Jefferies Has Hold On Tanger Factory Outlet Centers (NYSE: SKT)

Jefferies & Co. is initiating coverage on Tanger Factory Outlet Centers SKT with a Hold rating and a $53 price target on shares. In the research note Jefferies writes, "As the only pure-play outlet in the Shopping Center REIT sector, SKT is in a better position to take advantage of a still fragile, albeit improving retail outlook. That said, we are concerned about an influx of competition in the next few years." Jefferies goes on to say, "Regardless the state of the economy, but especially during economic downturns, consumers like brand name products at attractive price points. SKT has the only pure-play on retail outlets in the retail REIT sector and we believe the company has built a strong reputation among retailers with its ability to effectively manage its properties by generating a high volume of traffic. This reputation, coupled with 1) a still fragile consumer base seeking value-oriented products and 2) our belief that outlet retailers will continue to benefit from strong sales volume going into 2011, suggest growth will primarily come from internal growth prospects (e.g., leasing spreads). We note since its trough in 4Q09, leasing spreads have improved meaningfully -- increasing +6.6%, +7.1%, and +19.3% in 1Q10, 2Q10, and 3Q10, respectively. We expect this trend to continue going into 2011." Shares of SKT lost 29 cents yesterday to close at $50.11.