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August 6, 2020

With stores back open, including at Foxwoods, Tanger pares losses

Photos | Foxwoods Resort Casino The Tanger Outlets at Foxwoods Resort Casino.

The owner-operator of the 312,000-square-foot Tanger Outlets at Foxwoods and nearly 40 other shopping centers across North America said its operations became cash-positive in July, with virtually all of its centers now reopen for business.

However, it was too late to save second-quarter earnings for the company, Tanger Factory Outlet Center Inc., headquartered in North Carolina.

Tanger said it lost $22.9 million for the three-month period ended June 30. That was an improvement from its first-quarter loss of $27.4 million, but down from a profit of $13.6 million in the second quarter of 2019.

As of July 31, 95% of Tanger’s total occupied stores had reopened. That’s up from a low point on April 6 of just 6%. The Foxwoods outlet center’s non-essential retailers were allowed to re-open in June, under rules issued by Gov. Ned Lamont.

A potentially significant test looms later this month: Connecticut’s 20th annual Sales Tax Free Week, which will run from Aug. 16-22.  The Foxwoods outlet location will be waiving the normally added 1% Mashantucket Tribal Nation tax, the Connecticut Post reported.

Tanger offered tenants in all of its locations the option to defer April and May rent until 2021, which resulted in the company collecting just 12% of April rents, but things have been improving since then.

For the second quarter, Tanger said it expects to collect 43% of rents billed, defer 26%, and write off 25% (about one-third of which is due to retail tenant bankruptcies).

For July, the first month of its third quarter, the company has collected 72% of rent owed thus far.

Foxwoods outlet write-down

COVID-19 was a factor in Tanger’s first-quarter losses, as store closings ramped up in the final weeks of March, but another key factor was that increasing casino competition in the Northeast forced the company to recognize a decline in the future value of its Foxwoods location, recording a non-cash impairment charge of $45.7 million.

“...the opening of several casinos in nearby markets since the center was developed has negatively impacted the traffic to the resort and our center, and consequently, the performance of our tenants,” Tanger’s Chief Financial Officer Jim Williams said on a May investor call. “Based on the expected decline in the occupancy of the center and its future [net operating income] and cash flows, we wrote the asset down to its estimated fair value.”

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