Business Context and Reporting Period
Company: Tanger Factory Outlet Centers, Inc.
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Three months ended March 31, 1998
Business Overview: The Company operates factory outlet centers, growing primarily through acquisitions and expansions. As of March 31, 1998, the portfolio included 30 centers across 22 states with approximately 4.7 million square feet of gross leasable area (GLA) open, maintaining a 97% occupancy rate.
Key Financial Metrics
| Metric | Q1 1998 | Q1 1997 |
|---|---|---|
| Total Revenues | $22,806,000 | $19,225,000 |
| Net Income | $3,783,000 | $2,858,000 |
| Funds From Operations (FFO) | $9,615,000 | $8,202,000 |
| Operating Cash Flow | $8,522,000 | $8,658,000 |
| Net Income Per Share (Diluted) | $0.41 | $0.36 |
| Total Debt | $253,411,000 | $229,050,000 |
| Cash and Equivalents | $5,181,000 | $3,607,000 |
| Available Credit Capacity | $70.3 million | Filing text does not provide a clear value |
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased 19% to $22.8 million, driven by an 18% increase in base rentals due to a 19% increase in weighted average GLA from acquisitions and expansions.
- Acquisitions and Dispositions: Acquired Dalton Factory Stores (GA) for $17 million. Sold a single-tenant property in Manchester, VT, and two outparcels, recognizing a $994,000 gain on sale of real estate.
- Development Activity: Placed 297,000 square feet of expansion space into service, reducing "Developments under Construction" from $26.8 million to $501,000.
- Debt Restructuring: Terminated a $50 million secured line of credit and increased unsecured borrowing capacity by $25 million. This resulted in an extraordinary loss of $332,000 due to the write-off of unamortized deferred financing costs.
- Dividends: Quarterly dividends per common share increased to $0.55 from $0.52 in the prior year.
Outlook, Risks, and Management Commentary
- Capital Resources: Management believes adequate cash is available to fund operations and dividends. The Company has an active shelf registration for up to $100 million in equity and $100 million in debt. Unsecured borrowing capacity stands at $100 million with $70.3 million available.
- Future Plans: Pre-leasing is underway for sites in Concord, NC, and Romulus, MI. The Company is evaluating additional acquisitions and expansions for 1998 and beyond.
- Dividend Declaration: On April 9, 1998, the Board declared a $0.60 cash dividend per common share (a 9% increase), payable May 15, 1998.
- Risks: Risks include the inability to finance planned activities, retail industry volatility, inflation, interest rate increases, and tenant lease renewals. Approximately 306,000 square feet of space is up for renewal in 1998.
- Year 2000 Compliance: Most systems are compliant or will be with normal upgrades; costs are expected to be insignificant.
- Contingencies: No material environmental liabilities or legal proceedings are currently recorded or threatened.
Investor Verification Checklist
- Verify the impact of the $17 million Dalton acquisition on future cash flows and occupancy rates.
- Confirm the sustainability of the 9% dividend increase given the $2.0 million remaining construction commitments.
- Monitor the renewal rate for the 306,000 square feet of space expiring in 1998.
- Assess the effect of the shift from secured to unsecured debt on future interest rate exposure.
- Review the timeline and pre-leasing progress for the planned Concord, NC, and Romulus, MI, developments.