Tanger Factory Outlet Centers Inc.

The stable outlook reflects our expectation that, even though the operating environment will likely remain challenging over the next 12 to 24 months, Tanger will be able to manage the impact of tenant bankruptcies, lease modifications, and store closures while maintaining stable credit-protection measures. We could lower the rating if greater tenant distress causes Tanger's operating performance to weaken materially, such that debt to EBITDA increases to more than 7x or fixed-charge coverage falls below 3x. We could also lower our ratings if we believe the company's longer-term business prospects have deteriorated such that its above-average profitability and occupancy levels relative to peers are materially compromised. While highly unlikely over the next two years, as we think the ratings are

...We anticipate operating metrics to deteriorate over the next few years as the U.S. retail landscape remains challenged by tenant distress. Tanger Factory Outlet Centers Inc.'s reported fourth-quarter and fiscal year-end 2019 results were in line with S&P Global Ratings' expectations; however, guidance for 2020 was significantly weaker than we had previously forecast. Although we believe these numbers are conservative, we recognize the operating environment for the company will remain challenged. During 2019, the company recaptured approximately 198,000 square feet within its consolidated portfolio (compared to 126,000 square feet recaptured during 2018). As of Jan. 22, 2020, Tanger had lease renewals executed or in process for 45.8% of the space in the consolidated portfolio scheduled to expire during the year, compared to 58.6% as of Jan. 31, 2019. Even though occupancy levels will likely decline in 2020, we believe Tanger will be able to redeploy the majority of the space related to bankruptcies...

Full Report