareholders was $0.08 per share, or $8.3 million, compared to net loss of $0.40 per share, or $37 million, for 2020.