Achieves 11th Consecutive Quarter of Positive
Rent Spreads
All Centers Open and Operating after Multiple
Storms
Tanger® (NYSE:SKT), a leading owner and operator of
outlet and open-air retail shopping destinations, today reported
financial results and operating metrics for the three and nine
months ended September 30, 2024.
“I am pleased to announce another quarter of strong performance
and an increase in our full-year guidance,” said Stephen Yalof,
President and Chief Executive Officer. “Our team remains focused on
elevating our shopper experience and attracting in-demand retailer
brands and a diversified tenant mix, along with more food and
beverage and experiential destinations. Our strategy is driving
total rents, including our 11th consecutive quarter of positive
leasing spreads, and we will continue leveraging our platform to
realize additional growth. With our strong balance sheet and
liquidity, including no significant maturities until late 2026, we
have the flexibility to remain opportunistic and are
well-positioned to unlock additional value for all our
stakeholders.”
Mr. Yalof continued, “A core value of Tanger is to ‘Consider
Community First,’ and our team has recently demonstrated this
commitment as we have responded to the impacts of Hurricanes Helene
and Milton in the Southeastern U.S. While our team members and
their families remained safe and our centers experienced only minor
damage from the storms, Tanger Outlets Asheville closed temporarily
due to a lack of utilities and served as a staging location for
emergency response teams as they provided life-sustaining support
for the surrounding community. We are continuing to support the
Asheville community in many ways and have now fully reopened and
welcomed back shoppers.”
Third Quarter Results
- Net income available to common shareholders was $0.22 per
share, or $24.6 million, compared to $0.26 per share, or $27.2
million, for the prior year period.
- Funds From Operations (“FFO”) available to common shareholders
was $0.54 per share, or $62.7 million, compared to $0.50 per share,
or $55.8 million, for the prior year period.
- Core Funds From Operations (“Core FFO”) available to common
shareholders was $0.54 per share, or $62.7 million, compared to
$0.50 per share, or $55.8 million, for the prior year period.
Year-to-Date Results
- Net income available to common shareholders was $0.65 per
share, or $71.4 million, compared to $0.70 per share, or $74.5
million, for the prior year period.
- FFO available to common shareholders was $1.58 per share, or
$182.2 million, compared to $1.45 per share, or $160.2 million, for
the prior year period.
- Core FFO available to common shareholders was $1.60 per share,
or $183.7 million, compared to $1.44 per share, or $159.4 million,
for the prior period. Core FFO in the first nine months of 2024
excluded executive severance costs of approximately $0.01 per
share. Core FFO in the first nine months of 2023 excluded the
reversal of previously expensed compensation related to a voluntary
executive departure of approximately $0.01 per share. The Company
does not consider these items to be indicative of its ongoing
operating performance.
FFO and Core FFO are widely accepted supplemental non-GAAP
financial measures used in the real estate industry to measure and
compare the operating performance of real estate companies.
Complete reconciliations containing adjustments from GAAP net
income to FFO and Core FFO, if applicable, and further information
regarding these non-GAAP measures can be found later in this
release. Per share amounts for net income, FFO and Core FFO are on
a diluted basis.
Operating Metrics
Key portfolio results for the total stabilized portfolio,
including the Company’s pro rata share of unconsolidated joint
ventures, were as follows:
- Occupancy was 97.4% on September 30, 2024, compared to 96.5% on
June 30, 2024 and 98.0% on September 30, 2023. On a same center
basis (excluding Tanger Outlets Asheville and Bridge Street Town
Centre in Huntsville, AL, which were acquired in the fourth quarter
of 2023), occupancy was 97.5% on September 30, 2024, 97.1% on June
30, 2024 and 98.0% on September 30, 2023.
- Same center net operating income (“Same Center NOI”), which is
presented on a cash basis, increased 4.3% to $91.7 million for the
third quarter of 2024 from $87.9 million for the third quarter of
2023 and increased 5.8% to $269.2 million for the first nine months
of 2024 from $254.4 million for the first nine months of 2023.
- Average tenant sales per square foot was $438 for the twelve
months ended September 30, 2024 compared to $439 for the twelve
months ended June 30, 2024 and $437 for the twelve months ended
September 30, 2023.
- On a same center basis, average tenant sales per square foot
was $435 for the twelve months ended September 30, 2024 compared to
$436 for the twelve months ended June 30, 2024 and $437 for the
twelve months ended September 30, 2023.
- The occupancy cost ratio (“OCR”), representing annualized
occupancy costs as a percentage of tenant sales, was 9.5% for the
twelve months ended September 30, 2024 compared to 9.4% for the
twelve months ended June 30, 2024 and 9.1% for the twelve months
ended September 30, 2023.
- Lease termination fees (which are excluded from Same Center
NOI) for the total portfolio totaled $351,000 for the third quarter
of 2024 and $925,000 for the first nine months of 2024, compared to
$409,000 for the third quarter of 2023 and $484,000 for the first
nine months of 2023.
Same Center NOI is a supplemental non-GAAP financial measure of
operating performance. A complete definition of Same Center NOI and
a reconciliation to the nearest comparable GAAP measure can be
found later in this release.
Leasing Activity
Leasing activity in the Company’s portfolio continues to be
robust. For the total domestic portfolio, including the Company’s
pro rata share of domestic unconsolidated joint ventures, total
renewed or re-tenanted leases (including leases for both comparable
and non-comparable space) executed during the twelve months ended
September 30, 2024 included 543 leases, totaling 2.6 million square
feet, compared to 528 leases, totaling 2.2 million square feet,
during the twelve months ended September 30, 2023.
Blended average rental rates were positive for the 11th
consecutive quarter at 14.4% on a cash basis for leases executed
for comparable space during the twelve months ended September 30,
2024. These blended rent spreads are comprised of re-tenanted rent
spreads of 45.7% and renewal rent spreads of 12.0%.
As of September 30, 2024, Tanger had renewals executed or in
process for 72.5% of the space scheduled to expire during 2024
compared to 88.0% of expiring 2023 space as of September 30, 2023
(total portfolio, including the Company’s pro rata share of
unconsolidated joint ventures). Relative to 2023, the Company
continues to expect a higher re-tenanting rate in 2024 as it
focuses on portfolio enhancement and further elevating and
diversifying its retailer mix.
Hurricane Update
In late September 2024, Hurricane Helene severely impacted the
Southeastern U.S., including the Asheville, North Carolina region.
All team members remained safe, and Tanger Outlets Asheville
sustained relatively minor damage and served as a staging location
for emergency response teams serving the surrounding community. Due
to a lack of utilities, Tanger Asheville was closed from September
27 and reopened with reduced hours on October 11, along with nearly
half of its retailers. Additional retailers reopened throughout
October, with all reopened and the center operating at regular
hours by October 27.
While several Tanger centers were within the path of Hurricane
Helene and Hurricane Milton, which impacted Florida in October
2024, no other centers sustained damage or ongoing closures. Tanger
maintains insurance coverage to mitigate the financial impacts of
physical damage and business interruption at its centers as part of
its ongoing risk management plans.
Dividend
In October 2024, the Company’s Board of Directors authorized a
quarterly cash dividend of $0.275 per share, payable on November
15, 2024 to holders of record on October 31, 2024.
Balance Sheet and
Liquidity
During the three and nine months ended September 30, 2024, the
Company sold 0.8 million common shares under its at-the-market
stock offering (the “ATM Offering”) at a weighted average price of
$30.53 per share, generating gross proceeds of $25.0 million. In
October 2024, the Company sold an additional 0.5 million common
shares at a weighted average price of $33.38 per share, totaling
approximately $16.2 million of gross proceeds. As of October 31,
2024, the Company had $179.0 million of common shares remaining
available for sale under the ATM Offering.
The following balance sheet and liquidity metrics are presented
for the total portfolio, including the Company’s pro rata share of
unconsolidated joint ventures. As of September 30, 2024:
- Net debt to Adjusted EBITDAre (calculated as net debt divided
by Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization for Real Estate (“Adjusted EBITDAre”)) improved to
5.0x for the twelve months ended September 30, 2024 from 5.8x for
the year ended December 31, 2023. Management estimates that Net
debt to Adjusted EBITDAre would be in a range of 4.8x to 4.9x for
the September 30, 2024 period assuming a full twelve months of
Adjusted EBITDAre for Tanger Nashville, Tanger Asheville, and
Bridge Street Town Centre, which were added to the portfolio during
the fourth quarter of 2023.
- Interest coverage ratio (calculated as Adjusted EBITDAre
divided by interest expense) was 4.6x for the first nine months of
2024 and 4.7x for the twelve months ended September 30, 2024.
- Cash and cash equivalents and short-term investments totaled
$18.8 million with full availability on the Company’s $620.0
million unsecured lines of credit.
- Total outstanding debt aggregated $1.6 billion with $66.2
million (principal) of floating rate debt, representing
approximately 4% of total debt outstanding and 1% of total
enterprise value.
- Weighted average interest rate was 4.1%, including executed
swaps, and weighted average term to maturity of outstanding debt,
including extension options, was approximately 4.0 years.
- Approximately 89% of the total portfolio’s square footage was
unencumbered by mortgages with secured debt of $220.0 million
(principal), representing 14% of total debt outstanding.
- Funds Available for Distribution (“FAD”) payout ratio was 61%
for the first nine months of 2024.
Adjusted EBITDAre, Net debt and FAD are supplemental non-GAAP
financial measures of operating performance. Definitions of
Adjusted EBITDAre, Net debt and FAD and reconciliations to the
nearest comparable GAAP measures are included later in this
release.
Guidance for 2024
Based on the Company’s results to date along with its outlook
for the remainder of 2024, management is increasing its full-year
2024 guidance with its current expectations for net income, FFO and
Core FFO per share for 2024 as follows:
For the year ending December 31,
2024:
Revised
Previous
Low Range
High Range
Low Range
High Range
Estimated diluted net income per
share
$0.88
$0.92
$0.85
$0.92
Depreciation and amortization of real
estate assets - consolidated and the Company’s share of
unconsolidated joint ventures
1.20
1.20
1.19
1.19
Estimated diluted FFO per share
$2.08
$2.12
$2.04
$2.11
Executive severance costs (1)
0.01
0.01
0.01
0.01
Estimated diluted Core FFO per
share
$2.09
$2.13
$2.05
$2.12
Tanger’s estimates reflect the following key assumptions
(dollars in millions):
For the year ending December 31,
2024:
Revised
Previous
Low Range
High Range
Low Range
High Range
Same Center NOI growth - total portfolio
at pro rata share
4.25
%
5.00
%
3.25
%
4.75
%
General and administrative expense,
excluding executive severance (1)
$75.5
$78.5
$76.5
$79.5
Interest expense - consolidated
$60.0
$61.0
$60.0
$61.5
Other income (expense) (2)
$0.5
$1.5
$—
$2.0
Annual recurring capital expenditures,
renovations and second generation tenant allowances
$55.0
$60.0
$50.0
$60.0
(1)
Executive severance costs of $1.6 million
were recorded during the first quarter of 2024.
(2)
Includes interest income.
Weighted average diluted common shares are expected to
approximate 110.5 million for earnings per share and 115.5 million
for FFO and Core FFO per share. The estimates above do not include
the impact of the acquisition or sale of any outparcels, properties
or joint venture interests, or any additional financing
activity.
Third Quarter 2024 Conference
Call
Tanger will host a conference call to discuss its third quarter
2024 results for analysts, investors and other interested parties
on Thursday, November 7, 2024, at 8:30 a.m. Eastern Time. To access
the conference call, listeners should dial 1-877-605-1702.
Alternatively, a live audio webcast of this call will be available
to the public on Tanger’s Investor Relations website,
investors.tanger.com. A telephone replay of the call will be
available from November 7, 2024 at approximately 11:30 a.m. through
November 21, 2024 at 11:59 p.m. by dialing 1-877-660-6853, replay
access code #13748540. An online archive of the webcast will also
be available through November 21, 2024.
Upcoming Events
The Company is scheduled to participate in the following
upcoming events:
- Nareit’s REITworld: 2024 Investor Conference held at the Wynn
Las Vegas in Las Vegas, NV from November 19 through November 20,
2024
- Tour of Tanger Outlets Phoenix in Glendale, AZ on November 21,
2024 in connection with Citi’s Phoenix Retail Tour Post-Nareit
About Tanger®
Tanger Inc. (NYSE: SKT) is a leading owner and operator of
outlet and open-air retail shopping destinations, with over 43
years of expertise in the retail and outlet shopping industries.
Tanger’s portfolio of 38 outlet centers, one adjacent managed
center, and one open-air lifestyle center includes over 15 million
square feet well positioned across tourist destinations and vibrant
markets in 20 U.S. states and Canada. A publicly traded REIT since
1993, Tanger continues to innovate the retail experience for its
shoppers with over 3,000 stores operated by more than 700 different
brand name companies. Tanger is furnishing a Form 8-K with the
Securities and Exchange Commission (“SEC”) that includes a
supplemental information package for the quarter ended September
30, 2024. For more information on Tanger, call 1-800-4TANGER or
visit tanger.com.
The Company uses, and intends to continue to use, its Investor
Relations website, which can be found at investors.tanger.com, as a
means of disclosing material nonpublic information and for
complying with its disclosure obligations under Regulation FD.
Additional information about the Company can also be found through
social media channels. The Company encourages investors and others
interested in the Company to review the information on its Investor
Relations website and on social media channels. The information
contained on, or that may be accessed through, our website or
social media platforms is not incorporated by reference into, and
is not a part of, this document.
Safe Harbor Statement
Certain statements made in this earnings release contain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. We intend such
forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995 and included this
statement for purposes of complying with these safe harbor
provisions. Forward-looking statements, which are based on certain
assumptions and describe our future plans, strategies, beliefs and
expectations, are generally identifiable by use of the words
“anticipate,” “believe,” “can,” “continue,” “could,” “designed,”
“estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “might,”
“plan,” “possible,” “potential,” “predict,” “project,” “should,”
“target,” “will,” “would,” or similar expressions. Such
forward-looking statements include the Company’s expectations
regarding future financial results and assumptions underlying that
guidance, long-term growth, trends in retail traffic and tenant
revenues, development initiatives and strategic partnerships, the
anticipated impact of the Company’s recently acquired assets in
Huntsville and Asheville, as well as its recently opened Nashville
development and related costs and anticipated yield, expectations
regarding operational metrics, renewal trends, new revenue streams,
its strategy and value proposition to retailers, participation in
upcoming events, uses of and efforts to reduce costs of capital,
liquidity, dividend payments and cash flows.
Other important factors that may cause actual results to differ
materially from current expectations include, but are not limited
to: our inability to develop new retail centers or expand existing
retail centers successfully; risks related to the economic
performance and market value of our retail centers; the relative
illiquidity of real property investments; impairment charges
affecting our properties; our acquisitions or dispositions of
assets may not achieve anticipated results; competition for the
acquisition and development of retail centers, and our inability to
complete the acquisitions of retail centers we may identify;
competition for tenants with competing retail centers; the
diversification of our tenant mix and our entry into the operation
of full price retail may not achieve our expected results;
environmental regulations affecting our business; risks associated
with possible terrorist activity or other acts or threats of
violence and threats to public safety; risks related to the impact
of macroeconomic conditions, including rising interest rates and
inflation, on our tenants and on our business, financial condition,
liquidity, results of operations and compliance with debt
covenants; our dependence on rental income from real property; the
fact that certain of our leases include co-tenancy and/or
sales-based provisions that may allow a tenant to pay reduced rent
and/or terminate a lease prior to its natural expiration; our
dependence on the results of operations of our retailers and their
bankruptcy, early termination or closing could adversely affect us;
the impact of geopolitical conflicts; the immediate and long-term
impact of the outbreak of a highly infectious or contagious disease
on our tenants and on our business (including the impact of actions
taken to contain the outbreak or mitigate its impact); the fact
that certain of our properties are subject to ownership interests
held by third parties, whose interests may conflict with ours;
risks related to climate change; increased costs and reputational
harm associated with the increased focus on environmental,
sustainability and social initiatives; risks related to uninsured
losses; the risk that consumer, travel, shopping and spending
habits may change; risks associated with our Canadian investments;
risks associated with attracting and retaining key personnel; risks
associated with debt financing; risks associated with our
guarantees of debt for, or other support we may provide to, joint
venture properties; the effectiveness of our interest rate hedging
arrangements; our potential failure to qualify as a REIT; our legal
obligation to pay dividends to our shareholders; legislative or
regulatory actions that could adversely affect our shareholders,
our dependence on distributions from the Operating Partnership to
meet our financial obligations, including dividends; the risk of a
cyber-attack or an act of cyber-terrorism or the impact of outages
on our technology systems or technology systems generally; the
uncertainties of costs to comply with regulatory changes (including
potential costs to comply with proposed rules of the SEC to
standardize climate-related disclosures); and other important
factors which may cause actual results to differ materially from
current expectations include, but are not limited to, those set
forth under Item 1A - “Risk Factors” in the Company’s and the
Operating Partnership’s Annual Report on Form 10-K for the year
ended December 31, 2023.
We qualify all of our forward-looking statements by these
cautionary statements. The forward-looking statements in this
earnings release are only predictions. We have based these
forward-looking statements largely on our current expectations and
projections about future events and financial trends that we
believe may affect our business, financial condition and results of
operations. Because forward-looking statements are inherently
subject to risks and uncertainties, some of which cannot be
predicted or quantified, you should not rely on these
forward-looking statements as predictions of future events. The
events and circumstances reflected in our forward-looking
statements may not be achieved or occur and actual results could
differ materially from those projected in the forward-looking
statements. Except as required by applicable law, we do not plan to
publicly update or revise any forward-looking statements contained
herein, whether as a result of any new information, future events,
changed circumstances or otherwise.
TANGER INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per
share data)
(Unaudited)
Three months ended
Nine months ended
September 30,
September 30,
2024
2023
2024
2023
Revenues:
Rental revenues
$125,221
$110,835
$365,349
$319,005
Management, leasing and other services
2,485
2,138
7,095
6,174
Other revenues
5,295
4,373
12,884
11,751
Total revenues
133,001
117,346
385,328
336,930
Expenses:
Property operating
40,247
36,758
113,261
103,618
General and administrative (1)
18,215
18,937
56,518
54,675
Depreciation and amortization
35,376
25,374
103,410
76,656
Total expenses
93,838
81,069
273,189
234,949
Other income (expense):
Interest expense
(15,493
)
(11,688
)
(45,546
)
(35,997
)
Other income (expense)
(52
)
1,899
755
7,023
Total other income (expense)
(15,545
)
(9,789
)
(44,791
)
(28,974
)
Income before equity in earnings of
unconsolidated joint ventures
23,618
26,488
67,348
73,007
Equity in earnings of unconsolidated joint
ventures
2,312
2,389
7,803
6,030
Net income
25,930
28,877
75,151
79,037
Noncontrolling interests in Operating
Partnership
(1,074
)
(1,253
)
(3,122
)
(3,422
)
Noncontrolling interests in other
consolidated partnerships
—
—
80
(248
)
Net income attributable to Tanger
Inc.
24,856
27,624
72,109
75,367
Allocation of earnings to participating
securities
(232
)
(414
)
(692
)
(854
)
Net income available to common
shareholders of Tanger Inc.
$24,624
$27,210
$71,417
$74,513
Basic earnings per common
share:
Net income
$0.23
$0.26
$0.66
$0.71
Diluted earnings per common
share:
Net income
$0.22
$0.26
$0.65
$0.70
(1)
The nine months ended September 30, 2024
includes $1.6 million of executive severance costs. The nine months
ended September 30, 2023 includes the reversal of $0.8 million of
previously expensed compensation related to a voluntary executive
departure.
TANGER INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
data)
(Unaudited)
September 30,
December 31,
2024
2023
Assets
Rental property:
Land
$303,605
$303,605
Buildings, improvements and fixtures
3,011,234
2,938,434
Construction in progress
9,421
29,201
3,324,260
3,271,240
Accumulated depreciation
(1,401,334
)
(1,318,264
)
Total rental property, net
1,922,926
1,952,976
Cash and cash equivalents
11,053
12,778
Short-term investments
—
9,187
Investments in unconsolidated joint
ventures
70,245
71,900
Deferred lease costs and other
intangibles, net
77,508
91,269
Operating lease right-of-use assets
76,431
77,400
Prepaids and other assets
117,128
108,609
Total assets
$2,275,291
$2,324,119
Liabilities and Equity
Liabilities
Debt:
Senior, unsecured notes, net
$1,041,240
$1,039,840
Unsecured term loan, net
322,967
322,322
Mortgages payable, net
60,186
64,041
Unsecured lines of credit
—
13,000
Total debt
1,424,393
1,439,203
Accounts payable and accrued expenses
86,761
118,505
Operating lease liabilities
85,079
86,076
Other liabilities
86,426
89,022
Total liabilities
1,682,659
1,732,806
Commitments and contingencies
Equity
Tanger Inc.:
Common shares, $0.01 par value,
300,000,000 shares authorized, 110,208,387 and 108,793,251 shares
issued and outstanding at September 30, 2024 and December 31, 2023,
respectively
1,102
1,088
Paid in capital
1,102,443
1,079,387
Accumulated distributions in excess of net
income
(507,833
)
(490,171
)
Accumulated other comprehensive loss
(27,418
)
(23,519
)
Equity attributable to Tanger
Inc.
568,294
566,785
Equity attributable to noncontrolling
interests:
Noncontrolling interests in Operating
Partnership
24,338
24,528
Noncontrolling interests in other
consolidated partnerships
—
—
Total equity
592,632
591,313
Total liabilities and equity
$2,275,291
$2,324,119
TANGER INC. AND
SUBSIDIARIES
CENTER INFORMATION
(Unaudited)
September 30,
2024
2023
Gross Leasable Area Open at End of
Period (in thousands):
Consolidated
12,690
11,349
Unconsolidated
2,113
2,113
Pro rata share of unconsolidated
1,056
1,056
Managed
758
758
Total Owned and/or Managed Properties
(1)
15,561
14,220
Total Owned Properties including pro
rata share of unconsolidated JVs (1)
13,746
12,405
Centers in Operation at End of
Period:
Consolidated
32
29
Unconsolidated
6
6
Managed
2
1
Total Owned and/or Managed
Properties
40
36
Ending Occupancy:
Consolidated (2)
97.3
%
97.9
%
Unconsolidated
98.2
%
98.4
%
Total Owned Properties including pro
rata share of unconsolidated JVs (2)
97.4
%
98.0
%
Total Owned Properties including pro
rata share of unconsolidated JVs - Same Center (3)
97.5
%
98.0
%
Total U.S. States Operated in at End of
Period (4)
20
20
(1)
Amounts may not recalculate due to the
effect of rounding.
(2)
Metrics for September 2024 include the
results of Tanger Outlets Asheville and Bridge Street Town Centre,
both of which were acquired in the fourth quarter of 2023, and
exclude the results of Tanger Outlets Nashville, which opened
during the fourth quarter of 2023 and has not yet stabilized.
(3)
Excludes the occupancy rates at Bridge
Street Town Centre, Tanger Asheville and Tanger Nashville for the
September 30, 2024 period.
(4)
The Company also has an ownership interest
in two centers located in Ontario, Canada.
TANGER INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO
NON-GAAP SUPPLEMENTAL MEASURES (1)
(in thousands, except per
share)
(Unaudited)
Below is a
reconciliation of Net Income to FFO and Core FFO:
Three months ended
Nine months ended
September 30,
September 30,
2024
2023
2024
2023
Net income
$25,930
$28,877
$75,151
$79,037
Adjusted for:
Depreciation and amortization of real
estate assets - consolidated
34,357
24,953
100,764
75,077
Depreciation and amortization of real
estate assets - unconsolidated joint ventures
2,850
2,608
7,450
7,893
FFO
63,137
56,438
183,365
162,007
FFO attributable to noncontrolling
interests in other consolidated partnerships
—
—
80
(248
)
Allocation of earnings to participating
securities
(418
)
(651
)
(1,248
)
(1,560
)
FFO available to common shareholders
(2)
$62,719
$55,787
$182,197
$160,199
As further adjusted for:
Executive departure-related adjustments
(3)
—
—
1,554
(806
)
Impact of above adjustments to the
allocation of earnings to participating securities
—
—
(10
)
6
Core FFO available to common
shareholders (2)
$62,719
$55,787
$183,741
$159,399
FFO available to common shareholders
per share - diluted (2)
$0.54
$0.50
$1.58
$1.45
Core FFO available to common
shareholders per share - diluted (2)
$0.54
$0.50
$1.60
$1.44
Weighted Average Shares:
Basic weighted average common shares
108,972
104,461
108,675
104,308
Effect of notional units
799
1,026
746
898
Effect of outstanding options
933
832
925
783
Diluted weighted average common shares
(for earnings per share computations)
110,704
106,319
110,346
105,989
Exchangeable operating partnership
units
4,708
4,738
4,708
4,738
Diluted weighted average common shares
(for FFO and Core FFO per share computations) (2)
115,412
111,057
115,054
110,727
(1)
Refer to Non-GAAP Definitions beginning on
page xv for definitions of the non-GAAP supplemental measures used
in this release.
(2)
Assumes the Class A common limited
partnership units of the Operating Partnership held by the
noncontrolling interests are exchanged for common shares of the
Company. Each Class A common limited partnership unit is
exchangeable for one of the Company’s common shares, subject to
certain limitations to preserve the Company’s REIT status.
(3)
For the 2024 period, represents executive
severance costs. For the 2023 period, represents the reversal of
previously expensed compensation related to a voluntary executive
departure.
Below is a reconciliation of FFO to FAD
(1):
Three months ended
Nine months ended
September 30,
September 30,
2024
2023
2024
2023
FFO available to common
shareholders
$62,719
$55,787
$182,197
$160,199
Adjusted for:
Corporate depreciation
1,019
421
2,646
1,579
Amortization of finance costs
914
796
2,609
2,395
Amortization of net debt discount
191
159
548
455
Amortization of equity-based
compensation
2,875
3,387
8,980
9,040
Straight-line rent adjustments
(374
)
409
(361
)
1,410
Market rent adjustments
166
257
393
545
Second generation tenant allowances and
lease incentives
(11,802
)
(3,389
)
(20,858
)
(7,718
)
Capital improvements
(10,418
)
(10,275
)
(23,707
)
(19,776
)
Adjustments from unconsolidated joint
ventures
(845
)
(423
)
(1,149
)
(528
)
FAD available to common shareholders
(2)
$44,445
$47,129
$151,298
$147,601
Dividends per share
$0.275
$0.245
$0.810
$0.710
FFO payout ratio
51
%
49
%
51
%
49
%
FAD payout ratio
71
%
58
%
61
%
53
%
Diluted weighted average common shares
(2)
115,412
111,057
115,054
110,727
(1)
Refer to page ix for a reconciliation of
net income to FFO available to common shareholders.
(2)
Assumes the Class A common limited
partnership units of the Operating Partnership held by the
noncontrolling interests are exchanged for common shares of the
Company. Each Class A common limited partnership unit is
exchangeable for one of the Company’s common shares, subject to
certain limitations to preserve the Company’s REIT status.
Below is a
reconciliation of Net Income to Portfolio NOI and Same Center NOI
for the consolidated portfolio and total portfolio at pro rata
share:
Three months ended
Nine months ended
September 30,
September 30,
2024
2023
2024
2023
Net income
$25,930
$28,877
$75,151
$79,037
Adjusted to exclude:
Equity in earnings of unconsolidated joint
ventures
(2,312
)
(2,389
)
(7,803
)
(6,030
)
Interest expense
15,493
11,688
45,546
35,997
Other (income) expense
52
(1,899
)
(755
)
(7,023
)
Depreciation and amortization
35,376
25,374
103,410
76,656
Other non-property income
(199
)
(306
)
(1,000
)
(1,327
)
Corporate general and administrative
expenses
18,231
18,950
56,556
54,674
Non-cash adjustments (1)
(214
)
670
28
1,971
Lease termination fees
(335
)
(392
)
(875
)
(400
)
Portfolio NOI - Consolidated
92,022
80,573
270,258
233,555
Non-same center NOI - Consolidated
(7,702
)
(90
)
(22,978
)
(50
)
Same Center NOI - Consolidated
(2)
$84,320
$80,483
$247,280
$233,505
Portfolio NOI - Consolidated
$92,022
$80,573
$270,258
$233,555
Pro rata share of unconsolidated joint
ventures (3)
7,362
7,393
21,941
20,905
Portfolio NOI - Total portfolio at pro
rata share (3)
99,384
87,966
292,199
254,460
Non-same center NOI - Total portfolio at
pro rata share (3)
(7,702
)
(90
)
(22,978
)
(50
)
Same Center NOI - Total portfolio at
pro rata share (2) (3)
$91,682
$87,876
$269,221
$254,410
(1)
Non-cash items include straight-line rent,
above and below market rent amortization, straight-line rent
expense on land leases, and gains or losses on outparcel sales, as
applicable.
(2)
Centers excluded from Same Center NOI:
Nashville
October 2023
New Development
Consolidated
Asheville
November 2023
Acquired
Consolidated
Huntsville
November 2023
Acquired
Consolidated
(3)
Pro rata share metrics are presented on a
constant currency basis. Constant currency is a non-GAAP measure,
calculated by applying the average foreign exchange rate for the
current period to all periods presented.
Below are
reconciliations of Net Income to Adjusted EBITDA:
Three months ended
Nine months ended
September 30,
September 30,
2024
2023
2024
2023
Net income
$25,930
$28,877
$75,151
$79,037
Adjusted to exclude:
Interest expense, net
15,513
9,283
45,108
28,584
Income tax expense (benefit)
—
4
(248
)
(32
)
Depreciation and amortization
35,376
25,374
103,410
76,656
Executive departure-related adjustments
(1)
—
—
1,554
(806
)
Adjusted EBITDA
$76,819
$63,538
$224,975
$183,439
Twelve months ended
September 30,
December 31,
2024
2023
Net income
$99,996
$103,882
Adjusted to exclude:
Interest expense, net
54,673
38,149
Income tax expense (benefit)
(624
)
(408
)
Depreciation and amortization
135,643
108,889
Executive departure-related adjustments
(1)
1,554
(806
)
Adjusted EBITDA
$291,242
$249,706
(1)
For the 2024 period, represents executive
severance costs. For the 2023 period, represents the reversal of
previously expensed compensation related to a voluntary executive
departure.
Below are
reconciliations of Net Income to EBITDAre and Adjusted
EBITDAre:
Three months ended
Nine months ended
September 30,
September 30,
2024
2023
2024
2023
Net income
$25,930
$28,877
$75,151
$79,037
Adjusted to exclude:
Interest expense, net
15,513
9,283
45,108
28,584
Income tax expense (benefit)
—
4
(248
)
(32
)
Depreciation and amortization
35,376
25,374
103,410
76,656
Pro rata share of interest expense, net -
unconsolidated joint ventures
2,186
2,224
6,539
6,550
Pro rata share of depreciation and
amortization - unconsolidated joint ventures
2,850
2,608
7,450
7,893
EBITDAre
$81,855
$68,370
$237,410
$198,688
Executive departure-related adjustments
(1)
—
—
1,554
(806
)
Adjusted EBITDAre
$81,855
$68,370
$238,964
$197,882
Twelve months ended
September 30,
December 31,
2024
2023
Net income
$99,996
$103,882
Adjusted to exclude:
Interest expense, net
54,673
38,149
Income tax expense (benefit)
(624
)
(408
)
Depreciation and amortization
135,643
108,889
Pro rata share of interest expense, net -
unconsolidated joint ventures
8,768
8,779
Pro rata share of depreciation and
amortization - unconsolidated joint ventures
10,071
10,514
EBITDAre
$308,527
$269,805
Executive departure-related adjustments
(1)
1,554
(806
)
Adjusted EBITDAre
$310,081
$268,999
(1)
For the 2024 period, represents executive
severance costs. For the 2023 period, represents the reversal of
previously expensed compensation related to a voluntary executive
departure.
Below is a
reconciliation of Total Debt to Net Debt for the consolidated
portfolio and total portfolio at pro rata share:
September 30, 2024
Consolidated
Pro Rata Share of
Unconsolidated JVs
Total at Pro Rata
Share
Total debt
$1,424,393
$158,934
$1,583,327
Less:
Cash and cash equivalents
(11,053
)
(7,738
)
(18,791
)
Short-term investments (1)
—
—
—
Total cash and cash equivalents and
short-term investments
(11,053
)
(7,738
)
(18,791
)
Net debt
$1,413,340
$151,196
$1,564,536
December 31, 2023
Consolidated
Pro Rata Share of
Unconsolidated JVs
Total at Pro Rata
Share
Total debt
$1,439,203
$159,979
$1,599,182
Less:
Cash and cash equivalents
(12,778
)
(7,020
)
(19,798
)
Short-term investments (1)
(9,187
)
—
(9,187
)
Total cash and cash equivalents and
short-term investments
(21,965
)
(7,020
)
(28,985
)
Net debt
$1,417,238
$152,959
$1,570,197
(1)
Represents short-term bank deposits with
initial maturities greater than three months and less than or equal
to one year.
NON-GAAP DEFINITIONS
Funds From Operations
Funds From Operations (“FFO”) is a widely used measure of the
operating performance for real estate companies that supplements
net income (loss) determined in accordance with generally accepted
accounting principles in the United States (“GAAP”). We determine
FFO based on the definition set forth by the National Association
of Real Estate Investment Trusts (“Nareit”), of which we are a
member. In December 2018, Nareit issued “Nareit Funds From
Operations White Paper - 2018 Restatement,” which clarifies, where
necessary, existing guidance and consolidates alerts and policy
bulletins into a single document for ease of use. Nareit defines
FFO as net income (loss) available to the Company’s common
shareholders computed in accordance with GAAP, excluding (i)
depreciation and amortization related to real estate, (ii) gains or
losses from sales of certain real estate assets, (iii) gains and
losses from change in control, (iv) impairment write-downs of
certain real estate assets and investments in entities when the
impairment is directly attributable to decreases in the value of
depreciable real estate held by the entity and (v) after
adjustments for unconsolidated partnerships and joint ventures
calculated to reflect FFO on the same basis.
FFO is intended to exclude historical cost depreciation of real
estate as required by GAAP which assumes that the value of real
estate assets diminishes ratably over time. Historically, however,
real estate values have risen or fallen with market conditions.
Because FFO excludes depreciation and amortization of real estate
assets, gains and losses from property dispositions and
extraordinary items, it provides a performance measure that, when
compared year over year, reflects the impact to operations from
trends in occupancy rates, rental rates, operating costs,
development activities and interest costs, providing perspective
not immediately apparent from net income (loss).
We present FFO because we consider it an important supplemental
measure of our operating performance. In addition, a portion of
cash bonus compensation to certain members of management is based
on our FFO or Core FFO, which is described in the section below. We
believe it is useful for investors to have enhanced transparency
into how we evaluate our performance and that of our management. In
addition, FFO is frequently used by securities analysts, investors
and other interested parties in the evaluation of REITs, many of
which present FFO when reporting their results. FFO is also widely
used by us and others in our industry to evaluate and price
potential acquisition candidates. We believe that FFO payout ratio,
which represents regular distributions to common shareholders and
unitholders of the Operating Partnership expressed as a percentage
of FFO, is useful to investors because it facilitates the
comparison of dividend coverage between REITs. Nareit has
encouraged its member companies to report their FFO as a
supplemental, industry-wide standard measure of REIT operating
performance.
FFO has significant limitations as an analytical tool, and you
should not consider it in isolation, or as a substitute for
analysis of our results as reported under GAAP. Some of these
limitations are:
- FFO does not reflect our cash expenditures, or future
requirements, for capital expenditures or contractual
commitments;
- FFO does not reflect changes in, or cash requirements for, our
working capital needs;
- Although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often have to be
replaced in the future, and FFO does not reflect any cash
requirements for such replacements; and
- Other companies in our industry may calculate FFO differently
than we do, limiting its usefulness as a comparative measure.
Because of these limitations, FFO should not be considered as a
measure of discretionary cash available to us to invest in the
growth of our business or our dividend paying capacity. We
compensate for these limitations by relying primarily on our GAAP
results and using FFO only as a supplemental measure.
Core FFO
We present Core Funds From Operations (“Core FFO”) as a
supplemental measure of our performance. We define Core FFO as FFO
further adjusted to eliminate the impact of certain items that we
do not consider indicative of our ongoing operating performance.
These further adjustments are itemized in the table above. You are
encouraged to evaluate these adjustments and the reasons we
consider them appropriate for supplemental analysis. In evaluating
Core FFO you should be aware that in the future we may incur
expenses that are the same as or similar to some of the adjustments
in this presentation. Our presentation of Core FFO should not be
construed as an inference that our future results will be
unaffected by unusual or non-recurring items.
We present Core FFO because we believe it assists investors and
analysts in comparing our performance across reporting periods on a
consistent basis by excluding items that we do not believe are
indicative of our core operating performance. In addition, we
believe it is useful for investors to have enhanced transparency
into how we evaluate management’s performance and the effectiveness
of our business strategies. We use Core FFO when certain material,
unplanned transactions occur as a factor in evaluating management’s
performance and to evaluate the effectiveness of our business
strategies, and may use Core FFO when determining incentive
compensation.
Core FFO has limitations as an analytical tool. Some of these
limitations are:
- Core FFO does not reflect our cash expenditures, or future
requirements, for capital expenditures or contractual
commitments;
- Core FFO does not reflect changes in, or cash requirements for,
our working capital needs;
- Although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often have to be
replaced in the future, and Core FFO does not reflect any cash
requirements for such replacements;
- Core FFO does not reflect the impact of certain cash charges
resulting from matters we consider not to be indicative of our
ongoing operations; and
- Other companies in our industry may calculate Core FFO
differently than we do, limiting its usefulness as a comparative
measure.
Because of these limitations, Core FFO should not be considered
in isolation or as a substitute for performance measures calculated
in accordance with GAAP. We compensate for these limitations by
relying primarily on our GAAP results and using Core FFO only as a
supplemental measure.
Funds Available for Distribution
Funds Available for Distribution (“FAD”) is a non-GAAP financial
measure that we define as FFO (defined as net income (loss)
available to the Company’s common shareholders computed in
accordance with GAAP, excluding (i) depreciation and amortization
related to real estate, (ii) gains or losses from sales of certain
real estate assets, (iii) gains and losses from change in control,
(iv) impairment write-downs of certain real estate assets and
investments in entities when the impairment is directly
attributable to decreases in the value of depreciable real estate
held by the entity and (v) after adjustments for unconsolidated
partnerships and joint ventures calculated to reflect FFO on the
same basis), excluding corporate depreciation, amortization of
finance costs, amortization of net debt discount (premium),
amortization of equity-based compensation, straight-line rent
amounts, market rent amounts, second generation tenant allowances
and lease incentives, recurring capital improvement expenditures,
and our share of the items listed above for our unconsolidated
joint ventures. Investors, analysts and the Company utilize FAD as
an indicator of common dividend potential. The FAD payout ratio,
which represents regular distributions to common shareholders and
unitholders of the Operating Partnership expressed as a percentage
of FAD, facilitates the comparison of dividend coverage between
REITs.
We believe that net income (loss) is the most directly
comparable GAAP financial measure to FAD. FAD does not represent
cash generated from operating activities in accordance with GAAP
and should not be considered as an alternative to net income (loss)
as an indication of our performance or to cash flows as a measure
of liquidity or our ability to make distributions. Other companies
in our industry may calculate FAD differently than we do, limiting
its usefulness as a comparative measure.
Portfolio Net Operating Income and Same Center Net Operating
Income
We present portfolio net operating income (“Portfolio NOI”) and
same center net operating income (“Same Center NOI”) as
supplemental measures of our operating performance. Portfolio NOI
represents our property level net operating income which is defined
as total operating revenues less property operating expenses and
excludes termination fees and non-cash adjustments including
straight-line rent, net above and below market rent amortization,
impairment charges, loss on early extinguishment of debt and gains
or losses on the sale of assets recognized during the periods
presented. We define Same Center NOI as Portfolio NOI for the
properties that were operational for the entire portion of both
comparable reporting periods and which were not acquired, or
subject to a material expansion or non-recurring event, such as a
natural disaster, during the comparable reporting periods. We
present Portfolio NOI and Same Center NOI on both a consolidated
and total portfolio, including pro rata share of unconsolidated
joint ventures, basis.
We believe Portfolio NOI and Same Center NOI are non-GAAP
metrics used by industry analysts, investors and management to
measure the operating performance of our properties because they
provide performance measures directly related to the revenues and
expenses involved in owning and operating real estate assets and
provide a perspective not immediately apparent from net income
(loss), FFO or Core FFO. Because Same Center NOI excludes
properties developed, redeveloped, acquired and sold; as well as
non-cash adjustments, gains or losses on the sale of outparcels and
termination rents; it highlights operating trends such as occupancy
levels, rental rates and operating costs on properties that were
operational for both comparable periods. Portfolio NOI and
Same Center NOI should not be considered alternatives to net income
(loss) as an indication of our performance or to cash flows as a
measure of our liquidity or our ability to make distributions.
Other REITs may use different methodologies for calculating
Portfolio NOI and Same Center NOI, and accordingly, our Portfolio
NOI and Same Center NOI may not be comparable to other REITs.
Portfolio NOI and Same Center NOI should not be considered
alternatives to net income (loss) or as an indicator of our
financial performance since they do not reflect the entire
operations of our portfolio, nor do they reflect the impact of
general and administrative expenses, acquisition-related expenses,
interest expense, depreciation and amortization costs, other
non-property income and losses, the level of capital expenditures
and leasing costs necessary to maintain the operating performance
of our properties, or trends in development and construction
activities which are significant economic costs and activities that
could materially impact our results from operations. Because of
these limitations, Portfolio NOI and Same Center NOI should not be
viewed in isolation or as a substitute for performance measures
calculated in accordance with GAAP. We compensate for these
limitations by relying primarily on our GAAP results and using
Portfolio NOI and Same Center NOI only as supplemental
measures.
Adjusted EBITDA, EBITDAre and Adjusted EBITDAre
We present Earnings Before Interest, Taxes, Depreciation and
Amortization (“EBITDA”) as adjusted for items described below
(“Adjusted EBITDA”), EBITDA for Real Estate (“EBITDAre”) and
Adjusted EBITDAre, all non-GAAP measures, as supplemental measures
of our operating performance. Each of these measures is defined as
follows:
We define Adjusted EBITDA as net income (loss) available to the
Company’s common shareholders computed in accordance with GAAP
before net interest expense, income taxes (if applicable),
depreciation and amortization, gains and losses on sale of
operating properties, joint venture properties, outparcels and
other assets, impairment write-downs of depreciated property and of
investment in unconsolidated joint ventures caused by a decrease in
value of depreciated property in the affiliate, compensation
related to voluntary retirement plan and other executive officer
severance, certain executive departure-related adjustments, gain on
sale of non-real estate asset, casualty gains and losses, gains and
losses on early extinguishment of debt, net and other items that we
do not consider indicative of the Company’s ongoing operating
performance.
We determine EBITDAre based on the definition set forth by
Nareit, which is defined as net income (loss) available to the
Company’s common shareholders computed in accordance with GAAP
before net interest expense, income taxes (if applicable),
depreciation and amortization, gains and losses on sale of
operating properties, gains and losses on change of control and
impairment write-downs of depreciated property and of investment in
unconsolidated joint ventures caused by a decrease in value of
depreciated property in the affiliate and after adjustments to
reflect our share of the EBITDAre of unconsolidated joint
ventures.
Adjusted EBITDAre is defined as EBITDAre excluding gains and
losses on early extinguishment of debt, net, casualty gains and
losses, compensation related to voluntary retirement plan and other
executive officer severance, gain on sale of non-real estate asset,
gains and losses on sale of outparcels, and other items that we do
not consider indicative of the Company’s ongoing operating
performance.
We present Adjusted EBITDA, EBITDAre and Adjusted EBITDAre as we
believe they are useful for investors, creditors and rating
agencies as they provide additional performance measures that are
independent of a Company’s existing capital structure to facilitate
the evaluation and comparison of the Company’s operating
performance to other REITs and provide a more consistent metric for
comparing the operating performance of the Company’s real estate
between periods.
Adjusted EBITDA, EBITDAre and Adjusted EBITDAre have significant
limitations as analytical tools, including:
- They do not reflect our net interest expense;
- They do not reflect gains or losses on sales of operating
properties or impairment write-downs of depreciated property and of
investment in unconsolidated joint ventures caused by a decrease in
value of depreciated property in the affiliate;
- Adjusted EBITDA and Adjusted EBITDAre do not reflect gains and
losses on extinguishment of debt and other items that may affect
operations; and
- Other companies in our industry may calculate these measures
differently than we do, limiting its usefulness as a comparative
measure.
Because of these limitations, Adjusted EBITDA, EBITDAre and
Adjusted EBITDAre should not be considered in isolation or as a
substitute for performance measures calculated in accordance with
GAAP. We compensate for these limitations by relying primarily on
our GAAP results and using Adjusted EBITDA, EBITDAre and Adjusted
EBITDAre only as supplemental measures.
Net Debt
We define Net Debt as Total Debt less Cash and Cash Equivalents
and Short-Term Investments and present this metric for both the
consolidated portfolio and for the total portfolio, including the
consolidated portfolio and the Company’s pro rata share of
unconsolidated joint ventures. Net debt is a component of the Net
debt to Adjusted EBITDA ratio, which is defined as Net debt for the
respective portfolio divided by Adjusted EBITDA (consolidated
portfolio) or Adjusted EBITDAre (total portfolio at pro rata
share). We use the Net debt to Adjusted EBITDA and the Net debt to
Adjusted EBITDAre ratios to evaluate the Company’s leverage. We
believe this measure is an important indicator of the Company’s
ability to service its long-term debt obligations.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241105603395/en/
Investor Contact Information
Doug McDonald SVP, Treasurer and Investments 336-856-6066
tangerir@tanger.com
Media Contact Information
KWT Global Tanger@kwtglobal.com
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