Tanger (SKT) 2 Aug 24 2024 Q2 Earnings call transcript

Tanger Inc., a leading retail real estate investment trust (REIT) company, recently held its second quarter 2024 earnings call, revealing a strong financial performance and strategic growth initiatives. The company's focus on optimizing its value proposition for both retailers and shoppers, coupled with its strategic expansion and renovation efforts, has set the stage for a promising future.

Financial Highlights and Strategic Growth

Tanger Inc. reported an 8% increase in same center net operating income (NOI) and a 13% increase in funds from operations (FFO) per share, demonstrating the company's strong financial health and operational efficiency. The company's strategic focus on enhancing its retail mix and creating a community experience has resulted in a 10th consecutive quarter of positive rent spreads, driving total rent and NOI growth.

The company's net debt to adjusted earnings before interest, taxes, depreciation, and amortization (EBITDAre) ratio stands at 5.4 times, reflecting a strong balance sheet position and a well-positioned strategy for future growth. The company's low leverage, largely fixed-rate balance sheet, and ample free cash flow after dividends provide a solid foundation for internal and external growth initiatives.

Strategic Expansion and Renewals

Tanger Inc. has executed 2 million square feet of leases over the trailing 12 months, highlighting its ability to attract and retain high-quality tenants. The company's strategic approach to renewals and re-tenanting, coupled with its focus on enhancing the retailer mix, has resulted in a strong leasing pipeline and an average spread of 15%. The company's proactive relationships with tenants, even during challenging times such as bankruptcy proceedings, underscore its commitment to maintaining a strong and diversified tenant base.

Innovation and Sustainability

Tanger Inc. has shown a commitment to innovation and sustainability, with the publication of its 2023 Environmental, Social, and Governance (ESG) report, focusing on enhancing sustainability metrics, resource efficiency, stakeholder engagement, and return on investments. The company has also been recognized for its communication and reporting excellence with the 2024 Nareit Investor CARE Gold Award.

Future Outlook

Looking ahead, Tanger Inc. is optimistic about its future prospects, with a focus on enhancing its retailer mix, activating peripheral land, and maintaining a strong balance sheet. The company's ability to navigate challenges such as the impact of bankruptcies on its tenant base, coupled with its strategic growth initiatives, positions it well for continued success in the retail real estate sector.

In conclusion, Tanger Inc.'s second quarter earnings call highlighted a strong financial performance and strategic growth initiatives, underscoring its commitment to optimizing its value proposition for retailers and shoppers. The company's focus on enhancing its retailer mix, sustainability initiatives, and balance sheet positioning sets the stage for a promising future in the retail real estate sector.