Tanger Inc (SKT) 2006 Q1 法說會逐字稿

Good morning and welcome to Tanger Factory Outlet Center’s First Quarter 2006 Conference Call.

Please note that during this conference call some of management’s comments may be forward-looking statements regarding the Company’s property operations, leasings, tenant sales trends, development acquisition, expansion and disposition activities as well as their comments regarding the Company’s funds from operations, funds available for distribution and dividends.

These forward-looking statements are subject to numerous risks and uncertainties and actual results could differ materially from those projected due to factors including but not limited to changes in economics and real estate conditions, the availability and cost of capital, the Company’s ongoing ability to lease, develop and acquire properties as well as potential tenant bankruptcies and competitions.

We direct you to the Company’s filings with the Security and Exchange Commission for a detailed discussion of the risks and uncertainties.

This call is being recorded for rebroadcast for a period of time in the future.

As such, it is important to note that management’s comments include time-sensitive information and may be accurate only as of today’s date, April 26, 2006. [OPERATOR INSTRUCTIONS] I will now turn the call over to Stanley Tanger, the Company’s Chairman and Chief Executive Officer.

Please go ahead, sir.

Thank you and good morning everyone.

With me on our call today are Steven Tanger, President and Chief Operating Officer and Frank Marchisello, Executive Vice President and Chief Financial Officer.

Frank will take you through our results and Steve will follow with a summary of our operating performance new to developments and then we’ll have time for questions you may have.

We are pleased to announce our Board of Directors has approved a 5.4% increase in the annual dividend on our common shares from $1.29 per share to $1.36 per share.

The increase is effective for the quarterly cash dividend payable on May 15, 2006 to owners of record on April 28, 2006.

We have increased our annual dividend each year since becoming a public company 13 years ago at an average increase of 3.8% which is much higher than the average rate of inflation over the same period.

Looking at it another way, we have paid cumulative dividends on a split-adjusted basis equal to 128% of the initial public offering price of our stock.

I will now turn the call over to Frank Marchisello.

Thank you, Mr. Tanger, and good morning everyone.

Details on our first quarter results are included in our press release and supplemental information that have been filed with our Form 8-K.

So I’ll just focus on a few key points.

During the first quarter of 2006, we recognized a $13.8 million gain on the sale of real estate associated with the sale of our non-core outlet centers in Pigeon Forge, Tennessee and North Branch, Minnesota.

As a result, we reported net income available to common shareholders for the first quarter of 2006 of $13.6 million or $0.44 per share as compared to a net loss of $2.9 million or $0.11 per share for the first quarter of 2005.

Total funds from operations for the quarter increased by 30% to $18.9 million compared to $14.5 million in 2005.

FFO for the quarter was in line with first call consensus estimates at $0.51 per share as compared to $0.43 per share in 2005, an increase of 18.6%.

These positive results were achieved despite a nearly 162 basis point increase in short-term interest rates since the first quarter of last year which effectively reduced our FFO and net income for the first quarter of 2006 by an estimated $0.01 per share.

During the first quarter of 2006 we sold two land parcels receiving net proceeds of approximately $626,000 and recorded a gain on the sale of these parcels of $110,000 which is not enough to impact our FFO per share calculations.

We did not have any land parcel sales in the first quarter of 2005.

Our FFO count ratio for the first quarter of 2006 was 63% compared to 73% in the first quarter of last year.

Our FAD count ratio for the first quarter of 2006 was 85% as compared to 120% in 2005.

The high FAD count ratio in the first quarter of last year relates to $4.5 million in tenant allowances paid during the quarter.

Many of these allowances relate to our continued work on improving occupancies and adding key magnet tenants to many of our centers.

We are now seeing an acceptable return on these investments as we continue to achieve increases in average tenant sales, increases in percentage rent, increase in base rental rates and increasing same-center net operating income numbers.

Including the impact of the recently announced dividend increase, we currently believe we can maintain an FFO count ratio in the low-60% range and an FAD count ratio in the mid-80% range during 2006.

On a consolidated basis our debt to total market capitalization at the end of the quarter was approximately 32.5% and our total market capitalization was approximately $2 billion, up $764 million or 61.9% from a year ago.

We also maintained a strong interest coverage ratio of 2.93 times for the first quarter of 2006.

As of quarter end, March 31, 2006, our variable rate debt accounted for 15.5% or $106 million of our debt outstanding and the remaining 84.5%, or $548.8 million of our debt was at fixed rates.

We currently do not have any significant debt maturities until 2008.

At that time our $100 million of 9 1/8% senior unsecured notes and our $179 million GMAC mortgage encumbering the Charter Oak Portfolio will both mature.

In an effort to mitigate our refinancing risks associated with these 2008 maturities, we have entered into two forward treasury locks totaling $200 million at an average 10-year treasury rate of 4.62%.

As I mentioned earlier, we sold two non-core properties during the first quarter of 2006 generating net proceeds of approximately $20.2 million and two land parcels generating net proceeds of approximately $626,000.

Also, during February 2006 we issued 800,000 additional 7½% Class C Preferred shares generating $19.5 million in net proceeds and bringing the total number of preferred shares outstanding to 3 million.

Proceeds from the sales of the two properties, the two land parcels and the issuance of the additional preferred shares were used to reduce amounts outstanding on our unsecured lines of credit which currently have $33.7 million outstanding with a total capacity of $150 million.

I’ll now turn the call over to Steve.

Thank you, Frank, and good morning everyone.

We had an outstanding first quarter of 2006.

As of March 31st, our portfolio consisted of 28 -- I’m sorry, 29 wholly-owned, factory outlet shopping centers diversified across 21 states totaling 8 million square feet.

We also manage, for a fee, and own a 50% interest in one center which contains approximately 402,000 square feet; and manage for a fee three centers totaling approximately 293,000 square feet.

I am pleased to report that the positive rent spreads we achieved in the past few years have continued into the first quarter of 2006.

On March 31, 2006 we have executed or are in process over 63% of the 1.8 million square feet of leases scheduled to come up for renewal during the year with an average increase on the executed renewals of 11.7% on a straight-line basis.

We have also re-tenanted over 220,000 square feet at an average increase in base rent on a straight-line basis of 21.2% over the rent that was being paid by the previous tenant prior to their vacating the space.

We feel very good about our leasing momentum.

Same-center net operating income for our wholly owned portfolio increased 4.2% for the first quarter of 2006 compared to the same quarter last year.

In the first quarter of 2005 our net operating income increased by 1.1% over the same period in 2004.

Our overall occupancy rate was 95% at the end of the first quarter of both 2005 and 2006.

With respect to tenant productivity across our consolidated portfolio, same space sales increased by 3.4% for the three-months ended March 31, 2006, as compared to the three-months ended March 31, 2005, an increased 4.3% for the rolling 12-months ended March 2006 to $329 per square foot.

Reported same store sales for the three months ended March 31, 2006 increased 5.7% compared to the same period in 2005.

These sales numbers are exceptional when you consider that Easter holiday shifted from the first quarter last year to the second quarter this year.

The last time the shift in Easter occurred was in 2003.

Our same-space sales in the first quarter of 2003 were actually down 6.1% versus an increase this year of 3.4%.

Since most of our properties are located in high-volume, family-tourist locations, we expect that this proportion of impact to our sales when a holiday shifts between reporting quarters.

We are delighted to report that our traffic is up 9% in the first three weeks of April.

This is remarkable in view of the highly publicized increase in the price of gas.

The difference in the same-store increase of .7% and the same space increase of 3.4% is that the same-store number does not reflect our remerchandising success since new high-volume stores must be open since January 1, 2005 to be included in the same-store number.

As an example, in Barstow, California, we added tenants like Polo Ralph Lauren, Coach and Tommy Hilfiger.

Same-space sales are up 67% while same store-sales are up 21%.

In Sanibel, Florida we added Calvin Klein and Polo Ralph Lauren.

Same-space sales were up 11.4% while same-store sales were up only .3%.

Finally, in Park City, Utah we have added Aeropostale, American Eagle, Calvin Klein, Levi’s and Sketchers.

Same-space sales were up 2.5% while same-store sales actually declined 8.7%.

We feel that same-space, comparable sales is a better indicator of our portfolio performance; however we report both same-store and same-space sales to provide our investors with complete information and transparency.

During the first quarter of 2006 we had three small tenants file for bankruptcy protection.

These tenants represent 14 stores with a total gross leasable area of slightly more than 51,000 square feet or .6% of our wholly owned gross leasable area.

So it is not a material amount of space and I might add, not a material exposure from a bad debt perspective.

From the development standpoint we are now under construction for our new projects in Charleston, South Carolina and Wisconsin Dells, Wisconsin.

We currently have executed leases and lease commitments for 97% of the 265,000 square feet of gross leasable area in our first phase of the Wisconsin Dells Tanger Outlet Center.

In Charleston, South Carolina we have executed leases and lease commitments for 74% of the 352,000 square feet of gross leasable area.

In addition, we have lease proposals out on most of the remaining space in both locations.

Our leasing group continues to do a tremendous job in converting additional tenant commitments into signed leases.

We expect to have most of the space in both centers leased by the time construction is completed and for stores to begin opening in the third quarter of 2006.

In fact, we have already set the date for our grand opening celebration at both locations.

Wisconsin Dells’ grand opening celebration will be held on August 18, 2006, followed by Charleston’s grand opening celebration on August 31, 2006.

Both of these projects are located in high-traffic, tourist destinations and we anticipate that they will be very successful centers for us.

As for our site south of Pittsburgh, we have commented on previous calls that Bass Pro Shops controls the option on the land adjacent to our site and that they are continuing with their plans to develop the site.

Since our last earnings call, we have received some very good news regarding the TIF approval process.

The appeal, which was filed challenging the taxing authority’s approval of the TIF plan has been dismissed.

Subsequent to the announced dismissal of the appeal, we executed a $2.2 million contract with Allegheny Power to relocate power lines currently located on our development site.

Included in the $2.2 million paid to Allegheny Power, we now have approximately $4.4 million invested in this project and expect to invest an additional $3.5 million between now and the end of September, 2006, at which time we hope to be in a position to close on the acquisition of the land and to begin construction.

Tenant interest in this site remains robust and we are still targeting a fourth quarter 2007 opening.

With regard to our site in Deer Park, Babylon Township, New York, we continue to work our way through the permitting process which should be completed by year-end.

In the meantime, general economic conditions on Long Island have remained on solid footing with positive growth in employment, housing and economic expansion in both the service and defense related economies.

Based upon advance previews of the property, we have received commitments from several key magnet tenants.

Once the development and permitting process is complete, we will announce the turnover date to our tenants.

At that time, we expect to receive signed leases and to begin construction.

We remain comfortable with our previously announced opening in the fourth quarter of 2007.

New ground development is a phenomenal value creation opportunity for our Company.

Over the past 25 years, we have learned the skill set to manage the risk associated with this type of development.

We are negotiating an option for land I wish to develop another new Tanger Outlet Center, but we are in the very early stages of determining the viability and are therefore not prepared to announce the location at this time.

We will continue to explore other new development sites, potential acquisitions and disposition opportunities.

Our solid balance sheet allows us to fund our healthy development pipeline and to grow accretively.

Based upon current market conditions, the strength and stability of our core portfolio, we are maintaining our previously announced earnings guidance.

We currently believe that our estimated diluted net income for share excluding gains or losses from the sale of real estate will be between $0.74 and $0.78 per share and our FFO for 2006 will be between $2.18 and $2.22 per share.

We plan to continue our thoughtful use of our resources and to maintain a conservative financial position.

We are very excited about the execution of our strategy by our team in the first quarter of 2006 and look forward to another great year.

With that, we will be happy to answer any questions that you may have.

[OPERATOR INSTRUCTIONS] Your first question comes from Ross Nussbaum of Banc of America Securities.

Hi.

It’s Christine McElroy here with Ross.

Based on leasing momentum so far, where do you see Charleston and Wisconsin Dells opening in terms of initial yields?

We’re looking for both Charleston to be between 11 and 11½ and Wisconsin Dells about between 10½ and 11.

Okay.

And then just some housekeeping questions.

How should we be thinking about G&A for 2006?

Is Q1 a pretty good run rate?

Q1 is a good run rate for the remainder of the year.

Okay.

And then for FAS 141/142 income, what level are you assuming in your ’06 guidance?

We are at about the same amount each quarter from where we were for the first quarter.

Okay.

And then what’s included in your “Other Assets” line on the balance sheet and what caused it to essentially double in Q1?

Other Assets, I can get you a more detailed description of that if you’d like.

Typically what is there is our pre-development costs which obviously would have gone up with the $2.2 million Allegheny Power Contract that Steve mentioned as well as some other items; and then it’s typically escrow balances, accounts receivables, things like that.

Okay.

Great.

Thanks.

Your next question comes from Craig Schmidt with Merrill Lynch.

Good morning.

I’m wondering, could you repeat the lease commitments for Charleston and Wisconsin Dell?

Sure.

In Charleston we currently have executed or are in process about 74% of the first phase.

And in Wisconsin Dells we currently have 97% of the first phase committed or signed.

And in Charleston’s case, I know the costs increased on that project and I think some of that was due to GI.

So given so much of the leasing done you know that the rents are in place that get you through the 11 to 11 1/2% return?

I’m comfortable with that number.

Great.

And what are your yield expectations for Pittsburgh and Deer Park?

We’re looking in Pittsburgh right now around between 11½ and 12½.

And in Deer Park we’re looking at a return on cost of between 10 and 11.

Keep in mind, though, that we are a one-third partner in that project so return on our equity will be significantly higher than that.

Okay.

Thank you.

Your next question comes from Michael Bilerman with Citigroup.

Good morning.

I was wondering if you can maybe, Steve, comment a little bit on guidance.

You talked about how you’ve seen exceptional sales growth; your first quarter NOI of over 4% is clearly above your full-year of 2 to 3.

We talked a little bit about last quarter, on a percentage rate, coming in the fourth quarter.

Given what you’ve seen and the leasing that you’ve done, it’s almost 50% of what you have rolling this year, shouldn’t that take you to the higher end or even above where your guidance is?

Michael, we were very careful in issuing guidance last quarter for this year.

And we are still comfortable with the guidance that we’ve issued.

We are very pleased with the momentum that we have.

We are very pleased with the success our tenants are having and we are very pleased that the marketing programs we’ve instituted have driven traffic significantly.

If it does continue, we certainly - each quarter - update our budgets and we look at our guidance each quarter.

And if it changes, we’ll change it.

Do you feel more comfortable whether it’s the high-end or the low-end at this point knowing what you have under the bag at this point?

We’re comfortable with the guidance we’ve given you.

In terms of G&A what’s causing -- I guess if 4.1 million is a run rate which is - and I guess 16.4 for the year - that’s up almost 18% over 2005.

What’s causing the ramp in G&A?

Michael, this is Frank.

It’s a combination of things.

One is we’re just, as everyone is, we’re seeing higher legal and accounting as of professional fees and in addition to that we obviously have seen some increases in employee costs.

We have set up a bonus plan for our senior management team and to help keep everybody energized and continue to proceed forward and so we’re accruing and estimate of what that would be.

And then, of course, we did issue some restricted shares which are upping the non-cash charge option in restricted shares.

And how many seed people, senior management, are in the plan and how much of that accrual is in ’06 G&A?

Well, we’re going to accrue 100% of what we expect may be the bonus and it’s the entire senior management team that’s involved.

And how much is that bonus?

We filed the 8-K.

I don’t know the exact number; but it’s probably - I would hate to guess - but it’s probably a million dollars or so.

Okay.

And then I was wondering, Steve, is there anything that you’re doing differently now that you own 100% of the Charter Oak assets?

And the only reason I ask is the occupancy, at least in the Charter Oak pool, has dropped down to about 92% which is lower than it has been since you acquired it.

I don’t know if there was certain things that you’re doing differently this quarter or if there are certain tenants that have moved out?

I was wondering if maybe you could just elaborate a little bit on it?

Sure.

Michael, we’re executing what we internally call the “Tanger shuffle” where we over time will be moving tenants around to make room for larger, high-volume tenants and from one quarter to the next there may be some disparity in occupancy due to the fact that we have to create vacancies for a short period of time in order to fill them with the right tenants.

When we purchased the properties from Charter Oak two years ago, they were well-maintained by an institutional owner; but we have a more entrepreneurial perspective and we have better tenant relationships which has allowed us to effect this remerchandising strategy.

I think the bigger picture that we look at is the tremendous same-space, NOI increase throughout our entire portfolio and I believe that this strategy of remerchandising some of the centers that we purchased will lead to more increases in net operating income.

Was there something specific at Hilton Head where occupancy dropped year-over-year about 800 basis points to 35,000 square feet.

I don’t know if there were a couple of tenants that left or --?

We have two properties in Hilton Head and one property, which is the farthest from the bridge, we are in the process of remerchandising that asset.

We’ve vacated one building with the expectation of putting in two or possibly three family sit-down type restaurants.

The site is well located on the major artery into Hilton Head which is in the process of being widened to accommodate the traffic.

We have a traffic light at both of our shopping centers with full, four-way access to this main artery.

We are also talking to several other types of tenants to remerchandise what we call Hilton Head I. Hilton Head II’s occupancy continues to increase and we anticipate by year-end Hilton Head II will be at 100%.

Okay.

And then just overall on development, the yields that you are getting are clearly still very high relative to other retail property sites and other property types.

Are you seeing any ramp in development from the other key factory outlet players in terms of when you’re going out searching for land or in terms of deals that are in the market place?

It’s a big country out there.

We rarely run into our fine competitors in markets, in specific markets.

Prime retail is not a public company and does not disclose publicly their development pipeline; anecdotally from our tenants we’re told that they have not announced any new development sites.

I believe Simon has announced with their Chelsea subsidiary that they plan approximately two new centers per year and that’s consistent with what the tenant community is telling us; and we are planning to develop and deliver two centers per year.

When you look at a base of probably 250 outlet centers in the entire country, four new centers a year is reasonable growth and sustainable growth as an industry.

And then just a last question for Frank.

Just on the straight-line ramps and the market rate adjustment from FAS 141/142, is there any seasonality at all in how that will burn off or do you expect it to remain relatively stable at a combined range of 950,000 per quarter?

The market rate adjustment should stay fairly constant.

The market rent adjustment should stay relatively constant unless we have tenants that leave early for whatever reason; and then we have to write-off the entire amount of that value which has happened in the past, Michael.

I’m sure you remember.

Mhh-hmm.

So, given all things considered, without any early terminations, we are looking for that to stay pretty constant.

Okay.

Great.

Thank you.

You’re next question comes from David Fick with Stifel Nicolaus.

Good morning.

I just want to -- a point of clarity on those development yields.

Those are a stabilized yield, second, third year type deals.

Right?

The yields would be stabilized yields from the initial date of stabilization.

Which is, in your model, where?

In our model that would most likely be first of next year for basically assuming a 95-ish percent occupancy, etc.

Very fast.

Okay.

Any comment on the tenant mix on Long Island given that that project has sort of shifted around a little bit in terms of the flavor?

David, we are working our way through the process, the permitting process, on Long Island.

As you know, the tenants will not execute leases and will not make final commitments unless we can give them a delivery date.

So we are looking at several different mixes and are not prepared at this point in time to announce any magnet tenants or large tenants that are ready to come.

Okay.

I’m not looking for the actual tenants.

At one point there was sort of a mix of outlet, big box and, if you will, lifestyle restaurant.

Is that still sort of a shifting scheme or does it still include all three elements or is it biasing one or the other?

It includes all three of the elements that you mention and the asset has continued to appreciate in value in the past 2 to 3 years since we’ve owned it and we are -- we’ll make a final determination of the appropriate mix between all the different opportunities we have when we know the actual delivery date.

What were the cash rent-spreads this quarter?

Cash rent-spreads were, on re-tenanted space, 16.1% compared to 3.9 last year and on renewed space, the cash increases were 8.2% compared to 8.6 last year.

Wow, that’s really strong.

Steve, by the way, I appreciate the disclosure on the same-store, same-space numbers as well as the explanation on the shift year-over-year.

One last question - everybody is obviously focused on what’s happening with Mills.

They are partly in your sector and without resorting to the pabulum, “we wish them well,” answer can you give us any flavor of what you might be thinking about, what’s happening there as well as what you might be hearing from tenants at this point?

Very few of our tenants have any comments about the Mills.

With regard to the pabulum, we do “wish them well,” and with regard to all the other issues with regard to the Mills, our Company has a long-standing policy of never commenting on any specific acquisition or disposition opportunities.

I’d expect it.

Thank you.

Your next question comes from [Hadi Habal] with Millennium Partners.

Good morning, gentlemen.

I guess with that comment, Steve, my question I was going to ask you about the disposition outlook for the quarter, for the year, after the first quarter but I assume “no comment” there?

That’s correct.

Second question, could you comment on interest rate outlook for the year both on short-term and long-term debt?

What you’re seeing there?

We run our business and try to be very cautious with regard to our interest rate exposure.

As Frank mentioned a very small percentage of our debt is interest-rate sensitive.

We have been careful and I think opportunistic in executing a treasury rate lock to protect our shareholders on the significant refinancing that will occur in 2008.

We’ve locked the rate on the 10-year treasury which probably will be the index that will be used to determine the rate we pay at about 4.6 which is, I don’t know, 40 basis points less than the market today.

And that’s an all-in number.

So the only thing we have to be concerned about now, and our shareholders have to be concerned about, is the spread over the index at the point in time we refinance.

We’re not good estimators of interest rate rises and falls.

We’ll leave that to smart folks like you.

Thank you.

Your next question comes from Greg Andrews with Green Street.

Good morning.

Steve, it appears there have been a few outlet center transactions lately that either have occurred or are in the works.

What’s your sense of where cap rates are in the sector today?

Because the number of transactions are limited and usually the best assets got sold on a one-off basis, it’s difficult to determine.

You might want to take a look at the report your company issued two years ago with regard to the acquisition of the Chelsea Property Group by Simon Property Group.

At that point in time I believe that Green Street estimated the cap rate that Simon paid was about 7%.

Industry analysts tell us that in the past two years they estimate that on high quality properties there has been cap rate compression of about 150 basis points.

I don’t know if that’s true or not.

You can make that determination.

But if it is true, Simon on a comparable basis would have to pay about a 5.5 cap rate to buy a portfolio like Chelsea.

That is a large portfolio that’s probably comparable to ours.

Some people might say they have a few better assets but it’s pretty close.

Some of the one-off transactions at higher cap rates are properties that are better suited by local owners to remerchandise as maybe other retail uses and not appropriate for a public company like ours to try to remerchandise.

So I don’t think you’re going to get a clear picture on comparable comp rates to determine value because there’s not the volume of transactions that there might be in other property sectors.

Okay.

And how would you characterize tenant demands today compared to in the past?

And is it being driven by existing outlet store operators who are adding more stores?

Or is it being driven by new concepts that want to open up in the outlet business?

You’ve answered the question for me.

It’s being driven by both.

Our existing manufacturers and single-label retailers determining that the outlets now are a distribution channel as opposed to a short-term clearance vehicle.

As a distribution channel, they have ramped up and established them as free-standing business units with all of the services of a business unit from distribution to sourcing to merchandising to advertising to real estate and these are extremely profitable divisions of the companies that we do business with.

Several of the companies we do business with have, in public statements by their chairman and senior executives, said that they intend to increase the number of direct to consumer retail stores over the next 3 to 5 years significantly.

We are getting that message even more clearly in private conversations which is creating great demand for space in our properties.

And that’s leading to some of the development returns that we are getting.

We are having conversations, although we don’t have final leases signed yet, but we are in the late stages of negotiating with several exciting new tenants that up until today have not participated in the growth and profit of the outlet distribution channel.

And we hope, shortly, to be able to announce these names which I think will put a smile on our investors’ face and be very profitable for these new tenants.

When a new tenant comes into the space, they try to ramp up quickly which benefits the leaders in the outlet industry like Tanger.

So it’s a combination of both our existing long-standing tenants expanding their flagship stores and rolling out new concepts.

For instance, we have multiple concepts with Polo Ralph Lauren, Tommy Hilfiger and Liz Claiborne where they have multiple stores expanding on their multiple brands in the outlet division and new tenants coming into the Tanger portfolio and new tenants coming into the outlet industry which will benefit all of the players.

In the 25 years that we’ve been doing this I believe, from my perspective, it’s the strongest demand for space that we’ve seen.

We still are a low-cost provider compared to our competitors and we’re able to provide profitable space for our tenants and profitable returns for our shareholders.

Steve, when you say that department store consolidation has played into that, are your tenants saying that to you?

Absolutely with high volume and frequency.

One of our fine tenant’s chairman mentioned the fact that - I hope I’m quoting correct - “Five years ago there were 18 department stores with whom they did business and today there’s four.” It’s not a long-term growth vehicle for our tenants to continue to do business with the department stores.

It is a long-term growth vehicle for our tenants to open outlet stores and other direct retail venues.

Great.

And then just this last question, with new developments under way and others planned should we expect to see your land bank of “for sale” land grow and perhaps the volume of land sales, gains increase in the next couple of years?

I hope so.

We are purchasing property not in great volume but in each of the development sites we have out parcel land to try to capture some of the increase in value we create by installing a Tanger Outlet Center.

We are looking at some of the land that came with the acquisition of the Charter Oak Portfolio to try to add revenue to the vacant land.

So the quick answer is, yes.

I think you will see that over time.

Great.

Thank you.

At this time there are no further questions.

Do you have any closing remarks?

Thanks.

This is Stanley Tanger.

Thanks for participating today and for your interest in our Company.

Steve, Frank and I are always available to answer any other questions you may have.

Thank you.

God Bless you and have a good day.

Thank you.

This concludes the Tanger Factory Outlet Center’s First Quarter 2006 Conference Call.

You may now disconnect.