Tanger Factory Outlet Centers, Inc. (SKT) Q2 2012 Earnings Call August 1, 2012 10:00 am ET Executives Frank Marchisello – Executive Vice President and Chief Financial Officer Cindy Holt – Vice President-Finance and Investor Relations Steven Tanger – President and Chief Executive Officer Analysts Michael Bilerman – Citi Jeff Spector – Merrill Lynch Rich Moore – RBC Capital Markets Michael Mueller – JPMorgan Andrew Johns – Green Street Advisors Carol Kemple – Hilliard Lyons Jordan Sadler – KeyBanc Capital Markets Presentation Cindy Holt
Previous Statements by SKT
» Tanger Factory Outlet Centers CEO Discusses Q3 2010 Results – Earnings Call Transcript
» Tanger Factory Outlet Centers Inc. Q2 2010 Earnings Call Transcript
» Tanger Factory Outlet Centers, Inc. Q1 2010 Earnings Call Transcript
» Tanger Factory Outlet Centers, Inc. Q3 2009 Earnings Call Transcript
During the call, we will also discuss non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP measures to the comparable GAAP financial measures are included in our earnings release and in our supplemental information. This call is being recorded for rebroadcast for a period of time in the future. As such, it is important to note that management's comments include time-sensitive information that may be accurate only as of today's date August 1, 2012.At this time, all participants are in listen-only mode. Following management's comments, the call will be opened for your questions. We ask that you limit your questions to two, so that we will have the opportunity to address all callers'. We will address additional questions as time permits, so you may reenter the queue after your initial two questions. On the call today will be Steven Tanger, President and Chief Executive Officer; and Frank Marchisello, Executive Vice President and Chief Financial Officer. I will now turn the call over to Steven Tanger. Please go ahead, Steve. Steven Tanger Thank you, Cindy, and good morning, everyone. Our ability to successfully increase rental rates resulted in strong same-center net operating income growth of 7% in the second quarter of 2012. This marks the 30th consecutive quarter of positive same center NOI growth dating back to when we first began reporting this metric in 2005. Comparable traffic for the six months ended June 30, 2012, was up over 4%, marking the fifth consecutive year of positive traffic comps. Tenant comparable sales for the rolling 12 months ended June 30, 2012, increased 3.9% to $375 per square foot. Continued positive comparable tenant sales have allowed us to achieve a blended increase in rents of 23.7% in the first half of 2012. Our low cost of occupancy, which was 8.4% at the end of 2011, and increasing tenant sales should allow us to capture significant embedded value in our portfolio over time, while maintaining a very profitable distribution channel for our tenants.
Any of you who want to learn more about the progress we are making on the two Tanger Outlet Centers currently under construction, our domestic development pipeline, and our Canadian expansion plans through the co-ownership agreement with RioCan Real Estate Investment Trust, later in the call I will address these topics along with a summary of our operating performance and our current expectations for the balance of the year.But, first let me turn the call over to Frank, who will take you through our financial results for the six months ended June 30, 2012. Please go ahead, Frank. Frank Marchisello Thank you, Steve, and good morning, everyone. Total funds from operations or FFO for the quarter ended June 30, 2012 increased 30.4% to $38.6 million compared to $29.6 million last year. Adjusted FFO per share increased 18.2% to $0.39 per share from $0.33 per share for the second quarter of last year, and met Street's consensus expectations. This year-over-year increase in AFFO per share is a direct result of our ability to continue to drive rental rates and same center NOI growth, as well as the accretive impact of the acquisitions made during 2011. On a consolidated basis our total market capitalization at June 30, 2012 was approximately $4.2 billion, up from $3.4 billion last year. Our debt to total market capitalization was approximately 25% at June 30, 2012 compared to 26.2% last year. We also maintained a very strong interest coverage ratio of 4.08 times for the quarter. As of June 30, 2012, approximately 63% of our debt was at fixed rates. Our balance sheet strategy continues to be conservative targeting minimal use of secured financing and a manageable schedule of debt maturities. The dividend continues to be well covered. Our 2012 FAD payout ratio is expected to be less than 60%, generating significant incremental cash flow over our dividend, which will be used to help fund our new developments, or to reduce amounts outstanding on our lines of credit. We have started to maintain a conservative approach to every aspect of our business, and we believe will continue to build value for all of our stakeholders over time. Read the rest of this transcript for free on seekingalpha.com