Tanger developed the center in 1992 for less than $6 million and subsequently invested an additional $4 million in the property. Thanks to $6.4 million of depreciation, however, Tanger expects to recognize a $10.4-million net gain on the sale of the property, according to SEC filings. In addition, Tanger will continue on as the fee-based property and leasing manager.
The center represented about 1.6% of the company's gross leasable area and less than 1% of its calendar year 2005 net operating income, before general and administrative expenses. The sales price of $14.7 million represents an 8.6% capitalization rate on estimated 2006 net operating income.
Tanger chairman/CEO Stanley Tanger says it was an "opportune time" to divest the relatively small property. The proceeds will be invested in Tanger's new developments and/or to reduce outstanding debt, he says.
Tanger Factory Outlet Centers owns 8 million sf in 29 centers in 21 states. The company's portfolio of properties had a year-end occupancy rate of 97%.
During 2005, Tanger executed 460 leases, totaling 1.94 million sf. Of that total, 1.52 million sf was renewal activity that resulted in a 6% increase in average base rental rates, according to the company's annual report filed in February. The remaining 419,000 sf was re-tenanted at a base average rental rate 7.1% higher than re-tenanting accomplished in 2004, according to the report.
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