SEC Filing Summary: Tanger Factory Outlet Centers, Inc. (10-Q)
Business Context and Reporting Period
This is a Quarterly Report (Form 10-Q) for the period ended March 31, 2009. Tanger Factory Outlet Centers, Inc. is a fully-integrated, self-administered Real Estate Investment Trust (REIT) focused on developing, acquiring, owning, and operating factory outlet shopping centers. As of the reporting date, the Company owned and operated 31 outlet centers totaling approximately 9.2 million square feet with a 94% occupancy rate.
Key Financial Metrics
| Metric (in thousands, except per share) | Q1 2009 | Q1 2008 |
|---|---|---|
| Total Revenues | $65,158 | $57,276 |
| Net Income | $36,468 | $7,398 |
| Net Income Attributable to Shareholders | $30,770 | $6,417 |
| Diluted EPS | $0.92 | $0.16 |
| Funds From Operations (FFO) | $26,415 | $23,558 |
| Net Cash Provided by Operating Activities | $30,530 | $17,638 |
| Total Debt | $849,167 | $786,863 |
| Cash and Cash Equivalents | $3,101 | $4,977 |
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased 14% to $65.2 million, driven by the consolidation of the Myrtle Beach Hwy 17 center (acquired in January 2009) and the new Washington, PA center. Base rentals rose 15%.
- Profitability Surge: Net income increased significantly to $36.5 million (from $7.4 million). This was primarily due to a $31.5 million non-cash gain resulting from the fair value remeasurement of the Company's previously held interest in the Myrtle Beach joint venture upon full acquisition.
- Depreciation Increase: Depreciation and amortization expenses rose 31% to $20.4 million. This includes an additional $1.2 million in accelerated depreciation for the Hilton Head I center due to a change in estimated useful life following a redevelopment plan approval.
- Debt Levels: Total debt increased to $849.2 million, reflecting the assumption of a $35.8 million mortgage on the Myrtle Beach acquisition and increased utilization of unsecured lines of credit.
Outlook, Risks, and Unusual Items
- Unusual Items: The $31.5 million gain on the Myrtle Beach acquisition is a one-time non-recurring item. Additionally, the adoption of new accounting standards (FSP APB 14-1, FAS 160, FSP EITF 03-6-1) in January 2009 resulted in retrospective adjustments to equity and EPS calculations.
- Subsequent Event: In May 2009, approximately 95.2% of the Company's $149.5 million Exchangeable Notes were exchanged for common shares, leaving only $7.2 million outstanding.
- Outlook & Risks: Management notes that while existing tenant sales remain stable, the current economic environment may delay re-leasing of vacant space. Approximately 1.5 million square feet (16% of the portfolio) is up for renewal in 2009. The Company maintains $325 million in unsecured credit facilities, with no significant debt maturities until 2011.
- Liquidity: Cash and cash equivalents decreased to $3.1 million due to the $32 million cash outlay for the Myrtle Beach acquisition, though operating cash flow remains strong.
Key Facts for Investor Verification
- Quality of Earnings: Verify the sustainability of earnings by excluding the $31.5 million one-time gain on the Myrtle Beach acquisition; core operating income remained relatively flat compared to the prior year.
- Depreciation Impact: Confirm the long-term impact of the accelerated depreciation ($1.2 million) on the Hilton Head I center and whether this is a recurring charge or a one-time adjustment.
- Debt Structure: Review the terms of the $35.8 million mortgage assumed on the Myrtle Beach property and the utilization of the $325 million credit facility.
- Leasing Pipeline: Monitor the re-leasing of the 29,000 square feet of space vacated in Q1 2009 and the renewal rates for the 1.5 million square feet expiring in 2009.
- Joint Venture Exposure: Assess the financial health of unconsolidated joint ventures (Deer Park and Wisconsin Dells), which reported a net loss of $2.8 million in Q1 2009.