Skip to main content
No. of Recommendations: 5
SKT cut to sell by Goldman with a price target of $15 vs current $18.5, currently SKT dividend yield is 7.65%.

FWIW, SKT december $15 Put's have bid-ask of $0.45 ~ 0.6 whereas for BRX there is no bid. It may mean nothing, just ignore it.
Print the post Back To Top
No. of Recommendations: 1
sigh
Print the post Back To Top
No. of Recommendations: 0
Super thankful I did not buy nearly as much as I originally planned to (only 1/3) about 20% underwater. Where is the bottom?
Print the post Back To Top
No. of Recommendations: 1
Well that may just signal the bottom then. /heh/
Print the post Back To Top
No. of Recommendations: 5
Kingran,

Cross post from another board that linked Brad Thomas’s latest bullishness. I’m pausing, scratching my head, due to your considered posts on the long term outlook here.

Currently I’m in neutral.

Anyway I hope this helps some Fools understand recent events...<snip>

I am in process of evaluating Brad's latest as well as treading lightly with my SKT position (substantial for me: 2%) I bought back some sold $21 June puts recently; gulp....I did need to unencumber some cash.

Since yesterday's drop I've been thinking to add more but wanted to investigate this first:

2 retailers that are sinking are 5-10% of its portfolio. Brad talked about their stock price (ASCNA)

It's Ascena, stock ticker ASNA which has had it's stock cut almost in half since March. I haven't done any in depth with ASNA but read the first few pages of their 1Q19 CC.

Today's Dress Barn announcement had me doubly concerned. SO here's what I found:

Ascena is a 7% customer of Tanger (SKT) and its largest according to SKT latest investor presentation.

Ascena is a holding company for a number of fashion brands, most, if not all direct with their own stores.

Dress Barn announced closing today of 650 (100%) of stores. There are 40 Tanger Outlet Centers. Dress Barn has 22 Tanger locations.

Other Ascena brands according to the CC are characterized as doing very well: premium; needing help: value. These brands and Tanger locations as follows:

Maurices - recently sold majority ownership to a London based private equity firm. ASNA maintains minority ownership - small town and shopping center womens clothing - 900+ stores only 11 at Tanger.

Justice - children's / tween fashion 23 at Tanger

Lane Bryant - troubled; management in midst of "brand positioning" makeover. I think they may be onto something...they sound confident in a turnaround. 24 Lane Bryant outlets at Tanger.

Ann Taylor - 23 at Tanger - this is one of the 2 "premium" category brands that had double digit comps in 1Q19

Loft - 30 at Tanger - Ascena's other premium brand; also sporting DD comps.

As a whole ASNA had 2% comp's last quarter but "unacceptable" profitability -- CEO's term. That said, the "value" group, the most troubled, while still operating at an unacceptable level of profitability, delivered operating income improvement versus the year-ago period for the first time since the fourth quarter of fiscal 2015. Unfortunately, we took a step back at our Plus and Kids segments this past quarter, and we must deliver more consistent execution to get enterprise financials back to levels that we consider appropriate. On the 14-March CC the CEO said guidance for the year was now jeopardized and they would advance more decisive action. Hence the Dress Barn closing announcement today.

That said even the premium segment had operational issues - overbought winter inventory - 3Q18, that sorted itself by 1Q19.

So by the numbers, if 133 ASNA stores are located in Tanger, (about 70-75 lessors total x 40 locations = about 3,000 boxes to fill.) So 133 = ~ 4-5% of the boxes; so 7% must be by sq footage.

Let's say 22 Dress Barns are gone; that's 0.75% by number of stores.

11 Maurices are troubled

23 Justice's and 24 Lane Bryant's are in re-building / makeover phase.

53 of the 133 are doing well = 40%.

So 60% of 7% are troubled = 4.2%.

I think with SKT's management expertise it's a problem that can be overcome. Still we must consider long term trends, the glass could actually be half-empty as espoused by some here and over on thee REIT board. I for one, applaud the closings and think the adds nearer population centers is going to help.



Joe
Just my thoughts for now.
Print the post Back To Top
No. of Recommendations: 4
I think with SKT's management expertise it's a problem that can be overcome. Still
...

My concern with the outlet centers are there are lot of clothing retailers, and these retailers get the fashion wrong at some time or other and the concepts become irrelevant. Of course the space can be reused. I personally think, we have lots of mall space and it needs some rationalization.

Separately, I was early on BRX and that prevented me from loading around $14, same with KIM. If you want to open a position on SKT, wait for the absolutely ridiculous price. The stock is declining, and I will wait for some bottom forming before opening any position.

Is there a compelling reason you have to buy now?
Print the post Back To Top
No. of Recommendations: 2
I just got back from St. Louis and went to one SKT competitor while there - St. Louis Premium Outlets owned by SPG. I was there on a Tuesday afternoon when the weather wasn't so great, so the number of shoppers weren't so many, but in the main buildings occupancy appeared to be at or close to 100%. Did notice one large vacant out-property that used to house a Gander Mountain. I imagine that it has been empty since Gander Mountain's March 2017 vacancy. Also several out properties lots available for building.
Print the post Back To Top
No. of Recommendations: 4
Much thanks Joe for the additional information on SKT. I looked at the company a few days ago and can see why GS decided it now safe to downgrade, though it seems the company has already fallen to a fairly safe level.

I put together a few reference points when SKT was selling at $17.71. Much of my numbers are from the company web site and Craig Schmidt, who follows retail REITs at Merrill. He has a neutral rating on the company and in my opinion is one of the most detailed and best analysts in the industry.

If there is fear to be realized, it is likely because of the Weak Tenant Watch List which includes Ascena, S&P B rated debt,and GAP, S&P BB+ rated debt, currently occupying 7% and 6% of SKT space respectively, representing 13% of total space leased . On the plus side, SKT space is usually a smaller box and requires lower rent and fewer tenant improvements for tenants releasing the space. During the Q1 '19, tenants averaged $391/PSF in sales, up slightly from the @$385 during the last several quarters.

The company is now 95.4% occupied, down @1% from previous quarters with 63% of '19 lease renewals completed in Q1.

Schmidt believes the company will produce $2.20 FFO in '19, down 10% from '18's $2.48. With 10% NOI set aside for capital improvements and the cash value of GAAP rents, the AFFO comes in at $1.97. SKT is trading at 9x AFFO at $17.77.

The dividend is scheduled at $1.42 yielding 7.99% to SKT's $17.77 stock price a few days back and 72% of AFFO.

As a speculative buy and with trembling hands, I purchased several shares and plan to watch the show for awhile.

Best,
Gear

Long FRT, REG, SPG, KIM, WRI, and now SKT. Both KIM and SKT speculative.
Print the post Back To Top
No. of Recommendations: 0
wait for the absolutely ridiculous price. The stock is declining, and I will wait for some bottom forming before opening any position.


Thanks for this. It's a lesson I need. One of my repeated mistakes as an investor is not patiently waiting while a decline happens

Joe
Print the post Back To Top
No. of Recommendations: 1
"One of my repeated mistakes as an investor is not patiently waiting while a decline happens"

Speaking of which, things are beginning to look interesting for us with excess cash.

What REITs or REIT sectors would any of you recommend looking at, assuming prices keep going down?

I want REITs and non-REITs that are somewhat insulated from a weakening economy or a trade war.

For me, that rules out retail and hotels.

Non-retail triple net lease REITs with financially strong tenants would be ideal.

Thoughts?

VM - No REITs, but it "feels" like we are getting close to the time to dip my toe back into more equities.
Print the post Back To Top
No. of Recommendations: 1
I want REITs and non-REITs that are somewhat insulated from a weakening economy or a trade war.

I just bought ABBV, has a nice dividend and nice dividend growth. I am looking at ENB but thinking it needs to go down more but I like the business it's in, pipelines, electrical plants and wind and solar. Also has a 1099 not a k-1. Canadian company and if held in an IRA you won't pay taxes in Canada. Also growing it's dividend 10 to 11% a year.


Andy
Print the post Back To Top
No. of Recommendations: 0
Read something interesting today about REIT s expanding into mortgage securities, traditional domain of Fannie & Freddie. Investment needed as government bails.

REITs Bet Big by Ben Eisen, WSJ. I don’t have subscription but have article. It mentions REITs Annaly Capital and AGNC as accounting for most growth in the area. Others mentioned are Two Harbors and New Residential Investment.

I’d worry about defaults during recession though.

And just mentioning we re getting off topic.

JM
Print the post Back To Top
No. of Recommendations: 2
Andy,

Thanks for bringing ABBV and ENB to my attention. Will be looking into them. Would like ENB to be cheaper, but with the way things are going it may very well.

How many more countries do we need to start trade wars with before we start a major recession or even depression?

VM
Print the post Back To Top