TANGER INC. (SKT)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 was steady operationally: FFO/share rose to $0.53 (+2–4% vs LY depending on Core) on 2.3% Same Center NOI growth, while GAAP EPS fell to $0.17 due to a $4.2M non‑cash impairment tied to the April sale of Howell, MI .
• Occupancy dipped seasonally and from remerchandising timing (95.8% vs 98.0% in Q4), but leasing momentum stayed robust with the 13th straight quarter of positive blended rent spreads (+14.1% TTM) and stronger traffic into April, per management .
• 2025 guidance: FFO/share unchanged at $2.22–$2.30; GAAP EPS trimmed to $0.91–$0.99 solely for the impairment; SSS NOI growth, G&A, interest expense and capex ranges maintained .
• Balance sheet remains conservative post Pinecrest acquisition and Howell sale: Net debt/Adj EBITDAre 5.2x, interest coverage 4.6x; dividend was raised 6.4% to $1.17 annualized (declared April 9) .
• Near‑term stock drivers: sustained positive rent spreads and traffic, dividend increase/coverage (53% of FAD), and clarity on backfilling vacates (e.g., Forever 21), versus optical occupancy pressure from remerchandising timing .

What Went Well and What Went Wrong

• What Went Well

  • “Another quarter of strong financial and operating results,” with Core FFO/share at $0.53 and Same Center NOI +2.3% YoY, aided by higher rental revenues and ancillary revenues .
  • Leasing momentum and pricing power: 13th consecutive quarter of positive blended cash rent spreads (+14.1% TTM; re‑tenanting +33.2%, renewals +12.3%), and 56.7% of 2025 expirations already executed/in process by April 30 .
  • Management reiterated a confident tone on value channel demand, digital activation, and traffic strength in April: “Traffic…has been strong,” with targeted real‑time promotions through optimized digital capabilities .

• What Went Wrong

  • Occupancy fell to 95.8% (95.9% same center) from 98.0% at YE, reflecting seasonality and deliberate remerchandising downtime between old tenants exiting and new tenants taking possession .
  • GAAP EPS was pressured by a $4.2M non‑cash impairment for Howell, MI (sold in April), reducing Q1 EPS to $0.17; management cut GAAP EPS guidance accordingly while keeping FFO unchanged .
  • Same Center NOI was held back by higher snow expense and a prior‑year refund benefit; percentage rent is a small and variable contributor (~3% of revenues last year), limiting upside from sales volatility .

Financial Results

KPIs and Operating Metrics

Segment breakdown: not applicable; Tanger reports consolidated and pro‑rata portfolio metrics rather than discrete operating segments .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Core FFO increased to $0.53 per share, driven by a 2.3% rise in same‑center NOI… Traffic…has been strong, and we are encouraged…leading into our very important summer selling season.” – Stephen Yalof, CEO .
• “Our balance sheet remains well positioned… with low leverage, largely fixed rate debt, ample liquidity… We are updating the EPS outlook to account for the non‑cash impairment… and continue to expect core FFO of $2.22 to $2.30 per share.” – Michael Bilerman, CFO/CIO .
• “We are seeing continued momentum in our remerchandising strategy… replacing less productive tenants and adding more desirable retailers, restaurants, and entertainment.” – Stephen Yalof (press release) .

Q&A Highlights

• Occupancy and downtime: Lower occupancy stems from remerchandising timing (e.g., Main Event backfilling Wayfair in Deer Park; LEGO opening in Huntsville), with strong re‑tenant spreads (+30%+) supporting the long game .
• Temp tenants & inventory: Pop‑ups are a deliberate strategy to on‑ramp brands to outlet; inventory timing can route to outlets if full‑price seasons are missed, supporting sales velocity .
• Forever 21 closures: Nine stores (~100K sf) expected; low rent base; temp replacements largely lined up; view significant backfill upside .
• Traffic & tariffs: Despite macro headlines, April traffic was “extraordinarily strong,” consistent with peers’ early‑quarter reads .
• Financial sensitivity: Percentage rents only ~3% of revenues (last year), so NOI less sensitive to near‑term sales swings; range embedded in guidance .
• Interest rate risk: $75M forward swaps added (SOFR fixed at 3.3%) to replace Feb‑2026 expiries; term loan effectively fixed .

Estimates Context

• Street consensus (S&P Global) for Q1 2025 EPS and revenue was unavailable via this query; management and investors focus primarily on FFO for REITs. Results were broadly consistent with maintaining full‑year FFO guidance ($2.22–$2.30), suggesting limited need for material FFO estimate revisions, while GAAP EPS estimates may be trimmed to reflect the Howell impairment .
• Note: Attempts to fetch S&P Global estimates for SKT Q1 2025 EPS and revenue returned no data in this session. Values were unavailable from S&P Global at the time of retrieval.

Key Takeaways for Investors

• Reaffirmed FFO guidance with Core FFO/share at $0.53 in Q1 and 2–4% Same Center NOI growth targeted for 2025; GAAP EPS cut solely for a non‑cash impairment .
• Positive rent spreads (13th straight quarter) and strong April traffic indicate sustained demand, even as occupancy reflects remerchandising downtime; expect occupancy to rebuild as signed tenants open .
• Portfolio quality mix improving: Pinecrest adds an ~8% first‑year yield asset; Howell sale removes a non‑core, underperforming center .
• Balance sheet remains conservative: 88% fixed debt (total share), 3.5‑year WAM; net debt/Adj EBITDAre 5.2x; $481M revolver availability plus ~$70M forward equity capacity .
• Dividend growth (6.4% increase) with a 53% FAD payout in Q1 supports total return; coverage looks comfortable under current guidance .
• Watch items: cadence of backfills (Forever 21 boxes, Huntsville Bed Bath space), macro/tariff headlines vs. outlet value traffic, and % rent contributions given sales variability .
• Near‑term setup: modest occupancy optical pressure vs. durable pricing power and demand; maintaining guidance reduces downside risk while remerchandising and external growth provide upside optionality .

References:

• Q1 2025 8‑K and Supplemental (including News Release and Exhibits) .
• Q1 2025 Earnings Call Transcript .
• Related Press Releases (Results; Dividend) .
• Prior Quarters: Q4 2024 8‑K & Supp ; Q3 2024 8‑K & Supp .