Market Overview

Tanger Factory Outlet's Fundamentals Are Deteriorating, KeyBanc Says In Downgrade

Tanger Factory Outlet's Fundamentals Are Deteriorating, KeyBanc Says In Downgrade
Related SKT
55 Biggest Movers From Yesterday
43 Stocks Moving In Wednesday's Mid-Day Session
The Best Dividend Stocks For New Money Today (Seeking Alpha)

Tanger Factory Outlet Centers Inc. (NYSE: SKT), the REIT owner of the Tanger Outlet chain, reported Tuesday after the market close with forecast-beating first-quarter results and lower full-year guidance. 

The Analyst

KeyBanc Capital Markets analyst Todd Thomas downgraded Tanger Factory Outlet from Sector Weight to Underweight with a $19 price target.

The Thesis

Tanger Factory Outlet's pure-play outlet center portfolio is witnessing a rapid deterioration, Thomas said in a Tuesday note, citing a 1.5-percent decline in same store net operating income, or SSNOI, in Q1 compared to a 0.4-percent drop in Q4.

Despite attempts to preserve occupancy by offering rent relief, the analyst said occupancy continued to fall by 30 basis points year-over-year.

The analyst said he expects leasing to continue to struggle, as the number of short-term deals increased.

KeyBanc attributed the lower FFO and SSNOI growth guidance for fiscal 2018 to a higher level of store closures and more rent relief being granted than anticipated. 

"While the increase in weather-related expenses should ease in future quarters, we expect the operating environment to remain challenging," Thomas said. 

The Price Action

Tanger was down 8.5 percent at $20.42 at the time of publication Wednesday afternoon. 

Related Links:

Going Global With Real Estate ETFs

Stifel Downgrades 3 Medical Office REITs As Rising Rates Pressure Cost Of Capital, Investment Spreads

Photo by Billy Hathorn/Wikimedia. 

Latest Ratings for SKT

Dec 2018JP MorganDowngradesNeutralUnderweight
Aug 2018CitigroupMaintainsNeutralNeutral
May 2018KeyBancDowngradesSector WeightUnderweight

View More Analyst Ratings for SKT
View the Latest Analyst Ratings

Posted-In: KeyBanc Capital Markets Todd ThomasAnalyst Color REIT Downgrades Analyst Ratings Real Estate Best of Benzinga


Related Articles (SKT)

View Comments and Join the Discussion!

Latest Ratings

MCDStephens & Co.Upgrades200.0
CZZJP MorganUpgrades13.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Abiomed Earnings Outlook

Mid-Afternoon Market Update: Community Health Systems Surges Following Q1 Beat; TC PipeLines Shares Slide