Tanger Inc (SKT) 2012 Q3 法說會逐字稿

Good morning. I'm Cyndi Holt, Vice President Finance and Investor Relations, and I would like to welcome you to the Tanger Factory Outlet Centers third quarter 2012 conference call. Yesterday, we issued the quarter's earnings release, as well as our supplemental information package and investor presentation. This information is available on our web site under the Investor Relations tab.

Please note that during this conference call some of management's comments will be forward-looking statements including 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 and 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 the 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 in our supplemental information. This call is being recorded for rebroadcast for a period of time in the future. As such, it is important to know that management's comments include time sensitive information that may be accurate only as of today's date, October 31, 2012.

At this time all participants are in listen-only mode. Following management's prepared comments, the call will be opened up for your questions. We ask that you limit your questions to two so all callers will have the opportunity to ask questions. On the call today will be Steven Tanger, President and Chief Executive Officer, and Frank Marchisello, Executive Vice President and Chief Financial Officer. I will now turn the call over to Steven Tanger. Please go ahead, Steve.

Thank you, Cyndi, and good morning, everyone. Tanger's solid 2012 operating performance continued through the third quarter as evidenced by four key metrics -- same center net operating income, rental rate spreads, tenant comparable sales, and occupancy. Strong same center NOI growth of 5.6% during the quarter, which marks our 31st consecutive quarter of positive NOI comps, was the result of our ability to successfully increase rental rates and occupancy.

We achieved a blended straight line increase in rents of 31.3% for the quarter, boosting our year-to-date spread to 24.9%. Comparable tenant sales increased 7% in the quarter and 5.4% for the rolling 12 months ended September 30, 2012 to a record $381 per square foot. Occupancy at the end of the third quarter was 98.6% compared favorably on a year-over-year basis and on a sequential quarterly basis. Occupancy at September 30, 2011 was 98.3% and at June 30, 2012, 98%.

Highlights since our last quarterly call include our recent announcement of a new potential development site in Charlotte, North Carolina, the grand opening of the newest Tanger Outlet Center in the Houston, Texas market near Galveston and the announcement of the pending acquisition and rebranding of two existing outlet centers in the Montreal/Quebec, market. I will discuss our external growth pipeline in more detail later in the call. First, let me turn the call over to Frank who will take you through our financial results for the quarter.

Thank you, Steve, and good morning everyone. Total funds from operations, or FFO, for the quarter ended September 30, 2012 increased 10.6% to $41.9 million compared to $37.9 million last year. Adjusted FFO per share increased 5% to $0.42 per share from $0.40 per share for the third quarter of last year and met the Street's consensus expectations.

This year-over-year increase is a direct result of our ability to continue to drive rental rates and grow same center NOI as well as the accretive impact of the acquisitions made during 2011. On a consolidated basis our total market capitalization at September 30, 2012 was approximately $4.2 billion, up from $3.5 billion last year. Our debt to total market capitalization was approximately 24.8% at September 30, 2012 compared to 27.8% last year.

We also maintained a very strong interest coverage ratio of 4.37 times for the quarter, up from 4.11 times for the third quarter of 2011. As of September 30, 2012 approximately 63.3% of our debt was at fixed rates. Our balance sheet strategy continues to be conservative, targeting minimal use of secured financing and a manageable schedule of debt maturities. In fact, we have no significant maturities on our balance sheet before November of 2015.

Our FFO payout ratio for the first nine months of 2012 was approximately 53% and our FAD payout ratio was approximately 57%. At these levels we are able to generate significant incremental cash flow over our dividend which we plan to use to help fund our future growth or to reduce amounts outstanding under our lines of credit. I will now you turn it back to Steve. Go ahead, Steve.

Thanks, Frank. Our positive leasing momentum from the first half of the year continued into the third quarter. A strong 31.3% blended straight line rental spread on the renewal and re-leasing of space throughout the consolidated portfolio during the quarter increased the year-to-date spread from 23.7% at June 30 to 24.9% at September 30.

This year-to-date positive rental spread includes 407 leases that were executed through September 30, totaling about 1,800,000 square feet. Through September 30 we have executed renewals, and renewals in process, for about 1,450,000 square feet or about 80% of the space coming up for renewal during 2012. This yields an increase in average base rental rates on the executed renewal of 14.7%, up from 13.8% increase in average base rental rates on lease renewals executed during the first nine months of 2011.

In addition, during the first nine months of the year, we re-tenanted approximately 440,000 square feet with an increase in average base rental rates of 53.9%, up from 51.3% for the first nine months of 2011. Substantial leasing spreads like these, together with contractually embedded rental rate increases, have once again resulted in a strong same center net operating income growth.

During the quarter same center NOI growth was 5.6% compared to 5% for the third quarter of last year. Year-to-date, same center NOI growth was 6.5% compared to 4.9% increase in the same period last year.

This growth resulted from continued increases in rental rates as well as higher average occupancy rates at 2012 compared to 2011. Our overall occupancy rate, for our consolidated stabilized properties continues to climb, and was at 98.6% as of September 30, 2012 compared to 98.3% a year ago and 98% at June 30, 2012. As many consumers have become more value oriented, while still seeking to enjoy their favorite brands, Tanger has experienced positive tenant comparable sales trends.

For the third quarter 2012, tenant comparable sales within the consolidated portfolio increased 7% compared to 2.1% for the third quarter of 2011. For the 12 month ended September 30, 2012, tenant comparable sales increased 5.4% to $381 per square foot. There is high demand from the tenant community for space in Tanger centers and virtually no excess supply.

Tanger's low cost of occupancy and our tenants' increasing sales have allowed us the opportunity to continue to drive up rents while maintaining a very profitable distribution channel for our tenant partners. Consequently, we anticipate that demand for space at favorable rents will continue as our properties continue to perform well.

This demand for outlet space, coupled with our reputation within the industry for having refined a skill set of developing, leasing, operating, and marketing high quality outlet centers has afforded Tanger a robust external growth pipeline throughout the United States and Canada. Tanger pioneered the concept of outlet centers in 1981 and over the past ten years we have developed, or acquired, 21 outlet shopping centers.

Yesterday, Tanger, and RioCan Real Estate Investment Trust, announced the acquisition of two existing outlet centers in the Montreal/Quebec market. The acquisition of these centers will enable the co-owners to expand beyond the greater Toronto area and enhance their outlet center strategy immediately as Tanger Outlet's enters into another vibrant Canadian market. Through our co-ownership agreement, we have waived conditions to acquire two outlet centers in the Montreal area, Les Factoreries St. Sauveur, and Bromont Outlet Mall. Together, we will purchase these properties on a 50/50 basis at an expected aggregate purchase price of $94.7 million CAD.

RioCan will provide development, and property management services, and Tanger will provide leasing and marketing services. Tanger and RioCan intend to add value by expanding the scale of the properties, rebranding them under the Tanger outlets flag, and implementing the co-owner's operational and marketing programs. The purchase price includes the assumption of the aggregate in place financing at Les Factoreries St. Sauveur of CAD18.8 million which carries a weighted average interest rate of 5.7% and matures in 2015 and 2020. Bromont Outlet Mall is being acquired free and clear of financing.

Both transactions are scheduled to close in November of 2012. Les Factoreries St. Sauveur is located approximately 35 miles northwest of Montreal adjacent to Highway 15 in the town of St. Sauveur Quebec. The property was built in 1980 and expanded in 2006. It has approximately 116,000 square feet with the potential to expand to approximately 131,000 square feet. This well established outlet center features many national brands such as Nike, Tommy Hilfiger, Reebok, Guess, Jones New York, and Naturalizer. The St. Sauveur Valley is a first-class resort destination ideal for outlet shopping that combines outdoor activities with shopping, performing arts, and entertainment.

The mountains provide the back drop for great skiing and winter activities, and the nearby lakes offer endless summer hiking, biking, boating, and more.

Bromont Outlet Mall is located approximately 50 miles east of Montreal, near the eastern townships adjacent to Highway 10 in the town of Bromont Quebec. The property was built in 2004 and expanded through 2011. It is approximately 162,000 square feet with the potential to expand to approximately 251,000 square feet. This outlet center features many national brands such as Tommy Hilfiger, Guess, Puma, Mexx, and Urban Planet.

Bromont is located at the base of Mount Brome. The area is a well known tourist destination for downhill skiing, mountain biking, and equestrian events. In terms of development, we opened the newest Tanger Outlet center less than two weeks ago. On October 19 through a 50/50 joint venture with the Simon Property Group, Tanger Outlets Texas City opened 97% leased welcoming scores of shoppers and pleasing the many tenants that reported exceeding their opening weekend sales plan.

Over 85 brand name and designer outlet stores are featured in this approximately $66.5 million center including American Eagle, Banana Republic, Brooks Brothers, Coach, Columbia, the Gap, J. Crew, Kenneth Cole, Levis, Michael Kors, Nike, Nine West, Puma, Sketchers, Under Armor, and many more.

The property is located approximately 30 miles south of Houston and 20 miles north of Galveston on the highly traveled I-45 off exit 17 and Holland road. Interstate 45 has a daily traffic count of approximately 100,000 cars. Houston is the fourth largest city in the US, and the beaches and resort hotels in Galveston host over five million tourists each year. The center is approximately 353,000 square feet, with ample room for expansion for a total buildout of about 470,000 square feet.

And the next Tanger Outlet Center to be delivered to tenants and shoppers is Tanger Outlets Westgate. The grand opening is scheduled for November 15, 2012, just in time for the holiday shopping season. The center is located in the western Phoenix market of Glendale, just off Interstate 10 and Glendale Ave., adjacent to the Westgate City Center, Jobbing.com arena, home of the NHL Phoenix Coyotes, the University of Phoenix stadium, home of the NFL's Arizona Cardinals, Cabella's, and the Renaissance Hotel and Convention Center. Tanger owns a 58% interest in this project.

We currently expect the center will be more than 90% leased at opening, and that the total cost of the project will be approximately $79 million. When complete, the center will offer some 80 brand name and designer outlet stores in the first phase of approximately 330,000 square feet including American Eagle, Banana Republic, Brooks Brothers, Charlotte Russe, Chico's, Coach, Cole Haan, the Gap, Guess, H&M, J. Crew, Levis, Michael Kors, Nike, Talbots, Under Armor, White House Black Market, and many more.

As a result of the positive pre-leasing progress we plan to break ground in the metropolitan Washington, D.C. market in the fourth quarter of this year and commence construction of Tanger Outlets National Harbor. The center will be located within the National Harbor waterfront resort, a complex that offers fine dining, office, residential and hotel components including the Gaylord National Resort and Convention Center and is accessible from Interstate 95, Interstate 295, Interstate 495, and the Woodrow Wilson Bridge.

The nation's capital welcomes approximately 33 million tourist visitors annually. Tanger and the Peterson companies will each own a 50% interest in the project which will feature some 80 brand name and designer outlet stores. The projected total cost of this approximately 340,000 square foot project is approximately $91.6 million.

Earlier this month, we announced our newest development site which is located in the Charlotte, NC market. The site of the proposed 350,000 square foot center is approximately 8 miles southwest of uptown Charlotte at Interstate 485 and Steel Creek Road, which is also known as Highway 160. This section of 485 is located between Interstate 85 and Interstate 77, the major interstate thoroughfares for the city.

The nation's 17th largest market, Charlotte's population is nearly two million and more than three million people live within a 60 mile radius. The city is a major financial center and ten Fortune 500 companies are headquartered in the Charlotte metropolitan area. The Steele Creek community is one of the fastest growing areas in Mecklenburg County.

The proposed $80 million investment would represent Tanger's fourth wholly owned outlet center located in North Carolina. Domestically pre-leasing and pre development work continues for previously named sites at Foxwoods Resorts Casino in Mashantucket, CT, and in Scottsdale, Arizona. The same is true for our Canadian projects we intend to develop through our co-ownership agreement with RioCan.

These projects are in Kanata, in the Ottawa market, and in Mississauga in the Western Toronto market and the expansion of Tanger Outlets Cookstown, also in the Toronto market from approximately 156,000 square feet to approximately 320,000 square feet. We remain optimistic about the growth prospects for our company and for our industry as shoppers continue to seek branded value and the tenant community continues to indicate their desire to expand into new markets in the United States and Canada and to partner with Tanger.

With respect to earnings guidance for the balance of 2012, based on positive trends year-to-date and our current view of market conditions, we raised the low end of our previous guidance by $0.02 and currently believe our estimated diluted net income per share for 2012 will be between $0.60 and $0.62 and our FFO for 2012 will be between $1.61 and $1.63 per share.

Our 2012 guidance includes a projected increase in same center net operating income of approximately 6%, up from our previous guidance of between 5% and 6%. We are pleased to be able to deliver positive operating results through September 2012. The Tanger team is working hard to achieve the extraordinary results the industry and our shareholders have come to expect.

We have over 26 hundred leases with good credit brand name tenants who have historically provided a continuous and predictable cash flow in good times and in challenging times. No single tenant accounts for more than 6.4% of our base and percentage rental revenues or 7.9% of our gross leaseable area. In addition, approximately 91% of our total revenues are expected to be derived from contractual base rents and tenant expense reimbursements.

We plan to continue to thoughtfully use our resources and to maintain a conservative financial position. We expect our solid balance sheet with no significant maturities until November 2015, and approximately 92% of our consolidated GLA unencumbered by mortgages will provide the platform to execute our growth strategy in 2012 and beyond. I would like to now open the call to questions. Operator?

(Operator Instructions) Your first question comes from the line of Samit Parikh from ISI, your line is open.

Hey, good morning, everyone. Steve and Frank, my first question, have you been able to assess the damage on any of your assets from hurricane Sandy, most specifically, Atlantic City, but also, obviously, River Head, Deer Park, Hilton Head et cetera?

The storm was a tragic event and our hearts go out to the family and our friends in the communities where we live and work. The Tanger team at each property did a magnificent job of watching the property, of providing appropriate security, and working with local officials to evacuate where necessary.

Atlantic City was the hardest hit. On Monday, we had eight or nine properties representing about 38% of the portfolio was closed on Monday. As of today, thankfully, with the exception of Westbrook, CT, where there still is no power, and Atlantic City, which was probably the hardest hit, all of the Tanger Centers will be open. Our insurance coverage was conservatively structured and fortunately we only have a $50,000 deductible for a named event, such as this, throughout the entire portfolio.

And Steve, does that insurance coverage cover business disruption in the event that maybe your asset in Atlantic City needs to shut down for a prolonged period of time for a large redevelopment?

We have business interruption insurance also but it is difficult to prove the amount because we have leases with tenants that require payment every day regardless of whether they are open. I think all of our tenants have business interruption insurance to protect their businesses. I would not suspect much revenue from business interruption insurance for Tanger.

Okay. That's helpful. Thank you.

Your next question comes from the line of Andrew Johns, with Green Street Advisor. Your line is open.

Thank you. Steve, it has been about two years since you and RioCan formed the Canadian joint venture platform. I'm just wondering if you can talk in broad strokes. Relative to your initial expectations, what's been a little bit more challenging, and then on the opposite, what has been a little bit easier, or more positive, than you initially expected?

When we announced the co-ownership agreement with RioCan, we expected over a five to seven year buildout that the partnership, or the co-owners, would be able to have between eight and ten assets. Right now, 18 months into your partnership, we have three assets, each of which we are in the process of expanding. So I think we are pretty much on track.

The Canadian market is different than the United States. There is a different skill set for development, construction, et cetera, and that is why we feel we have partnered with the best. With a 30 year track record in Canada, RioCan has a highly skilled group of professionals and I think we are on track to meeting our plan.

That's helpful. On the recently announced acquisitions in Montreal, Can you give us a sense for the sales productivity of those assets and then the pricing that you guys paid in terms of cap rate?

As you know, we have a long history over 30 years of not being specific on sales productivity for individual assets. Nor have we announced individual cap rates on acquisitions.

Okay. Thank you.

Your next question comes from the line of Todd Thomas from KeyBanc Capital Markets. Your line is open.

Hi, good morning, thank you. Just a question regarding Charlotte. I was just wondering what your thought was of that market, whether you think the two centers can be built or if the distance between the two proposed sites is enough such that there can be two centers in that market?

We live and work in the state of North Carolina and are well aware of the Charlotte market. The sites of about 19 miles apart. There are other parts of the United States and other markets where outlet centers of 19 miles apart and both operate successfully.

Charlotte is one of the top 20 markets in the United States, and probably could support two outlets in addition to Concord Mills. We are proceeding with our development of the site and we will see which site the tenants support.

As you know, Todd, we have a 30 year history of very disciplined development. We don't buy property and we don't build on speculation. At the end of the day the tenant community will decide, regardless of what all of the developers say, who has the best site, and will determine which goes forward, or both go forward.

Okay. And then just a follow-up on development. Any change to your expected yields on new projects at this time? Either Charlotte or any new development announcements that would take place, is there any reason to expect that you wouldn't be targeting a 10% to 11% stabilized yield? And then also, given that Houston opened at 97%, any comment on where that Center's yield settled out relative to expectations?

Our target continues to be 10% to 11% cash on cash un-leveraged return for new developments. Houston opened at the 97%, and thank you for mentioning that. Which is a terrific opening for us and most of the tenants had record-breaking openings. I think right now the yield on Houston will be at the high end of that range.

All right. Thank you.

Your next question comes from the line of Emmanuel Korchman with Citibank. Your line is open.

Hi, guys. Most of my questions have already been answered, but looking at Charlotte again, is there any chance that you could partner up with Simon as you did in Texas?

We have no plans today. We have had a successful partnership with Simon in our project in Houston, but as of today we are proceeding directly by ourselves.

And then can you give us an update on the pre-leasing level in Scottsdale?

We continue to get positive reaction from the tenant community in Scottsdale. We are not in a position today to announce a ground breaking. When we get to the appropriate level of pre-leasing we will.

Thank you.

Your next question comes from the line of Ross Nussbaum, from UBS. Your line is open.

Hey, Steve, good morning. It would seem to me that your stock has been an under performer versus all of the other regional mall companies this year and the biggest concern I hear is the over building complaint. And can you put into some perspective the level of construction development activity you expect to see over the next couple of years and maybe put that in context to what you have seen over the last decade or two?

Because it would seem to me that demand for outlets is stronger than it has ever been in the history of the industry, and maybe it is a little more visible that the construction is out there because the public companies are doing it, but can you address that concern that is out there in the market?

We don't perceive any over building. We have never been in a position in our industry of over building. To put it in perspective, the entire industry, by our computation, has only about 150 outlet centers in the entire United States, totaling between 50 million and 55 million square feet.

The city of Chicago alone has 178 million square feet of retail. So you can fit our entire industry three and a half times into Chicago. Nobody is going convince me that our industry is over built. This year, probably 7 or 8 outlet centers will be delivered. That is on a base of 150. So it is not significant growth.

There are, over the past many conference calls, we have identified numerous markets, 17 to 20 markets, around the country that we feel are either underserved or not served at all by outlets. We have several markets this year where one or two outlet centers, by different developers, will be developed and hopefully opened successfully.

The market for non public developers is challenged because it is difficult to get financing without substantial equity. The public REITs are highly sophisticated, disciplined management teams, with long histories of not doing silly things and I think that will continue. We would much rather compete against disciplined developer, owner, managers, than speculators. And we are not seeing speculative building in this market, which is also dangerous.

The quick answer is I don't see over building, I don't expect over building. The tenants run business units that are highly profitable within their corporations. Their success, their business manager's success, is based upon delivering those successful outlet centers, and they tend to go with the larger, highly skilled, long-term public REITs, as opposed to speculative developers.

Appreciate that. Thank you. Let me try to follow up on the question that was asked before regarding the economics on Montreal. Without specifically giving us the yields on the acquisition, can you talk about it in the context of how you think about pricing versus the US market and how you approach acquisitions in the US market, with respect to the fact that Canada is still roughly virgin territory for you and I would think that you would perhaps want a higher yield up there than in your backyard in the US? Is that a fair statement?

Well, regardless of what we may want, the market dictates pricing and there is a scarcity of outlet center product in Canada already built. So the cap rates are low, substantially lower than in the states for acquisitions, due to the scarcity factor.

I'm not going to get into specific amounts, but buying an existing center, or two existing centers, in the Montreal market, which was a directed sale, not a public process, allows us to enter the market two to three years ahead of other competitors who may be going through finalizing their permits and building and constructing in the Canadian climate. So to jump start, we felt it was a market deal. And probably at a lower cap rate than if we were purchasing in the states.

Is it going to be accretive to your earnings?

Right now, we think it will be either break even or marginally accretive. Keep in mind, we have a 50% partner in Canada, and the amount of the investment is not substantial. So it is not going to move the needle either way.

And that is assuming permanent funding or is that assuming some short-term funding costs?

We have existing funding on St. Sauveur. We are looking for more permanent financing on Bromont, and when we put all that in place we will be happy to talk specifics with you.

Appreciate it. Thank you.

The next question comes from the line of Ben Yang, with Evercore Partners. Your line is open.

Hi, good morning, thanks. Maybe going back to Samit's question on Atlantic City. I'm not sure if you specifically addressed this, but is it your expectation that that center will need to be rebuilt at some point? And if that is the case, do all of the leases basically terminate when that happens?

We have no expectation of any demolition and rebuilding in Atlantic City.

Okay, great. Thank you.

Your next question comes from the line of Carol Kimball with Hilliard Lyons. Your line is open.

Good morning. You all have fantastic occupancy at this point. What is the highest level it has ever been in your history as a public company? I know it could go to 100% but realistically how high has it been in the past?

With the exception of a moment in time when we went public 20 years ago, Carol, where we had higher occupancy on a very, very small portfolio, this is bumping up against a record occupancy for us. Fortunately, there is significant tenant demand, and the tenants are going and growing in all of our properties.

Okay. And then I noticed, in the supplement, it looks like Dress Barn took about 25 more spaces this quarter from the second quarter. Are they opening a new concept or was there anything specific going on there?

Well, Dress Barn purchased Justice, and that is probably included in the Dress Barn. We include a corporate entity, much like The Gap includes Banana Republic, Old Navy, et cetera. Dress Barn now includes Dress Barn, Maurice's, and Justice.

Okay. Does Justice have outlet concepts or is it basically the full price store just in the outlet centers?

Justice has an outlet concept which is similar to the full price but more on sale product.

Okay, great. Thank you.

Carol, this is Frank. My understanding is that they also acquired lane Bryant.

All right. Thanks.

Your next question comes from the line of Molly McCartin, with JPMorgan. Your line is open.

Yes, just going back to the development pace, so we used to assume about 1 to 2 outlet developments per year. Do you see this pace picking up over the next three years, should we adjust that number?

Well, we have not only developments but expansions in both the United States and Canada. We are still targeting one to two new developments a year. This year, as you know, we met the two developments, and next year we hope to meet the two but we are not ready to raise guidance yet.

And do you see more of them being wholly owned rather than JV'd?

We are being opportunistic. In some instances the land owner invites us in, or wants to maintain a position in the property, and in order to get a great site, we will form a partnership. Our preference is to have it wholly owned, but our preference is also to create shareholder value, and sometimes by doing that we enter into partnerships.

All right. Great. That's it for me. Thanks, guys.

Your next question comes from the line of Wes Golladay, with RBC Capital Markets. Your line is open.

Good morning, guys. With the high occupancy in the portfolio, is it possible to expand some of the existing centers?

We are looking at increasing the density at every one of our properties all the time. We are expanding right now in Gonzalez, Louisiana. We are looking to expand in several others. But these are relatively small expansions. Some of the newer properties we developed in the last couple of years, Charlotte, Pittsburgh, Mevin, NC, some of these have the ability to expand, and if the centers continue to perform at the high level of productivity, and tenant demand remains high, we will continue to build out the portfolio.

Okay. And going to the acquisition front, is there more product available in the US or Canada at the moment?

We continually look for high quality product. Should that product become available, we will aggressively perform our due diligence and see if we can buy it.

Okay. And looking at the tenants, looking across the portfolio, what are some of the categories or tenants which are struggling and what categories, or tenants, are looking to expand the most?

Fortunately, virtually every one of the tenant categories of product in the outlets are doing well today. Some of the ones that are expanding now with the housing market rebounding, some of the house wares, table top tenants are expanding. The jewelry market folks are expanding. But it is pretty much across the board. I just want to reiterate that we don't sell a significant amount, if any, of consumer electronics, books, computer hardware, computer software so the items that have been efficiently sold on the internet are not tenants of ours.

Okay. Thanks for taking the questions.

(Operator Instructions). Your next question comes from the line of Ben Yang, with Evercore Partners. Your line is open.

Hi, thanks for taking the follow-up. Just a quick one on Canada. Is Tony Grossi still your consultant there, and if he is, is there any exclusivity in your relationship with him to the extent he finds opportunity there?

Tony did a fabulous job of getting the partnership launched and helping us understand the Canadian market. Tony now has taken a senior management position with a local Canadian retailer. He is still a very good friend and co-trustee of myself on the ICSC board, but he is no longer employed by, or working with, the partnership in Canada.

Okay. That's helpful. And do you have anyone lined up to maybe replace him to find those opportunities for you guys or do you guys feel pretty comfortable, given your relationship with RioCan, that you can continue to do some interesting things up there?

We are very comfortable with the professional staff of RioCan.

Great. Thank you.

Your next question comes from the line of Emmanuel Korchman, with Citibank. Your line is open.

Hi, guys. A follow-up from me as well. Can you give us a little bit of color on what the acquisition competitive landscape looks like in terms of other buyers who are looking at the same outlet centers that you are?

Well, as I mentioned before, if something comes on the market we will look at it. It is difficult to tell without specifics so, the outlets are an attractive retail distribution channel today. But I have no specific information to give you so I can't really answer that.

Thanks.

Your next question he comes from the line of Todd Thomas with KeyBanc Capital Markets. Your line is open.

Hi, thanks. Just two quick ones for me. First, sorry if I missed it, but is National Harbor, where you going to break ground this year, is that expected to open in time for the holidays next year, 2013?

That is your plan, Todd. We are planning to break ground before the end of this year and it will either be open by holiday 2013 or spring 2014.

Okay. And then, just lastly, in terms of G&A, it looked like it ticked up a bit again and if I look at my notes, I think it looked like last quarter you expected it to run about $8.5 million a quarter. Was there anything in the third quarter number or is that a good run rate to think about using going forward?

Todd, this is Frank. I think between $8.5 million and $9 million is a good run rate. We had a couple extraordinary items hit in the third quarter. We are expensing quite a bit of money in dealing with setting up and getting the joint ventures online, so that is a little bit bumpy in the G&A number. But I think $8.5 million to $9 million is a good number for Q4.

Okay. Thank you.

There are no further questions at this time. I'll turn the call back over to Mr. Tanger.

Thank all of you for participating on the call today and for your interest in our company. Tanger is the only public REIT with a pure outlet portfolio. We have conservatively structured our 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 we have an enviable growth pipeline. Frank and I are always available to answer any of your questions you may have. Thank you, again. Have a great day. Think outlets. Think Tanger.

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