Tanger Factory Outlet Centers Inc.

Overview Key strengths Key risks Niche portfolio of open-air retail outlet centers that is well diversified across markets and tenants, and supports stability in cash flow streams. The portfolio?s small scale, approximately $2.8 billion in undepreciated real estate assets, magnifies disruption to operating performance relative to peers with larger asset bases. An experienced senior management team with a track record of committing to conservative financial policies through economic cycles. Tightened consumer spending in a recessionary environment could pressure occupancy, leasing activity, and the portfolio?s growth prospects. Strong balance sheet and ample liquidity position should help maintain key credit metrics despite facing some pressure from rising interest rates and capital market volatility. Modest development execution risk related to its in-process project

...We expect Tanger's well-diversified tenant base to support relatively stable operating performance for the next two years despite facing pressure from an impending recession. During the fourth quarter, Tanger reported solid same-store net operating income growth of 5.1% compared to the fourth quarter of last year and 5.5% for the full year (both inclusive of their pro rata share of joint ventures). Occupancy also demonstrated consistent growth quarter over quarter, with ending occupancy as of Dec. 31, 2022, of 97.0%, a 50 basis point improvement relative to the third quarter, and a 170 basis point increase from fiscal year 2021. We expect the U.S. to enter a recession during the first half of this year as the Fed's aggressive rate hikes take hold and inflation remains high, albeit slowing from its peak during the third quarter of 2022, and as a result consumers will continue to pull back on spending (particularly discretionary purchases) as these higher cost-of-living pressures erode most...

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