GREENSBORO, N.C. — Tanger Factory Outlet Centers Inc. (NYSE: SKT) has closed on the sale of five non-core outlet centers to an undisclosed buyer for a total cash sales price of $150.7 million in two separate transactions.
The five properties are located in Barstow, Calif.; Kittery, Maine (two properties); Tuscola, Ill.; and West Branch, Mich.
The fully occupied, 171,300-square-foot Tanger Outlet Barstow sold for $106.7 million. The 89 percent-occupied Tuscola, West Branch and Kittery centers traded for $44 million.
The Barstow center sold at an estimated capitalization rate of 5.8 percent, while the other four properties traded at a cap rate of 10.4 percent.
“These centers have an average age of approximately 24 years compared to our remaining portfolio average of 16 years,” says Steven Tanger, president and CEO of Tanger Factory Outlet Centers. “Because of the potential upcoming capital expenditures necessary to enhance these centers, as well as changes within each market, we no longer felt these assets could produce the growth in long-term internal cash flow and tenant sales that we are expecting within our core portfolio.”
While the Barstow center is performing at a high level today, Tanger says it was an outlier in its portfolio given the center’s relatively small size and exceptionally high reliance on foreign tourism.
Some or all of the proceeds from the sales transactions may be held with a qualified intermediary and subsequently be invested in a tax-efficient manner, according to the company. Any proceeds not used in this manner may be used to pay down the company’s unsecured line of credit or the payment of a special dividend.
Greensboro-based Tanger Factory Outlet Centers is a publicly traded REIT that operates or has an ownership interest in a portfolio of 42 upscale outlet shopping centers in 21 states and Canada totaling approximately 14 million square feet.
SKT’s stock price closed at $33.90 per share on Monday, Oct. 5, up slightly from $33.08 per share a year ago.
— Scott Reid