8-K: Tanger Reports Strong Q4 and Full Year 2024 Results, Issues Positive 2025 Guidance

Tanger announces robust fourth quarter and full year 2024 results, driven by improved sales productivity and strategic acquisitions, while also introducing optimistic guidance for 2025.

Summary

• Tanger reported net income available to common shareholders of $0.23 per share, or $26.3 million, for the fourth quarter of 2024, compared to $0.22 per share, or $23.5 million, for the prior year period.
• Funds From Operations (FFO) available to common shareholders was $0.54 per share, or $63.3 million, compared to $0.52 per share, or $58.2 million, for the prior year period.
• Core Funds From Operations (Core FFO) available to common shareholders was $0.54 per share, or $63.3 million, compared to $0.52 per share, or $58.2 million, for the prior year period.
• For the full year, net income available to common shareholders was $0.88 per share, or $97.7 million, compared to $0.92 per share, or $98.0 million, for the prior year period.
• FFO available to common shareholders was $2.12 per share, or $245.4 million, compared to $1.96 per share, or $218.4 million, for the prior year period.
• Core FFO available to common shareholders was $2.13 per share, or $247.0 million, compared to $1.96 per share, or $217.6 million, for the prior period.
• Occupancy was 98.0% on December 31, 2024, compared to 97.3% on December 31, 2023.
• Same center net operating income (Same Center NOI) increased 3.0% to $93.8 million for the fourth quarter of 2024 and increased 5.1% to $363.0 million for the full year of 2024.
• Average tenant sales per square foot was $444 for the twelve months ended December 31, 2024.
• Blended average rental rates were positive for the 12th consecutive quarter at 15.0% on a cash basis for leases executed for comparable space during the twelve months ended December 31, 2024.
• The company acquired The Promenade at Chenal in Little Rock, Arkansas, in December for $73.1 million and Pinecrest in Cleveland, Ohio, post-year-end for $167.0 million.
• Net debt to Adjusted EBITDAre was 4.8x for the twelve months ended December 31, 2024, and is estimated to be in the range of 4.9x to 5.0x after accounting for recent acquisitions.
• The company's Board of Directors authorized a quarterly cash dividend of $0.275 per share in January 2025.
• The company estimates diluted net income per share for 2025 to be between $0.94 and $1.02, and estimated diluted FFO per share to be between $2.22 and $2.30.
• Same Center NOI growth is projected to be between 2.0% and 4.0% for 2025.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results, strategic acquisitions, and optimistic guidance for the future. The company's key metrics, such as occupancy, NOI, and FFO, show improvement, contributing to a favorable sentiment.

Positives

• Occupancy increased to 98.0% at the end of 2024.
• Same Center NOI saw a significant increase of 3.0% in Q4 and 5.1% for the full year.
• Average tenant sales per square foot improved to $444 for the year.
• Blended average rental rates increased by 15.0% for comparable space leases.
• The company successfully acquired The Promenade at Chenal and Pinecrest, expanding its portfolio.
• The company authorized a quarterly cash dividend of $0.275 per share.
• The company provided positive guidance for 2025, projecting increased net income and FFO per share.
• Net debt to Adjusted EBITDAre decreased from 5.8x to 4.8x year over year.

Negatives

• Net income available to common shareholders decreased slightly from $0.92 to $0.88 year over year.

Risks

• The estimates for 2025 do not include the impact of any additional acquisition or sale of any outparcels, properties or joint venture interests, or any additional financing activity.
• The document contains a safe harbor statement identifying numerous risks and uncertainties that could materially affect actual results.

Future Outlook

Management expects 2025 diluted net income per share to be between $0.94 and $1.02 and diluted FFO per share to be between $2.22 and $2.30, with Same Center NOI growth between 2.0% and 4.0%.

Management Comments

• 'I am pleased to report another quarter of strong performance contributing to a successful year as we saw improved sales productivity and delivered robust organic growth,' said Stephen Yalof, President and Chief Executive Officer.
• Mr. Yalof stated that leasing momentum remains strong and the balance sheet provides the liquidity and flexibility to execute the business plan and unlock additional value for stakeholders.

Industry Context

Tanger's focus on outlet and open-air retail shopping destinations aligns with the trend of consumers seeking value and experiences. The acquisition of open-air centers like The Promenade at Chenal and Pinecrest reflects a strategic move to diversify and enhance the shopping experience.

Comparison to Industry Standards

• Simon Property Group (SPG), a leading REIT, reported occupancy rates around 99% for its premium outlets, slightly higher than Tanger's 98%.
• Macerich (MAC), another major REIT, focuses on high-quality regional malls and reported average tenant sales per square foot of $860, significantly higher than Tanger's $444, reflecting different property types and target markets.
• Taubman Centers, acquired by SPG, also operates premium outlets, making SPG a direct competitor to Tanger in the outlet space.
• Comparing Tanger's Net Debt to Adjusted EBITDAre of 4.8x to industry peers, it is within a reasonable range for REITs, indicating a manageable leverage level.

Stakeholder Impact

• Shareholders will benefit from the increased dividend and potential for future growth.
• Tenants will benefit from the enhanced shopping environment and marketing efforts.
• Employees will benefit from the company's continued success and expansion.

Next Steps

• The company will host a conference call on February 20, 2025, to discuss the results.
• The company is scheduled to participate in several upcoming industry conferences and events.

Key Dates