Tanger Inc (SKT) 2011 Q4 法說會逐字稿

Good morning. I'm Cindy Holt, Assistant Vice President, Finance and Investor Relations and I would like to welcome you to the Tanger Factory Outlet Centers Fourth Quarter and Year End [2000] conference call. Yesterday, we issued our earnings release, as well as our supplemental information package and investor presentation. This information is available on our website under the Investor Relations tab. Please note that during this call, some of Management's comments will be forward-looking statements regarding the Company's property operations, leasing, 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. Actual results could differ materially from those projected due to factors including but not limited to, changes in economic 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 competition. We direct you to the Company's filings with the Securities and Exchange Commission for a detailed discussion of these risks and uncertainties.

During the call, we will also discuss non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP measures to the comparable GAAP financial measures are included in our earnings release and our supplemental information, and in our form 10-Q which will be filed later this month. This call is being recorded for rebroadcast for a period of time in the future. As such, it's important to note that Management's comments include time sensitive information that may be accurate only as of today's date, February 15, 2012. At this time, all participants are in listen-only mode. Following Management's prepared comments, the call will be opened for your questions. We ask that you limit your questions to two so that we will have the opportunity to address all caller's questions. We will address additional questions as time permits, so feel free to re-renter the queue after your initial two questions. On the call today will be Stephen Tanger, President and Chief Executive Officer; and Frank Marchisello, Executive Vice President and Chief Financial Officer. I will now turn the call over to Stephen Tanger. Please go ahead, Steve.

Thank you, Cindy, and good morning everyone. I am delighted to report that Tanger generated an 18% total return to our shareholders in 2011. This marks yet another year in our long history of rewarding our shareholders. As of December 31, 2011, Tanger ranked number one of all mall REITs in total return to shareholders in both the 5 and 10 year categories, with cumulative total shareholder returns of 81% and 831% respectively. Obviously, this is a tough act to follow. But I'm convinced that our team, our portfolio, our pipeline for growth, and our fortress balance sheet have us well positioned for continued success. Our business model helps make us both resilient and agile.

Our 2011 operating results were strong. We reported adjusted funds from operations for the year above the high end of the guidance we issued last quarter, and well above our initial guidance of $1.35 to $1.41 per share which we issued on February 22, 2011. This 2011 performance was fueled by best in class same center net operating income growth of 5.3% for the year and 6.2% for the fourth quarter. This internal growth exceeds all reporting mall REITs and compares favorably to our 2010 performance of 2.6% for the year and 3.7% for the fourth quarter. Also driving our 2011 growth was the expansion of our strong portfolio of core properties. We delivered our 177,000 square foot LEED-certified Hilton Head One Redevelopment in Bluffton, South Carolina on March 31, 2011. In addition, we acquired five existing outlet centers in key markets during the second half of the year. Collectively, these acquisitions totaled approximately 1,500,000 square feet expanding the Tanger footprint by 15% and into three new states domestically and across the border into Canada.

In 2012, we will enjoy the full year positive impact of these acquisitions and redevelopment. We expect to benefit from the Tangerization of the acquired centers. We will be rebranding them onto the Tanger flag improving the leasing, marketing and operations over time. We are proud of achieving significant expansion of our portfolio while maintaining a balance sheet that is a fortress. In terms of both debt, total market capitalization, and recurring EBITDA to interest expense, Tanger's low leverage at December 31, 2011 was best in the mall sector according to Keybanc's leadership report.

We also added significant talent during the year to both our management team and our Board of Directors. Chad Perry, with nearly 15 years of legal experience in both client-based and corporate counsel roles joined Tanger in December in the new role of Executive Vice President and General Counsel. Chad hit the ground running, and his background as a trusted business advisor on strategic initiatives, corporate governance, and compliance are already adding value to Tanger. Our Board of Directors was expanded in March with the addition of Donald Drapkin. The board benefits from his demonstrated knowledge of sophisticated securities transactions garnered over a 30-plus year career in the field. These two new thought Partners will help to guide and implement our growth strategy for many years.

I know that many of you want to learn more about the progress we are making on the Tanger Outlet Center under construction South of Houston, our domestic development pipeline, and our newest acquisition of the Cookstown Outlet Mall in Ontario through our co-ownership agreement with RioCan. I will address these topics later in the call, but first, let me turn the call over to Frank. He will take you through our financial results for the year ended December 2011, and discuss the financing activities that further strengthened our balance sheet during the year. I will then follow with a summary of our operating performance and our current expectations for the year 2012.

Thank you, Steve, and good morning, everyone. Our reported year-end funds from operations, or FFO, of $1.44 per share was at the top end of our guidance range of $1.41 to $1.44 per share. Total adjusted funds from operations for the year ended December 31, 2011 increased 14.7% to $141.3 million compared to $123.2 million last year. Adjusted FFO per share increased 10.5% to $1.47 per share compared to $1.33 per share for the 12 months ended December 31, 2010, in spite of the dilution caused by the successful offering of 4.6 million additional common shares issued on July 6, 2011 in connection with our 2011 property acquisitions.

Net proceeds of the offering of $117.4 million, were used to repay borrowings under the Company's unsecured revolving lines of credit, which we utilized to initially fund our acquisitions. Their share price at $25.66 per share, a 2.5% discount to the pre-announced closing price of $26.32 per share. Our shares have traded well post offering. A feat accomplished by only a couple of other REITs issuers among recently completed bought deals. On a consolidated basis, our total market capitalization at December 31, 2011 was approximately $3.9 billion including $1 billion of debt outstanding, equating to a debt to total market capitalization of approximately 26.3%. We also maintained a very strong interest coverage ratio of 4.07 times for 2011. As of December 31, approximately 65.2% of our debt was at fixed rates.

In November of 2011, we closed on an amendment to our unsecured revolving lines of credit increasing the total capacity to $520 million from $400 million, extending the maturity through November 2015, plus an additional one year extension option and reducing our overall pricing. Based on our current credit ratings of LIBOR spread was reduced to 125 basis points from 190 basis points, and the annual facility fee, which is payable on the total committed amount, was reduced to 25 basis points from 40 basis points. The amendment did not require any material change to our related financial covenants.

Yesterday, we announced that we are in the midst of completing a fully committed to $250 million seven year unsecured bank term loan. The facility will bear interest at LIBOR plus 180 basis points and be pre-payable without penalty beginning the second quarter of 2015. We intend to use the net proceeds to reduce the outstanding balances under unsecured lines of credit. Closing is expected to occur by the end of February subject to definitive documentation and customary conditions. As a result of the amendment of our lines, we have no significant debt maturing until November 2015. On a pro forma basis, to reflect the funding of the pending seven year unsecured term loan, our year-end available credit under our lines would have been $412.9 million or 79.4% of the total committed amount. Our consolidated portfolio properties in terms of gross leasable area was 92% unencumbered at December 31, 2011.

Our Board of Directors declared a dividend of $0.20 per common share for the fourth quarter ended December 31, 2011 payable today to shareholders of record on January 30. The annualized cash dividend currently equates to $0.80 per share. We have paid a cash dividend each quarter over the past 18 consecutive years since becoming a publicly traded entity in May of 1993. We are one of only a handful of REITs who have raised their dividend each year since going public. Our dividend is well covered. Our 2012 FAD payout ratio is expected to be less than it was in 2011, which was 64%. We will generate incremental cash flow over our dividend which was planned to use to help fund our new development and to reduce amounts outstanding on our lines of credit. We have maintained a conservative approach to every aspect of our business, which continues to build value for all of our stakeholders over time. I will now turn it back over to Steve.

Thank you, Frank. I'm pleased to report that through the end of the fourth quarter, we continued to see positive rent spreads on the renewal and releasing of space within our portfolio. As of the end of December, we executed 463 leases totaling 2,007,000 square feet throughout our wholly owned portfolio. New tenants and concepts to Tanger in 2011 include outstanding brands such as Andrew Marc, Bare Escentuals, Christopher and Banks, Crazy 8, Crewcuts, Faconnable, Joe's Jeans, Theory, and Vince Camuto. Lease renewals for the year 2011 accounted for 1,459,000 square feet or about 82.4% of the square footage coming up for renewal in 2011. And generated an increase in average base rental rates on the executed renewals of 13.1%, up from 9.2% in 2010. In addition, during the year we re-tenanted approximately 548,000 square feet with an increase in average base rental rates of 50.1% up from 25.9% last year. The blended rent increase on lease renewals and re-tenanted space was 23.4% compared to 13.8% in 2010.

Tenant comparable sales for the rolling 12 months ended December 31 increased 3.5% to $366 per square foot. Comparable sales for the fourth quarter increased 4.9% compared to the fourth quarter of 2010. Tanger's low cost of occupancy and our tenants' increasing sales allow us the opportunity to continue to drive up rents while maintaining a very profitable distribution channel for our tenant partners. The overall occupancy rate for our consolidated stabilized properties was 98.8% at the end of the fourth quarter, up from 98.3% at September 30, 2011, and 98.4% at the end of 2010. This is Tanger's 31st consecutive year since the Company was formed in 1981 that we have achieved a year-end portfolio occupancy rate at or above 95%. This long-term consistent performance is unmatched by any other REIT. There is high demand for space in Tanger centers and virtually no excess supply. Consequently, we anticipate that our pricing power will continue as our properties continue to perform well.

Construction is progressing at the site of the next Tanger Outlet Center to be delivered to tenants and shoppers located in the Houston, Texas market. The project, which is being developed through a 50/50 joint venture with the Simon Property Group will play host to over 90 brand name outlet and designer stores in the first phase of approximately 350,000 square feet with ample room for expansion for a total build out of approximately 470,000 square feet. The site is in a fabulous location. 30 miles South of Houston and 20 miles North of Galveston, in Texas City, along the highly traveled Interstate 45 with a traffic count of approximately 100,000 cars per day. Houston is the fourth largest US city and the beaches and resort hotels in Galveston host over 5 million tourists each year. Tenant interest for the project is strong and we expect to center to be approximately 90% leased at its opening. The tenant lineup for Phase I, which we expect to open in time for the 2012 holiday season, will include Banana Republic, Brooks Brothers, Calvin Klein, Gap, Guess, Nine West, Polo Ralph Lauren, Puma, Skechers, Tommy Hilfiger, Under Armour, Zumiez, and many more.

Our 50/50 co-ownership agreement with RioCan Real Estate Investment Trust to open Tanger Outlet Centers throughout Canada over the next 5 to 7 years, made great strides in the fourth quarter of 2011 with the acquisition and rebranding of the Cookstown Outlet Mall. The center is located approximately 30 miles North of Toronto directly off Highway 400 in the town of Innisfil, Ontario, and approximately 50 miles from our previously announced pre-development site in Halton Hills. The December 9 acquisition was priced at $47.4 million plus an additional $13.8 million for excess land payable upon the seller meeting certain conditions for an aggregate purchase price of $61.2 million including the assumption of in place financing of $29.6 million.

The 159,000 square foot center can be expanded to approximately double its size utilizing the excess land. Current tenants include Coach, Adidas, Tommy Hilfiger, Puma and Rockport. This acquisition by RioCan and Tanger is the start of our plans to offer a Canadian outlet platform to our tenants rather than a single development site. Other Canadian sites that we have identified as having high potential for a Tanger Outlet Center include our site in Halton Hills, located approximately 30 miles west of Toronto, and Kanata, Ontario, near Ottawa. Both sites have fully executed purchase and sale agreements. The tenant response to both sites as been very positive as our pre-leasing and pre-development activities continue.

We are in the process of building our pipeline of potential new domestic developments as well. Our pre-leasing and pre-development work continues for the previously named sites in the Scottsdale, Arizona market as well as the National Harbor site in the Washington, DC market. We do not anticipate permitting or entitlement issues for either site. These sites have received enthusiastic support from our tenant base and each one has excellent market potential for a new Tanger Outlet Center.

And now, it is my pleasure to announce that we are mobilizing today to begin construction in the next week on the Tanger Outlets Westgate in Glendale, Arizona. The site is located just off Interstate 10 on the Loop 101 and Glendale Avenue, adjacent to Westgate City Center, Jobing.com Arena, University of Phoenix Stadium, and the Renaissance Hotel and Convention Center. We were the first Company to announce an outlet site in the Phoenix market and we plan to open the center in time for the 2012 holiday shopping season. Our tenants are delighted to be part of this exciting 328,000 square foot project, as evidenced by strong pre-leasing with commitments for 50% of the space. The formal groundbreaking ceremony is planned for March 14, 2012.

In addition to these named sites, we have identified a shadow pipeline including several markets that are either under-served or not served at all by the outlet industry, where we intend to either develop or acquire properties. We remain very optimistic about the growth prospects of our Company and for our industry as the tenant community continues to indicate the desire to expand their outlet divisions into new markets in both the United States and Canada.

With respect to earnings guidance for 2012, based on the positive trends in 2011 and our current view of market conditions, we believe our estimated diluted net income per share for 2011 -- for 2012 will be between $0.60 and $0.66 per share and our FFO for 2012 will be between $1.57 and $1.63 per share. Our 2012 guidance also includes a projected increase in same center net operating income of between 4% and 5%. This guidance also assumes the Company's general and administrative expense will average approximately $8.3 million per quarter. Our 2012 earnings guidance assumes that the 7 year unsecured term loan discussed earlier closes as planned, but does not include the impact of any future refinancing transactions, any rent termination fees, the sale of any out-parcels or the sale or acquisition of any properties.

We have over 2,500 leases with good credit, brand name tenants who have historically provided a continuous and predictable cash flow in good times and in challenging times. We plan to continue to thoughtfully use our resources and to maintain a conservative financial position. Our solid balance sheet with no significant debt maturities until November 2015, and 92% of our consolidated GLA, unencumbered by mortgages, will provide the liquidity to execute our growth strategy in 2012 and beyond.

2011 was a record year for our Company. The hard work of the entire Tanger team achieved extraordinary results. We have continued to reinvest in our assets to upgrade their appearance and tenant mix. We are all passionate about our successful business model and look forward to continued growth. I would now like to open the call to questions. Operator, please.

(Operator Instructions). Craig Schmidt from Bank of America.

Good morning. Steve, I was wondering, approximately where does the pre-leasing stand on Scottsdale and National Harbor?

We have received terrific response from our tenant community. We are not at the 50% level yet. And when we do receive that level we will proceed to break ground. But we don't announce interim of leasing statistics.

Okay, and then just one other question. Your sense of sales in 2012 will be at a same pace as 2011 or above or below?

We're being conservative in our estimate. It's hard in the middle of February to judge what the economy is going to look like for the rest of the year. I think that we would be very happy to have sales compound at the same rate as last year.

Thank you.

Samit Parikh from ISI.

Hello. Good morning everyone. Could you provide just any more granularity on your same-store guidance for next year? Expectations for year-end occupancy, anything on what you're expecting of releasing spreads and if you're expecting any sort of turn of tenants in 1Q that might give you a large roll up in leases similar to what you had this year?

That's several questions in one.

I'm sorry.

We don't anticipate any large bankruptcies of tenants that have multiple stores in our portfolio. With regard to our pure guess as with regard to sales, we're not prepared to do that. Our guidance, as I mentioned in our conference call, assumes same center net operating income of between 4% and 5% increase. Which compounded with this year's terrific performance, I think is just fine.

Okay, and then just listening to the RioCan call, it sounded like they were very optimistic on Kanata and on Cookstown that there's a lot of interest there. And it sounded like construction there might even start towards the later end of this year. Do you have any timeframe in mind of when you think construction might be starting for those two projects?

We have no reason to disagree with our fine Partners in Canada.

Okay, thank you.

Todd Thomas from Keybanc Capital Markets.

Hello, good morning. I'm on with Jordan Sadler as well. Just as a quick follow-up to the previous question on leasing spreads. Given that the spreads on the new leases are much higher than those on renewals, it sounds like you're not expecting anything in the first quarter and I know you don't have much inventory to lease, but I was just wondering if do you foresee any opportunities in 2012 to get back some space and having the ability to re-tenant the space at market rents at all?

I think you stated it very well. With our portfolio at 98.8% we certainly do what we can to recapture underperforming tenant space in our various properties. And that's an ongoing effort, but right now we're not prepared to announce anything.

All right. And then can you remind us how the leases are structured with regard to rents during option periods? Do the option periods contain -- generally contain stated rents or are the rents on renewals negotiated at fair market?

Well we have 2500 leases and I can assure you every one is different. But on just a Global basis, we started several years ago rather than a fixed rent for the first five-year term and then a bump up at the end of five, we have worked with our tenants and now are getting annual bumps. So you have to pay attention to numerous metrics at one time. The metric that we look at is comp NOI growth and I think you'll agree that the comp NOI growth in the fourth quarter was best of class for the mall and the strip shopping center REIT industry.

And part of our NOI growth for 2012 is associated with some of the releasing and renewals that were done in 2011. We're getting a full year benefit of those rent bumps and we do have quite a few renewals in 2012 that come up without renewal options so we should be able to mark some others to market.

Okay, and then just lastly as a follow-up to that actually. On the leases that you are moving towards putting in the annual escalators, what do those look like on average?

Again, every one is different. And for competitive reasons, I'd prefer not to mention individual lease terms. But I would encourage you to look at our comp NOI growth which incorporates all of the different metrics that we look at in the business.

This is Frank. I think if you look at Page 10 where we show the cash and those straight line stats it'll give you some indication of how to come up with those numbers.

Okay, great. Thank you.

Quentin Velleley from Citi.

Hello, good morning. Steve, I'm just wondering if you could give us some sense of how much of the 2012 leasing you've done and whether those renewals are coming through at similar spreads to what you achieved through 2011?

We right now as historically are probably between 45% and 50% complete on 2012 renewals. And right now we're really not prepared to announce interim results with regard to that. We will next quarter. When we have more of an indicator, more indicative numbers. But just to take the first I think would not be an appropriate measurement.

Okay. That's great. Just in terms of your development and pre-development work, I know you've always stuck with a 50% pre-leasing before you break ground. Given in some particular markets there's a little bit more competition at the moment. Are there any circumstances where you might look to break ground if you did have a lower pre-leasing amount or is that -- are you still sticking with 50%?

Well we're just delighted that we've reached that threshold in the Glendale market and the Westgate area. And that as you know is a competitive market. The tenants have rallied around our site. We were the first one into the market and we will be the first one to deliver in that market. We will open this year in time for the holiday season. Going forward, every market stands on its own. And we will analyze every market based on its potential and based on the mix of tenants that are signed and committed as to how we go forward.

Okay. Thank you.

Ben Yang from KBW.

Yes, hello, good morning. Just a question on the five acquisitions last year. Obviously the impact does hit FFO. But I believe it's excluded from this same-store NOI guidance. I'm just curious, is it fair to assume that the comp NOI growth for these five assets is better than the portfolio average given your plans to I think you said Tangerize them? Or do you think it's just going to take you several years to basically tap into this source of internal growth?

I think in a couple of instances we have the ability to raise occupancies and drive rental rates and overall NOI. But I think if you look at them as a whole, I think the growth rate that we are going to get from the acquisition properties in 2012 would be similar to what we would see in our entire portfolio. Which is 4% to 5%.

4% to 5%. Okay.

Because with Tangerizing, let me just state, with Tangerizing it we may have some downtime as we re-lease certain space. And so that's going to obviously dampen the growth in the short term during 2012. But I think you will see a ramp up in the future years.

So from these five assets 4% to 5% this year, maybe even higher going forward?

Well we're not prepared to make that statement. But we have the opportunity to drive occupancies, but we may not get the full benefit of that occupancy gain until 2013.

Okay, got it. And then second question, given all the competition in the outlet space, one of your peers recently suggested that they might build new outlets without hitting any pre-leasing hurdles, is this a strategy that you would also consider to maybe build on spec that went out in certain markets or is that completely off the table for you guys?

I think I just answered that question from the last person. But we don't built on speculation. We never have. It's not the type of Company we run. But I don't want to reiterate the answer.

Got it. Sorry I missed that.

Carol Kemple from Hilliard Lyons.

Good morning. Considering the strong occupancy at a lot of your centers, would you look to expand any of those especially when you're 99% or 100% occupied?

I'd love to, Carol. Unfortunately it's tough to put a second-level on top of these structures.

Are there any that have room excess land nearby we you could build?

We just completed a small expansion in our property south of Atlanta in Locust Grove. It's about 25,000 feet and it will -- the tenants will start to open in April/May. We are looking at another site to expand in Park City, Utah where we're going through some permitting process. We have a small expansion, again another 25,000 to 30,000 feet that we're in the process of starting in Gonzales, Louisiana. But in aggregate our portfolio is in essence built out and we don't buy excess land on speculation and then land bank. We've always just been very conservative and build to what we own.

Okay. And I know I think when I was talking to you all at NAREIT you mentioned that a lot of your customers are wanting more like the home stores like the Pottery Barns in the Outlet Centers, are you seeing any of those retailers wanting space?

Well we've been fortunate that we've executed a deal with Restoration Hardware. Pottery Barn we're pleased to have a couple of their stores. And we just executed a lease with Kaflon for a store in one of our centers. So yes, I believe as the housing market continues to recover, there will be more demand for products such as home furnishings, tabletop, domestic's, et cetera. Which basically went away rapidly with the housing bust in the last five years.

Okay, great, thank you very much.

Rich Moore from RBC Capital Markets.

Hello, good morning guys. Steve, on the Canadian side of things, can you give us a little color on what exists up there that might -- or you know how much space exists currently that might be of interest maybe from an acquisition standpoint kind of the lay of the land for Canadian Outlet Centers at this point?

Well there's several existing Canadian Outlets that we're in the process of analyzing. Right now we've not decided to move forward. With regard to the Canadian market, as you well know, there's per capita significantly less GLA per person in Canada than in the United States. We are very confident that we can deliver successfully with our outstanding Partners RioCan in Canada, American-style outlet centers to the Canadian market on a national basis.

Okay, all right. Good. Thank you. And then just in general, you answered Carol on the specific type of tenant, but can you give us some thoughts on just overall what retailer and manufacture demand is for Outlet Center space say versus a year ago or five years ago or however you think about it?

The tenants that we work with and tenants that we're talking to all the time about opening outlet stores look at this as a valuable, profitable distribution channel. It's a business unit within their companies with all the skill sets of any other business unit. We feel that demand is the same or greater than it has been. Evidenced by 98.8% occupancy. And I think our major competitor probably has the same or even greater occupancy. So we have a mismatch in our business which is more demand for space than space available. But we are being very conservative and not over-building and building on speculation.

Okay, great. Thanks, guys.

Michael Mueller from JPMorgan.

Yes hello, a couple questions for Frank. First of all, Frank, the $250 million term loan, why is $250 million the right size? Why not go a little bit larger considering you had what $350 million on the line of credit at year end?

Yes. When we looked at our maturity schedule we wanted to do $250 million so that if and when we take it out in the future it'll be a chunk that's index eligible. -We also felt like leaving some on our line of credit was reasonable at this juncture considering we just expanded it to $520 million. And obviously there's a little dilutive impact of using the term loan. So we wanted to balance all that out and we felt $250 million was the right number.

Okay. And then second question, with the bigger portfolio after the acquisition, can you just talk about expectations for 2012 looking at straight-line rent, TIs, leasing commissions, CapEx, those sorts of numbers?

Yes, I think we're looking at second generation tenant allowance and CapEx similar to 2011. Not materially above that -- those levels. We did a lot of work last year and a lot of our centers are in great shape so our CapEx budget Id' say very similar to this year. Tenant allowance may be slightly higher.

Okay, and what about straight-line rent?

Straight-line rent will probably be slightly up given the new acquisition properties being added into the mix. That's a tough one for us to really budget given that we have to time turnover dates and things like that.

Got it. Okay, great, thank you.

Frederick LaChance from Greenstreet Advisors.

Thank you. Just going back to the term loan, I'm curious as to and philosophically why you use variable rates versus secured rates?

Why we did what now?

Why did you go for a variable instead of fixed?

Well when we analyze the situation, we could take a seven-year term loan and actually swap it to fixed and have a lower all in rate than if we went out to the bond market for a seven-year bond. Our estimate is that we are saving about 50 to 60 basis points. So we're and -- we entered into the term loan and we don't believe current rates are going to be increasing any time soon so we felt like using this term loan was the best approach.

So it's your intention to potentially swap it?

We are not intending to do it at the time we close. But we will monitor the situation and potentially swap at sometime in the future if we see things changing.

Okay, thank you.

(Operator Instructions). David Leibowitz from Horizon Kinetics.

Yes, a couple of unrelated questions if I may. Right now looking at your roster of existing accounts, how many of them as a percentage of your revenue might be in financial difficulty? Before the end of this calendar year?

Very few. Our tenants are not local mom-and-pop type shops as you might find in a strip shopping center. Most of the very large majority of our tenants are New York Stock Exchange or similar sized, very professionally run enterprises. So we have a low credit risk and if we do get space back through bankruptcy, normally the bankrupt estate wants to keep the stores open because it's a way of liquidating excess inventory.

And the second question. On your Canadian joint venture, could you run us through what the numbers will be once they're up and operating how much you invest, what you expect your return on investment to be and what sort of bottom-line contribution can be viewed as a likely number?

All that's speculative at this point in time until we break ground. And we would anticipate our development yields to be similar to what they are in the United States, but I hope you can understand for all kinds of competitive purposes, we don't disclose any of that until we're ready to break ground and have leases executed and ready to go.

Thank you very much.

Todd Thomas from Keybanc Capital Markets.

Hello. Thanks. Just a quick follow-up on the Westgate development project in Glendale. My understanding was that this deal would be a joint venture of some sort with the landowners. Is this wholly owned or do you own the land?

It will be a joint venture.

Okay. Any detail on the arrangements?

At this point, no. And I appreciate all your questions, but there are other people in the queue so if you don't mind we will get to them, please.

Okay.

And we have no further questions at this time. I turn the call back to our presenters. I'm sorry, we do have a question online from Michael O'Dell from AIG Asset Management.

Hello guys. Now that you've executed your first transaction with RioCan, could you give any further color on whether your guaranteeing the debt at the JV level?

We are not guaranteeing the debt at the JV level. Are you talking about specifically Cookstown's debt?

Correct.

yes. There's no guarantee from Tanger on that.

Great, thank you.

And there are no further questions at this time. I turn the call back to our presenters.

Thank you all for participating today and for your interest in our Company. Tanger is the only public REIT with a pure outlet portfolio. We have a conservatively structured balance sheet, high brand recognition, and a tenured management team with a disciplined development approach. Our strong portfolio of geographically diversified operating properties provides significant returns for our shareholders and our pipeline of growth opportunities is enviable. All of you are invited to our groundbreaking facilities in Glendale, Arizona on March 14. We hope to see you there. As always, we are available to answer any of your questions. Thank you again and have a great day.

This concludes today's conference call. You may now disconnect.