Outlets on fire as occupancy rate set new record

So much for the argument that the U.S. market is saturated with retail stores and e-commerce is hurting mall traffic. Tanger Factory Outlet Centers brought four new properties online in 2015 and still managed to achieve a portfolio occupancy rate in excess of 95% for the 35th consecutive year.



If retailers are concerned about the effect of e-commerce on traffic to physical stores it certainly isn’t evident from Tanger’s year-end report to investors. The company’s portfolio of 43 upscale outlet shopping centers encompassing 14.5 million square feet ended the year with an occupancy rate of 97.5%. The essentially full occupancy rate is even more impressive considering the company added four new properties totaling 1.4 million square feet throughout 2015.



The projects represented a total investment of approximately $386.1 million and are located in Memphis, Tennessee; Savannah, Georgia; Grand Rapids, Michigan; and the Foxwoods Resort Casino in Mashantucket, Connecticut. Each was at least 95% occupied at the end of 2015. This year, Tanger is plans to bring invest $186.1 million to open two new outlet centers. A property in the Columbus, Ohio market is due to open in June followed by a new property in Daytona Beach schedule to open before the 2016 holiday season.



Not only is demand for Tanger’s brand of retail real estate strong, the company is able to charge tenants higher rents given the popularity of centers that offer shoppers a strong value proposition. Base rental rates increased 22.4% on the 397 leases Tanger executed last year and that was on top of a prior year increase of 23%.



"2015 was another record year for Tanger. Significant highlights included opportunistic dispositions that upgraded the overall quality and long-term growth potential of the Tanger portfolio, delivery of four new Tanger Outlet Centers that expanded our total footprint significantly, and double digit adjusted funds from operations (AFFO) per share growth over 2014, while achieving a compounded annual AFFO growth rate of 12.9% over the last three years,” said Tanger president and CEO Steven Tanger. “Other 2015 milestones included completing our 35th consecutive year with consolidated portfolio occupancy of at least 95%, and in the fourth quarter, reporting same center net operating income growth for the 44th consecutive quarter. We enter 2016 with optimism.”