Skip to Content
Stock Strategist

Industry Dynamics Support Strong Growth Tailwind at Tanger Factory Outlet Centers

Balanced internal and external growth opportunities promise inflation-beating dividend growth.

Mentioned: , ,

 Tanger Factory Outlet Centers (SKT) has entered a multiyear period of outstanding growth. This sustainable growth trajectory differentiates it from other real estate investment trusts, as does its reasonable valuation in an environment where the majority of the REITs we cover trade at a premium to our fair value estimates.

The attractiveness of the outlet format--to both Tanger's tenants as well as the end consumer--drives our view of Tanger's ability to achieve inflation-plus growth from its existing portfolio as well as through new development opportunities. Embedded in-place rents that we estimate to be 10%-15% below market rates will drive internal growth, while new development opportunities and opportunistic acquisitions contribute to external growth. Overall, our average annual revenue growth rate expectation for 2012-16 is 8.2%, about 40% of which is organic, 40% from developments, and 20% from 2011 acquisitions.

Todd Lukasik does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.