Tanger Factory Outlet Centers (NYSE:SKT) Canadian Strategy a Good One

Tanger Factory Outlet Centers (NYSE:SKT) decision to enter the Canadian market is a good one, according to UBS (NYSE:UBS), which sees the long-term outlook good for the company there.

UBS says, "We view Tanger’s JV to develop and acquire outlet centers in Canada as a long term positive for the company, especially with a strong operator like RioCan. Given the strength of outlet fundamentals in the U.S. and clear demand for additional space among retailers, it makes sense to us that Tanger would expand its platform up North where this distribution channel is much less mature and there’s significantly less competition among landlords and developers (versus the U.S. where the forecast for new outlet supply growth is picking up).

"We expect further evidence of strong demand trends in Q4 results, including sector-leading SS NOI growth and releasing spreads. The shares look fairly valued to us here at an 8% premium to FW NAV and in line with DCF."

UBS reiterates a "Neutral" rating on Tanger Factory Outlet Centers (SKT), which closed Tuesday at $25.68, gaining $0.54, or 2.15 percent. UBS raised their price target on Tanger from $50 to $52.