Humbled markets may offer Tanger growth

NEW YORK (Reuters) - Some of the hardest-hit housing markets may provide the best opportunities for future outlet centers, the CEO of Tanger Factory Outlet Centers Inc (SKT.N) said on Tuesday.

"I think there's significant growth as California recovers, and it will," Steven Tanger said at the Reuters Global Real Estate Summit in New York. "I think there's growth in Florida when it recovers, and it will recover. There's growth opportunity in Phoenix when that recovers, and it will recover. We have a team looking for sites."

Tanger is one of the largest owners and operators of U.S. factory outlet centers. At the end of the first quarter, it had 31 outlet centers encompassing 9.2 million square feet, and the centers were 94 percent occupied.

The company currently has an option on a site in Mebane, North Carolina, to serve the Raleigh/Durham, Chapel Hill, Greensboro, High Point and Winston-Salem areas. It also has an option on a site in Irving, Texas, near an upcoming new light rail line.

Although the recession has taken a harsh toll on stores, malls and most other shopping centers, outlet centers, whose stores offer merchandise at a discount, have fared better.

"Our traffic was up in April. Our traffic was up in May," Tanger said. "It appears sales were up in April and our sales were up in May."

Rainy weather in the Northeast seems to have held back shoppers in June, he said.

Tanger, unlike Simon Property Group Inc (SPG.N), has no plans to expand its outlet centers internationally.

"In our conversation with our tenants, they have very little interest in opening in other parts of the world," Tanger said. There's some good outlets in Europe. But it's very difficult to develop over there and it takes a long time."

Tanger also questioned Simon's success in Asia with its Premium Outlet Centers.

Responding to Tanger, David Simon said in a telephone interview: "The demand in Asia continues to be very strong."

Chelsea Japan, of which Simon owns 40 percent, will be opening its eighth center this summer, Simon said. The company has more than 300 employees. In Seoul, Simon is expanding its center, which it owns in a joint venture.

"That's one of the best outlet centers in all of Asia," Simon said.

Simon Property recently closed an office in Hong Kong but still has offices in Shenzhen, China; Tokyo and Seoul. Sales at its Mexico City center continue to rise each year.

(Reporting by Ilaina Jonas; editing by John Wallace and Gerald E. McCormick)