Q4 2020 Tanger Factory Outlet Centers Inc Earnings Call

Was it was a very about it by the was an immaterial transaction. So we're not going to provide any other on the details on that other than on the sales price was.

Was around eight eight and a half million dollars.

We have a robust asset management plan that we will that we review every property in our portfolio to decide which properties, we want to want to retain and which ones do we want to divest of.

We'll continue that process, we don't do on a comment on properties to be disposed off until we have an agreement or they close.

Okay. Thank you.

The next question comes from Mike Mueller of J P. Morgan. Please go ahead.

Yeah, Hi.

I think you talked about $18 million of cost savings that you achieved over the past nine months can you walk through some of the categories. Those came in and and is there a portion of that do you think is permanent or should it all.

Essentially go go way as occupancy built again.

Well initially for last year I mean, we did operate at 40%.

The operating hours in the field are sorry.

We reduced our operating hours by 40% when our shopping centers reopened.

Some of the savings were embedded in that.

Less operating hours for some of our shopping centers. We're currently operating at about 20% fewer hours than we had historically.

A lot of that savings is also in G&A and.

Although the savings that we experienced in G&A in 2000.

We'll maintain those savings, but we will we will.

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Add some expense in that category going forward.

But as far as expense mitigation is concerned we've got a robust strategy with our field management teams to work very closely to mitigate expenses, we've as I've mentioned in my opening.

The remarks that through our new EVP of operations and the field management strategy that we've just put in place. We've made the general managers of each of our shopping centers far more responsible for expense and property management and their shopping centers, where theyre managing on a daily basis.

On their property wide expenses, when we think of lot of that expense savings will pass right through.

Got it.

And I think the release mentioned you were about 47% through 21 exploration. Thus far are you seeing any geographical differences in terms of tenant demand whether it's the.

The middle of the country versus coastal or southern geographies versus northern.

Okay.

Well I think our properties are pretty much drive to American tourist locations.

And a lot of those locations or second home locations locations, where a lot of people during COVID-19 have repositioned themselves and their families that we'd seen.

But the that lends itself to a lot of reasons why we're seeing a lot of traffic increases in some of the shopping centers. So I think that the the.

The increase in leasing activity is pretty much across the board.

But favoring a line of these tried to American tourist locations.

Got it okay. Thank you.

Again, if you have a question. Please press Star then one on the Touchtone phone the.

Next question comes from Floris Van <unk> of Compass point. Please go ahead.

Good morning, Thanks, guys for taking my question encouraging news on the collections, obviously and the traffic numbers as well just wanted to to ask you a little bit about about the balance sheet particulars as your your leasing costs.

<unk> rose by about 50% it appears.

And obviously the the the line hasn't been renewed yet what about equity your stock has.

Has been pretty volatile, but it's making it you know it's one of the better performers so far this year.

Hugh you spiked at one point of.

What are your thoughts around raising equity when.

When you're trading at a premium to NAV.

Hi, Floris.

Good morning.

Yes.

Yeah.

Certainly that's that's the that's an option I think right now.

From a liquidity perspective, we got $80 million of cash on the books.

No near term maturities until 2023.

So we're on.

We're in good shape from from a liquidity perspective.

Yes.

I'll say, it's from folks of.

A lot of questions about ATM programs, we have not had an ATM program in.

In the past.

For those reasons, but given given the work.

Where we've seen of the market go and I think that's something that we'll evaluate.

It adds some flexibility to.

To the balance sheet of think of another tool on the tool kit. So that's something that we will.

The evaluate putting in place in cash somewhere down the road. We think is the right time to raise equity right now from literally putting perspective I think of we are in good shape.

Thanks, Tim and the.

Then in terms of our.

Obviously, the dividend has been reinstated now.

You sold one of your lower lower tier assets, maybe if you can give a little comment on the.

The how you see the leasing spreads trending over the next 12 months, obviously, it's not an ideal of leasing environment today with with heightened.

Vacancy levels.

And still a little bit of reduced demand.

Demands or certainly number of tenants out there.

Do you when do you think that youre going to start to see an inflection point in your leasing spreads on your portfolio and maybe Steve If you want to comment on that and where should people think about what the potential longer term upside is.

Well Floris, what I can share with you is that.

Obviously leasing spreads came under real pressure on.

In 2020.

We favorite occupancy and made deals to keep our tenants.

Particularly those in corporate restructuring and those filed for bankruptcy to keep those tenants in possession.

And I think that strategy was a sound strategy I mentioned that our leasing activity has definitely picked up through Q4.

And as we take a look at some of the leases.

Take a look at the at the lease at the new leases and the renewal leases.

For stores that will open in 'twenty one.

Leasing spreads are starting to improve.

And we will.

Hopeful that that's the trend going forward I really can't can't guide because we know that.

The 21, certainly is going to be fraught with headwinds, but we're very encouraged by what we're seeing particularly with new leasing and renewal leasing going into this year.

Yeah.

Thanks, Steve.

That's it from me.

And we have a follow up from Caitlin Burrows of Goldman Sachs. Please go ahead.

Hi, I was just wondering if maybe we could talk about the watch list the.

900000 square feet that was recaptured in 2020, how much of that space corresponded to the tenants that you had recognized pre COVID-19, where I confirm the first is how much was maybe its proprietary acceleration given the conditions that ended up coming up and what's the status of the company has lots of us today.

Yeah.

With today's watch list of significantly less than last year as watch list was on.

And I definitely agree with you that COVID-19 accelerated.

Retailer bankruptcies.

But fortunately a lot of the bankruptcies were restructures non liquidations and in that connection we were able to save a lot of retailers on our portfolio I mentioned earlier that we favorite occupancy in 2020, we wanted to make sure that our retailers.

Stayed in our shopping centers that we could weather the COVID-19 pandemic together and we feel optimistic that when the.

The vaccine rolls out that people return to normal life of normal shopping cadence.

It's best to have these stores.

Open and operating.

Not.

Yeah.

Okay.

So I guess it sounds like with the acceleration of our like pull forward, possibly of bankruptcy activity in 2020.

Whereas if I watch the.

Today, I guess, one thing you guys maybe had out in the past and you just mentioned now there were a lot of research.

The restructuring versus the liquidation do you expect that the retailers who have restructured debt kind of done or do you think there is some of them.

Risks debt that can be I guess.

Bankruptcy part of Taylor, how do you think those retailers that you're doing now.

Well first of all I think that.

They like the outlet channel I think that we're a low cost of occupancy low cost of entry.

And we're seeing a lot of the retailers that may have had other results in other brick and mortar formats.

The stick with us in the outlet channel I think that's of great place for them to do business. They can control of their pricing. They can control of their product they can control their placement and our traffic numbers of definitely supported.

The fact that theyre seeing customers through that channel. So I would I would venture to say that.

No material surprises based on what we shared with you relative to what we believe we're going to be getting back and our expectation is we will probably work out with a line of those retailers to keep them on occupancy.

A lot of those workouts will be short term in nature, so that when the market returns when sales return.

We will be able to re price our real estate accordingly.

Okay.

And then maybe just one last one.

The balance sheet side again, given the Kangaroos current credit ratings, how the negative outlet. What do you think the risk is of a downgrade and theoretical case of one what would the impact the.

Or is that not something that you are concerned of that right now.

Okay.

Okay on Jim.

We're in constant communication with our rating agencies.

The keep them up to date on our progress that we're making on the trends.

I don't want to speculate on what they're likely to do and that's that's not in our control other than.

Keeping them up to data centers as I mentioned.

Certainly the the debt.

Debt metrics.

Are as strong as they were a year ago.

The net debt EBITDA is not what it was seven one of seven two.

So we're mindful of where that is if the if there are if there are downgrades.

The cost there is an implied cost, but its not a significant cost in the spreads of our that's embedded in our term loan and line of credit that's not significant.

Okay. That's all thanks.

This concludes our question and answer session I would like to turn the conference back over to Steven Tanger for any closing remarks.

I want to once again, thank everybody for.

Joining our call today.

We wish you and your families well please be safe please be safe and we'll talk to you again in 90 days Goodbye.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

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Yeah.

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