Tanger Inc (SKT) 2016 Q4 法說會逐字稿

Good morning, everyone. This is Cyndi Holt, Vice President of Investor Relations. I would like to welcome you to the Tanger Factory Outlet Centers year-end and fourth-quarter 2016 conference call.

Yesterday, we issued our earnings release, as well as our supplemental information package and our investor presentation. This information is available on our investor relations web page, investors.tangeroutlet.com.

Please note that during this conference call, some of Management's comments will be forward-looking statements that are subject to numerous risks and uncertainties, and actual results could differ materially from those projected. We direct you to our 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, including funds from operations or FFO, adjusted funds from operations or AFFO, same center net operating income, and portfolio net operating income. Reconciliations of these non-GAAP measures to the most directly 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 note that Management's comments include time-sensitive information that may only be accurate as of today's date, February 15, 2017.

(Caller Instructions)

On the call today will be Steven Tanger, President and Chief Executive Officer; Jim Williams, Senior Vice President and Chief Financial Officer; and Tom McDonough, Executive Vice President and Chief Operating Officer. I'll now turn the call over to Steven Tanger. Please go ahead, Steve.

Thank you, Cyndi. And good morning, everyone. 2016 was another great year for Tanger Outlets. We continued to produce both internal and external growth, and our fortress balance sheet got even stronger. No other retail venue provides the combination of social experience with the world's best brand and designers, cutting out the middle person, and selling direct to the consumer.

Our traffic is growing. Our NOI and cash flows are growing. And our fortress balance sheet was strengthened by converting $525 million of floating rate debt to fixed rates, including a $350 million 10-year bond at 3.125%, of which we completed $250 million in August, and an additional $100 million in October, just before rates started to increase.

Although a few tenants are rationalizing their store count, we are not faced with the challenge of re-merchandising large-format Macy's, Sears, and Sports Authority stores, since they are not in our portfolio. While the retail environment is challenging, demand for high-volume, profitable space remains robust. We are taking advantage of this demand to re-tenant underperforming retailers with higher-volume, more popular brands. This redevelopment strategy should strengthen our future sales and cash flow. We have always been willing to accept limited vacancy to put together enough space to attract new retailers.

Before I discuss our operating performance and our outlook for 2017, I will turn the call over to Jim, who will take you through our financial results and a brief overview of our recent financing activities. Afterwards, Tom will update you on our development activities. Please go ahead, Jim.

Thank you, Steve. Fourth-quarter 2016 AFFO was $0.61 per share, and in line with consensus estimates and up 5.2% compared to the fourth quarter of 2015. For the full year, 2016 AFFO was $2.37 per share, which represents a 6.8% increase over 2015 and a five-year compounded annual growth rate of 10%.

During 2016, we completed a number of financing transactions that made our fortress balance sheet even stronger. As Steve mentioned, we successfully executed our strategy to convert $525 million of floating rate debt to fixed interest rates. Also, we paid down our floating rate debt by an additional $109 million with a portion of the proceeds from 2015 and 2016 asset sales. In addition to repaying balances outstanding under our unsecured lines of credit, we repaid three floating rate mortgages totaling $310 million, unencumbering the assets that secure these loans.

Looking back at the end of 2015, our floating rate exposure represented 36% of our total debt outstanding, or 12% of our total market capitalization. As of December 31, 2016, our floating rate exposure represented only 11% of our total debt, and 4% of our total enterprise value. In addition to reducing floating rate debt exposure, during 2016 we extended the average term to maturity for our outstanding debt from 5.4 years to 5.9 years, expanded our unencumbered asset pool from 84% of our consolidated portfolio square footage to 92%, and increased liquidity available under our unsecured lines of credit from 45% to 88% of capacity.

Our total market capitalization as of December 31, 2016, was $5.3 billion, up 9% compared to December 31, 2015. Our debt-to-total-market-capitalization ratio was 32% at the end of both 2016 and 2015. We continued to maintain a strong interest coverage ratio of 4.4 times during 2016.

In April, we raised our dividend by 14%, the 23rd consecutive year of dividend increases since becoming a public company in May of 1993. Our current annualized dividend of $1.30 per share has more than doubled our 2005 dividend, which was $0.645 per share on a split adjusted basis. Today, we paid our 95th consecutive quarterly dividend, $0.325 to holders of record of January 31, 2017. Over the last three years, our dividend has grown at a 13% compounded annual growth rate, or 18% including the $0.21 per share special dividend we paid in January 2016.

Our dividend is well covered. In 2016, we generated over $100 million of cash flow in excess of our dividend, which was nearly 1.5 times more than 2011, representing a five-year compounded annual growth rate of 12%.

Over and above what we have invested in new developments and expansions, we have reinvested more than $300 million into our portfolio over the last 10 years to renovate our properties and add new sought-after retailers. We expect to once again generate more than $100 million of cash flow after dividends in 2017, with an expected FFO pay-out ratio in the mid-50% range. We plan to continue to reinvest in our Business by upgrading our properties and funding most of our development needs.

Our conservative mindset has served Tanger well throughout 36 years of economic peaks and valleys. Maintaining a fortress balance sheet and investment-grade credit is our way of life. Financial stewardship is a hallmark of Tanger Outlets that we do not intend to change. I'll now turn the call over to Tom.

Thank you, Jim. In 2016, we expanded our overall footprint by 5%, by opening two new outlet centers that are expected to generate a weighted average stabilized yield of approximately 10.3%.

During the fourth quarter, we opened the newest Tanger Outlet Center in Daytona Beach, Florida. This 349,000 square foot wholly owned center opened 93% leased on November 18, featuring over 80 brand name and designer outlet stores. We had a fantastic grand opening weekend, with many retailers exceeding plan, and traffic so strong we had to utilize off-site overflow parking, and shuttle shoppers to the center.

In the 12 weeks that have followed, we have continued to receive positive feedback from both tenants and shoppers. Everyone seems to love the fresh, upscale look of the architectural features, and the shopper amenities like the kids splash pad, the cozy common areas with soft seating and charging stations, and especially the new VIP shopper lounge.

We remain optimistic about the future of the Tanger Outlets business. Our reputation with retailers of having a quality portfolio of outlet centers, and a refined skill set for developing, leasing, operating and marketing them, has afforded us a robust external growth pipeline.

This year, we plan to complete two development projects that are currently under construction. In the fastest growing area of the Dallas-Fort Worth market, we are planning a holiday 2017 opening of our new 350,000 square foot Fort Worth, Texas, outlet center located within the Champions Circle mixed-use development adjacent to Texas Motor Speedway. During the third quarter of 2017, we expect to complete a major expansion that will increase the size of the Tanger Outlets Center in Lancaster, Pennsylvania, by 123,000 square feet, and add over 20 new brand name and designer outlet stores. These wholly owned projects are expected to generate a weighted average stabilized yield of approximately 9.3%.

In addition, work is ongoing for other pre-development-stage sites in our shadow pipeline, which we plan to announce upon successful completion of our underwriting process. Currently, we expect to continue to deliver, on average, 1 to 2 development projects annually.

Turning to leasing, we have added some great new brands to the portfolio in 2016, like LK Bennett, Karen Millen, Brighton, and White Barn Candle, to name a few. During 2016, two areas of leasing focus for Tanger have been food and the home products category.

Our food objective has been to make more and better food offerings available to enhance the shopper experience. While this can be challenging due to outlet traffic patterns being more concentrated on the weekends, we have had success signing 44 new food leases during 2016, 19 of which were new to our portfolio. Our centers will now have seated dining options like Texas Roadhouse and Metro Diner, fast-casual options like Five guys, Chipotle, Zoes Kitchen, Rise Pies, Jimmy John's, and Schlotzsky's Deli, as well as coffee and grazing food options like Dunkin' Donuts, Krispy Kreme, and Planet Smoothie.

Our home objective has been to enhance the variety of home products offerings in our centers as a convenience to our shopper and to earn a greater number of her overall shopping trips. In 2016, we executed leases to add seven home products tenants to our portfolio, including Restoration Hardware, Home Goods, Westpoint Home, and Kirkland. And we are currently negotiating deals with additional tenants in the home products category. I will now turn the call back over to Steve.

Thank you, Tom. Same-center net operating income increased 3.3% during 2016, on top of a 3.5% increase in 2015. This is the 53rd consecutive quarter of comp NOI increases. In fact, our same-center net operating income has grown cumulatively by 47% over the past five years.

During the fourth quarter of 2016, same-center NOI increased 2.7%, on top of a 2.1% increase in the fourth quarter of 2015. In addition, portfolio NOI for the consolidated portfolio increased 8.4% and 12.5%, respectively, for the full year and fourth quarter of 2016. Over the last five years, our portfolio has grown by 46% cumulatively.

Portfolio NOI is property-level net operating income excluding lease termination fees and non-cash adjustments, like straight-line, and net above- and below-market rent amortization. Lease termination fees were approximately $3.6 million and $100,000, respectively, during the full year and fourth quarter of 2016, compared to $4.6 million and $200,000, respectively, in the same periods in 2015.

Blended base rental rates increased 20.2% during 2016, on top of a 22.4% increase during 2015. With the lowest average tenant occupancy cost ratio among the high-quality mall REITs at just 9.9% of our consolidated portfolio in 2016, we have been successful at raising rents while maintaining a very profitable distribution channel for our tenant partners.

Lease spreads are a function of what rates were years ago, what location in the centers are coming up for renewal, and what decisions we made to re-merchandise and strengthen a property for the long term. With 97.7% occupancy, sometimes we must hold space off the market to make room for new, high-volume tenants.

Over the past several years, we have successfully implemented a leasing strategy to give fewer and shorter renewal options, to increase the number of leases with annual rent escalations, and to convert pro rata CAM to fixed CAM. Our rent spreads at lease expiration have narrowed slightly as a result of our ability to capture base rent growth, and to increase CAM reimbursement annually through the lease term rather than waiting until the end of the lease term. As of year end, approximately 34% of the space in our consolidated portfolio was on a fixed CAM. These embedded base rent and CAM escalations during the term of the lease are key drivers of our same-center NOI growth.

During the fourth quarter of 2016, traffic and tenant sales at several of our centers were negatively impacted by major weather events. In mid-October, severe weather and mandatory evacuations related to Hurricane Matthew negatively impacted seven centers, including our locations in Charleston, South Carolina; Hilton Head, South Carolina; Myrtle Beach, South Carolina; Nags Head, North Carolina; and Savannah, Georgia. These centers were closed anywhere from 2 to 6 days each, due to the storm.

During the third quarter, these same properties were also negatively impacted by Hurricane Hermine over Labor Day Weekend. And in August, our center in Gonzales, Louisiana, was closed all or part of six consecutive days due to the devastating flooding and enforcement of subsequent curfews. Trailing-12 month traffic was down over 1% for these eight centers, which comprised about 19% of the total square footage in our consolidated portfolio. In spite of the weather impact, overall traffic was up 1.2%, or 1.8% excluding these centers.

Price deflation remains prevalent in the apparel and footwear business, which makes up a large percentage of the outlet industry. There are no Apple or Tesla stores in our portfolio. In this heavily promotional environment, average tenant sales within our consolidated portfolio were $394 per square foot for the trailing-12 months ended December 31, 2016, excluding the eight weather-impacted centers.

On a same-center basis, sales were stable, excluding these centers. Including the weather-impacted centers, average tenant sales were $387 per square foot for the trailing-12 months ended December 31, 2016. On a same-center basis, sales decreased by 80 basis points.

Two new centers, Grand Rapids, Michigan, and Savannah, Georgia, rolled into the consolidated portfolio average tenant sales metric during the third quarter of 2016. Initially, new centers do not typically exceed our portfolio average, but in the first several years, have the potential for strong tenant sales growth. Westgate Arizona and the Phoenix market is a good example of this, having started out below our portfolio average in the first quarter of 2014, and growing to its current productivity, which is ranked in our top-10 centers.

As I mentioned earlier, our consolidated portfolio was 97.7% occupied as of December 31, 2016, up 20 basis points from 97.5% on December 31, 2015, and up 30 basis points from 97.4% at September 30, 2016. Historically, we have maintained both high occupancy and a dynamic lineup of the most sought-after brand name retailers. At times in the cycle when underperforming brands have shuttered stores, we have capitalized on these opportunities to enhance the tenant mix by filling the space with fresh new brands that our shoppers tell us they want in our centers.

While magnet tenants have a lower relative occupancy cost that may impact re-tenanting spreads in the short term, re-merchandising vacant space with high-volume retailers has been a successful long-term strategy for Tanger for more than 35 years. Enhancing the tenant mix in this way has historically increased shopper traffic, driven demand for additional tenants, increased future renewal spreads, and increased overall tenant sales productivity.

In spite of the highly publicized challenges facing parts of the retail sector, we have created opportunities. In 2015, we got back 157,000 square feet. In 2016, we got back 105,000 square feet. In spite of this vacant space, we ended the year 97.7% occupied.

We continue to plan for about 1% of the space in our portfolio to turn over each year for various reasons. This feels like a normal retail cycle to me, not a new paradigm.

We are pleased to introduce our 2017 FFO guidance at $2.41 to $2.47 per share, which represents growth of 2% to 4% over 2016 AFFO per share. This guidance includes about $0.05 per share increase in interest expense comprised of $0.03 per share related to transactions we completed in 2016 to convert floating rate debt to fixed rates, and about $0.02 per share based on an assumption that LIBOR will increase during 2017. Excluding this dilutive impact, our guidance would represent growth of 4% to 6%.

We currently expect our 2017 estimated diluted net income to be between $1.02 and $1.08 per share. Up against tough comps, we expect 2017 same-center NOI of 2% to 3%, or the consolidated portfolio, which includes about 100 basis points negative impact from re-merchandising planned for our centers in Hilton Head, South Carolina; Howell, Michigan; Jeffersonville, Ohio; Myrtle Beach 17, South Carolina; Ocean City, Maryland; Tilton, New Hampshire; and Westbrook, Connecticut.

In many of these projects we are re-merchandising space with retailers that operate bigger boxes, which will require us to shuffle other tenants around within these centers to create suites with adequate size, and will involve downtime. However, we expect our portfolio NOI growth for the consolidated portfolio to be between 8.5% and 9.5%.

Combined, we expect 2017 CapEx and second-generation tenant allowance to be approximately $60 million. A little over $10 million of that total will be allocated to routine CapEx, with the remaining $50 million split between tenant allowance and renovation projects in Rehobeth Beach, Maryland; Myrtle Beach, South Carolina; and Hilton Head, South Carolina.

Due to tight expense control, we are able to lower our general and administrative expense guidance to between $11.2 million and $11.7 million per quarter for 2017, which is a 2% decrease compared to 2016's quarterly guidance, and are based upon approximately 100.7 million weighted average diluted common shares for 2017. Our forecast does not include the impact of any termination rents, any refinancing transactions, any property acquisitions, or the sale of any outparcels or any outlet centers.

We remain optimistic about the growth prospects for our Company, as shoppers continue to seek Tanger's unique shopping experience in a wide array of brand name merchandise direct from the 80 to 90 manufacturers that operate stores in each Tanger Outlets center. The tenant community continues to indicate its desire to expand into new markets within the profitable outlet channel and with Tanger as a preferred partner. The resiliency of the outlet channel has been proven over the past 35 years, through many economic cycles.

We have more than 3,100 long-term leases with good-credit, brand-name tenants that have historically provided a continuous and predictable cash flow in good times and in challenging times. No single tenant accounts for more than 6.2% of our base and percentage rental revenues, or 7.6% of our gross leasable area. And approximately 90% of our total revenues are expected to be derived from contractual-based rents and tenant expense reimbursement.

To conclude, our business fundamentals remain strong. The robust tenant demand for space at Tanger Centers is evidenced by our 97.7% occupancy. We remain focused on growing our cash flow and creating shareholder value. Now I would be happy to open the call to any questions. Operator?

(Operator Instructions)

Todd Thomas, KeyBanc Capital Markets.

Hi. Thanks. Good morning. First question for Jim. You talked about what is in guidance in terms of the stores re-captured in the 100 basis point impact. That activity is expected to have same-store growth in 2017 and I am just curious how much cushion is embedded in the range at the low-end for future closings throughout the year?

Todd, that is hard to quantify. Our process to come up with our same-center NOI guidance range is to meet with our leasing guys and we do a ground up lease [calling] projections. So what is in our numbers is what is output from that project and product. So it reflects, as Steve mentioned earlier, what we think we may get. It feels like somewhere between 100,000 and 150,000 square feet we got back last year.

Okay. And then Steve, in terms of the space that you are recapturing in your comments that this feels like a typical retail cycle. Can you just talk about that a little bit? Given what we are hearing and seeing out there from retailers.

Perhaps you could just give us a sense for how deep the demand pipeline is from new tenants taking space? Because I think there is a view that the pipeline for new tenants is thinning. So maybe some anecdotes or data points around demand would be helpful.

I have been doing this for a long time. And I have never seen a new paradigm. I am of believer in retail cycles. This feels that way to me.

Tom, in his prepared remarks, mentioned numerous new tenants that are expanding in the outlet sector with us. We don't anticipate at this point any extraordinary amounts of space to be returned to us, due to tenants rationalizing their store counts which has happened every year since we have been in business.

We are looking at less than 1% of our portfolio which we have been successful in re-merchandising. And in most instances, when higher productivity tenants. I don't see that is going to change. We are actually looking at this as an opportunity to improve the tenant mix in our presentation to the consumer.

And as I think Jim mentioned, we've invested $300 million into our properties in the last 10 years. Our properties look fantastic. The tenant mix is superb. None of the rationalization of tenant fleets of stores is surprising to us. It has been part of our business every year for the past 35 years. This feels no different.

Okay. Thank you.

George Hoglund, Jefferies & Company.

Good morning. I appreciate the comments about some of the new restaurants and adding more food into the outlets. From looking at, and touring several properties, that could be a big growth driver going forward in terms of adding more food concepts. How much more upside is there in terms of space you could actually build out to existing outlets to add and additional food court or something like that?

Most of our properties are built out. And we do have some out parcels which might be appropriate for sit down type popular restaurants. But we are putting lots of these tenants in line.

As Tom mentioned I think we opened 44 restaurants this year. And 14 were new to the portfolio. We are very excited about that. Where there is traffic, there is demand for food. We welcomed this year about 186 million shopping visits. And we are capitalizing on that by talking to the finest, most popular restaurants available today. And introducing them to the outlet space.

Okay. Thank you.

Craig Schmidt, Bank of America.

I am wondering at this point, do you expect that you may have a ground-up project opening in 2018?

We are in the process of underwriting and doing our due diligence on a property in the Detroit market. If our due diligence and our leasing gets to the point where we are ready to break ground, which is 60% committed, and all permits in hand, we will move forward. If we don't get to that point, we will not move forward. Craig, you have known us, for many years. We have never built a property on speculation and we do not intend to.

We appreciate that discipline. I am just interesting to hear that you do have a project in Detroit. I was also wondering, maybe you could tell me what is impacting Bromont's current occupancy level?

Bromont is a very small property in Canada. And due to bankruptcy, in Canada we have lost a couple tenants. But our partner is RioCan which is the largest retail REIT in Canada. We're 50/50 partners. And RioCan is working with several prospects to fill those vacancies. Long-term, we still think Bromont will be a successful market for us in the Quebec area.

Okay. Thank you.

(Operator Instructions)

Andrew Rosivach, Goldman Sachs.

Good morning. This is Caitlin Burroughs. I just had a question on the same store NOI guidance of 2% to 3% for this year and that is including the negative hundred basis point impact from the re-merchandising effort. I was wondering if you could give a little more detail on what that re-merchandising entails? And are these happening to boxes at their lease expiration? And/or is that something with the common area space?

It does not include the common area space. We are constantly re-merchandising some of our properties, which we mentioned in our remarks. To attract some high volume tenants like H&M and some other high volume tenants we're talking to. Their box is larger than our average size. So it requires a little better shuffling tenants and accumulating space off the market until we can get a size large enough to accommodate them. So that is all in those numbers.

Okay. Got it. And then just on the occupancy cost side. I know you mentioned the Tanger portfolio's up to 9.9% which is lower than other high quality [mall carriers]. But I guess going forward if your sales productivity remains flat do you think this [time] continue to increase closer to the other mall peers? Or is there some concern that retailers expect lower occupancy cost at the outlets? And as a result may be comparing versus those mall peers could be less relevant?

Well, there is lots of questions there. Let me see if I can answer one at a time.

We have the lowest occupancy costs in the mall sector at 9.9%. We have the highest occupancy at 97.7% among our mall peers. Obviously, there is demand for space in Tanger Centers which continues. This is no different than any other cycle we have been through.

So I don't know how to answer all the rest of your questions or assumptions, but this is no different. The demand is there. We attract the best brands and designers in the world to our centers. The high volume, most popular brand names continue to open outlet stores because they are very profitable. And this does not feel any different to me than it does a year or two ago. Although we probably will get less space back than previous.

Okay. Thank you.

Jeremy Metz, UBS.

Good morning. This is Greg McGinnis on for Jeremy. Obviously re-leasing spreads can be a bit lumpy but the negative12% print on the new lease signed this quarter is a bit of a sticker shock. [It appears] to be only one or two leases based on size. I was just curious what happened here or any color you can provide will be appreciated.

You said it yourself. It is not a meaningful sample size. I think the re-tenanted space you referred to, we did better than the fourth quarter of last year. And I think you can draw inappropriate conclusions from that really small sample size. And I would encourage you not to do that. We don't look at one quarter. We look at the trailing 12 months.

Okay. Thank you for that. And going back to that 100 [bip] impact on same store NOI real quick. Is any of that related to the Limited or Aeropostale? And then based on your earlier comments on making the spaces larger. How does that help to accelerate future same-store?

Again we are 97.7% occupied. It doesn't really matter to us what the name of the tenant is. We have re-merchandising strategies and are prepared for these tenants to leave. We get monthly sales. We know what is going on. So we plan way in advance to re-merchandised in the event we get the space back. We are very comfortable with our guidance.

Okay. Thank you.

Christine McElroy, Citibank.

Good morning, everyone. Many of the mall landlords over the last year have granted rented modifications to tenants in bankruptcy or some big lease tenants that are struggling. To what extent have you been granting any rent relief over the last year? And if so, does that show up in your re-leasing spread?

We have deep, long-standing relations with a lot of our tenant partners. We also have a contract. And we work very hard to fulfill our obligations under the contract. And we expect the tenants to fulfill their obligations under the contract. At the end of the contract term, we are happy to visit with tenants and discuss where we are in the cycle and their cost of occupancy and their strategy going forward.

As far as any modifications, we again have long-standing relationships. We talk long-term strategy with the people that run those businesses. It is a two-way street. We want to create a win-win scenario.

We are working hard and we spent $300 million upgrading our portfolio in the last 10 years. We are sympathetic if tenants help themselves. If they invest their product, presentation, and environment. If they invest their people, we are happy to talk to that because it is just a short-term blip. But if they are not interested in helping themselves, we will continue to fulfill our obligations under the contract we signed.

As far as your second question, whatever modifications may have been signed and they are not a lot are reflected in our 2017 guidance.

Okay got it. And is there anything that you are seeing in terms of potential acquisition opportunities? And if you did the opportunities out there at some point what is your willingness to take advantage of your low cost of capital in the balance sheet [to do deals]?

Our industry is consolidated, faster to a greater degree than most other sectors of retail. So if you know of any high-quality centers looking to sell, please have them call us.

Got it. Thank you.

(Operator Instructions)

[Forrest Van Deese], from Boning.

Thank you. Good morning Steve. A quick question on your 34% fixed cam ratio. Are all of the new leases that you are signing, are they now going to have fixed cam going forward? And what impact do you think that could have on your expense recovery ratio going forward?

34% is up from zero five years ago. So we are moving towards as much of the portfolio being fixed cam as possible. New leases and new development are primarily fixed cam. And when our contract with existing tenants comes from to the end of the term and we renew, we endeavor to get fixed cam included.

The second part of your question is the impact. Most of the fixed cam have escalators. They range anywhere from 2% to 5%. Which we hope will give us a little bit of spread over inflation. We are able now to capture annually, a little bit more in reimbursement in the rent spread as opposed to waiting five years to capture it. So you are going to probably see, and we forecasted this a year and two and three years ago. You can feel free to check our conference call scripts.

As lease spreads narrow, our comp NOI continues to grow. We run the business. And I know there is a curiosity and fascination of lease spreads. Last year it was a fascination with stores closing. The year before, it was a fascination with something else. But this year's lease spreads, we don't run the business based on lease spreads. Our team is focused on generating more cash flow from our assets and growing our net operating income. And over time that has proven to be a very successful formula.

Great. Thanks. One follow-up question. Maybe get your take, it sounds like you are adding a lot of food concepts to your centers. Food sales, densities generally are higher than apparel. And so what do you think that will do to the average sales per square foot at your centers over the next 18 to 24 months? Do you expect we should see a pick up as a result of that?

I think your first assumption is probably right. Food users have less square footage, and usually higher per square foot volume. But a lot of these tenants are new to the portfolio. As we mentioned, we are very excited to have opened 44 new restaurants this year. Including 14 new names to our portfolio. We can probably give you more accurate information a year from now. I hate to speculate.

Okay. Thank you.

There are no further questions at this time. I'll turn the call back to our presenter.

I want to take the opportunity on behalf of all of my colleagues here in the room to thank you for your interest in our Company. We look forward to seeing you in a couple weeks at the next upcoming investor conference. And as always, we are here to answer any of your questions. Feel free to call any time. Have a great day. Goodbye.

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