8-K: Tanger Inc. Reports Strong First Quarter 2025 Results, Driven by Robust Tenant Demand

Tanger Inc. announced positive first quarter 2025 results, highlighting strong tenant demand and a low-leveraged balance sheet.

Summary

• Tanger Inc. reported first quarter 2025 net income available to common shareholders of $0.17 per share, or $19.0 million, compared to $0.20 per share, or $22.2 million, for the prior year period.
• The 2025 period includes a non-cash impairment charge of $0.04 per share, or $4.2 million, related to the center in Howell, Michigan that was sold in April 2025.
• Funds From Operations (FFO) available to common shareholders was $0.53 per share, or $62.7 million, compared to $0.51 per share, or $58.6 million, for the prior year period.
• Core Funds From Operations (Core FFO) available to common shareholders was $0.53 per share, or $62.7 million, compared to $0.52 per share, or $60.1 million, for the prior year period.
• Occupancy was 95.8% on March 31, 2025, compared to 98.0% on December 31, 2024 and 96.5% on March 31, 2024.
• Same center net operating income (Same Center NOI) increased 2.3% to $96.4 million for the first quarter of 2025 from $94.3 million for the first quarter of 2024.
• Average tenant sales per square foot was $455 for the twelve months ended March 31, 2025 compared to $437 for the twelve months ended March 31, 2024.
• Blended average rental rates were positive for the 13th consecutive quarter at 14.1% on a cash basis for leases executed for comparable space during the twelve months ended March 31, 2025.
• In February 2025, the Company completed the acquisition of Pinecrest for $167.0 million.
• In April 2025, the Company sold a non-core center in Howell, Michigan for $17.0 million.
• Net debt to Adjusted EBITDAre was 5.2x for the twelve months ended March 31, 2025 compared to 4.8x for the year ended December 31, 2024.
• Interest coverage ratio was 4.6x for both the first quarter of 2025 and the twelve months ended March 31, 2025.
• In April 2025, the Companys Board of Directors approved a 6.4% increase in the dividend for common shares from $1.10 to $1.17 per share on an annualized basis.
• The company expects full-year 2025 diluted net income per share to be between $0.91 and $0.99 and FFO per share to be between $2.22 and $2.30.

Sentiment

Score: 7

Explanation: The sentiment is positive due to strong operating results, increased dividend, and strategic acquisitions, but tempered by a slight decrease in net income and occupancy.

Positives

• The company achieved positive blended average rental rates for the 13th consecutive quarter, indicating strong leasing performance.
• The acquisition of Pinecrest is expected to deliver an eight percent return during the first year, with potential for additional growth.
• The dividend was increased by 6.4%, reflecting confidence in the company's financial performance.
• The company refinanced the mortgage for Tanger Outlets Memphis, increasing borrowings to $61.7 million and extending the maturity date to April 2030.
• The company entered into $75 million of forward-starting swaps that commence on February 1, 2026 and mature on April 1, 2028 fixing the Adjusted SOFR base rate at a weighted average of 3.3%.

Negatives

• Net income available to common shareholders decreased compared to the prior year period.
• Occupancy decreased from 98.0% on December 31, 2024 to 95.8% on March 31, 2025, reflecting the timing of the company's remerchandising strategy and closure of seasonal tenants.
• The sale of the Howell, Michigan center resulted in a non-cash impairment charge of $4.2 million.

Risks

• The company acknowledges risks associated with general economic and financial conditions, including inflationary pressures and recessionary fears.
• There are risks related to the company's ability to develop new retail centers or expand existing ones successfully.
• The company faces competition for tenants with competing retail centers.
• The company is exposed to risks associated with environmental regulations and possible terrorist activity.
• The company is exposed to risks associated with debt financing.

Future Outlook

Management expects full-year 2025 diluted net income per share to be between $0.91 and $0.99 and 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 announce another quarter of strong financial and operating results, which support our recent dividend increase and forward outlook,' said Stephen Yalof, President and Chief Executive Officer.
• Mr. Yalof continued, 'We are encouraged by the consistent performance of our portfolio and the resilience of the value channel.'

Industry Context

The announcement highlights Tanger's focus on remerchandising and diversifying its tenant mix, which aligns with broader industry trends of enhancing the retail experience to attract and retain customers. The company's emphasis on a strong balance sheet and ample liquidity positions it well to navigate the current macroeconomic environment and capitalize on growth opportunities.

Comparison to Industry Standards

• Simon Property Group (SPG), a leading mall REIT, reported occupancy of 95.5% in Q1 2024, which is comparable to Tanger's occupancy of 95.8% in Q1 2025.
• Macerich (MAC), another mall REIT, reported a blended rental rate increase of 11.3% in Q1 2024, while Tanger reported a blended rental rate increase of 14.1% in Q1 2025, indicating stronger leasing performance.
• Taubman Centers, a high-end mall operator, focuses on luxury retail, while Tanger focuses on outlet and open-air retail, catering to a different segment of the market.
• The acquisition of Pinecrest for $167.0 million is similar to Brookfield Property Partners' acquisition of GGP Inc. in 2018, demonstrating a strategic move to expand and diversify the portfolio.

Stakeholder Impact

• Shareholders will benefit from the increased dividend and potential for future growth.
• Tenants will benefit from the company's remerchandising strategy and focus on attracting desirable retailers.
• Employees will benefit from the company's continued success and stability.

Next Steps

• Tanger will host a conference call on May 1, 2025, to discuss the first quarter 2025 results.
• The Company is scheduled to participate in several upcoming events, including tours of Tanger Outlets Charleston and Bridge Street Town Centre, and conferences such as ICSC Las Vegas and Nareits REITweek.

Key Dates

Keywords

Tanger, REIT, Retail, Outlets, Occupancy, Leasing, FFO, Dividend, NOI, Pinecrest, Acquisition, Financial Results