No juice in the outlets: Tanger down 4%
It’s official: The shopping mall crisis has hit the outlets.
Tanger Factory Outlet Centers said Wednesday that weakness at its 43 shopping centers will keep it from raising rents this year.
The announcement seemed to surprise Wall Street, which sent Tanger shares down 4 percent, to $25.97. The stock is down 27 percent this year.
The jitters spread throughout the in- vestment community despite Tanger beating profit and revenue expectation for the second quarter.
The Greensboro, NC, company is the largest publicly traded pure-play outlet operator in the US.
“The red flag is that it’s getting tougher to raise rents,” said Jefferies analyst Omotayo Okusanya. “We are now seeing the impact of all the bankruptcies and store closures on their results.”
“Landlords must carefully balance rent and occupancy,” said Chief Execu- tive Steven Tanger during a call with analysts.
In one glaring example of retail weakness, Tanger said he was forced to sign 29 one-year leases just to keep the lights on at those locations.
It is traditional for retailers to sign 5or 10-year leases.
“Vacancies are a cancer on any retail center,” Tanger said, “and it’s our desire to keep those spaces occupied.” The company’s overall occupancy rate is 96.1 percent.
Six of its underperforming centers, including those in Ocean City, Md., and Myrtle Beach, SC, are suffering significant tenant turnover as 24 smaller spaces were vacated and are being converted into eight large spaces that Tanger is filling with stores like H&M that can fill, on average, 18,000 square feet.
More telling is that Tanger has no plans to open new centers next year — the first time it has not done so in seven years.