Tanger Factory Outlet Centers Inc. (SKT 1.28%) announced solid second-quarter 2018 results on Tuesday after the market closed, detailing flat top-line growth but also continued high occupancy rates, an increased dividend, and a reiteration of full-year guidance.
Let's look at the results of this the retail outlet-center REIT to get a better idea both of the state of the business and what investors should be watching in the coming quarters.
Image source: Tanger Factory Outlet Centers.
Tanger Factory Outlets results: The raw numbers
| Metric |
Q2 2018 |
Q2 2018 |
Year-Over-Year Growth |
|---|---|---|---|
|
Revenue |
$119.7 million |
$119.6 million |
0% |
|
Net income available to Tanger common shareholders |
$22.7 million |
$29.1 million |
(22%) |
|
Net income per diluted share |
$0.24 |
$0.31 |
(22.6%) |
Data source: Tanger Factory Outlet Centers.
What happened with Tanger Factory Outlets this quarter?
- Adjusted funds from operations -- a real-estate industry metric that essentially measures Tanger's cash flow from operations -- declined 0.6% year over year to $59.1 million but grew 1.7% on a per-share basis to $0.60.
- Trailing-12-month (TTM) blended average rental rates grew 14% on a straight-line basis, and 5.8% on a cash basis, excluding strategic remerchandising costs.
- Consolidated portfolio occupancy was 95.6%, down from 95.9% last quarter and 96.1% at the same point last year.
- TTM average tenant sales productivity was flat on a year-over-year basis, at $383 per square foot.
- Same-center tenant sales increased 1% for the trailing 12 months ended June 30.
- Tanger commenced 358 leases totaling 1.7 million square feet renewed or released during the quarter, including 296 leases totaling 1.4 million square feet for a term of at least 12 months.
- Tanger recaptured 68,000 square feet related to bankruptcies and brandwide restructurings among retailers during the quarter.
- Tanger repurchased 476,000 common shares for $10 million, or an average price of $21.01 per share.
- Earlier this month, Tanger raised its annual cash dividend by 2.2% to $1.40 per share, marking its 25th consecutive annual dividend increase.
What management had to say
Tanger CEO Steven Tanger stated:
Consumers continue to seek the brands and value that we provide at our centers, as seen in the year-over-year sales increase. Additionally, customers are reacting positively to our enhanced efforts to bring experience and fun to shopping with events such as food truck festivals and family fun nights. We continue to work hard to maintain our high occupancy, extend shorter-term leases with quality long-term tenants, and pursue new prospects for our centers. As we look ahead, we maintain an unwavering focus on creating shareholder value by procuring the right tenant mix for our consumers, and providing retailers with a quality yet cost-effective distribution channel.
Looking forward
As such, Tanger Factory Outlets reiterated its previous full-year 2018 guidance, which calls for net income per diluted share in the range of $0.95 to $1.01, and funds from operations per share of $2.40 to $2.46.
In the end, there were no big surprises this quarter, and -- after last quarter's relative pain induced by those retailer bankruptcies -- that's a good thing for patient, long-term investors willing to collect Tanger's juicy 5.8% dividend while the company traverses these headwinds.
