Tanger Reports First Quarter 2009 Results
Funds From Operation Increases 12.8%, Same Center Net Operating Income Up 2.4%
Net income and FFO per share amounts above are on a diluted basis. FFO is a supplemental non-GAAP financial measure used as a standard in the real estate industry to measure and compare the operating performance of real estate companies. A complete reconciliation containing adjustments from GAAP net income to FFO is included in this release.
First Quarter Highlights
- Dividend increase approved by Board of Directors to raise the quarterly common share cash dividend from
$0.38 to $0.3825per share, $1.53per share annualized, representing the 16th consecutive year of increased dividends
- Announced exchange offer for 3.75% Exchangeable Senior Notes
- 2.4% increase in same center net operating income
- 14.5% increase in average base rental rates on leases renewed during the quarter, compared to 17.9% last year
- 42.4% increase in average base rental rates on released space during the quarter, compared to 41.7% last year
- 93.5% period-end wholly-owned portfolio occupancy rate, compared to 95.3% last year
$338per square foot in reported tenant comparable sales for the rolling twelve months ended March 31, 2009
Portfolio Operating Results
During the first quarter of 2009, Tanger executed 213 leases, totaling 994,000 square feet throughout its wholly-owned portfolio. Lease renewals during the first quarter accounted for 806,000 square feet, generated a 14.5% increase in average base rental rates and represented 53.8% of the square feet originally scheduled to expire during 2009. Average base rental increases on re-tenanted space during the first quarter averaged 42.4% and accounted for the remaining 188,000 square feet.
Same center net operating income increased 2.4% for the first quarter of 2009 compared to 2.5% in the fourth quarter of 2008 and 5.7% in the first quarter of 2008. Reported tenant comparable sales for our wholly owned properties for the rolling twelve months ended
Cash Dividend Increased
Exchange Offer Launched
Balance Sheet Summary
2009 FFO Per Share Guidance
Based on current market conditions and the strength and stability of its core portfolio, the company currently believes its net income available to common shareholders for 2009 will be between
For the twelve months ended December 31, 2009: Low Range High Range Estimated diluted net income per share $1.35 $1.45 Non-controlling interest, gain/loss on acquisition of real estate, depreciation and amortization uniquely significant to real estate including non-controlling interest share and our share of joint ventures 1.38 1.38 Estimated diluted FFO per share $2.73 $2.83
First Quarter Conference Call
Tanger will host a conference call to discuss its first quarter results for analysts, investors and other interested parties on
About Tanger Factory Outlet Centers
Tanger Factory Outlet Centers, Inc.(NYSE: SKT), a fully integrated, self-administered and self-managed publicly traded REIT, presently owns and operates 31 outlet centers in 21 states coast to coast, totaling approximately 9.2 million square feet of gross leasable area. Tanger also manages for a fee and owns an interest in two outlet centers containing approximately 950,000 square feet. Tanger is filing a Form 8-K with the Securities and Exchange Commission that includes a supplemental information package for the quarter ended
Estimates of future net income per share and FFO per share are by definition, and certain other matters discussed in this press release regarding our re-merchandising strategy, the renewal and re-tenanting of space, tenant sales and sales trends, interest rates, funds from operations, the development of new centers, and coverage of the current dividend may be forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are subject to risks and uncertainties. Actual results could differ materially from those projected due to various factors including, but not limited to, the risks associated with general economic and local real estate conditions, the company's ability to meet its obligations on existing indebtedness or refinance existing indebtedness on favorable terms, the availability and cost of capital, the company's ability to lease its properties, the company's inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise, and competition. For a more detailed discussion of the factors that affect our operating results, interested parties should review the Tanger Factory Outlet Centers, Inc. Annual Report on Form 10-K for the fiscal year ended
TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended March 31, 2009 2008 Revenues Base rentals (a) $42,927 $37,232 Percentage rentals 1,308 1,178 Expense reimbursements 19,219 17,478 Other income 1,704 1,388 Total revenues 65,158 57,276 Expenses Property operating 21,748 19,219 General and administrative 5,935 5,271 Depreciation and amortization (b) 20,397 15,583 Total expenses 48,080 40,073 Operating income 17,078 17,203 Interest expense (c) 11,210 10,199 Income before equity in earnings (loss) of unconsolidated joint ventures and gain on fair value measurement of previously held interest in acquired joint venture 5,868 7,004 Equity in earnings (loss) of unconsolidated joint ventures (d) (897) 394 Income from continuing operations 4,971 7,398 Gain on fair value measurement of previously held interest in acquired joint venture (e) 31,497 -- Net income 36,468 7,398 Preferred share dividends (1,406) (1,406) Non-controlling interest in operating partnership (5,698) (981) Allocation to participating securities (f) (437) (139) Net income available to common shareholders $28,927 $4,872 Basic earnings per common share available to common shareholders: Income from continuing operations $.93 $.16 Net income .93 .16 Diluted earnings per common share available to common shareholders: Income from continuing operations $.92 $.16 Net income .92 .16 (a) Includes straight-line rent and market rent adjustments of $699 and $683 for the three months ended March 31, 2009 and 2008, respectively. (b) Includes accelerated deprecation and amortization of approximately $1.2 million for the three months ended March 31, 2009 as a result of the change in estimated useful life of the Hilton Head I, South Carolina center to three years based on our redevelopment plan for the center. The accelerated depreciation and amortization reduced income from continuing operations and net income by approximately $.03 per share for the three months ended March 31, 2009. (c) In accordance with FSP APB 14-1 "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)", the results of operations for all prior periods presented for which such instruments were outstanding have been restated. (d) Includes Wisconsin Dells, Wisconsin property for the 2009 and 2008 periods which is operated by us through 50% ownership joint venture. Includes Myrtle Beach, South Carolina Hwy 17 property for the 2008 period during which period it was operated by us through a 50% ownership joint venture. We acquired the remaining 50% interest in January 2009. Includes Deer Park, New York property for the 2009 period which is operated by us through a 33.3% ownership joint venture. Includes our share of losses incurred by the Deer Park property, which opened during October 2008, totaling $1.1 million due to depreciation charges and leverage on the project. However, we expect results to improve during the stabilization of the property in its first year of operation. (e) Represents FAS 141R "Business Combinations", gain on fair value measurement of our previously held interest in the Myrtle Beach Hwy 17 joint venture upon acquisition on January 5, 2009. (f) In accordance with EITF 03-06-1 "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities", represents earnings allocated to unvested restricted share awards that contain non-forfeitable rights to dividends or dividend equivalents. TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) (Unaudited) March 31, December 31, 2009 2008 ASSETS: Rental property Land $135,710 $135,689 Building, improvement and fixtures 1,348,211 1,260,243 Construction in progress 4,805 3,823 1,488,726 1,399,755 Accumulated depreciation (374,541) (359,301) Rental property, net 1,114,185 1,040,454 Cash and cash equivalents 3,101 4,977 Investments in unconsolidated joint ventures 9,773 9,496 Deferred charges, net 48,294 37,750 Other assets 34,010 29,248 Total assets $1,209,363 $1,121,925 LIABILITIES AND EQUITY Liabilities Debt Senior, unsecured notes (net of discounts of $8,367 and $9,136, respectively) $391,133 $390,363 Mortgage loan, net of discount of $1,166 and $0, respectively) 34,634 -- Unsecured term loan 235,000 235,000 Unsecured lines of credit 188,400 161,500 Total debt 849,167 786,863 Construction trade payables 9,070 11,968 Accounts payable and accrued expenses 27,777 26,277 Other liabilities 33,868 30,914 Total liabilities 919,882 856,022 Commitments Equity Shareholder's equity Preferred shares, 7.5% Class C, liquidation preference $25 per share, 8,000,000 shares authorized, 3,000,000 shares issued and outstanding at March 31, 2009 and December 31, 2008 75,000 75,000 Common shares, $.01 par value, 150,000,000 shares authorized, 31,888,401 and 31,667,501 shares issued and outstanding at March 31, 2009 and December 31, 2008, respectively 319 317 Paid in capital 372,762 371,190 Distributions in excess of net income (a) (184,349) (201,679) Accumulated other comprehensive loss (8,533) (9,617) Total shareholders' equity 255,199 235,211 Non-controlling interest in operating partnership (b) 34,282 30,692 Total equity 289,481 265,903 Total liabilities and equity $1,209,363 $1,121,925 (a) Distributions in excess of net income as of December 31, 2008 includes a reduction of earnings of $5,144 that represents the cumulative effect adjustment of the implementation of FSP APB 14-1, "Accounting for Convertible Debt Instruments that May be Settled in Cash Upon Conversion (Including Partial Cash Settlement)". (b) Represents a reclassification of non-controlling interest from prior presentation upon adoption of FAS 160 "Non-controlling Interests in Consolidated Financial Statements, an amendment of ARB No. 51". TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES SUPPLEMENTAL INFORMATION (in thousands, except per share, state and center information) (Unaudited) Three Months Ended March 31, 2009 2008 FUNDS FROM OPERATIONS (a) Net income $36,468 $7,398 Adjusted for: Depreciation and amortization uniquely significant to real estate - wholly-owned 20,278 15,508 Depreciation and amortization uniquely significant to real estate - unconsolidated joint ventures 1,166 652 Gain on fair value measurement of previously held interest in acquired joint venture (31,497) -- Funds from operations (FFO) 26,415 23,558 Preferred share dividends (1,406) (1,406) Allocation to participating securities (306) (246) Funds from operations available to common shareholders 24,703 21,906 Funds from operations available to common shareholders per share - diluted $.66 $.59 WEIGHTED AVERAGE SHARES Basic weighted average common shares 31,269 30,979 Effect of exchangeable notes -- 92 Effect of outstanding options 81 169 Diluted weighted average common shares (for earnings per share computations) 31,350 31,240 Convertible operating partnership units (b) 6,067 6,067 Diluted weighted average common share (for funds from operations per share computations) 37,417 37,307 OTHER INFORMATION Gross leasable are open at end of period - Wholly-owned 9,218 8,434 Partially-owned - unconsolidated 950 667 Outlet centers in operations - Wholly-owned 31 29 Partially-owned - unconsolidated 2 2 States operated in at end of period (c) 21 21 Occupancy percentage at end of period (c) (d) 93.5% 95.2% (a) FFO is a non-GAAP financial measure. The most directly comparable GAAP measure is net income (loss), to which it is reconciled. We believe that for a clear understanding of our operating results, FFO should be considered along with net income as presented elsewhere in this report. FFO is presented because it is a widely accepted financial indicator used by certain investors and analysts to analyze and compare one equity REIT with another on the basis of operating performance. FFO is generally defined as net income (loss), computed in accordance with generally accepted accounting principles, before extraordinary items and gains (losses) on sale or disposal of depreciable operating properties, plus depreciation and amortization uniquely significant to real estate and after adjustments for unconsolidated partnerships and joint ventures. We caution that the calculation of FFO may vary from entity to entity and as such the presentation of FFO by us may not be comparable to other similarly titled measures of other reporting companies. FFO does not represent net income or cash flow from operations as defined by accounting principles generally accepted in the United States of America and should not be considered an alternative to net income as an indication of operating performance or to cash flows from operations as a measure of liquidity. FFO is not necessarily indicative of cash flows available to fund dividends to shareholders and other cash needs. (b) The convertible operating partnership units (non-controlling interest in operating partnership) are not dilutive on earnings per share computed in accordance with generally accepted accounting principles. (c) Excludes Wisconsin Dells, Wisconsin property for the 2009 and 2008 periods which is operated by us through 50% ownership joint venture. Excludes Myrtle Beach, South Carolina Hwy 17 property for the 2008 period during which period it was operated by us through a 50% ownership joint venture. We acquired the remaining 50% interest in January 2009. Excludes Deer Park, New York property for the 2009 period which is operated by us through a 33.3% ownership joint venture. The Deer Park property opened during October 2008. (d) Excludes our wholly-owned, non-stabilized center in Washington, Pennsylvania for the 2009 period.
SOURCE Tanger Factory Outlet Centers, Inc.
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