Tanger Inc (SKT) 2017 Q3 法說會逐字稿

Good morning. This is Cyndi Holt, Vice President of Investor Relations, and I would like to welcome you to the Tanger Factory Outlet Centers Third Quarter 2017 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 webpage, investors.tangeroutlets.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 be only accurate as of today's date, November 8, 2017. (Operator Instructions)

On the call today will be Steven Tanger, Chief Executive Officer; Jim Williams, Senior Vice President and Chief Financial Officer; and Tom McDonough, President and Chief Operating Officer.

I will now turn the call over to Steven Tanger. Please go ahead, Steve.

Thank you, Cyndi, and good morning, everyone. I would like to start by saying that our thoughts and prayers go out to everyone affected by hurricanes Harvey and Irma during August and September.

Fortunately, none of our employees or their families were physically harmed, though many suffered damage to their homes or lost their cars to the flooding. Despite their personal losses, our Tanger team members did a fantastic job under enormous pressure in the preparation, response and recovery of 8 Tanger assets that were impacted by the storms. Cumulatively, these centers were closed for 22 days during the third quarter, with the impact on local residents and tourists resulting in a significant reduction in traffic and tenant sales in the weeks before, during and after the storms.

In spite of these devastating storms, we are pleased to report that we beat the consensus estimate for this quarter's AFFO and raised our year-end occupancy guidance to a range of 96.5% to 97%.

Before I discuss our operating performance and our outlook for the balance of 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. Tom then will update you on our development activities and the leasing environment. Go ahead, Jim.

Thank you, Steve. Third quarter 2017 AFFO available to common shareholders was $0.63 per share. Portfolio NOI, which includes NOI for noncomparable centers, increased 7.9% throughout the consolidated portfolio during the first 9 months of 2017 and 3.8% during the quarter. Over the last 5 years, our portfolio net operating income has grown by 49% cumulatively. Our top 15 properties generate nearly 60% of our portfolio NOI. Same-center net operating income for these centers grew at a rate of 3.5% during the first 9 months of 2017 and 2.5% during the third quarter.

We're pleased to have extended our streak of 56 consecutive quarters of consolidated portfolio same-center net operating income growth. Excluding the 5 centers -- the 5 remerchandising centers discussed in our earnings release, consolidated portfolio same-center NOI increased 1.7% on a year-to-date basis and 1% during the quarter. Including remerchandising centers, same-center NOI increased 0.8% on a year-to-date basis and 0.7% during the quarter. Lease termination fees, which are not included in same-center and portfolio NOI, totaled approximately $2.8 million for the consolidated portfolio during the first 9 months of 2017 compared to $3.5 million for the same period of 2016.

Steve will go over our rent spreads momentarily, but first let me provide some color. We believe reporting on a trailing 12-month basis is more indicative of the actual results of our leasing efforts, represents what is currently included in our same-center NOI and is consistent with the rent spreads reported by many of our peers. Our previous method reported leases executed during the period for a space expected to commence within the current calendar year. Leases executed during the period that would commence in the following year were reported in the first quarter of the year of commencement, so they did not reflect rent spreads for future rent commencements. As most of our leasing efforts have historically been reported in the first half of the year, the number of leases reported in the second half could be easily skewed by 1 or 2 leases due to the small sample sizes and thus may not be relevant to our actual overall performance.

Our spreads are also calculated on rents that include both the base rent component and the common area maintenance component. We have been successful in transitioning our portfolio to a fixed CAM structure with nearly 40% of our portfolio now converted to fixed CAM and the majority of new deals negotiated are on this basis. Most components are heavily negotiated and each are dependent on the other. Thus, we believe the best reflection of the economics of the lease transaction on a comparative basis is to consider both components as a whole. This is also a common practice followed by many mall REITs.

We took an impairment charge related to 2 of our Canadian properties held in an unconsolidated joint venture, of which our share was approximately $9 million. These very small properties, one is 99,000 square feet and the other is 161,000 square feet, located in the Montr?al market and were acquired shortly after forming our joint venture with RioCan. Given the challenges that these assets have in competing with the much larger center in the market that was developed after our acquisition, we felt it was appropriate to write each asset down to its estimated fair value. The other 2 centers in our Canadian portfolio, Cookstown and Ottawa, are larger core assets and continue to operate successfully.

Following last year's timely conversion of $525 million of floating rate debt to fixed interest rates, we've continued to successfully execute liability management strategies in 2017. We completed a $300 million 10-year bond offering on July 3, 2017.

On August 2, 2017, we used the $295.9 million of net proceeds from this 3.875% offering to redeem $300 million of 6.125% on debt that was due June 1, 2020. We utilized borrowings out of our unsecured lines of credit to fund the balance of the $334.1 million required to execute the redemption, which included a $34.1 million make-whole premium.

Other alternative strategies to manage the treasury risk, playing 3 years would bring into play market risk, execution risk and spread risk. We prefer the certainty of executing now to take unknown risk off the table.

These transactions will increase cash flow by about $6 million annually and AFFO available to common shareholders by about $0.06 per share on an annualized basis.

As of September 30, 2017, approximately 91% of the square footage in our consolidated portfolio was not encumbered by mortgages and only $148 million was outstanding under our unsecured lines of credit, leaving 70% unused capacity or approximately $366 million. We maintained a strong interest coverage ratio during the third quarter of 4.38x and a net debt-to-EBITDA ratio of approximately 6.1x. Our floating rate exposure represented only 16% of our total debt and 7% of our total enterprise value. As of quarter-end, the average term to maturity for our outstanding debt was 6.5 years, the weighted average interest rate on our outstanding debt was 3.3%, and we have no significant maturities until April of 2021.

Our conviction that our shares are undervalued is so strong that we recently put a 2-year $125 million share buyback plan in place. We repurchased 1.9 million of our common shares during the year at a weighted average price of $25.80 per share for a total consideration of $49.3 million, most of which was funded by asset sales. This leaves $75.7 million remaining under our $125 million share repurchase authorization.

In April, we raised our dividend by 5.4% on an annualized basis. This was the 24th consecutive year we have increased our dividend or every year since becoming a public company in May of 1993. Our current annualized dividend of $1.37 per share is more than double our 2006 dividend, which was $0.68 per share on a split-adjusted basis. Over the last 3 years, our dividend has grown at a 13% compounded annual growth rate. Next week, we will pay our 98th consecutive quarterly cash dividend of $34 -- $0.3425 per share to holders of record on October 31, 2017.

We expect our AFFO to exceed our dividend income by more than $100 million in 2017 with an expected AFFO payout ratio in the mid-50% range. Our dividend is well covered. With no new center openings planned for next year and annual capital expenditures and lease of cost expected to return to a normalized level of approximately $30 million, we should have ample internally generated cash that may be used to increase our common share dividend, naturally delever our balance sheet and further reduce floating rate debt exposure and/or repurchase additional common shares as market conditions warrant. 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 will now turn the call over to Tom.

McDonough" type="E" />

Thank you, Jim. Since our last earnings call, we opened our new outlet center in Fort Worth, Texas, and a major expansion of our Lancaster, Pennsylvania center, both of which opened 93% leased. This is an extraordinary achievement in a challenging retail environment, as set forth in this e-mail we received from a tenant shortly after the Fort Worth grand opening. The e-mail read, "You're quite welcome my friend. Thank you for delivering the product you delivered. How you and your team were able to deliver a new center on time and 92% open is just shy of a miracle considering the challenges you had to meet. As you probably know, the last several new outlet centers that opened fell far short of their projected co-tenancy, hovering around the 50% range. I would encourage you to pause for a moment and ask yourself why you can deliver when others fail? It is everything to do with tenants wanting to partner with Tanger, trusting that you will deliver on your promise. It has a lot to do with the organization you've developed, and how dedicated and loyal they are to the company, its culture and their associates. Job well done!"

To-date, shopper traffic has been strong and retailer feedback has been positive for both centers. For example, many tenants at both centers reported that sales were 20% to 30% above plan and a few reported sales greater than 100% above plan.

Our new 35,200 square-foot center in Fort Worth opened on October 27. We're very pleased with the tenant mix. Restoration Hardware outlet is a first-to-market tenant and their store looked fantastic and was very busy during grand opening weekend. Other tenants that opened in Fort Worth and are reporting strong sales include Polo Ralph Lauren, Michael Kors, Nike, Vera Bradley, Columbia and Levi's. The center is located adjacent to Texas Motor Speedway and within the Champions Circle mixed-use development in Denton County, where the resident population is projected to increase from 800,000 in 2015 to 2.1 million in 2040.

Like in many of the centers in our portfolio, we benefit from the attractions of a mixed-use development without putting our own capital at risk to develop the additional amenities. In addition to the Speedway, Champions Circle is home to a Marriott Hotel and conference center, an 18-hole championship golf course, a Buc-ee's mega travel center and over 200 residential units. Future expansion plans announced by the mixed-use developer include up to 2 million square feet of office space, a large power center and up to 680 additional residential units. Moreover, Texas Motor Speedway hosts more than 1,300 events annually, including 2 NASCAR Sprint Cup race weekends and 1 IndyCar Series race weekend.

The Lancaster expansion opened on Labor Day weekend increasing the size of the center by 123,000 square feet or 53% and adding over 20 brand -- new brand name and designer outlet stores. The center was already highly productive with stellar tenants, such as Coach, Nike, Movado and Talbots. With the addition of upscale brand name and designer tenants opening in this expansion, including North Face, Michael Kors, Under Armour, H&M, Columbia and a newly relocated and state-of-the-art Polo Ralph Lauren store, the expanded Lancaster center is even more productive.

As of quarter-end, $39.2 million remained to be funded to complete these 2 wholly owned projects, about half of which we expect to fund by the end of this year. Combined, these projects are expected to generate a weighted average stabilized yield of approximately 9.3%.

So far, 2017 has been a challenging year for retailers, characterized by multiple bankruptcies and store closing announcements. Fortunately, we have no Macy's, Sears, Kmart, JCPenney or Sports Authority stores. Our tenants continue to tell us that outlets are their most profitable distribution channel and demonstrated by our success leasing Lancaster and Fort Worth and our 96.9% occupancy, many tenants continue to grow their presence in the outlets.

Demand for outlet space is coming from existing retailers interested in opening new stores or upsizing their existing stores as well as retailers that are newer to outlet distribution. In addition to the tenants mentioned earlier, T.J. Maxx, Old Navy, American Eagle, Bath & Body Works, Kate Spade, Lee Wrangler and Starbucks are about a few of the active tenants in the outlet world at this time.

Temporary occupancy is up about 50 basis points over last year. Sometimes, new tenants will try out the outlet distribution channel by first opening up temporary or pop-up stores. These deals give us an opportunity to experiment with up-and-coming retailers. Vineyard Vines is a great example. They opened their first store in our portfolio in Rehoboth Beach, Delaware as a temp in 2011. Today, they are a highly productive tenant with 8 Tanger stores. We are hopeful that some of our recent temp deals, like ESCADA and Spartina turn out to be just as successful in our portfolio.

In October, we successfully settled litigation with the estate of our former partner in the Foxwoods Connecticut joint venture. In return from mutual releases and no-cash consideration, the estate tendered its partnership interest to us. Prior to this settlement, we had 100% economic interest in the consolidated joint venture as a result of our preferred equity interest and the capital and distribution provisions in the joint venture agreement.

Subsequently, on November 3, we repaid the $70.3 million floating-rate loan secured by the property with borrowings under our unsecured floating rate lines of credit. This refinancing will result in annual interest savings of approximately $450,000 or about $75,000 for the fourth quarter of 2017.

I will now turn the call back over to Steve.

Thank you, Tom. As I mentioned earlier, our consolidated portfolio was 96.9% occupied as of September 30, 2017. 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 those opportunities to enhance our tenant mix by filling the space with fresh new brands that our shoppers tell us they want in our centers. While these desirable high-volume retailers have a lower relative cost of occupancy that may impact retenanting spreads in the short term, remerchandising vacant space with high-volume retailers has been a successful long-term strategy for Tanger for more than 36 years. Enhancing the tenant mix in this way has historically increased shopper traffic, driven demand from other new tenants and increased future renewal spreads and overall tenant sales productivity. These were our objectives when we made plans to remerchandise 5 outlet centers this year, all of which are now complete or will be complete by year-end.

Our projected unlevered yield is expected to be about 8% on the $20.6 million capital investment. We are not currently forecasting any additional major remerchandising activity in 2018. Six of the new leases executed to date at these centers to retenant 102,000 square feet with high-volume retailers required the consolidation of 22 storefronts with an average size of 4,700 square feet to create these larger new storefronts with an average size of approximately 17,100 square feet.

Excluding these large format spaces, blended rental rates increased 15.4% on 334 leases renewed or retenanted throughout the consolidated portfolio during the trailing 12 months ended September 30, 2017, totaling 1,404,000 square feet. Retenanted space accounted for 278,000 square feet of this space and resulted in an average rental rate increase of 26.6%. Lease renewals accounted for the remaining 1,126,000 square feet of executed leases and resulted in an average rental rate increase of 12.2%.

To provide an apples-to-apple comparison to the spreads reported in prior periods, our third quarter year-to-date spreads under the old method were up 10.4% on a straight-line basis or 3% on a cash basis. This compares to our second quarter year-to-date spreads of 11.7% on a straight-line basis and 4.2% on a cash basis.

Our leasing team is staying busy. Through the end of the quarter, we have executed leases or leases in process for approximately 78% of the consolidated portfolio space scheduled to expire this year. In total, including unconsolidated joint ventures, we have executed 2.2 million square feet of leases. During the first 9 months of 2017, we recaptured 166,000 square feet within our consolidated portfolio related to bankruptcies and brand-wide restructurings by 21 retailers, including 24,000 square feet during the third quarter. Currently, we have tenant commitments for about 72% of the 271,000 square feet that we have recaptured since the beginning of 2016.

Based on what we know today, we expect to recapture a total of about 200,000 square feet in 2017, up from our previous estimate of 157,000 square feet on August 2, 2017.

Four unseen -- unforeseen bankruptcy filings during the third quarter caused most of the additional recaptured space. As I mentioned earlier, the good news is that our outlook for year-end occupancy has improved to a range of 96.5% to 97%, up from last quarter's projection of 96%.

Average tenant sales productivity within our consolidated portfolio was $381 per square foot for the trailing 12 months ended September 30, 2017, or $400 per square foot on an NOI-weighted basis. Impacted by hurricanes Harvey and Irma, same-center tenant sales performance for the trailing 12 months ended September 30 was down 0.9% for the overall portfolio compared to the 12 months ended September 30, 2016.

We acknowledge that these are challenging times for many retailers. However, with the lowest average tenant occupancy cost ratio among the mall REITs at just 9.9% for our consolidated portfolio, we have been successful at raising rents while maintaining a very profitable distribution channel for our tenant partners. Said another way, at the rents that our tenants are paying, there is more cushion for the store to remain profitable should top line growth slow.

Historically, this has resulted in fewer outlet stores vacating when a retailer announces store closings. For example, a tenant that is actively growing in the outlet channel made an announcement earlier this year that they are planning to close a 125 full-priced stores and no outlet stores. There are many other examples that illustrate this thesis. In fact, at our recent meetings with tenants, the mood has been more cautiously optimistic, professional, with most discussing new stores.

Regarding our outlook for the balance of the year, we are revising our full year 2017 guidance to reflect the anticipated impact of the hurricanes on variable rents, unforeseen bankruptcy filings during the quarter, incremental termination rent expectations and additional shares repurchased during the third quarter.

We currently expect our net income per share to be between $0.61 and $0.65 per share, FFO to be between $2.05 and $2.09 per share, and AFFO to be between $2.41 and $2.45 per share. This guidance assumes same-center net operating growth of 1.5% to 2%, excluding the 5 outlet centers undergoing remerchandising efforts, or between 0.5% and 1.0% including the remerchandised centers.

We are assuming no additional bankruptcy filings and assuming the deals we have reached with tenants currently in bankruptcy are ultimately approved by the bankruptcy courts. Other key guidance assumptions include: Lease termination fees, which are not included in same-center NOI, totaling $3.9 million for the full year, including our share of unconsolidated joint ventures; average G&A expense between $11 million and $11.5 million per quarter; 94.5 million weighted-average diluted common shares for 2017 net income per share; and 99.6 million shares for FFO and AFFO per share.

The potential for repurchasing additional shares through the balance of the year will be contingent upon market conditions and on maintaining a flexible leverage profile and our investment-grade credit ratings. Our forecast does not include the impact of any additional financing activity, the sale of any out-parcels, additional properties or joint venture interest, or the acquisition of any properties or joint venture partner interest.

To conclude, our unique business model differentiates us from other mall REITs. Despite bankruptcies and store closing announcements by a number of underperforming retailers, outlets continue to provide the brand value and experience that consumers want and remain one of the most profitable channels of distribution for retailers.

We believe our fortress balance sheet, the strength of our core portfolio and our long-standing retailer relationships leave us well positioned to weather the challenges of today's retail environment and prosper when the cycle turns positive.

And now I'd be happy to take any of your questions.

(Operator Instructions) Our first question comes from Craig Schmidt, Bank of America.

When do the high-volume tenants that you've added, when do they start impacting your sales-per-square-foot number?

Most of them will be -- are open now or will be opening before year-end, Craig. So it's our anticipation that they will kick in with sales volume impacting 2018. We're also seeing lift in traffic in the centers that we've remerchandised. So we're hopeful that the strategy will start to kick in with higher sales productivity in 2018.

I guess. And then -- and follow-up. The -- you talked about the mood being cautiously optimistic. Do you think you will be hit with fewer store closings in 2018 than you faced in 2017?

My crystal ball is a little cloudy, Craig. I never anticipated 21 bankruptcies and store brand restructurings this year. And that's why we've continued to update our investors as the year progressed. My instinct is that there should be fewer, but my crystal ball's a little cloudy.

Your next question comes from the line of Caitlin Burrows, Goldman Sachs.

You mentioned that you've leased about 78% of the space scheduled to expire so far. So I'm just wondering first how does that 78% compare versus past year's at September 30 when you're 3 quarters of the way through the year? And then also looking forward, how has leasing been progressing for 2018 expirations?

The 78% at this time of the year is within a couple of percent as to what it's been the last couple of years, historically, at this point in time. And I don't know the second part of your question, I believe was looking for guidance into next year, which we are not prepared to do.

Okay. And then also just regarding the new center in Fort Worth. From what I've heard from private contacts and in line what you guys said that the opening there really was extraordinary versus other recent outlet projects that have opened with much lower occupancy. So just kind of wondering if you could give us any of the driving factors of that success, if it was something like site selection, competition in the market specifically or if it was just the Tanger way.

Well, first, thanks so much for your compliment, and we're glad you're getting positive feedback on our center in Fort Worth. It has been, in view of all the press, a huge success. The tenants are responding positively. We are in active discussions with additional tenants to fill the balance of the space, which is really exciting in this market. I think there is lots of things that go into a successful site. We -- keep in mind, we started planning this site over 2 years ago. And we got commitments from several large anchor or magnet tenants that led us to start construction. But we maintained our discipline and did not -- even though we thought instinctively that the site was fantastic, we just did not want to move forward until we had at least 60% committed tenants on the site, which we did. And that led during the construction to the balance of the lease-up. So we're delighted. If you are going to be at NAREIT, we're hosting a group of investors at our center. We love to have you come and see it. For those of you on the line that are coming, I look forward to welcoming you and showing you around. But again, thanks for your positive comments, Caitlin.

Your next question comes from Todd Thomas, KeyBanc Capital Markets.

This is Drew on for Todd today. Just to follow up on Craig's question a little bit. Steve, you mentioned in your prepared remarks that there's been some increased cautious optimism as it relates to stores. Could you elaborate that on -- on that a little bit more and maybe give us some specific examples?

I prefer not to give you specific examples, because until leases are signed and stores open, it is just conversation. We've been doing this for a long time, 36 years, it's hard to believe. And our pulse of the market is that some of the tenants continue to struggle. We certainly acknowledge that it's a difficult retail environment. But this is an interesting business where new people with dreams and great ideas tend to capture the imagination of the consumer and open great stores and grow their business. So we're in contact with hundreds of different retailers. This is a change in mood. It's not wild-eyed enthusiasm. But we're seeing the change going from big, big negatives to cautious optimism and -- in opening new stores.

And would you say that these are newer uses for your centers? Or are they more of the traditional tenants that you've had historically?

I think it's a combination of both. I mean, I'm not going to mention the name, but one of our very-high volume, very fine, long-standing tenants was just purchased by another. And their first call was to us, and we're going to open in the next, I think, 3 to 6 months, 8 new stores. I mean this is an existing tenant, and we've been saying for many, many years that when an acquisition occurs, part of the strategy is to open outlet stores because that, usually, if executed well, is a cash-flow generator to help pay for the acquisition.

Got it. That's helpful. And then just one last one on traffic. How's traffic been recently? And how you guys are feeling about the holiday season? I know it's early, but are you seeing any signs of any early pickup in holiday-related traffic? And just what your thoughts are there in general.

Before the devastating hurricanes, our traffic was trending flat to up, which was encouraging to us. We are essentially flat year-to-date in the traffic -- in traffic to our centers even after the devastation of the hurricanes. I really don't want to give you any forward-looking statements. But we hope that the National Retail Federation estimate of holiday sales increases of 3% to 4% will be accurate. And if that does happen, we anticipate that our traffic will be up. Obviously, we touch wood all the time and hope for a nice cold, dry winter. And in the next 45 days, we'll be able to tell. Hard to believe, it's only 45 more days till the end of the year.

Our next question comes from Christy McElroy from Citi.

Steve, just wanted to follow up on Caitlin's question. I appreciate you providing us with the spreads on the old basis for comparison purposes. It would be great to get that stat on an executed basis going forward as well. If I look at your blended spreads of 5.7% on a cash basis over the last 12 months, given this 3% that you mentioned on an executed basis in Q3, it looks like we should expect that 5.7% to narrow further in the coming quarters based on what you've executed. But also that 3% doesn't seem to include what's commencing in 2018 just what's commencing in Q4. So just maybe a little bit more color on how we should expect that commenced trend to trend just based on what you've already executed.

Christy, this is Jim. Just to go up to review the comments I made in the prepared remarks, I mean our method has not ever been to report in our supplement the spreads on leases that's going to commence next year. What I can say is what we've -- what we're seeing for fourth quarter leases that we expect to open. The spreads are pretty consistent with what we had in third quarter. And as Steve said earlier on the call, we really don't want to try to give guidance right now on what spreads will look like in '18. We'll certainly have more information and more color on that in our year-end conference call.

All right. I guess it would just really be helpful in terms of just getting a sense for what the current leasing environment looks like, just given how much you've been leasing. And I realized that you raised guidance for what you expect the lease occupancy rate to be at year-end. And you also talked about the greater space recapture. Obviously, at the end of the day, it's the commence occupancy that's driving NOI. So I'm wondering, do you have your -- what your commenced occupancy rate was at Q3 end and what you expect it to be at year-end?

We're happy, Caitlin (sic) [Christy], to get that granular with you offline. I think that might be more appropriate. I'm sorry, Christy. Excuse me.

That's okay. And then just lastly, just if you're following up on your assumptions for the space recapture. Just -- it looks like you have 14 Vitamin World locations at your centers. Can you disclose the percentage of base rents that the stores comprise? And I know so far they're liquidating half of their locations. At this point, do you know how many you're getting back? Is that factored into the 200,000 square feet of recapture that you stated?

There's still some uncertainty in the 200,000. I think you can respect the fact that we're, based on our experience, giving an estimate. But I don't want to go into individual tenant negotiations, as you might imagine. So our best guesstimate big picture is that we'll end up the year with 200,000 back. And as you might imagine, we're in negotiations with all of the -- with each of the 4 tenants that declared bankruptcy in the last 90 days. And hopefully, the bankruptcy courts will sustain the deals that we're making.

The next question comes from the line of Tayo Okusanya from Jefferies.

Just a couple from us. First of all, now that you've kind of completed the development pipeline, I guess how should we be thinking about any new development starts you may have over the last 12 to 18 months?

Good morning, Tayo. We've been to this movie before. I just want to remind everybody on the line that between 2008 and 2010, the market was challenged, retail sales were challenged, and we decided not to develop any new assets during that period. We've announced that there will be no new centers from Tanger in 2018. However, we still have a very active real estate group monitoring sites all over the country. And when we feel the -- when we feel we can get an appropriate return on our investment with high-quality tenants, we will begin construction again, and we will announce sites again. But we're not going to change our underwriting criteria at this time.

Okay. That's helpful. And then #2, the -- again, retailers that are in bankruptcy, it is a whole process of renegotiation. Without specifically talking about any tenant, could you just talk a little bit about kind of that kind of push and pull of ultimately, what are the kind of things they're asking for? And what are the things you're kind of willing to kind of "give up" to kind of strike a deal in bankruptcy?

It's a negotiation just like any other negotiation. We're not prepared to get that granular, because every particular lease, every issue is different. So I'm just not going to answer that.

Okay. That's fair. And then another one from us. Guidance. The same-store NOI guidance lowered. Could you talk a little bit about some of the offsetting factors there to kind of end up with Tanger raising the low end of guidance -- of FFO per share guidance?

I think we did in our prepared remarks.

I might have missed. I'm sorry.

The major unforeseen issue, of course, was the devastating hurricanes. And the amount of time that our properties were closed both before, during and after the event. Closed stores, obviously, don't produce any sales, which will impact our variable rent and primarily in the fourth quarter. And variable rent is percentage of sales or percentage rents once our tenants reach a certain breakpoint. So the major component is the variable rent.

But what's the offset that FFO percent guidance was still increased? Because all those things impact -- negatively impact same-store NOI.

Well, we've -- if you've noticed, we've lowered our G&A compared to last year. And we're able to get some termination rents, which are not in same-center NOI guidance. So -- and again, if we want more detail, we're happy to talk to you about offline. But those are the 3 major components. And the final component is that we have bought back quite a bit of our stock. So the share count is down.

Our next question comes from the line of Floris van Dijkum from Boenning.

Steve, I wanted to ask you about the share repurchase. Obviously, you have about $75 million left and buying stock at a big discount generally locks in gain and makes a lot of capital allocation sense. Would you look to renew or increase that authorization from the board when you use up that ability? And then also would you look to increase in the fourth quarter the $10 million of bought-back shares, potentially depending if your shares continue to trade where they are?

Good morning, Floris. I'm not going to answer the question with regard to our board deliberations. The management team is executing the stock buyback plan that was approved on an opportunistic basis. Second, with regard to future purchases, I really don't think the lawyers would allow me to answer that. So please give me a pass on that question. We don't want to impact or affect the trading of our stock at all.

Got it. Got. Fair enough. And then the other -- sorry, can I have one follow-up question as well? If you can talk about the temp occupancy, I think, Tom, you mentioned that it increased 50 basis points from last year. Could you give us what your overall temp occupancy is in the portfolio at this point?

Floris, this is Jim. Temp occupancy right now is about 3.8%. It's usually ranged in the -- historically, around 3% to 3.5%, and we're up about 50 basis points this year compared to where we were last year. And we think by year-end, it'll be similar to that, around 3.8%.

Our last question comes from the line of Christy McElroy from Citi.

Just a follow-up here. Steve, just mentioned the 5 remerchandising outlet centers. Originally, I saw that number was 8 earlier in the year. Were there some that were completed or did you pull 3 out of the pipeline?

Christy, actually, the original number a year ago was 7. We sold one of our assets in Westbrook, Connecticut that we had scheduled for remerchandising. And the second was the one in Tilton, New Hampshire. The -- this really strong magnet tenant that was going to leave that remerchandising did not approve the site. So we don't build on speculation, and we decided just to put those plans on hold.

It's Michael Bilerman here at Christy. Just a question on the leasing spreads and the leasing numbers. So I want to make sure we're all on the same page. So the trailing 12 months, it's in the new supplemental, of $1.4 million would take the 3 quarters of this year and fourth quarter of last year in terms of what had been leased. Last quarter, you, obviously, gave us the first and second quarter of leasing, which totaled about 1.2 million square feet. And we can go back to the fourth quarter sup from last year and pull out the 183,000 square feet. That totals about 1.37 million relative to the 1.4 million, a difference of only 30,000 square feet. And I don't think you -- I think you leased a lot more than 30,000 square foot in the quarter. So I'm just trying to understand the differential between those 2 methodologies and what's changing?

Michael, by the way, I have a large floral arrangement being delivered to your office. Please don't say, I don't send you flowers anymore. And I'm going to do my Neil Diamond impersonation for you. I would sing on the call, but I think it would cause a panic on the phone lines. We'd be happy to walk through with you and get as granular as you like. But I'm tired now, and I think it's probably best that we do it offline. So give me a -- give us a pass on that, and Cyndi and our group would be happy to walk through with you.

Yes -- no. Look, I appreciate that. I'm excited for the flowers. But the -- I guess, you had typically in the first quarter only showed, it was like, 60%, 65% of the leasing during a year was shown in that first quarter stats. Was that always what was executed in -- or executed in the quarter, actually signed deals? Or could that have taken into account prior year volumes? And the reason I ask is given the fact that so much of your business over the history at least what was shown in that first quarter being upwards of 60%, 63% and then another almost 15% in the second quarter, obviously, getting a current view of what was executed is important rather than what's commencing, which is more of a backward-looking measure.

Michael, this is Jim. I appreciate -- we appreciate your comments. We understand where you're coming from. And as a Steve said, we'd be happy to get more granular with you and discuss offline. But just as a general note to respond to your question, to give you sort of an example, I'm executing leases today that's going to commence next year, those will show up in the first quarter spreads next year. So it's not -- and first quarter -- that's the old method. That's why I think you're -- I think, that's your question. So those leases...

So you're going to put in, like if you executed a lease for this quarter that was commencing September of next year, you wouldn't even put that into the third quarter leasing activity, you would have waited and put that into the first quarter of '18 leasing activity, even though that lease wouldn't have begun until, let's say, the third quarter of 2018. Is that correct?

That is correct, Michael. That's exactly right. We were trying to match the execution and opening within the same year. But give it to you, when it was executed, as long as it was in that year.

So the reality was you weren't having 63% of your leasing being executed and done in the first quarter. A lot of that had been done, it was much more smoother during the year in terms of the volume of leasing that you were doing. Is that a fair assumption?

That is a fair assumption, Michael.

And do you have the breakout by history of what it actually -- what leasing you're doing every quarter? My apologies, covering Tanger for 20 years, I probably should know the answer to that, but I just didn't...

Respectfully, I think if we can take these questions offline, we'll be happy to walk you through the detail.

We do have a follow-up question from the line of Caitlin Burrows, Goldman Sachs.

Just one more quick one. It was excluded for the adjusted or normalized FFO, but your results make it look like you actually had a gain, albeit small, $99,000 related to abandoned predevelopment costs. So I was just wondering if you could clarify if that's true? And if so, what was driving that?

It wasn't a gain, Caitlin. This is Jim again. We as part of that project, there were some -- if we decided to walk away, there were some costs that we would incur to reimburse some tenants for their legal work. So we had some reserves that we accrued that ended up being a little bit more than we needed and that's just a reversal of that reserve.

No further questions. Back to presenters for closing remarks.

Again, I want to thank everybody for their time and their interest. We remain delighted to welcome your phone calls after this conference call to answer specific questions you'd like. We look forward to seeing you in Fort Worth next week. We've got some great Texas barbecue. And thank you for your interest. Goodbye and good luck.

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