No. of Recommendations: 2
The earnings call was an eye opener, and much more illuminating than the press release and the slide presentation:

https://seekingalpha.com/article/4319282-tanger-factory-outl...

David
No position
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No. of Recommendations: 2
…..but guidance is below expectations:

Tanger Factory Outlet Centers (NYSE:SKT) guidance for 2020 FFO per share of $1.96-$2.04 trails the consensus estimate of $2.16.

Guidance assumes 2020 same-center net operating income for consolidated portfolio between -6.75% and -8.25%, reflecting $37.6M impairment recognized for Jeffersonville, OH, property, average occupancy of 92%-93%; and projected store closures related to tenant bankruptcies and restructurings.



https://seekingalpha.com/news/3534591-tanger-factory-guidanc...

Cheers!
Murph
BO 2019 and MFPP Home Fool
(long SKT)
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No. of Recommendations: 0
SKT receives chinese "tourist" shoppers. That volume will be impacted, now that China has banned travel abroad for "trourism". Separately, the company has raised the dividend by 1 cent. When you see these symbolism moves, it makes you wonder whether the management is even aware of the challenges ahead of them?
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No. of Recommendations: 2
The earnings call was an eye opener, and much more illuminating than the press release and the slide presentation:

https://seekingalpha.com/article/4319282-tanger-factory-outl...

David
No position
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No. of Recommendations: 7
The first question of the conference call...

Christy McElroy

Hi. Good morning, everyone. Thank you. I’m wondering if you could shed some light on any conversations you may have had with State Street on how they plan to effectuate their share sale this week? And while I recognize it's not in guidance, is a buyback an option to help facilitate that trade?

Steven Tanger

Good morning, Christy. Thanks for getting in so early.

Christy McElroy

You’re welcome.

Steven Tanger

First of all, we cooperate with all of our large shareholders, and get appropriate representations to ensure that we maintain our REIT status. We have looked at with our advisers, many different scenarios and opportunities with regard to the position at State Street.

And right now, we’ve decided just to continue with our - continue to execute our business strategy and not to change the leverage profile of our balance sheet. So the market will take care of itself. And we’re as anxious as you are to see how it reacts.


The last question of the call



Douglas Eden

Good. Given the large short interest in the stock and acknowledged strong balance sheet of the company, have you considered increasing the leverage ratio even somewhat to repurchase shares at these depressed levels and possibly start to squeeze the shorts?

Steven Tanger

We have, with our advisers, looked at various different scenarios, some of which included purchasing back the stock. We've concluded it's in the best interest of the company that we continue to execute our business plan. We could not, in our view, buy back enough stock to have a meaningful impact.

It's not our strategy to shrink the portfolio. It's not our strategy to shrink the equity market capitalization. And it is our strategy to execute our business plan long term. We think that will provide the best results. And maintain the liquidity and optionality that we have with a strong balance sheet.



So you know what the analysts community wants the company to do... and what the company is not going to do. Also, there is an interesting question about dividend increase too... sort of why are you even bothering to increase the dividend by 1c.
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No. of Recommendations: 4
It's not our strategy to shrink the portfolio. It's not our strategy to shrink the equity market capitalization.

I found Tanger's statements from the CC to be bizarre. With the stock price so far below its NAV isn't one of the company's best investments a buyback if its own shares? And selling off its worse performing outlet malls and/or those that are the most expensive to renovate seems like a no-brainer.

SKT is off my watchlist.

David
No long and no short position in SKT.
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No. of Recommendations: 2
Hmmm....

I find the 'stay the course (unchanged)' policy NOT encouraging when there is no catalyst for change that is natural occurring. It's understandable, and even inspiring, during the recession, but not during what is supposed to be the recovery.

Now I'm thinking about our 'take the loss and move on' thread....

-srockaz
Long SKT
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No. of Recommendations: 2
I found Tanger's statements from the CC to be bizarre. With the stock price so far below its NAV isn't one of the company's best investments a buyback if its own shares? And selling off its worse performing outlet malls and/or those that are the most expensive to renovate seems like a no-brainer.

------------

No.
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No. of Recommendations: 3
I'm struggling to find a positive point of view to his approach. Is it preserving liquidity?

Not selling worse performing locations ensures your total revenue's don't dip, even if you look less profitable. By keeping the revenue, maybe your dividend coverage ratio stays a little higher?

Are their fundamentals and revenue trajectory good and it's just the market suppressing their price and this will just change?

-srockaz
Confused SKT holder
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No. of Recommendations: 1
If they buy stock, they are guaranteeing a ~10% return on that capital through dividend obligations. Are they going to get a higher return through other reinvestment or aquisition?

If they buy stock, they are sacrificing 100% of cash for a 10% reduction on the dollar of DCF. Do they have too little excess cash to enable this plan or is the first statement above driving the strategy?

Long SKT
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No. of Recommendations: 5
The real challenge, which management is not talking openly is, there is no market for those properties. If they have to sell them, probably it is going to be at a very high cap rate, which the management's are struggling to accept. So if they cannot sell the properties, there is not going to be enough cash flow to do any buybacks, and they know the need the cash for all the redevelopments.

Very few managements objectively look at shrinking the business. The CEO's are paid to build empires and not to shrink them.
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I think there is a market for the land, not necessarily for the buildings, the locations and large sizes make them perfect for industrial warehouses, question is could they pivot that way.
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With the stock price so far below its NAV isn't one of the company's best investments a buyback if its own shares? And selling off its worse performing outlet malls and/or those that are the most expensive to renovate seems like a no-brainer.
-----------

Thanks to the 2 people who recommended my previous post.

As an investor one wants to maximise returns, and sure if management did what the OP says, it would take money from the business and transfer it to investors who are leaving. Is that worthwhile?

Secondly, a manager has more constituents to think of than only 'shareholders' (ironically only the shareholders bailing on the stock/company benefit from the buyback, a big middle finger to those who stay invested).

Therefore this, rotten to the core, mantra of buybacks needs to be stabbed more times than Julius Ceaser, and should be exposed as what it truly is, a temporary giveaway to cheap suit shareholders who are saying sayonara.
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Secondly, a manager has more constituents to think of than only 'shareholders' (ironically only the shareholders bailing on the stock/company benefit from the buyback, a big middle finger to those who stay invested).

Therefore this, rotten to the core, mantra of buybacks needs to be stabbed more times than Julius Ceaser


WOW!

There are many misconception. Shareholders buy and sell all the time for various reasons. For the seller who is a buyer doesn't matter and immaterial. For buyers who the seller and their intentions are immaterial.

If the buyer is the company, instead of another investor, the seller is not getting any additional pleasure like throwing any finger at anybody.

Now, REIT's all the time sells equity to raise cash, because REIT's are cap-ex intensive and by charter and "for reasons only known to management" they payout most of their cash flow to shareholders in dividend. Now, selling equity is "dilutive" except in some limited circumstances, Selling equity is the most anti-existing-shareholder move, yet most REIT's do this all the time. If you are worried about something that makes current shareholders suckers, then you should not even be looking into REIT's.

Share prices don't always track underlying business or value. In such scenarios' the management has the "fiduciary responsibility" to buyback just like they sell equity to raise capital. When a management pays a dividend they are returning some part of the capital back to their investors, if some of that capital return is done by "buying shares back", when share prices trade below their value, it is part of their job. Every company is listed and in the market because they have a potential need to sell shares. So making sure their share prices are trading up to their value is part of their mandate. Lastly, for most going firms, buying their shares is a shareholder friendly action. Because it increases the existing shareholders claim on the firm.

Now, often when a company does buyback, it creates a steady demand, that drives prices higher, supply and demand 101. Given the unusual circumstances surrounding SKT shares, short position and a potential for a significant share price disruption, it is part of managements "fiduciary responsibility" to take advantage of the situation and effect a significant buyback. There are investors and some in analyst community believe SKT share price is "depressed" by the huge short position and company buying back shares will remedy it.

These are all market forces, various stakeholders expressing, exercising their views. I think your view on buyback is myopic and shows lot of misunderstanding.
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No. of Recommendations: 7
REIT's are cap-ex intensive and by charter and "for reasons only known to management" they payout most of their cash flow to shareholders in dividend.

Actually, the reason that REITs pay out most of their cash flow to shareholders as dividends is that the law requires them to pay out 90% of what would otherwise be taxable income (i.e. profits) as dividends in order to maintain their REIT status. The REIT status allows REITs to pass that income on to their shareholders without having to pay any income taxes. Shareholders then get taxed on the dividends at ordinary income rates, rather than at qualified dividend rates. (Note - with the new QBI rules, some REIT dividends may get a break on the ordinary income rates.)

In contrast, when non-REIT companies pay dividends to their shareholders, the company pays income taxes on the profits (at corporate rates) that are used to pay the dividends, and then the shareholder pays income taxes on the dividends. If the shareholder and the company both meet the rules for qualified dividends, then the shareholder's taxes will be at the capital gains rates, instead of ordinary income rates.

AJ
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Actually, the reason that REITs pay out most of their cash flow to shareholders as dividends is that the law requires them to pay out 90% of what would otherwise be taxable income

This is what I meant by 'charter' but most companies dividend is based on their FFO (Fund from operations) which includes D&A (Depreciation and amortization). Most REIT's are distributing more than their profits. Typically, you will see this as ROC (Return of Capital).
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Actually, the reason that REITs pay out most of their cash flow to shareholders as dividends is that the law requires them to pay out 90% of what would otherwise be taxable income (i.e. profits) as dividends in order to maintain their REIT status.

Now, SKT has increased their dividend for the coming year, yet their guidance is their income is going to go down, their cash flow is going to go down.

Are you suggesting they have increased the dividend for maintaining the REIT status?

No, not at all.

The reason I have invested in limited REIT's is because, most REIT's are paying out more than what they are earning, pretty much fund their dividend by borrowing or raising additional equity.
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There are many misconception. Shareholders buy and sell all the time for various reasons. For the seller who is a buyer doesn't matter and immaterial. For buyers who the seller and their intentions are immaterial.

If the buyer is the company, instead of another investor, the seller is not getting any additional pleasure like throwing any finger at anybody.
-----------------------

thinking like an investor, not an owner. Also increases leverage, increasing possibilities of failure.

xxxxxxxxxxxxxxxx


Now, REIT's all the time sells equity to raise cash, because REIT's are cap-ex intensive and by charter and "for reasons only known to management" they payout most of their cash flow to shareholders in dividend. Now, selling equity is "dilutive" except in some limited circumstances, Selling equity is the most anti-existing-shareholder move, yet most REIT's do this all the time. If you are worried about something that makes current shareholders suckers, then you should not even be looking into REIT's.

--------------------

They don't have to pay out "return of capital" - which a lot of REITs do.
Tanger is preventing said dilution by keeping and thinking of it's owners.

xxxxxxxxxxxxxxxx


Share prices don't always track underlying business or value. In such scenarios' the management has the "fiduciary responsibility" to buyback just like they sell equity to raise capital. When a management pays a dividend they are returning some part of the capital back to their investors, if some of that capital return is done by "buying shares back", when share prices trade below their value, it is part of their job. Every company is listed and in the market because they have a potential need to sell shares. So making sure their share prices are trading up to their value is part of their mandate. Lastly, for most going firms, buying their shares is a shareholder friendly action. Because it increases the existing shareholders claim on the firm.

--------------------

Sure - the only problem is here this reason doesn't apply. For most corporations in the US currently buybacks are simply a way to goose their share price so that monies can be transferred from the corporation to management selling their share options, holding etc.
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No. of Recommendations: 1
thinking like an investor, not an owner. Also increases leverage, increasing possibilities of failure.

Quite opposite. As an owner, buying other partners increases my stake in the company is more preferable than sending the cash away from business or when you leave all that excess cash, the CEO mindless expansion putting the firm on risk. Actually a development has a far higher risk than betting on existing known, profitable centers, that is what you do when you buyback.

They don't have to pay out "return of capital" - which a lot of REITs do.
Tanger is preventing said dilution by keeping and thinking of it's owners


Not sure what you are trying to say. Tanger is not thinking like owner, get that notion out of your head, if anything the CEO has a very low ownerhip, essentially the current CEO is the son of the original founder and inherited his stakes and options and RSU for many decades and if you see his ownerhip, you know he bailed on the business personally.

For most corporations in the US currently buybacks are simply a way to goose their share price so that monies can be transferred from the corporation to management selling their share options, holding etc.

First of all I am not even sure this is correct for all the buybacks in aggregate or in general. There are some firms which didn't forecast or understood the problems ahead and invested heavily in buybacks instead of the business, classic example is IBM. But even there it is not the management, but its shareholders have benefited.

On the other hand, if your point is SKT has to really conserve cash to sustain, I would say, they should as a shareholder friendly move, monetize the assets and return the money back to shareholders when there is value.
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No. of Recommendations: 10
Buybacks are just one way that a company can use its cash. I like to think that there are three broad ways that a company can use its cash.

1) Return it to shareholders through dividends and/or buybacks. With REITs dividend requirements, dividends is the most common.
2) Improve their balance sheet by either reducing debt or increasing cash balances.
3) Buy assets (reinvestment) for the company.

I can name failures and successes for each of the three ways a company can spend cash. GE's $20 billion repurchase a few years ago is an example of buybacks gone wrong! McDonalds has bought back over half of their stock and its been a great for everyone - previous selling shareholders and those that continued to hold.

If a company has significant business problems repurchasing a bunch of shares may look bad in retrospect, but investing more into the existing business would probably look worse and going into new business areas could be very successful or more likely VERY bad.

I once owned a natural gas producer named Range Resources that was a 23 bagger for me. I sold at $73 and it went up to $93 around 2014. Today it trades at $3.00. Its management kept reinvesting all their earnings and considerable borrowed funds back into increasing production and reserves. Industry wide too much was spent on increasing reserves and production and with Range being the poster child for these increases in natgas they were kinda stupid.

I love undervalued companies that repurchase shares, but I've learned that quality (buying true dips) beats quantity. Too much spent on buybacks keeps company from strengthening its balance sheet and making adequate investments back into the business.

Everything in moderation!
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Everything in moderation!

Apple has so far bought back $319 billion in the last 7 years.

Separately, moderation, thinking in small, medium are not path to greatness. Go big or go home.
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Quite opposite. As an owner, buying other partners increases my stake in the company is more preferable than sending the cash away from business or when you leave all that excess cash, the CEO mindless expansion putting the firm on risk. Actually a development has a far higher risk than betting on existing known, profitable centers, that is what you do when you buyback.
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If you individually want that, feel free to buy more share, no need for the business to use its cash flow to buyback shares.
xxxxxxxx

First of all I am not even sure this is correct for all the buybacks in aggregate or in general. There are some firms which didn't forecast or understood the problems ahead and invested heavily in buybacks instead of the business, classic example is IBM. But even there it is not the management, but its shareholders have benefited.
--------

Warren Buffet says it's true.
xxxxxxxx

On the other hand, if your point is SKT has to really conserve cash to sustain, I would say, they should as a shareholder friendly move, monetize the assets and return the money back to shareholders when there is value.
---------

We Agree! :)
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Everything in moderation!

Apple has so far bought back $319 billion in the last 7 years.

Separately, moderation, thinking in small, medium are not path to greatness. Go big or go home.
--------------

Apple has a sustainable business currently with high demand for pretty much all of it's product lines and services increasing. They have a lot of cash too, which can sustain them in the event of a business (their own) level downturn.

Therefore it might make sense for them to do the buybacks.

Different from most other corporate buybacks.

Valuemongeran is correct about everything in moderation.
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Apple has a sustainable business

SKT has much more visibility into their earnings and cash flow. SKT generates cash too, they are not interested in accepting market reality. First you made an argument that buybacks are bad,how SKT is focused on long-term shareholders, etc and now you are making up another argument.

SKT has a market reality staring at its face and the management is more worried about their compensation which depends on empire building and not right sizing to the market reality and that is reflected in the stock price.

If SKT wants to preserve cash, then the symbolic 1c dividend hike is the stupidest thing they can do.
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SKT has much more visibility into their earnings and cash flow. SKT generates cash too, they are not interested in accepting market reality. First you made an argument that buybacks are bad,how SKT is focused on long-term shareholders, etc and now you are making up another argument.

- Sigh! (Emoji for Shrug)


SKT has a market reality staring at its face and the management is more worried about their compensation which depends on empire building and not right sizing to the market reality and that is reflected in the stock price.

- In my experience, SKT Management is one of the least self-serving one.


If SKT wants to preserve cash, then the symbolic 1c dividend hike is the stupidest thing they can do.

- I agree, it should have been 0.01c or less increase.
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