Wednesday, August 3, 2011

Tanger Outlets 2nd Quarter Results

Here are some highlights from Tanger Outlet Centers 2nd quarter results


Second Quarter Same Center NOI Increases 3.8%
Tenant Comparable Sales Increase 6.8%

GREENSBORO, N.C., Aug. 2, 2011 (GLOBE NEWSWIRE) -- Tanger Factory Outlet Centers, Inc.(NYSE:SKT) today reported its financial results for the quarter and six months ended June 30, 2011. Funds from operations ("FFO") available to common shareholders, a widely accepted supplemental measure of REIT performance, increased 33.9% for the three months ended June 30, 2011 to $29.6 million, or $0.32 per share, as compared to FFO of $22.1 million, or $0.24 per share, for the three months ended June 30, 2010. For the six months ended June 30, 2011, FFO increased 15.9% to $59.2 million, or $0.64 per share, as compared to FFO of $51.1 million, or $0.55 per share, for the six months ended June 30, 2010.

"Our strong operating performance continued through the second quarter. Same center net operating income increased by 3.8% for the quarter and 4.9% for the first half of the year. Tenant comparable sales increased 6.8% for the quarter and 4.6% for the rolling twelve months. Leasing activity remained robust, with a positive second quarter straight-line basis spread for renewals and re-tenanted space of 26.1%," commented Steven B. Tanger, President and Chief Executive Officer. "We have had an extremely productive quarter, integrating three newly acquired outlet centers into our portfolio, and embarking upon two joint ventures to build new developments in the Washington, DC and Houston, Texas markets. We also secured capital to fuel our growth in the form of a $150 million unsecured bridge loan and a 4.6 million common share offering that provided proceeds of $117.3 million, net of offering expenses," he added. 

Second Quarter Highlights

  • Completed the acquisitions of Prime Outlets Jeffersonville (Ohio) on June 28, 2011, and Atlantic City Outlets The Walk (New Jersey) and Ocean City Factory Outlets (Maryland) on July 15, 2011
  • Announced joint ventures for the development of Tanger Outlet Centers in the Houston, Texas and Washington, DC markets
  • Completed an offering of 4.6 million common shares at $25.662 per share; net proceeds to the company of $117.3 million at closing on July 6, 2011
  • Completed a $150 million unsecured 90-day bridge loan priced at 160 basis points over LIBOR, with three 90-day extension options
  • Finalized and executed the co-ownership documentation for our 50/50 joint venture with RioCan Real Estate Investment Trust
  • Upgrade in outlook received from Standard & Poor's from Stable to Positive
  • 26.2% debt-to-total market capitalization ratio as of June 30, 2011 compared to 23.2% last year
  • 3.75 times interest coverage for the second quarter ended June 30, 2011
  • 3.8% increase in same center net operating income during the quarter compared to 2.4% last year
  • 26.1% blended increase in average base rental rates on renewed and released space during the quarter, compared to 12.5% last year
  • 97.8% period-end wholly-owned portfolio occupancy rate at June 30, 2011, up from 96.9% at June 30, 2010 and 96.7% at March 31, 2011
  • Reported tenant comparable sales increased by 4.6% to $361 per square foot for the rolling twelve months ended June 30, 2011


National Portfolio Drives Operating Results 

During the first six months of 2011, Tanger executed 373 leases, totaling 1,660,000 square feet throughout its wholly-owned portfolio. Lease renewals during the first six months accounted for 1,191,000 square feet, which generated a 14.9% increase in average base rental rates and represented 69.8% of the square feet originally scheduled to expire during 2011. Base rental increases on re-tenanted space during the first six months averaged 51.5% and accounted for the remaining 469,000 square feet.

Same center net operating income increased 3.8% for the second quarter of 2011 compared to 2.4% last year and increased 4.9% for the first six months of 2011 compared to 1.7% last year. Reported tenant comparable sales for Tanger's wholly-owned properties for the rolling twelve months ended June 30, 2011 increased 4.6% to $361 per square foot. Tenant comparable sales for the three months ended June 30, 2011 increased 6.8% compared to 4.8% in the previous year.


Investment Activities Provide Potential Future Growth

On May 23, 2011, Tanger announced the formation of a 50/50 joint venture agreement with The Peterson Companies for the development, leasing and management of Tanger Outlets at National Harbor. National Harbor, the Washington, DC metro area's premier waterfront resort destination, includes fine restaurants, distinctive retail, office, residences, and a number of world-class hotels including the Gaylord National Resort and Convention Center. Developed by The Peterson Companies, National Harbor comprises 350 acres of prime real estate along the scenic Potomac River in Prince George's County. When completed, the 350,000 square foot Tanger Outlets at National Harbor will feature 80 brand name and designer outlet stores, located with easy access to I-495, I-95, I-295 and the Woodrow Wilson Bridge.

On June 28, 2011, Tanger closed on the acquisition of Prime Outlets at Jeffersonville for $134 million in cash. The acquisition adds approximately 410,000 square feet to the Tanger portfolio and expands the company's footprint into the state of Ohio. The center is Ohio's largest outlet shopping center and is centrally located in the tri-city area of Cincinnati, Columbus, and Dayton.

On June 30, 2011, Tanger announced the formation of a 50/50 joint venture agreement with Simon Property Group, Inc. for the development, construction, leasing and management of a Tanger Outlet Center south of Houston in Texas City, Texas. The center will be located approximately 30 miles south of Houston and 20 miles north of Galveston on the highly traveled Interstate 45, Exit 17 at Holland Road. Houston is currently the fourth largest U.S. city, and Galveston is a popular Gulf Coast getaway destination that attracts over 5 million visitors a year. When completed, the center will play host to over 90 brand name and designer outlet stores in the first phase of approximately 350,000 square feet, with ample room for expansion for a total build out of approximately 470,000 square feet.

On July 15, 2011, Tanger closed on the acquisition of substantially all of the economic interests in Phase I & II of Atlantic City Outlets The Walk and Ocean City Factory Outlets. The company is also under contract to purchase substantially all of the economic interests in Phase III of Atlantic City Outlets The Walk, which it expects to close by the end of 2011. The combined acquisition price, including Phase III, is estimated to be $199.3 million, which consists of approximately $125.8 million in cash and the assumption of approximately $73.5 million of indebtedness.   Including all phases, the Atlantic City asset includes approximately 491,000 square feet, and Ocean City totals approximately 200,000 square feet.   In addition to expanding the size of Tanger's portfolio, the acquisition increases the company's geographic footprint into New Jersey and Maryland.

Tanger and RioCan Real Estate Investment Trust recently finalized and executed the co-ownership documentation for the 50/50 joint venture to develop Tanger Outlet Centers in Canada. Completion of the co-ownership documents is a major step in our plans to offer tenants a platform for expansion across the Canadian border. Tenant interest for the joint venture's first development site in the Halton Hills area of Toronto remains strong as preleasing efforts continue.
    Financing Activities

    On June 27, 2011, Tanger completed a $150 million unsecured bridge loan facility with Wells Fargo Bank, National Association. Proceeds of the loan, which bears interest at 160 basis points over LIBOR based on Tanger's current long-term debt rating, were used to repay borrowings under the company's unsecured lines of credit. This interim facility matures September 26, 2011, and at its discretion, Tanger may extend the maturity to June 22, 2012 by exercising each of its three ninety-day extension options. The remaining terms and conditions of the bridge loan are substantially the same as the company's lines of credit.

    On June 29, 2011, Tanger's closing price was $26.32, and after the market close, the company announced a 4 million common share offering with Jeffries & Company as the sole underwriter. The transaction closed on July 6, 2011 with the issuance of 4.6 million common shares, including 600,000 shares issued and sold upon the full exercise of the underwriter's overallotment option. The company received $25.662 per share, which yielded proceeds of approximately $117.3 million after deducting estimated offering expenses.

    Balance Sheet Summary

    As of June 30, 2011, Tanger had a total market capitalization of approximately $3.4 billion including $886.6 million of debt outstanding, equating to a 26.2% debt-to-total market capitalization ratio. As of June 30, 2011, 62.6% of Tanger's debt was at fixed interest rates and the company had $182.0 million outstanding on its $400.0 million in available unsecured lines of credit and its $150.0 million bridge loan was fully funded. During the second quarter of 2011, Tanger continued to maintain a strong interest coverage ratio of 3.75 times.

    Deer Park Joint Venture

    On May 17, 2011, the $269.3 million in loans related to the company's Deer Park, New York joint venture matured and the joint venture did not qualify for the one-year extension option under the loans. Subsequently, the joint venture has been accruing interest expense at the default rate of approximately 9.2%, compared to the stated rate of approximately 1.7% based on current LIBOR and prime rates. Tanger's one-third share of the incremental interest expense for the second quarter was $848,000, or $0.01 per share. The joint venture partners continue to work with the administrative agent bank of the lender group to negotiate new financing terms for the property. Tanger has a long-term approach to its investment in the joint venture, and is hopeful that the joint venture will successfully refinance this asset based on the property's location and tenant mix, together with positive trends in occupancy, tenant sales and traffic.

    Updated 2011 FFO Per Share Guidance

    Based on Tanger's recent public offering of 4.6 million common shares, the closing of the unsecured bridge loan, the accretive impact of the acquisition of the Jeffersonville, Atlantic City, and Ocean City properties, along with the company's internal budgeting process, its view on current market conditions, and the strength and stability of its core portfolio, the company raised its internal forecast for 2011 by $0.03 per share. However, the company's estimates have also been adjusted downward approximately $0.02 per share to reflect the assumption that the default interest rate on the Deer Park joint venture loan continues through the end of 2011. As a result, Tanger currently believes its net income available to common shareholders for 2011 will be between $0.46 and $0.50 per share and its FFO available to common shareholders for 2011 will be between $1.38 and $1.42 per share.  

    FOR THE FULL REPORT FOLLOW THIS LINK.

    RELATED POSTS:
    Posted by Unknown at 3:29 PM
    Labels:

    No comments:

    Post a Comment

    Subscribe to: Post Comments (Atom)