Tanger Factory Outlets (SKT 4.51%) has come a long way from the depths of the 2020 COVID-19 fueled market crash, but the company's latest results certainly justify its strong performance. In this Fool Live video clip, recorded on Dec. 13, Fool.com contributors Matt Frankel and Jason Hall discuss why they aren't planning to sell this retail real estate investment trust (REIT) anytime soon.
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Jason Hall: Frankel, this is a company you love, too. This is Tanger Factory Outlets, ticker S-K-T. I'm going to share some slides from their most recent presentation. I think this is the best way to quickly describe the company. So 36 locations, this is outdoor, luxury discount shopping, I guess this is the best way to describe it. It's a great destination locations. This is actually smaller than the business was like five years ago.
They fortunately divested a lot and sold off a lot of their lower-performing assets in the years leading up to the pandemic. They were in a better position to emerge from that relatively quickly. You can see it's also pretty regional, Atlantic Coast and in the Southeast. Now, let's see here. Again, this is where they target. One of the nice things about their property mix and their strategy is they tend to all be relatively uniform in size. Don't rely on a lot of large anchor stores and anchor tenants like you see with malls that are really expensive to try to repurpose and end up empty, like Sears goes out of business, for example. That's allowed them to continue to retain pretty quickly even as they've dealt with some tenant closures over the years. Now -- sorry, I went to the wrong slide here.
Let's talk about their operating metrics: This is through the third quarter, 94% occupancy, they were pretty consistently, getting over 95% occupancy heading into the coronavirus crisis. That's come down a little bit, but again, 94%. There's a lot of strip mall operators out there and retail property owners that would love to have that occupancy rate. This $448 tenant per square foot, that's up 13% from 2019, so pre levels and the highest in the company's history. It was in the high $300s before, and that was a pretty good number to be at.
You see, the economic strength is pretty good, same-store net operating income is up almost 20% year over year, again, comparing to a pretty tough year. But by the third quarter of last year, most of its businesses were back open, but nonetheless, it's still continued to grow that. Balance sheet is strong: Only about 7% of its debt is secured. It has investment- grade credit, it's able to use unsecured credit. Most of its debt is at fixed rate interest, like 96% of it. In this environment where interest rates are likely to go up over the next five years, it has a pretty predictable expenses when it comes to interest.
Now, earnings, I want to talk about this quickly, too. Funds from operations, that good proxy for net income for REITs instead of GAAP net income, $1.32 per share in the third quarter, that's up from last year. It's actually almost as much as it earned in all of 2020. You see it's making good progress toward normalizing its funds from operations back to where it was before the pandemic. That's it.
Matt Frankel: There's a lot of room to grow in the outlet industry.
Hall: 36 properties, tons of room.
Frankel: There's 36, Tanger's the No. 2, Simon's (SPG 1.87%) Premium Outlets is the No. 1 by far. They've I think two-thirds of the market. I read a statistic where all of the square footage of all of the outlet space in America is about the size of just the mall space in Chicago. It's really not a lot of retail space yet. There's a lot of room for expansion. We saw Jason put the occupancy, it was 94.3%, on the screen.
That's actually gone up for the first time in years. Tanger's occupancy had been declining before the pandemic because brick-and-mortar retail was in trouble, and then they saw a wave of bankruptcies. They've done a great job of re-leasing and thinking outside the box with their tenants. Dick's Sporting Goods (DKS 2.01%), for example, just opened its first-ever outlet in a Tanger property. They're looking at some non-retail elements like more-trendy restaurants than the food courts you normally expect at an outlet property. There's a lot of room for them to grow, they're doing a great job. This is a profitable company that remained profitable throughout the pandemic, by the way.