Tanger Factory Outlet Centers (SKT -0.11%) released slightly better-than-expected second-quarter 2019 results on Wednesday after the markets closed, boasting healthy portfolio occupancy rates and an anticipated moderation in profits following last quarter's strategic divestments.

After initially climbing Thursday morning as the market absorbed the news, shares of the outlet-center REIT pulled back to trade down nearly 3% by the close. Let's take a closer look, then, at what Tanger accomplished over the past few months, and what we should be watching.

Shopper walking outdoors carrying multiple colorful bags.


Tanger Factory Outlets results: The raw numbers


Q2 2019

Q2 2018

Year-Over-Year Growth


$115.7 million

$119.7 million


Net income (loss) available to Tanger common shareholders

$13.6 million



Net income (loss) per diluted share




Data source: Tanger Factory Outlet Centers. 

What happened with Tanger Factory Outlets this quarter?

  • Adjusted funds from operations (AFFO) declined to $55.8 million, or $0.57 per share, down from $59.1 million, or $0.60 per share in the same year-ago period.
  • Trailing 12-month (TTM) blended average rental rates fell 0.6% on a cash basis and grew 3.5% on a straight-line basis for renewals and retenanted leases.
  • Consolidated portfolio occupancy expanded 60 basis points sequentially from last quarter, to 96%.
  • Consolidated portfolio net operating income (NOI) fell 5.7% to $76.4 million. Same-center NOI declined 0.1%.
  • TTM average tenant sales productivity was $395 per square foot, up from $391 last quarter and $383 a year ago.
  • TTM same-center tenant sales grew 1.5%.
  • Tanger commenced 338 leases totaling 1.6 million square feet over the past year. It also recaptured 105,000 square feet this quarter from bankruptcies and brandwide restructurings by retailers.

What management had to say

Tanger CEO Steven Tanger stated:

I am delighted by our outperformance relative to expectations in the second quarter and year to date, which benefited from strong variable rental contributions and increased occupancy. With better than expected results for the first half, we are raising our guidance for the year. Our unwavering focus on leasing resulted in a 60-basis-point sequential increase in consolidated portfolio occupancy to 96% at quarter end. The outlet distribution channel continues to offer a compelling value proposition to retailers because of its low cost of occupancy and high profitability,

Looking forward

More specifically, Tanger now sees full-year 2019 net income per share ranging from $1.24 to $1.30, down from $1.30 to $1.36 before, but also raised its outlook for full-year AFFO per share to be in the range of $2.25 to $2.31, up from $2.22 to $2.28 previously.

While the latter increase may not have been enough to impress traders today, I think patient, long-term investors should be more than pleased with the relative outperformance of Tanger's business so far this year. With shares hovering near a 52-week low and offering an annual dividend yield close to 9%, it could be an absolute bargain today.