As a REIT with mostly non-essential retail tenants, Tanger Factory Outlet Centers (NYSE:SKT) was highly disrupted by the COVID-19 pandemic. Its properties were largely shut down as the pandemic hit, and several key tenants went bankrupt in 2020. However, in this Fool Live video clip, recorded on Feb. 16, Millionacres real estate analyst Matt Frankel, CFP, discusses why Tanger's business could have a bright future ahead of it.

Matt Frankel: Tanger, their stock price has rebounded nicely. They're triple what they were at the height of the pandemic. The reason is their business is doing a lot better than people thought it would. There are not essential businesses at Tanger Outlets. They were shutdown during the pandemic. Their big tenants are Gap, companies like that. Companies that could shutdown in a pandemic and the world keeps turning.

Their properties were shutdown. Since they reopened, their properties have been doing a lot better than people expected. They're getting some fallout from all these retail bankruptcies. Ascena Brands, which is the parent company of Loft, went bankrupt, for example. That was a major tenant of theirs. I think Brooks Brothers had a bunch of Tanger Outlets. Lucky Brand, I know was a tenant of theirs, which is now owned by Simon. They're getting hit by some of these store closures, but their business is responding very well.

During the summer quarters, the third quarter, in particular, Tanger reported that customer traffic at its properties was at 99% of pre-pandemic levels; virtually unchanged. In the fourth quarter, the holiday quarter when the COVID numbers started going back up and stuff like that, it came down a little bit. They still said it was at 90% of 2019 levels -- for a retail business during the middle of the pandemic. Simon didn't put out numbers like that, but I guarantee you it wasn't 90% in the fourth quarter of 2019 levels.

Tanger's outlets, especially, are pretty much outside. They're very conducive to social distancing. People feel more comfortable going to them than they do an indoor mall, especially when it's cold and everyone's getting sick. The tenant count has shrunk a little bit. But they're profitable, which people were surprised to hear. They've been profitable since the third quarter. I think the second quarter was the only one where they were in the red. They've built up cash. They have $80 million in cash, which is a lot for them. They're not a big company. $600 million in available credit, they re-instituted their cash dividend in January, which a lot of people were very surprised about, myself included.

And their new CEO seems to be doing a great job. It IPO'd in '93, for the first time in history, someone whose last name is not Tanger is running the company. They stole the CEO of Simon's Premium Outlets, which is actually the best possible hire they could have made. They take the CEO of the biggest outlet player in the game, Stephen Yalof, I'm probably saying his last name wrong, but he's doing a fantastic job so far. Although their occupancy has fallen a little bit -- about 8% of their portfolio is vacant -- they have big plans on how to fill that space efficiently. Brings you back to that point, who can be the most efficient?

They were saying they're going after retailers that could fill two or three old spaces like furniture stores, for example. Let's say like an Ashley Furniture outlet opens. That could take the space of a Gap, Loft, the Brooks Brothers, all in one. So it's a really efficient way to fill space, and they said they've had a lot of luck with initial conversations in that regard. I'm a big fan of Tanger. I'm a big fan of all of these.

I think retails have a lot of hidden value. Now they're yielding 5% by the way so they're once again a good dividend stock. They've been around since 1993, a great track record.

By the way, the outlet space still has a lot of room to grow on the other side of this. Outlet shopping is not a very big industry when you get away from the popular resort towns on the coast. Tanger and Simon are the dominant players and Tanger owns about 40 properties. This isn't a giant footprint yet. I was reading that all of the outlet space in America is smaller than the retail space in Chicago. So it's not a giant market yet. There's a lot of room and a lot of underserved markets by outlet shopping.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.