Tanger Factory Outlet Centers (SKT) Reports In-Line Q1 EPS, Beat on Revenue; Revises 2017 Guidance

Tanger Factory Outlet Centers (NYSE: SKT) reported Q1 EPS of $0.23, in-line with the analyst estimate of $0.23. Revenue for the quarter came in at $121.37 million versus the consensus estimate of $120.16 million.

GUIDANCE:

Tanger Factory Outlet Centers sees FY2017 EPS of $1.04-$1.09, versus the consensus of $1.01.

Earnings Guidance for 2017

As a result of the challenging retail environment, the Company is revising its net income, FFO, and AFFO per share guidance for 2017 to the following:

For the year ended December 31, 2017:

Low Range

High Range

Estimated diluted net income per share

$1.04

$1.09

Noncontrolling interest, depreciation and amortization

of real estate assets including noncontrolling interest

share and our share of unconsolidated joint ventures

1.36

1.36

Estimated diluted FFO per share

$2.40

$2.45

AFFO adjustments per share

0.00

0.00

Estimated diluted AFFO per share

$2.40

$2.45

This new AFFO per share guidance represents growth of 1.3% to 3.4% over 2016 AFFO per share and includes a $0.06 per share increase in interest expense. Excluding this dilutive impact, the new AFFO per share guidance would represent growth of 3.6% to 5.7%.

Tanger is also revising its guidance for consolidated portfolio Same Center NOI growth to a range of approximately 1.5% to 3.0% excluding the impact of re-merchandising at several of the Company\'s outlet centers. Including these centers, Tanger is updating its Same Center NOI guidance to a range of approximately 0.5% to 2.0% based on the following factors:

• The primary drivers of the current Same Center NOI growth expectations is attributable to delayed store openings expectations and incremental unexpected store closings relative to the Company\'s previous forecast. Currently the Company expects average occupancy for the full year to be approximately 96%, compared to actual 2016 average occupancy of 97%.
• To a lesser extent, lease modifications and reduced percentage rents are now reflected in Tanger\'s current forecast.
• These factors are partially offset by approximately $1 million in incremental operating expense savings not reflected in the Company\'s previous forecast.

Lease termination fees, which are not included in Same Center NOI, help offset, and may more than offset, the impact of rent loss from expected store closings. The amount and timing of lease termination fees can be volatile and difficult to predict. Tanger\'s current 2017 guidance is based on $2.3 million of forecasted lease termination fees for the full year, including $1.1 million expected to be recognized during the second quarter. The Company\'s previous guidance assumed no lease termination fees.

Other key guidance assumptions, all of which are unchanged from Tanger\'s initial guidance, are as follows:

• Average general and administrative expense of between $11.2 million and $11.7 million per quarter
• 2017 weighted average diluted common shares of approximately 95.7 million for net income and 100.7 million for FFO and AFFO per share
• Does not include the impact of any financing activity, the sale of any outparcels, properties or joint ventures interests, or the acquisition of any properties or joint venture partner interests

For earnings history and earnings-related data on Tanger Factory Outlet Centers (SKT) click here.

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