Tanger Factory Outlet Centers Is Looking Awfully Nice

Summary

• Times have been tough for Tanger, with the company hit first by fears of underperformance and now by the coronavirus pandemic.
• Given where the company is today, it makes for an excellent prospect to consider.
• Whether this remains the case or not depends on what happens with the coronavirus and whether management can stabilize the firm.
• Looking for a helping hand in the market? Members of Crude Value Insights get exclusive ideas and guidance to navigate any climate. Get started today »

One of the greatest yield-offering opportunities today is Tanger Factory Outlet Centers (NYSE:SKT). After a slide in the share price over the past year, but with the distribution having been raised yet again for the current fiscal year, the REIT's yield today stands at 20.5%. Such a high level is often a sign of trouble ahead for unitholders. After all, what must transpire eventually is either a resurgence in the share price or a cut to the distribution as a changing reality for the firm sets in. Often, what comes to pass is the latter. In Tanger's case, though, the picture may very well be the former. In its 2020 guidance, released when the company reported 2019's financial results in late January, the REIT made clear some very big troubles it is facing, but when you drill down and look at its cash flow, you come to realize that the business is still stable… for now.

An ugly transition

Source: Tanger Outlet

Tanger has a long history of boasting strong financial results. To see this, we need to only consider the image above. In it, you can see the high occupancy rates the business has been able to maintain over the years. Last year, for instance, occupancy ended at a robust 97%. In the image below, you can also see another encouraging metric boasted by the firm: tenant sales per square foot. In 2019, tenants at the REIT's properties generated sales per square foot of $395. This was up $10 from the $385 per square foot seen in 2018.

Source: Tanger Outlet

Looking solely at these results, you might think everything is great for Tanger, but that would be where you're wrong. As part of the retail space crumble, management has done well to ensure that the firm's exposure was limited. But any firm inexorably

Analyst’s Disclosure:I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.