Tanger Factory closes on sale of Westbrook, Connecticut center
In keeping with the company's long-standing practice of pruning its portfolio and recycling capital, Tanger closed on the sale of its Westbrook, Connecticut center on May 17, 2017 to a private real estate developer and operator for $40M, which represents a capitalization rate of approximately 10.0% on forward property level net operating income excluding lease termination fees and non-cash adjustments and net of property management fees. This compares favorably to four similar, but more productive, non-core assets the Company sold in 2015 at an average 10.4% cap rate. The 290,000 square foot Westbrook center was 90% occupied at March 31, 2017 and was the least productive asset in Tanger's consolidated portfolio, having generated average tenant sales 44% below the Company's consolidated portfolio per square foot average for the trailing twelve months ended March 31, 2017. Tanger expects to record a gain of approximately $6.6M on the sale of the Westbrook outlet center during the second quarter of 2017 and has elected not to defer any taxable gain on this transaction, which is currently not expected to have a significant impact on the Company's 2017 taxable income. Tanger intends to use the net proceeds from the sale of this unencumbered asset to fund purchases under the newly authorized share repurchase plan as soon as possible, based on market conditions. Tanger expects a net accretive effect on 2017 net income per share of approximately $0.04, which reflects the expected gain on the Westbrook transaction, partially offset by the loss of seven and a half months of net operating income from the Westbrook property. The dilutive effect on 2017 funds from operations is expected to be approximately $0.025 per share. The Westbrook transaction is not expected to have a significant impact on Tanger's 2017 same center net operating income growth. The impact of the share repurchase plan is contingent upon the quantity and timing of shares repurchased as well as the weighted average purchase price of shares repurchased.