Tanger Factory Outlets Sells Four Non-Core Centers for $131M
“By completing these asset sales, we are strengthening the overall quality, reducing the average age, and improving the longer-term growth profile of the portfolio,” says Steven B. Tanger, CEO of Tanger Factory Outlet Centers.
GREENSBORO, NC—Tanger Factory Outlet Centers Inc. reports it has sold four non-core outlet centers for $130.5 million. The four outlet center properties are located in Nags Head, NC; Ocean City, MD; Park City, UT and Williamsburg, IA.
Initially, Tanger expects to use the $128.7 million of net proceeds from the sale of the four unencumbered assets to repay balances under its lines of credit. Ultimately, it intends to allocate the proceeds between opportunistically repurchasing its common shares and reducing outstanding debt balances to maintain a strong and flexible balance sheet.
Tanger expects to record a gain of approximately $44 million during the first quarter of 2019. The company has elected not to defer any taxable gain on this transaction and currently does not expect a special dividend to be necessary during 2019.
Tanger expects a net accretive effect on 2019 net income of approximately $0.40 per share, which reflects the expected gain on the transaction and the impact of the use of proceeds, partially offset by the loss of nine months of earnings from the properties sold.
The identity of the buyer or buyers of the four Tanger Factory Outlet Centers was not disclosed.
“By completing these asset sales, we are strengthening the overall quality, reducing the average age, and improving the longer-term growth profile of the portfolio,” says Steven B. Tanger, CEO of Tanger Factory Outlet Centers. “We believe the benefits of these dispositions over time will more than offset the expected short-term earnings dilution, given that these assets are not expected to produce the long-term growth in cash flow that we anticipate from our core portfolio. Our dividend remains well-covered even with the sale of these assets.”
The four outlet centers sold by Tanger had an average occupancy rate of 95,8% in 2018, as compared to 96.8% for the company’s overall portfolio. Last year’s tenant sales per-square-foot at the sold properties totaled $295, as compared to $385 portfolio-wide in 2018.
The Greensboro, NC-based REIT currently operates and owns, or has an ownership interest in, a portfolio of 40 upscale outlet shopping centers. Tanger’s operating properties are located in 20 states coast to coast and in Canada, totaling approximately 14.4 million square feet, leased to more than 2,900 stores which are operated by more than 500 different brand name companies.