Is Tanger (SKT) a Hidden Buy in the Retail REIT Sector?

In the evolving retail real estate investment trust (REIT) landscape, Tanger Inc. (SKT) emerges as a compelling case study for investors seeking undervalued opportunities with long-term growth potential. With a current stock price of $32.58 as of December 5, 2025, and a trailing twelve months (TTM) funds from operations (FFO) per share of $2.26 according to Yahoo Finance, Tanger's price-to-FFO (P/FFO) ratio stands at approximately 14.4. This metric, while modest compared to historical averages for the sector, appears to understate the company's recent operational strength and strategic adaptability. Analysts have raised their price target to $36.73, suggesting a potential 12.8% upside from current levels-a dislocation that warrants closer scrutiny.

Valuation Dislocation: A Case for Undervaluation

Tanger's valuation appears to lag behind its fundamentals. For the full year 2025, the company expects FFO per share to range between $2.28 and $2.32 according to Marketscreener, reflecting a 7-9% growth rate. This outpaces the broader retail REIT sector's average FFO growth of 4-6% in 2025, according to a report by Bloomberg. The raised analyst price target of $36.73 implies a forward P/FFO of 15.6–16.0, aligning with the sector's median multiple but offering a margin of safety for investors given Tanger's superior occupancy rates and income growth.

The company's Q3 2025 results further underscore its value proposition. Earnings per share of $0.28, exceeding forecasts by 12%, highlight operational efficiency. Meanwhile, a 97.4% occupancy rate-a record for the firm-demonstrates robust tenant demand, even in a market grappling with e-commerce headwinds. This resilience is compounded by an increase in average tenant sales per square foot to $475, driven by remerchandising efforts and digital marketing campaigns.

Long-Term Growth: Strategic Adaptation to Retail Evolution

Tanger's ability to navigate sector-specific challenges, particularly e-commerce disruption, is a critical factor in its long-term appeal. The company has proactively diversified its offerings through mixed-use developments and partnerships with experiential retailers, as noted in a 2025 analysis by Reuters. These initiatives aim to transform traditional retail centers into destinations that blend shopping, dining, and entertainment-a strategy that has historically driven foot traffic and tenant retention.

Digital integration further strengthens Tanger's growth narrative. The firm has invested in tools to enhance the online shopping experience for tenants, including virtual try-ons and omnichannel inventory management. Such innovations mitigate the risk of physical retail becoming obsolete, positioning Tanger as a bridge between traditional and digital commerce.

Risks and Mitigants

While Tanger's valuation and strategies are compelling, investors must remain cognizant of risks. E-commerce growth, though slowing in 2025, continues to erode demand for traditional retail spaces. However, Tanger's focus on outlet centers-where e-commerce penetration remains below 15%-provides a natural hedge. Additionally, the firm's geographic diversification, with a 40% concentration in the Sun Belt region, benefits from population and income growth trends that bolster retail footfall.

Valuation premiums also warrant caution. At $36.73, SKT's price would trade at a 10% premium to its 2025 FFO guidance midpoint, a level that may test investor patience if growth slows. Yet, given the company's consistent 11% year-over-year core FFO growth and disciplined capital allocation, this premium appears justified for a long-term hold.

Conclusion: A Near-Term Buy with Long-Term Legs

Tanger's combination of undervalued pricing, strong occupancy, and proactive adaptation to retail evolution makes it a standout in the REIT sector. The $32.58 stock price offers a discount to analyst estimates while reflecting the company's operational momentum. For investors with a three- to five-year horizon, SKT represents a rare opportunity to capitalize on a retail REIT that is both defensively positioned and strategically agile.

As the retail landscape continues to shift, Tanger's ability to balance traditional strengths with digital innovation will likely determine its trajectory. For now, the data supports a near-term entry, with the raised price target and earnings growth serving as catalysts for upward revaluation.