Q2 2025 Tanger Inc Earnings Call

Ashley Curtis: Good morning. I am Ashley Curtis, Assistant Vice President of Investor Relations, and I would like to welcome you to TANGER INC.'s second quarter 2025 conference call. Yesterday evening, we issued our earnings release as well as our supplemental information package and investor presentation. This information is available on our IR website, investors.tanger.com. Please note this call may contain forward-looking statements that are subject to numerous risks and uncertainties, and actual results can 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. 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.

Able in our IR website. Investors.com please note, this call may contain forward-looking statements that are subject to numerous risks and uncertainties and actual results can 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.

Ashley Curtis: 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 only be accurate as of today's date, August 5th, 2025. At this time, all participants are in listen-only mode. Following management's prepared comments, the call will be open for your questions. We request that everyone ask only one question and one follow-up question. If time permits, we are happy for you to re-queue for additional questions. On the call today will be Stephen Yalof, President and Chief Executive Officer, and Michael Bilerman, Chief Financial Officer and Chief Investment Officer. In addition, other members of our leadership team will be available for Q&A. I will now turn the call over to Stephen Yalof. Please go ahead.

Reconciliations of these non-gaap measures to the most directly comparable. Gaap, Financial measures are included in our earnings release 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 only be accurate. As of today's date, August 5th, 2025, at this time, all participants are in listen-only mode. Following Management's prepared comments. The call will be open for your questions. We request that everyone asked only 1 question and 1 follow-up question if time permits, we are happy for you to reach you for additional questions.

On the call today we'll be Steen. Y'all off president and chief executive officer and Michael Berman, Chief Financial Officer and chief investment officer. In addition, other members of our leadership team will be available for Q&A. I will now turn the call over to Stephen y'all off. Please go ahead.

Stephen Yalof: Thank you, Ashley, and good morning. I am pleased to report another quarter of great results driven by our internal and external growth initiatives, and we have raised our full-year guidance. For FFO, it was $0.58 per share, a 9.4% increase over the prior year, which was driven by robust same-center NOI growth of 5.3%. Operating metrics for the quarter were strong, with occupancy increasing sequentially to 96.6% and blended leasing spreads of 12% over the trailing 12 months. We also delivered a solid increase in tenant sales, which were up 6.2% to $465 per square foot on a trailing 12-month basis, and traffic to our centers was up for the quarter compared to last year. This performance reflects the fundamental strength of our platform as well as the effectiveness of our differentiated and proven leasing, marketing, and operational strategies, and our successful external growth initiatives.

Thank you, Ashley, and good morning. I'm pleased to report another quarter of great results, driven by our internal and external growth initiatives. We have also raised our full-year guidance.

For ffo was 58 cents, per share a 9.4% increase over the prior year, which was driven by robust, same Center. Noi growth of 5.3%

Operating metrics for the quarter were strong with occupancy. Increasing sequentially in 96.6 and Blended leasing spreads of 12%. Over the trailing 12 months.

We also delivered a solid increase in tenant sales, which were up 6.2% to $465 per square foot on a trailing 12-month basis, and traffic to our centers was up for the quarter compared to last year.

Stephen Yalof: Our merchandising strategy is yielding impressive results with our open-air outlet and newly acquired lifestyle centers. We continue to attract brands and retail categories that are new to our portfolio while expanding store counts with our most productive existing tenants. This thoughtful approach to merchandising is attracting a younger demographic while maintaining our core value-seeking shopper base. Across our portfolio, we are seeing our shoppers visit more frequently, stay longer when they visit, and ultimately spend more. We continue to maximize value through peripheral land activation, merchandising optimization, and investments in our centers. Population shifts and residential densification in many of our core markets have created the need for more restaurants, service uses, health clubs, and entertainment venues, and the land adjacent to our traffic-generating shopping centers has proven to be a destination of choice for many of these national and local businesses.

This performance reflects the fundamental strength of our platform as well as the effectiveness of our differentiated Improvement, leasing marketing and operational strategies and our successful external growth initiatives.

Our merchandising strategy is yielding impressive results with our open air outlet and newly acquired, lifestyle centers.

We continue to attract Brands and Retail categories that are new to our portfolio while expanding store counts with our most productive existing tenants.

This thoughtful approach to merchandising is attracting a younger demographic while maintaining our core value-seeking Shopper base.

Across our portfolio. We are seeing our Shoppers visit more frequently day longer when they visit and ultimately spend more.

We continue to maximize value through peripheral land. Activation merchandising optimization and investments in our centers.

Population shifts and residential densification in many of our core markets. Have created the need for more restaurants.

Stephen Yalof: Our digital capabilities and marketing initiatives are driving strong engagement and delivering meaningful results. As I mentioned earlier, traffic to our centers was up in the quarter compared to last year, driven by a balanced marketing plan aimed at deepening connections with our core customers, attracting new and younger demographics, and engaging our local markets as we see these populations grow. Further, participation in our enhanced loyalty program continues to expand, supported in great part by our retailer partners. Our proprietary loyalty program, TangerClub, enables us to deliver more targeted and compelling offers to our customers. These programs are driving results as we continue to see meaningful improvements to both traffic and sales.

Service uses health clubs and entertainment. Venues and the land adjacent to our traffic generating shopping centers has proven to be a destination of choice for many of these national and local businesses.

Our digital capabilities and marketing initiatives are driving strong engagement, and delivering meaningful results.

As I mentioned earlier traffic to our centers was up in the quarter. Compared to last year driven by a balanced marketing plan aimed at deepening connections, with our core customers, attracting new and younger demographics and engaging our local markets. As we see these populations grow,

Further participation in our enhanced loyalty program continues to expand supported in great part by our retailer partners.

Our proprietary loyalty program, Tanger Club enables us to deliver more targeted and compelling offers to our customers.

Stephen Yalof: Our strategic Summer of Savings campaign and early back-to-school value messaging, which we rolled out last quarter, took aim on tariff uncertainty and provided a messaging opportunity to inspire customers to shop early and take advantage of favorable pricing and product availability. These initiatives, with strong support from participating retailers, inspired targeted ad campaigns that appear in print, digital, and social channels and have proven to be particularly effective. These proactive marketing programs will continue as we plan to reintroduce our Black Friday Everyday messaging this fall, where we celebrate the holiday shopping throughout November. Our marketing partnerships and paid media sponsorships business continue to grow our other revenues. These programs leverage our shopper traffic and offer participating brands the opportunity to reach highly engaged consumers throughout our centers and social channels.

These programs are driving results. As we continue to see meaningful improvements to both traffic and sales.

Our strategic summer of savings campaign and early back to school value messaging, which we rolled out last quarter. Took aim on tariff uncertainty and provided a messaging opportunity to inspire customers to shop early and take advantage of favorable pricing and product availability.

Friday, every day messaging this fall, where we celebrate the holiday shopping throughout November.

Our marketing Partnerships and paid media sponsorships business. Continue to grow our other revenues,

Stephen Yalof: We are leveraging AI technology across our business to optimize customer service, enhance our data and analytics predictive functionality, and enable more efficient use of resources across our enterprise. Our strong balance sheet, conservative leverage profile, and ample liquidity provide us with flexibility to pursue selective external growth opportunities while continuing to invest in our existing portfolio. Our disciplined approach to capital allocation remains focused on generating long-term shareholder value through both internal and external growth initiatives. Our recent acquisitions and national development have assimilated quickly into the Tanger portfolio, and in addition to growing NOI, they've provided the opportunity to engage new retailers, restaurants, grocery, service, and entertainment uses, which will prove to be a valuable source of new business as we introduce them to the balance of our portfolio.

These programs, leverage, our Shopper traffic and offer participating Brands the opportunity to reach highly engaged, consumers throughout our centers and social channels.

We are leveraging AI technology across our business to optimize customer service, enhance our data and analytics predictive functionality, and enable a more efficient use of resources across our enterprise.

Strong balance sheet, conservative, leverage profile, and ample liquidity provide us with flexibility to pursue selective external growth opportunities while continuing to invest in our existing portfolio.

Our disciplined approach to Capital, allocation remains focused on generating long-term, shareholder value through both internal and external growth initiatives.

Stephen Yalof: In today's uncertain macroeconomic environment characterized by persistent inflation and shifting consumer sentiment, Tanger's value proposition is a constant that continues to resonate strongly with both shoppers and retailers. We remain confident in our strategic approach to leasing, marketing, and operations, combined with our strong balance sheet and proven track record of execution, which provide us with multiple opportunities to pursue growth over time. I want to thank our dedicated Tanger team members, retail partners, shoppers, and shareholders for your continued support. I will now turn the call over to Michael to discuss our financial results, capital markets activities, and updated guidance in more detail.

Our recent acquisitions and Nashville development of assimilated quickly into the Tang report portfolio. And in addition to Growing noi, they provided the opportunity to engage New retailers restaurants, grocery service and entertainment uses which will prove to be a valuable source of new business as we introduce them to the balance of our portfolio.

in today's uncertain, macroeconomic environment characterized by persistent inflation in shifting consumer sentiment,

Hager's value. Proposition is a constant that continues to resonate strongly with both Shoppers and retailers.

We remain confident in our strategic approach to leasing marketing and operations combined with our strong balance sheet, and proven track record of execution, which provide us with multiple opportunities to pursue growth over time.

I want to thank our dedicated tiger team members, Retail Partners Shoppers and shareholders through your continued support. I'll now turn the call over to Michael to discuss our financial results Capital markets activities and updated guidance in more detail.

Michael Bilerman: Thank you, Steve. For the second quarter, core FFO was $0.58 per share, compared to $0.53 a share in the prior year period, driven by our strong internal and external growth. Same-center NOI increased 5.3%, driven by higher rental revenues from the continued strong leasing activity, which is leading to higher base rents and higher tenant reimbursements as we continue to drive total rents. We also saw continued growth in other revenues. For the first half of the year, same-center NOI was up 3.8%. Our balance sheet remains well-positioned with low leverage, ample liquidity, and a largely fixed-rate debt structure. At the end of the quarter, our net debt to adjusted EBITDA was at 5 times, benefiting from the strong EBITDA growth and the retention of free cash flow after dividends, with our growing dividend only representing about 60% of our funds available for distribution or FAD.

Thank you, Steve.

For the second quarter core.

Was 58 cents per share. Compared to 53 cents, a share in the prior year period driven by our strong internal and external growth.

Same Center revenue increased 5.3%, driven by higher rental revenues from the continued strong leasing activity, which is leading to higher base rents and higher tenant reimbursements, as we continue to drive total rents.

We also saw continued growth in other revenues.

For the first half of the year, Same Center NOI was up 3.8%.

Our balance sheet remains well positioned with low Leverage.

Ample liquidity and a largely fixed rate, debt structure.

At the end of the quarter, our net debt to adjusted Eva de was at 5 times.

Michael Bilerman: Outside of the leverage capacity, from a liquidity perspective, we had approximately $614 million of total liquidity at quarter end, including $17 million of cash, $528 million available in our lines of credit, and $70 million of proceeds still available from the forward equity that we issued late last year. During the quarter, we also continued to proactively manage and further strengthen our debt profile through a couple of refinancings, which increased proceeds, lowered rates, and extended duration, and we continued to execute on our interest rate hedging strategies. At quarter end, 95% of our debt was at fixed rates, and our weighted average interest rate stands at 4%, with a weighted average term to maturity of 3.4 years. The next significant maturity will be our unsecured bonds next September 2026.

Benefiting from the strong EPA, dog growth and the retention of free cash flow after dividends with our growing dividend, only representing about 60% of our funds available for distribution or fad.

Outside of the leverage capacity from a liquidity perspective, we had approximately $614 million of total liquidity at quarter end, including $17 million of cash.

528 million available in our lines of credit.

And $70 million of proceeds is still available from the forward equity that we issued late last year.

During the quarter, we also continue to proactively manage and further strengthen our debt profile through a couple of refinancing which increased proceeds

Lowered rates and extended duration and we continue to execute on our interest rate hedging strategies.

Quarter end, 95% of our debt was at fixed rates, and our weighted average interest rate.

Stands at 4% with a weighted average term to maturity of 3.4 years.

Michael Bilerman: In terms of interest rate swap activity during and post-quarter end, we entered into interest rate swaps on the Memphis and Houston refinancings, fixing the interest rate on these loans through 2029. We have also now addressed $125 million of the $150 million of interest rate swaps which are due to expire in 2026, with the new forward starting swaps fixing SOFR at a weighted average rate of 3.2%, which represents a 40 basis point reduction from the expiring swaps at various points next year. The new swaps run through 2027 and 2028, as detailed in the supplemental. Based on our strong performance year to date and a positive outlook, we are raising our full-year guidance, and we now expect core FFO per share of $2.24 to $2.31, representing core FFO growth of 5.2% to 8.5%.

The next significant maturity will be our unsecured bonds next September 2026.

In terms of interest rate, swap activity during and post quarter end, we entered into interest rate swaps on the Memphis and Houston. Refinancing fixing the interest rate on these loans through 2029.

We have also now addressed 125 million of the 150 million dollars of interest rate swaps, which are due to expire in 2026.

Weighted average rate of 3.2% which represents a 40 basis point reduction from the expiring swaps at various points next year.

The new swaps run through 27 and 28 as detailed in the supplemental.

Based on our strong performance, year-to-date, and a positive outlook.

Michael Bilerman: We have lifted same-center NOI growth to 2.5% to 4%, up from 2% to 4% previously. Our guidance reflects our continued strong operational execution and does not assume any additional acquisitions, dispositions, or financing activities. For additional information and assumptions, please see our release issued last night. We have greatly enjoyed having you at our centers through all of the tours, and we do hope you will stop by and shop at Tanger's center before the summer ends. We look forward to seeing and speaking to many of you in the fall at Evercore's Real Estate Conference, Bank of America's Global Real Estate Conference, Jeffrey's Real Estate Conference, NARY, as well as a number of tours. Operator, we would now like to turn the call over for questions.

We are raising our full year guidance and we now expect core ffo per share of 2 dollars. And 24 cents to $2.31 representing core ffo growth of 5.2 to 8 and a half percent.

And we've lifted same Center and a wide growth to 2 and a half to 4% up from 2 to 4 percent previously.

Our guidance, reflects our continued strong, operational execution and does not assume any additional Acquisitions dispositions or financing activities.

For additional information and assumptions. Please see our release issued last night.

We've greatly enjoyed having you at our centers, through all of the tours and we do hope you'll stop by and shop at Tanger center before the summer ends. And we look forward to seeing and speaking to many of you in the fall at evercore real estate conference bfa's Global real estate, conference Jeffries real estate conference NY as well as the number of Tours.

Ashley Curtis: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. The first question is from Jeff Spector from Bank of America. Please go ahead.

Operator: We would now like to turn the call over for questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2. If you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star Keys 1 moment, please while we pull for questions.

Greg Mcginniss: Great. Good morning, everyone. My first question, let's focus on the merchandising strategy. I know that's been a big effort to upgrade the tenancy and bring in different mix. Stephen, I know you talked about higher traffic. Can you just talk a little bit more about that effort and how that's tied to the improvement in sales per square foot? Thank you.

The first question is from Jeff Spectre from Bank of America. Please go ahead.

Great. Good morning, everyone. Um, I guess my first question, let's focus on the the merchandising strategy. I know that's been a big effort to upgrade the tenancy and bring in different mix. Uh, Steve, and I know you talked about higher traffic, I guess. Can you just talk a little bit more about, uh, that effort and how that's tied to the Improvement in sales per square foot? Thank you.

Justin Stein: Good morning, and thanks for the question. I think the issue is macroeconomically, there is not a lot of new development happening in the retail space. As a company, we consider our retail space to be more valuable every day. That being said, there are a lot of retailers that are actively looking for space in our shopping centers, both in our popular top markets and our mid-tier markets. We see a lot of expansion from retailers in both of those shopping centers, from our lifestyle centers to our outlet centers. The brands that are looking to get in are brands that are new to outlet.

Good morning, and thanks for the question. So I

I,

Is Mac macroeconomic lead is not a lot of new development happening in the retail space.

And as a company, we consider our retail space to be more valuable every day.

That being said, there's a lot of retailers that are actively looking for space in our shopping centers, both in our popular uh top markets and our mid-tier markets.

Justin Stein: We are growing some, we have talked about Sephora last quarter and the proliferation of Sephora across our shopping centers, which has been a great brand, not only attracting their core consumer, but bringing a much younger consumer into our shopping centers. We are also going after a lot of food and beverage as the populations begin to shift to some of those markets that were typically tourist-driven markets that are now primary resident markets. We are seeing the need for food and beverage, more service orientation, and some entertainment-type uses that were either taking space in line or on our peripheral land. I think the combination of all those has caused a lot more traffic to our shopping centers. We get a lot more frequency, particularly from our local customer base. Ultimately, that is where we see a lot of pop in our sales.

And we see a lot of expansion from retailers in both of those, uh, in those, in those shopping centers from our lifestyle, a lifestyle centers to our outlet shopping centers. The brands that are looking to get in or brands that are new to outlet. So we're growing some uh you know, we talked about support last quarter and the proliferation of support across our, our shopping centers, which has been a great brand. Not only attracting their core consumer but bringing a much younger consumer into our shopping centers. We're also going after a lot of food and beverage is the populations. Begin to shift

Those markets that we're typically tourist driven markets, that are now primary resident markets.

Uh, we're seeing the need for food and beverage more service orientation and some, um, uh, entertainment type use is that we're either are taking space in line, or on our peripheral land. I think it's a combination.

Of all those.

Has caused a lot more traffic to our shopping centers. We have far more a lot more frequency particularly from our local customer base.

And ultimately, that's where we see a lot of pop in our sales.

Greg Mcginniss: Great. Thank you. My follow-up question, I know last quarter you talked about starting back-to-school early with concerns over tariffs and inventory. You put that strategy into place. I guess, did that help in the quarter? How are you now thinking about inventory for back-to-school in the holiday season? Thank you.

Great, thank you. And then my follow-up question. I know, uh, last quarter, you talked about starting back to school early, um, with you know, concerns over tariffs and inventory. Um, you know, you had you put that strategy into place I guess was, did that help in the quarter? And how are you now, thinking about inventory for back to school in the holiday season? Thank you.

Justin Stein: Yeah, thanks for asking that question, Jeff. As far as the early back-to-school, yeah, we think that's resonating. We've seen a lot of traffic growth where we've seen a lot of pop. Most recently is also in tax-free days. A lot of the centers that we have in the South have just experienced tax-free day. With back-to-school shopping being the second biggest shopping holiday of the retail calendar, our early initiative to get folks out as early as June resonated with a lot of the consumers that were looking to, who might have had some uncertainty with regard to tariff impact and macroeconomic impact. We want to get the consumers out earlier, get them shopping so they could find the brands they wanted at the best possible value. We saw tremendous traction.

For asking that question Jeff but you know as far as the early back to school. Yeah. We think that's resonating resonating.

We we've seen a lot of traffic uh growth where we've seen a lot of Pop. Most recently is also in tax-free days, you know, and a lot of the centers that we have in the South have just experienced tax-free day and with back to school shopping being the second biggest shopping holiday of the retail calendar.

To get folks out as early as June resonated with a lot of the consumers that were looking to, uh, who might have had some uncertainty with regard to, you know, tariff impact or macroeconomic impact. We want to get the consumers out earlier, get them shopping, so they can find the brands, they want it at the best possible value.

Justin Stein: Some of that was attributable based on some of the social and digital initiatives that we put in front of our customers. So we were able to actually see the data in real time. Going into Q3, I think there was probably far less impact, particularly from a traffic point of view than we had thought. I think most of our retailer partners are well inventoried. There's a lot of product in the store. Our value channel, we still see pricing very compelling, incenting customers to come and shop with us. I remind you, I think I said it in my opening comments, we continue to anniversary our every day of November is Black Friday sale this year. So keeping the selling theme in front of our core shoppers as we get into the holiday selling season.

We uh we we saw a tremendous traction, some of that was attributable based on some of the social and digital initiatives that we put in front of our customers. So we're able to actually see the data in real time.

Um, and, you know, going into, uh, the few 3, you know, I think there was probably far less impact, particularly from a traffic point of view, than we had thought, I think most of our retailer partners are, well, inventory. There's a lot of product in the store. Uh, in our value Channel, we still see pricing very compelling, um, incenting customers to come and Shop with us. And, you know, I remind you, I think I said it in my opening comments, we continue to anniversary our, um,

Greg Mcginniss: Great. Thank you.

Every day of November is Black Friday sale this year. So keeping the selling theme in front of our our core Shoppers as we get into the holiday selling season.

Great. Thank you.

Ashley Curtis: The next question is from Greg McGinniss from Scotiabank. Please go ahead.

Craig Mailman: Hey, good morning. I wanted to touch on this remerchandising a bit more. As you bring in more differentiated tenants into your outlet centers and you've increased traffic and stay time, I am curious how far along this remerchandising process you feel that Tanger Inc. has come, and if you would give us some context for this portfolio evolution, whether that is percent of non-apparel and footwear from a few years ago versus today and where you are expecting to go, or any commentary with regards to what you expect to happen on the remerchandising effort long term.

The next question is from Greg. McInnis from Scotia Bank. Please go ahead.

Justin Stein: Yeah, sure. Look, again, I think remerchandising is a process that goes on in perpetuity. There is no end to remerchandising. There is always going to be brands that have stopped investing or just are losing a little bit of their market share to other newer brands. We have got a great leasing team that is out there every day speaking to tenants, maybe a year, a year and a half out, that have not necessarily done deals in the outlet space. They are direct-to-consumer brands. They are specialty store brands that think one day the outlet business might be something that they would invest in. So we are constantly a year, a year and a half out talking to brand new retailers. I talked about Sephora with Jeff.

Hey, good morning. Uh I wanted to touch on this merchandising a bit more you know as you bring in more, differentiated tenants into your outlet centers and you've increased you know, traffic and and stay time I'm curious how far along this re merchandising process. You feel that Tango has come. And if you'd give us some context for this portfolio of evolution, whether that's, you know, percent of non-apparel and Footwear, uh, from, you know, a few years ago versus today and where you're expecting to go, uh, or any commentary, uh, with regards to what you expect to happen on the re merchandising effort, long term.

Yeah, sure. Look again, I think we merchandising is a process that

that goes on.

In perpetuity, you know, there's no end to read merchandising. There's always going to be brands that, you know, have, uh, you know, stopped investing, or just are losing a little bit of their market share to other newer Brands. We've got a great leasing team that's out there every day. Speaking to tenants, maybe a year or a year and a half out that haven't necessarily. Um uh, done deals in the outlet space. They're direct to Consumer Brands. They're, they're a specialty store brands that think 1 day. The Outlet business might be something that they'd, uh, they'd invest in. So we're constantly a year year and a half out talking to brand new retailers.

Justin Stein: I use that as an example because they only recently discovered the outlet business, and that is a brand that has been in business for years and years. So as we get to the transition, it is on us to make sure that the brands understand that there is great value in the outlets. In addition, there are also a lot of customers that shop. There are over 125 million customers a year come through Tanger centers. I think that is a lot of folks for brands to get their customers in front of. We will continue to remerchandise our centers, I would say, for many, many years to come.

Um, you know, I I talked about Sephora with with Jeff. I I use that as an example, because they only recently discovered the Outlet business and that's a brand that's been in business for years and years. So as we, I guess, the, the transition is really, um, it's on the, it's on us to make sure that the brands understand that there is Great Value in the outlets that, but in addition, there's also, um, a lot of customers that shop there over 125 million customers a year, come through, uh, Tango centers. I think that's a lot of folks for Brands to get their customers in front of

Craig Mailman: To follow up on that in the near term, have your tenants or new potential tenants become more hesitant to sign leases until the tariff situation gets more resolved?

And, you know, so we'll we'll continue to re merchandise our centers. I would say, uh, for for many many, many years to come

Justin Stein: I do not think we have seen that. I think there is a tremendous amount of activity in our space. This past year, we have done more leasing than we have in almost any other year at Tanger Inc., over 2.8 million square feet of leasing. So, there is a lot of activity that is going on in our portfolio right now. I think retailers are making long-term decisions. I think the tariff uncertainty that they are facing is probably, it is a little bit more lumpy with regard to whether, how it is going to affect them in the near term. But long-term leasing decisions have not been affected. In fact, I will go back to what I said to Jeff, not a lot of new retail development happening in the United States because of that. Retail space is becoming more and more valuable.

I guess to follow up on that in the near term uh you know, have have your tenants or new uh potential tenants, I guess, uh become more hesitant to sign leases uh until the Tariff situation gets maybe more resolved.

You know, I don't think we've seen that. I think that there's a tremendous amount of activity in our space. We've this this past year, we've done more leasing than we have in almost any other year and Tango over 2.8 million square feet of leasing. So there's there's a lot of activity that's going on in our portfolio right now.

Craig Mailman: Okay. Thanks, Steve.

Um, I think retailers are making long-term decisions. I think the the tear up uncertainty that they're facing is probably, you know, it's it's a little bit more, um, you know, lumpy with regards to whether you know how, how it's going to affect them in the near term. But long-term leasing decisions, haven't been affected. And in fact, you know, I'll go back to what I said, you know, to to Jeff not a lot of new retail development happening in the United States because of that uh retail space is becoming more and more valuable.

Okay. Thanks. Steve.

Ashley Curtis: The next question is from Craig Mailman from Citi. Please go ahead.

Rich Hightower: Hey, good morning, everybody. We are getting some questions about the growth algorithm here for you guys over the next couple of years, given the success you have had early on in Stephen Yalof and your tenure. It is almost half a decade at this point. But one of the things I noticed, OCR is still at 9.7%, but your average price, your average sales per square foot continue to go up. That is just one metric. Can you give us a sense of the organic opportunity in the portfolio from OCRs, from the mark-to-market, to give us a sense of what, however you guys want to look at it, AFFO growth, same-store growth could look like relative to peer average here over the next few years?

The next question is from Craig mailman from City. Please go ahead.

Hey, good morning everybody. Um,

It's almost half a decade at this point, but, um, 1 of the the things I noticed, ocr's still at 9.7%, but your average price, your average sales per square foot continue to go up. You know, that's just 1 metric, but can you kind of give us a sense of

The organic opportunity in the portfolio from ocrs from The Mark to Market. Um to kind of give us a sense of what

You know, however you guys want to look at it afo growth, same store growth could look like relative to peer average here over the next few years.

Justin Stein: Well, look, the guidance is in the release. I can give you some generalizations based on the question that you asked. I think, if you look at our spreads, you will see our mark-to-market. We have had 14 or 15 quarters of positive rent spreads, which speaks to the fact that we think there is a tremendous amount of upside in rent. I think as poor-performing retailers get replaced by better-performing retailers, retailers that are doing more than all-average sales on a per square foot basis, I think we will see an opportunity for us to continue to push our rents forward. Anybody has anything they want to?

Well look, the guidance is in the is in the the release.

You know, I can give you some generalizations based on the question that you asked, you know, I I think, uh, you know, if you look at our spreads, you'll see our Mark to Market. You know, we've had 14 or 15 quarters of positive rent, spreads, which speaks to the fact that we think there's tremendous amount of upside in rent, I think, as poorer performing retailers,

um, get replaced by better performing, retailers, retailers that are doing more than all average sales on the first square foot basis. I think we'll see an opportunity for us to continue to push our rents forward

um,

Craig Mailman: Yeah. Yeah, Craig. When we think about the value creation and driving, ultimately cash flow, it is driven by the internal growth and our external growth activities and continuing to invest in our asset base and intensify and activate our peripheral land. That is wrapped in a balance sheet that is in the best position relative to our industry at five times debt to EBITDA with a significant amount of free cash flow. Our job is there are enough levers that we have to drive NOI, leverage our balance sheet to create long-term growth for our stakeholders.

Anybody else? Anything they want to? Yeah, so yeah, Craig, I mean, look when we think about the value creation and driving, you know, ultimately cash flow is driven by the internal growth.

And you know, our external growth activities and continuing to invest in our asset base and intensify and activate our peripheral land.

And that's wrapped in a balance sheet that is in the best position, relative to our industry, at 5 times that TA, with a significant amount of free cash flow. So our job is, there's enough levers.

That we have to drive.

Noi.

Leverage, our balance sheet to create.

Long-term growth for our stakeholders.

Rich Hightower: Okay. That is helpful. I noticed there was an article about some additional leasing at Huntsville. Could you just run through maybe where that asset could be leased by year-end and maybe the economic uptick from some of those leases?

okay, uh, that's helpful and then, um, I noticed there was an article

About, uh, some additional leasing at Huntsville, could you just run through, maybe where that asset could be leased by by year end? Um, and maybe the economic uptick from from some of those leases.

Justin Stein: Hey, Craig, it's Justin. How are you? I appreciate you calling out our full priced assets. Last week, we announced, in addition to announcing early in the year the Apple expansion and the Warby deal, Starbucks opened earlier this year. Late last week, we announced that Madewell will be joining us in Huntsville. LL Bean will be coming, taking a significant portion of the old Bed Bath and Beyond box. Rowen will be joining us, and Kropp's just opened. Additionally, at Pine Crest, we opened up a great new food and beverage tenant called Tostit that opened up about two weeks ago. Tacobas will be opening up later this year. We have a lot of activity in our full priced assets. We're really bullish on it. As these tenants open up later this year, they'll annualize in 2026. That's where we're going to see the financial impact of those brands.

Hey Craig. It's Justin, how are you?

Rich Hightower: Awesome. Can I slip one third one in there? It is quick. On your occupancy, you guys have Deer Park in there, but Main Event doesn't really commence for a few more months. Is the occupancy number, just to clarify, is that a leased occupancy or a commenced occupancy, that the 96.6%?

And appreciate you call calling out our, our our full price assets. Yeah. So last week we announced, I mean, in addition to announcing earlier, in the year, the Apple expansion and the Warby deal. Um, Starbucks opened earlier this year and late. Last week, we announced that made will will be joining us in Huntsville. LLB will be coming taking a significant portion of the old, uh, Bed Bath and Beyond box. Uh, Rowan will be joining us in Crocs, just open. Additionally at finest. Uh, we opened up a, a great new food and beverage tenant called toastique that opened up about 2 weeks ago. And to seos will be opening up later this year. So, uh, we have a lot of activity in our full price assets. We're really bullish on it as these tenants open up later this year, they'll annualize, then in 26. And that's where we're going to see the financial impact of those brands.

Doug: Hey, Craig, it's Doug. We quote physical occupancy. So, when a tenant takes possession of the space, they're in physical occupancy. Main Event has possession. They're building out their space right now. They'll open in the first quarter, but they're in our physical occupancy right now.

Awesome. Can I slip 1? Third 1 in there. It's quick. Um um on your occupancy. You guys have Deer Park in there but Main Event doesn't really commenced for a few more months is the accuracy number just to clarify is that a lease occupancy or a commencement, do you see that the 966

Rich Hightower: Cool. Thank you.

Hey Craig, it's Doug, we quote physical occupancy. So, when a tenant takes possession of the space, they're in physical occupancy. And Main Event has possession. They're building out their space right now. They'll open in the first quarter, but uh, they're in our physical occupancy right now.

Well, thank you.

Ashley Curtis: The next question is from Michael Griffin from Evercore ISI. Please go ahead.

Greg Mcginniss: Great, thanks. It seems like the national retailer concepts probably have, maybe more certainty or clarity around their footprint needs despite the tariff uncertainty. Stephen Yalof, maybe you can give some context around the demand you are seeing from those regional and local tenants. I imagine that tariffs could crunch the mom-and-pop budget a little bit more than the bigger guys. So maybe talk a little bit about the demand from that cohort within your portfolio.

The next question is from Michael Griffin from evercore isi. Please go ahead.

Justin Stein: First of all, I understand it is a very small population of retailers that you are talking about and a very, very even smaller population of our NOI. But, it is still a very important part of our business. I think local retailers, particularly in some of our full-priced lifestyle shopping centers, are really important to the communities that they serve to avoid traffic from that local population. As far as my visits to shopping centers, which have been, I have spent the last couple of weeks out visiting our centers, I have not seen any impact to shelves. There is lots of inventory and a lot of supply. I think a lot of the retailers or manufacturers and distributors, I would suppose that the Q3 and Q4 inventory is really already cleared in the warehouse and sitting here in the United States for distribution.

Great thanks. Um, you know it seems like the the national retailer Concepts probably have you know maybe more certainty or Clarity around their you know footprint needs despite the Tariff uncertainty but Steve maybe you can give some context around the demand you're seeing from those you know, Regional and and local tenants. I imagine that you know, tariffs could could crunch the mom and pop budget a little bit more than the bigger guys. So maybe talk a little bit about the demand from from that cohort within your portfolio.

Oh, it's first of all I understand it's a very small population of retailers that you're talking about in very very even smaller population of our of our noi.

Um, but you know, it's still, it's still a very important part of our business. I think local retailers, particularly in some of our full price lifestyle shopping centers are really important to the, uh, the communities that they serve enjoy great traffic from, uh, from that local population.

Um, as far as my visits to shopping centers, which have been, you know, I've spent the last couple of weeks out, visiting our centers

I haven't seen any impact, uh, to shelves. There's there's lots of inventory in, uh, and a lot of Supply. So, I think a lot of the retailers, or, or manufacturers distributors,

Justin Stein: I cannot really report much issue as it relates to that group of tenants in our portfolio.

I I would, I would suppose that the, uh, third quarter and fourth quarter inventory is really already cleared in the warehouse and sitting here in the United States for distribution. So, um, I can't really report much issue, as it relates to that, uh, group attendance in our portfolio.

Greg Mcginniss: Thanks. Appreciate the color there. You've highlighted the continued resilience of the consumer at your centers. I'm curious if you've seen a shift in customer demo. Do you have any sense if consumers who may have traditionally shopped at full-priced retailers are trying to find a value at your centers? Just trying to get a sense about what the kind of customer profile looks like these days.

Justin Stein: I would say anecdotally that people are actually, we are seeing new customers to the outlet centers. I think part of the reason why is because of the localization of those centers. We built Nashville only nine miles away from downtown Nashville. A lot of our other centers have seen significant population shifts where secondary homes or second homes have become primary residences. A lot of that driven by just, you know, the people moving out of cities and moving into different markets post-COVID. What we have decided from a merchandising point of view is the more uses we can bring into one of our shopping centers, the better chance we have getting a car to park in one of our parking lots.

Thanks, appreciate the uh, the color there. And you know, you've highlighted the continued resilience of the the consumer at at your centers. I'm, I'm curious if you've seen maybe a shift in in customer demo, you know? Have do you have any sense if, if consumers, who may have traditionally shopped at at full price retailers are trying to find a value at at your centers, just just trying to get a sense about what the kind of customer profile. Looks like these days.

Justin Stein: Whether that is the customer, our core customer that is coming to shop value every day, or it is a new customer that might be coming for the restaurant, the grocery store, the health club, the service, or the amenities that we offer on the center. If we can bring them in for one of those uses and get them to stay for the shopping, I think we are winning a new customer every day.

I would say anecdotally that people are actually, uh, we're we're seeing new customers to the, to the outlet centers. And I think part of the reason why is because the localization of those centers. So we built Nashville, only 9 miles away from from downtown Nashville, but a lot of our other centers have seen significant population shift where secondary homes or uh, second homes have become primary residences. A lot of that driven by just, you know, the people moving out of cities and moving into different, uh, markets, uh, postco. So, you know what we've decided from merchandising point of view is the more uses we can bring into 1 of our shopping centers. Better chance, we have getting a car to park in 1 of our parking lots. And whether that's the customer or core customer, that's coming to shop value every day, or it's a new customer. That might be coming for the restaurant. The grocery store the health club service.

Um or the amenities that we offer on this on Center, you know, if we can bring them in for 1 of those uses and get them to stay for the shopping, I think we're winning a new customer every day.

Rich Hightower: Great. That's it for me. Thanks for the time.

Justin Stein: Thanks, Craig.

Great. That's it for me. Thanks for the time.

Thanks Chris.

Ashley Curtis: The next question is from Caitlin Burrows from Goldman Sachs. Please go ahead.

Caitlin Burrows: Hi. Good morning. In the press release, you guys went through how you have renewed about 65% of the space set to expire in 2025. I was wondering if you could comment on your latest thoughts on renewals versus re-tenanting and then what the status is of that other 35% of 2025 expirations.

The next question is from Caitlyn Burroughs from Goldman Sachs. Please go ahead.

Hi. Good morning. Um maybe just in the press release. You guys went to how you've renewed about 65% of the space set to expire in 2025. I was wondering if you could comment on your latest thoughts on renewals versus reten and then what the status is of that other 35% of 25, expirations

Justin Stein: Sure, Caitlin. It's Doug. We quote the renewed percentage, that's that 65%. If you layer in the space that we've already re-tenanted or certain tenants that are relocating, we're at about 80% of the expiring population is addressed. With the remaining 20%, we have active conversations and think that a majority of that space is going to renew.

Okay, then it's done. So we quote the renewed percentage that that 65%. Um, if you layer in the space that we've already retened or certain tenants that are relocating, we're at about 80% of the expiring. Population is addressed

Uh, and with the remaining 20%, we have active conversations and think that a majority of that space is is going to renew.

Caitlin Burrows: Got it. Okay. Then maybe just on the acquisition side, I feel like we continue to hear that the competition for acquisition deals is high. I was wondering if you guys could comment on maybe the volume of deals you looked at in either Q2 or the first half, and more broadly, how hard it has gotten to be the winning bidder on a deal, or are you able to identify off-market or lightly marketed deals?

Justin Stein: Thanks, Caitlin. We have been extraordinarily active across both of those fronts in terms of marketed transactions as well as negotiated off-market transactions. We feel where we are going to lean in is where we can really add value to what we buy. I think that has been evidenced through Pine Crest, Little Rock, Asheville, Huntsville. We are pretty unique and differentiated being able to look at both outlet centers as well as open-air retail shopping destinations. Given our geographical footprint and boots on the ground at every one of our assets, we feel that that gives us a competitive advantage in looking at the entire marketplace. We are out deals when we close them.

Got it. Um, okay. And then, uh, maybe just on the acquisition side. So I feel like we um, continue to hear that. The competition for acquisition deals is high wondering. If you guys could comment on maybe the volume of deals, you looked at in either 2 Q or the first half and more broadly, how hard it's gotten to be the winning that are on a deal. Or are you able to identify off marketed off-market or lightly marketed deals?

Thanks Caitlyn. And we've been extraordinarily active across both of those fronts in terms of marketed transactions, as well as negotiated off-market transactions. You know, we feel, um, you know, where we're going to lean in is where we can really add value, um, to what we buy. And I think that has been evidenced through pinerest Little Rock Asheville Huntsville. Um, and, you know,

are pretty unique and differentiated being able to look at both Outlets as well as open are lifestyle centers and given our geographical footprint and boots on the ground that, you know, every 1 of our assets. You know, we feel that that gives us a competitive Advantage, um, in looking at the entire Marketplace,

Justin Stein: The balance sheet is sitting in really good shape to be able to execute, running at 5 times debt to EBITDA today, and still having the $70 million of forward equity that we issued late last year.

execute running at 5 times Dead tee, but dot today, and still having the 70 million dollars of forward equity,

um, that we issued late last year.

Caitlin Burrows: Thanks. That sounds encouraging.

All right, thanks, that sounds encouraging.

Ashley Curtis: The next question is from Todd Thomas from KeyBanc Capital Markets. Please go ahead.

Greg Mcginniss: Hi. Thanks. Good morning. You touched on the increase in occupancy during the quarter, but same-store base rent growth was higher by only 1.8% year over year. I heard the comments about Main Event, but I was wondering if you could comment on the portfolio's signed not occupied pipeline in total, what that looks like today, or whether there was anything you can share regarding the timing of some of the lease signings in the quarter that was reflected in the occupancy metric, but that was not rent paying during the quarter. I am just trying to get a sense of the trajectory of base rent growth throughout the remainder of the year.

The next question is from Todd Thomas from KeyBanc Capital Markets. Please go ahead.

Justin Stein: Thanks, Todd. One part of it is, when we are signing new leases, we are getting both an increase on the base, and we are getting our share fixed CAM. Depending on the type of activity, we are looking to grow our total rent. When you look at P&L, you really have to look at both of those line items to be able to think about our total revenue growth, which is leading to NOI growth with our expense load. In terms of signed not open, given the fact that our portfolio is a pretty small tenant, we have talked about our average tenant size is 4,700 square feet across 3,000 stores. The speed at which a tenant, when we turn over to open, is pretty short, we do not have a large signed not open pipeline.

Hi. Thanks. Good morning. Um, you you touched on the increase in occupancy during the quarter uh but same store base rank growth was higher by by only 1.8% year-over-year and I heard the comments about main event but I was wondering if you could comment on the portfolio's sign not occupied uh pipeline in total, what that looks like today or whether there was anything you can share regarding the timing of some of the least signings in the quarter that was reflected in the occupancy metric but that was not ramping during the quarter just trying to get a sense of the trajectory of Base rank growth throughout the the remainder of the year.

Uh, thanks Todd. So, you know, 1 1, part of it is, you know,

when we're

signing new leases, we're getting both an increase on the base.

And we're getting our share fixed cam.

And so depending on uh the type of activity, we're looking to grow our total rent. So when you look at p&l, you really have to look at both of those line items to be able to think about our total revenue growth, which is leading to noi growth with our expense load.

In terms of sine not open given the fact that our portfolio is pretty small tenant. We've talked about you know, our average tenant size is 4,700 square feet plus 3,000 stores.

Justin Stein: In fact, Main Event is probably the biggest component right now, about 30 basis points that has been turned over that is not cash paying today that will become open next year. The rest is pretty small between quarter to quarter, just given the short timeframe, 60 to 90 days between turning over and the store opening.

And the speed at which a tenant when we turn over to open is pretty short. We don't have a large sign, not open pipeline. In fact, main event is probably the biggest component right now about 30 basis points that's been turned over. That's not cash paying today that will, you know, become open next year.

And then the rest is pretty small uh, between quarter to quarter, just given the short time frame 60 to 90 days between, um, turning over and the store opening.

Greg Mcginniss: Okay. Then I noticed that the straight line rent in the quarter was up significantly. I was wondering if there was any one-time or non-recurring impact either related to the leasing or otherwise that we should consider moving into the third quarter.

Okay. Um, and then, uh, notice that the, uh, the straight line rent, um, in the quarter was up. Um, significantly. I was wondering if there was any, you know, 1 time or non-recurring impact, either related to the leasing or otherwise, um, that we should consider. Um,

You know, moving into the, to the third quarter.

Justin Stein: Sure. Our straight line typically gets a little bit higher in the second and third quarters. It relates partly to the cadence of our occupancy. We have talked about troughing in the first quarter, building back up throughout the year, peaking in the fourth quarter. When tenants take over, and Michael talked about the 60 to 90-day build-out period, the straight line occurs when they take possession. The cash rent starts when they open. There is a little bit more straight line rent typically in the second and third quarters of the year. We would expect that again this year.

sure, our straight line typically gets a little bit higher in the second and third quarter, you know,

it relates partly to the Cadence of our occupancy. We've talked about dropping in the first quarter building back up throughout the year. Peaking in the fourth quarter, when tenants take over and Michael talked about the 60 to 90 day buildout period, the straight line occurs when they take possession, the cash rent starts when they open. Um,

Greg Mcginniss: Okay. Got it. So that will burn off a little bit moving throughout the balance of the year. One more, if I could, Steve, you talked a little bit about the centers that you consider primary or that sort of fit into that localization bucket and have been benefiting from a broader use of tenants. I was wondering how many of your centers do you consider to be in that bucket, if you will? What percentage of ABR or GLA or just number of centers would you consider to fit that criteria? Looking out longer term, are the centers that do not have that support from a primary population or that local market impact that you are discussing, would they be considered non-core?

And so, there's a little bit more straight line rent, typically in the second and third quarters of the year. And we would expect that again this year.

Okay. Got it. So that all that will burn off a little bit, uh, moving throughout the balance of the year. Um, it won't more if I could. Um, Steve, you know, you you talked a little bit about, um, you know, the centers that you consider a primary or, or that, um, you know, sort of fit into that localization bucket and have been benefiting from a broader use of of, of tenants. And um, I was wondering

Wondering.

You know how many of your Centers do you? You know, consider to be in in that bucket if you will? Um, you know what percentage of of ABR or gla or or just number of centers? Would you would you consider to to fit that criteria and then, you know, looking out longer term, you know, or the centers that do not have that support from, you know, a primary population or that that local market impact that you're discussing, would they be considered non-core?

Justin Stein: I think where we are right now, all the centers in our portfolio are definitely core centers. It is just we address them differently. We have a shopping center in Sevierville, Tennessee, actually home of Dollywood, which was voted the number one amusement park in the United States this month. That shopping center benefits from tourist traffic 100%. It is one of our top producing assets. So it is really hard to rationalize which ones do better from local trade, which ones do better from that tourist trade. We definitely market our centers a little bit differently. We have a far wider catchment as it relates to those centers that rely a little bit more on tourist destination or tourist population. The shopping centers' position and closure of the casinos, things of that nature, I think, definitely benefit from more tourist-driven traffic.

You know, I think where we are right now. All the centers in our in, our portfolio are definitely Corps centers. It's just we address them differently.

So you know um we have a shopping center in severville Tennessee. Um actually home of Dollywood which was voted the number 1. Mm Park in the United States this month.

That shopping center benefits from tourist traffic, 100%. It's 1 of our top producing assets.

so it's, you know, it's really hard to, um,

Justin Stein: But when Myrtle Beach and Hilton Head and Daytona were built 10, 15, 20 years ago, they were built for tourism, and now are some of the fastest growing permanent population markets in the country. So the shift is happening rapidly. We are embracing the shift, but will continue to remerchandise our centers accordingly as that shift takes place.

Sort of rationalize which ones do better from local trade, which ones do better from, from that tourist trade. You know, we definitely Market our centers a little bit differently. We much, we have a far wider catchment. As it relates to those centers that rely a little bit more on tourist destination uh or tourist population, the shopping centers position closer to the casinos things of that nature. I think definitely benefit from more tourist, driven traffic. When Myrtle Beach and Hilton Head and Daytona were built and 1520 years ago, they were built for tourists for tourism and now are some of the fastest growing permanent population markets in the country. So the shift is happening rapidly. We're embracing the shift, but we'll continue to re merchandise. Our centers accordingly is that shift takes place.

Greg Mcginniss: Okay. Thank you.

Okay, thank you.

Ashley Curtis: The next question is from Hong Zhang from J.P. Morgan. Please go ahead.

Greg Mcginniss: Yeah. Hey, good morning. I guess my first question is just thinking about same-store NOI growth in the second half of the year. You were 3.8% year to date, and it seems like the guidance implies some deceleration at the midpoint. Just wondering what is driving that.

The next question is from Hong Zhang from JP Morgan. Please go ahead.

Yeah. Hey, good morning, I guess. My first question is just on thinking about same-store, analogous with the second half of the year. You were 3.8% year-to-date, and it seems like the guidance implies some deceleration at the midpoint. Just wondering what's driving that?

Justin Stein: Thanks, Hong. We were very pleased to be able to increase our full-year guidance, bringing up the low end to 2.5%. We think about the back half of the year, we still have a certain amount of uncertainty related to the macroeconomic environment, tenant credit, sales environment, our operational expense cadence. There is nothing specific in the second half relative to the first half. That is why we have a range that is still producing a very healthy same-center NOI forecast for the year, with a midpoint at 3.25%.

Um, thanks Hong. You know, we were very pleased to be able to increase our full year guidance, uh, bringing up the low end to 2 and a half.

And, you know, we think about the back half of the year.

We still have a certain amount of uncertainty related to the macroeconomic environment and a credit.

Sales environment. Our operational expense Cadence. So you know there's nothing specific

In the second half relative to the first half.

And that's why we have, you know, a range uh that still producing.

A very healthy, same Center and oi forecast for the year.

You know, with a midpoint at 3 in the quarter percent

Greg Mcginniss: Got it. I guess you still have around $70 million of forward equity to settle for the remainder of the year. I guess I am curious what you would use the proceeds for if acquisition does not shake out.

Got it. And I guess I think you still have around $70 million of Ford equity to settle for the remainder of the year. Um, I guess I'm curious what you would use the proceeds for if the acquisition doesn't shake out.

Justin Stein: We have time on that forward equity. We do not need to pull it down right away. So, we have that there to be able to fund any of our internal or external investments in addition to the balance sheet capacity that we have being at 5 times leveraging.

Um, yeah, we have time, uh, on that forward Equity. We don't need to pull it down, uh, right away. And so, you know, we have that there to be able to fund any of our internal or external investments, in addition, to the balance sheet capacity that we have being at 5 times levered.

Greg Mcginniss: Great. Have a great day.

Great. Have a great day.

Thanks.

Ashley Curtis: The next question is from Floris van Dijkum from Green Street. Please go ahead.

The next question is from Flores van dikum from ladenburg Salman, please go ahead.

Greg Mcginniss: Thanks, guys. Could you maybe talk a little bit about the internal growth prospects regarding your estimated 10% tenancy, and also how much more fixed CAM can you increase your portfolio by over the next six quarters?

Hey, thanks guys. Um

I guess. Could you maybe talk a little bit about the the internal growth uh uh uh prospects regarding your your your 10% estimated 10%, you know, 10 Tenney and also how much more fixed cam, can you increase your portfolio, uh, by um, over the next, you know, call it, uh, you know,

Uh, 6 quarters.

Justin Stein: Floris, I will take the second one first. I would not be focused just on the expense reimbursement side because when we are negotiating with a tenant, we are looking to drive total rent. If that means higher fixed CAM with the expensive base, we will just do that because we are driving our total NOI growth at the end of the day. There is not a specific formula to look at, and there is a wide variety of types of leases as well, some that do not pay us fixed CAM. It really depends on the leasing activity that we are doing.

Of floors. You know, take the second 1 first, you know, I wouldn't be focused just on the expense reimbursement side because, you know, when we're negotiating with a tenant, we're looking to drive.

Justin Stein: In relation to the tenancy, that is one part of the NOI growth that we could see over time, whether that is driving rents on our existing permanent base and continuing to re-tenant, but also continuing to use the temporary business as a strategy because the consumers that come shop with us, they do not know the difference between a temporary tenant and a permanent tenant, but they do know the difference between an open store and a closed store. We want to keep our assets vibrant and be able to continue to drive NOI over the long term. That is one source of potential upside that we could see over time.

Total rent. If that means a higher fixed payment with the expensive base, we'll just do that because we're driving our total NOI growth at the end of the day. So there's not a specific formula to look at, and there's a wide variety of types of leases as well, some that don't pay us. Thanks, Cam. So it really depends on the leasing activity that we're doing in relation to the tenancy. You know, that's one part of the NOI growth that we could see over time, whether that's driving rents on our existing permanent base.

And continuing to reach tenant.

But also continuing to use the temp business as a strategy.

Because, you know, the consumers that come shop with us, you know, they don't know the difference between a temp tenant and a permanent tenant but they do know the difference between an open store and a closed store. And so we want to keep our assets vibrant and be able to continue to drive noi.

Over the long term and that's 1 source of potential upside that we could see over time.

Greg Mcginniss: Just to make sure that I understand correctly, Michael, because I do not, obviously, the 10% tenants do not pay fixed CAM. What is your fixed CAM percentage today on your overall tenancy? Where do you think you can push that? Do you expect, as the retailer demand continues to be really strong, I think historically your 10% percentage was closer to 5%. Do you think, how quickly do you think that 10% goes back to the historical norms? I guess that was what I was getting at in my question.

Just just to make sure that I understand correct Michael. Um,

Justin Stein: Yeah. You know, I wouldn't focus too much on the fact that 10 doesn't give us fixed CAM. I look at it more, we look at it more, you know, what is the total rent that we can get for that space from a permanent tenant relative to a 10 tenant? We've talked about anywhere from 2 to 3 to 4X the rent. In terms of, you know, the cadence of that, you are right. Historically, we've operated in the 500 to 600 basis point range. In terms of 10 tenancy, we are higher than that today. But we don't have a time that we want to bring it down. We're trying to drive our total NOI growth and continue to diversify and remerchandise our centers.

Pay 6 cam. Um, what is your fixed cam percentage? Uh, today, uh, on your overall Tenney, uh, where do you think you can? Can push that and um, and then do you expect as the the retailer demand continues to be really strong? Uh, I I think historically, your temp percentage was closer to 5%. Do you think you know how quickly do you think that 10% goes back to the historical Norms? I I guess that was what? I was getting at my question.

Yeah, you know, I I wouldn't Focus too much on the fact that temp doesn't give us 6, cm, I look at it more. We look at it more. You know what is the total rent that we can get for that space from a permanent tenant relative to attempt tenant? We've talked about anywhere from 2 to 3, to 4X the rent.

In terms of, you know, the Cadence of that you are right, you know, historically we've operated in the 5 to 600 basis, point range.

In terms of 10 Tenney, we are higher than that today. Uh but we don't have a time that we want to bring it down. We're trying to drive our total noi growth and continued to

Justin Stein: And it, you know, provides us a pool of leases that we think that there's upside, and we'll continue to see that upside over the next few years.

diversify and re merchandise, our centers, and it, you know, provides us a tool of

Pieces that we think that.

There's upside and we'll continue to see that upside over the next few years.

Greg Mcginniss: Thanks. Maybe the second question I have is maybe more of a Stephen Yalof question, but Stephen Yalof, you talked about bringing new retailers to the outlet centers. Can you talk, you mentioned Sephora, how are those discussions going? Are you seeing increased demand from retailers for the outlet space in particular? How much growth do you think you could get over the next couple of years from new retailers to the outlet format?

Thanks. So, maybe the, the second question I, I have is, maybe more of a c question, but Steve, you talked about bringing new retailers to the outlets. Can you talk? Uh, you mentioned Sephora. Um, how are those discussions going? Are, are, are you seeing increased demand from retailers, uh, for the outlet space in particular, and how much growth do you think you're going? You could get over the next couple of years from from new retailers, uh, to the outlet format.

Justin Stein: Floris, look, we are out in front of retailers all day, every day. So we have a team just thinking about new business, and their sole mission is to go out and speak to brands that just have not discovered us yet. There are plenty of those brands, enough to keep a couple of people occupied a full-time job. It is exciting when new brands want to enter. We just recently did our first Marc Jacobs deals in the outlet space, and their performance has been amazing. They are drawing a customer. They have got fans of that brand. There are a lot of things that new brands do for us. Aside from the fact that we get great productivity, they pay market rents. They also draw their own customer base to our centers.

Well, actually, do I look, we, we're out in front of, we're out in front of retailers, all day every day. So we have a team just thinking about new business

And their mission is to go out and speak to brands that just haven't discovered us yet. And there are plenty of those brands—enough to keep a couple of people occupied, a full-time job.

You know, it's exciting. When new brands want to enter. You know, we just recently did our first uh Marc Jacobs deals in in uh the outlet space.

And their performance has been amazing. They're drawing a customer. They've got fans of that brand. There's a lot of things to do brands do for us, aside from the fact that we get great productivity.

Um, they pay Market rents.

Justin Stein: So as these new brands are discovering our product, so are some of the customers that are loyal to that brand. I think that is just a great win-win for us. It is hard for me to sort of guide to how big that business can be. If you go back 30 years, I have been in this business leasing outlets for a really long time. An outlet center of 30 years ago looks completely different than the outlet center of today because there has been constant evolution of brands discovering and replacing brands that have sort of performed, I guess, less than to their capabilities. So we are going to continue to grow newness. We are going to continue to bring in new brands, new uses, new types of tenants. Food and beverage, you could say, in the last five years is relatively new to the outlet space.

They also draw their own customer base to our centers.

As these new brands are discovering our product, so are some of those customers that are loyal to that brand. Okay. That's just a great win-win for us.

it's, it's hard for me to

Justin Stein: But as that customer becomes a little bit more localized, those are the things that they are demanding when they want to come and shop with us. We think it is really smart for us to play into the demand of the consumer base to constantly drive traffic into our centers.

Sort of guide to how big that business can be, but if you go back 30 years, you know, I’ve been in this business leasing outlets for a really long time, and an outlet center of 30 years ago looks completely different than the outlet center of today, because there’s been constant evolution of brands discovering and replacing brands that have, you know, sort of performed, I guess, less than to their capabilities. So we’re going to continue to grow newness. We’re going to continue to bring in new brands, new uses, new types of tenants. You know, food and beverage, you could say, in the last 5 years, is relatively new to the outlet space. But as that customer becomes a little bit more localized, those are the things that they’re demanding when they want to come and shop with us. We, uh, you know, we think it’s really smart for us to play into the demand of the consumer base and possibly drive traffic.

4 sets.

Greg Mcginniss: Thanks, Steve.

next, Steve,

Ashley Curtis: The next question is from Rich Hightower from Barclays. Please go ahead.

Rich Hightower: Hey, good morning, guys. Thank you for taking the questions here. I think maybe just to put a little bit finer point on some of the occupancy questions so far on the call. I think we understand Deer Park. We understand Huntsville. But in the context of the guidance and the different swing factors, are there any other known move-outs, move-ins, cash versus straight line, any other elements you would like to sort of call out that we should be aware of over the next couple of quarters?

The next question is from Rich. Hightower from Barkley's, please go ahead.

Justin Stein: The big one was Forever 21. We observed Forever 21. We have been able to place where we have got five of the nine Forever 21s are already leased, and we will probably have the rest leased by the end of the year. I think that speaks to the high demand that retailers have for space in our shopping centers and also the.

Hey, good morning guys. Thank you for taking the questions here. Um, I think maybe just to put a little bit finer point on some of the occupancy, um, questions so far on the call, you know, I think we understand Deer Park, we understand Huntsville. But you know it's maybe in the context of the guidance and the different swing factors are there any other known move outs move in cash for straight line? Any any other elements? You'd like to sort of call out um, that we should be aware of over the next, you know, couple of quarters.

Well, you know, the big one was Forever 21, but we absorbed Forever 21. We've been able to, uh, place where we've got 5 of the 9 Forever 21s already.

East and we'll probably have the rest at least by the end of the year. So I think that speaks to uh

As retailers have.

Ashley Curtis: The fact that we're going to be, we're going to curate. We're not going after just retailers just to fill space. We're looking for retailers that are really going to bring a little bit more to the party. We want to drive customers. We want to be interesting. We want to be the shopping center of choice in the geographies that we serve. Because of that, we're going to be real smart about how we curate centers and make sure that we're bringing in not only retailers that can pay the best rents, but also retailers that will do the best volume and draw the most amount of shoppers to our centers.

Operator: Okay. I appreciate that. Just to be clear, Forever 21 would probably be the biggest swing factor to call out for the second half in that regard, just to clarify?

The space in our shopping centers and also speaks to the fact that we're we're going to be we're going to curate. You know, we're we're not going after um just retailers just to fill space. We're looking for retailers, are really going to bring a little bit more to the party. You know, we want to, we want to drive customers. We want to be interesting. We want to be the shopping center of choice in the, in the geography is that we serve and because of that, we're going to be real smart about how we curate centers and make sure that we're bringing in not only retailers that can pay the best rents, but also retailers that will do, uh, the best volume and draw the most amount of uh Shoppers to ourselves.

Ashley Curtis: I would say yes.

Operator: Okay. Great. Then, more broadly, I think you addressed this, maybe from a different angle before, but just as far as the double-digit leasing spreads for the past many quarters, and obviously, a very overt remerchandising strategy that I think you have articulated very well. Is there a natural runway for that given sort of existing tenancy that is probably not leaving the center in the next several years? Can it go on for years and years? How would you sort of think about that runway going forward?

Ashley Curtis: Look, again, as you know, I mentioned earlier, we are creating our own demand. I think demand is sort of a virtuous cycle in that the better retailers you bring into the center, the better sales performance they execute to, and then the more rents that we could ultimately charge. As centers become more popular, as sales continue to grow, more retailers take note and want to be part of that. So in this environment right now, with very little new retail coming online, retailers are looking for places where they can do business. They are looking for voids in the market where they have distribution. Look, a lot of these brands, we could be competing with a department store business that may be contracting, where retailers are looking for places to put their freestanding stores so they could execute and get their product in front of a customer.

Okay, so just I appreciate that. Just to be clear. So Forever 21 would probably be the the the biggest swing factor to call out for for the second half, in that regard, just to clarify, I would say yes. Okay, okay, great. And then, um, you know, more broadly and I think I think, you know, you addressed this, uh, maybe from a different angle but before but um, you know, just as far as the double digit leasing spreads, you know, for for the past many quarters and obviously, you know, a very overt. REM merchandising strategy that I think you've you've articulated very well, you know, is there a is there a natural? Um, you know, runway for that given sort of existing Tenney that's probably not leaving the center in the next several years. Is it? I mean, can I go on for years and years? I mean, how how would you sort of think about that Runway going forward?

You know, look again, this, you know, I mentioned earlier, we're creating our own demand, you know, and I think demand is sort of a virtuous cycle in that the better retailers, you bring it to the center, the better sales performance, they execute to. And then, the more rents that we can, ultimately charged, but as centers become more, popular, as sales, continue to grow more retailers, take note and want to be part of that.

Ashley Curtis: I do not see an end to that in the foreseeable future. As I mentioned earlier, with a team of people that are out 18, 24 months looking at new brands to bring in, there is a lot of interest in being part of what we are doing over here at Tanger.

So, in this environment right now, with very little new retail coming online, retailers are looking for places where they can, uh, they can do business. They're looking for voids in the market where they have distribution look. Um, a lot of these Brands we could be con competing with a a department store business that may be contracting. We're retailers are looking for places to put their freestanding stores so they can execute and get their product in front of a customer that.

Sure.

Operator: Great. Thank you.

And 1,924 months looking at new brands to bring in. There's a lot of, um, there's a lot of interest in being part of, uh, what we're doing over here in Tanger.

Great. Thank you.

David Brown: The next question is from Tayo Otusanya from Deutsche Bank. Please go ahead.

The next question is from Tayo. Oh, to sauna from Deutsche Bank, please go ahead.

Stephen Yalof: Yes. Good morning. Solid results here. Wanted to follow up on Hong's question around guidance. The low end of seems to analyze risk to 2.5%. Curious if what's driving that is really more occupancy, as you've kind of discussed some of the occupancy gains, or whether there's an OpEx component to it, if there's a bad debt component to it.

Uh yes, good morning. Uh solid results here. Um, wanted to follow up on, Hong's question around guidance. Again, the low end of seems to noi risk to 2.5%, uh, curious. If what's driving that is really more occupancy as if kind of discussed some of the occupancy gains or whether there's an Opex component to it, if there's a bad debt component to it,

Ashley Curtis: Thanks, Tayo. I mean, look, the range both at the high and the low end has got a variety of assumptions around a lot of the variables that impact both revenues and expenses. So we give a range that we feel comfortable with. We are pleased to, at the midway through the year, be able to lift our FFO guidance, as well as lift our same center guidance. At both ends of the range, there's varying assumptions around occupancy or tenant credit, sales environment, our variable operating expenses, the downtime, the spread. So all of that goes into it to arrange that we feel comfortable. The best part is in 90 days, we get to report again and see where our results are and update guidance again at that point.

No thanks. I am I mean you know look the range. Both at the high and the low end. It's got a variety of assumptions around, a lot of the variables that impact both revenues and expenses. And so you know we give a range that we feel comfortable with uh we are pleased to at the Midway through the year to be able to lift our ffo guidance.

Um, as well as lists our same Center guidance.

And you know, at both ends of the range, there's varying assumptions around.

Occupancy or tenant credit sales environment, our variable operating expenses, uh the downtime uh the spread. So there's you know,

And all of that goes into it to arrange that we feel comfortable. And

Stephen Yalof: Gotcha. Then a quick follow-up as it pertains to tenant credit. Could you just talk a little bit about your exposure to Torrid that I believe recently filed bankruptcy? Again, a lot of talk about Claire's may also do something. If I am thinking about some of those names and possibly some other watchlist tenants.

Best part is in 90 days. We get to report again and see where results are and you know, update guidance again at that point.

Gotcha. Uh, and then a quick follow-up. Uh, as opportunity to tenant credit, could you just talk a little bit about you know, your exposure to like torid that I believe kind of recently filed bankruptcy again, a lot of talks about Claire as may also do something so far. You're kind of thinking about some of those names and maybe possibly uh some other watch lists tenants.

Ashley Curtis: So, our watchlist remains at pretty manageable levels. In regards to the tenants you talked about, they are not top 25 tenants for us. I would say the store size, specifically on the Claire's size, is pretty small. While there may be a number of stores, it is a relatively smaller part of our base rent. If I can add, I have said this on past calls, I will say it again. Outlet stores have tended to be very profitable for brands, and some of the last stores that brands will close in a restructuring.

On the cleric size is pretty small. Um, and so, while there may be a number of stores,

it's a relatively smaller part of our, uh, base threat.

Ashley Curtis: Even though a brand may declare bankruptcy, I guess, in the case of a Claire's or the other brand that you mentioned, I think that as they work through their population of stores they are going to keep and stores they are going to reject, my guess is very few will happen in the outlet space.

If I can add, you know, I I've said this on past calls, I'll say it again, outlet stores, have attended to very to be very profitable for Brands and some of the last stores that Brands will will close in a restructuring.

So um even though a brand May uh you know, be declared bankruptcy, I guess, in the case of a players are there's a brand that you mentioned, you know, I think that as they work through their population of stores are going to keep and stores. Stores, stores are going to reject, my guess is very few. Um, will happen in in the outlet space.

Stephen Yalof: Appreciate it. Thank you.

Appreciate it. Thank you.

so,

David Brown: The next question is from Vince Taibone from Green Street. Please go ahead.

The next question is from Vince. Tywone from Green Street, please go ahead.

Michael Bilerman: Hi. Good morning. Could you help quantify the near-term out parcel opportunity in the portfolio in terms of how many you expect to be actionable and monetizable over the next one to two years? What do you anticipate being the most common structure here, whether it is you are selling the dirt, doing a ground lease, or doing a full development that a tenant would ultimately lease? I am just trying to get a sense of how much capital will be committed here and how much NOI could ultimately be generated over the near term.

Hi, good morning. Um, could you help quantify the near-term out? Parcel opportunity in the portfolio? In terms of how many you expect to be, you know, actionable and monetizable over the next 1 to 2 years. And then also kind of what do you, you know, anticipate being the most common structure here. Whether it's, you know, selling the dirt doing the ground lease or, you know, doing a full development of a tenant would. Uh, ultimately release is trying to get a sense of how much Capital we committed here and then, you know, um, you know how much I know why I could ultimately be generated too over

Ashley Curtis: We said in the past that the value of our outparcel business is probably equivalent to one of our top shopping centers. I think that number continues to grow as we buy more shopping centers that give us more outparcel capacity. What is interesting from a capital allocation point of view as it relates to an outparcel deal, we are not looking to sell outparcels. We are looking to lease them. But, typically, the investment that we are going to make in an outparcel, whether it is a build-to-suit or a ground lease deal, we do not make the investment until after the lease is executed. So it is a, we have, they are typically high teens to low double-digit returns where we have already had those deals executed before we commit the capital from a risk profile point.

That, you know, your term.

Yeah, we we said in the past that you know, the value of our out, parcel business is probably equivalent to 1 of our top shopping centers. I think that number continues to grow as we buy more shopping centers, that give us more out partial capacity. What's interesting from a capital, allocation point of view. As it relates to, uh, out parcel deal, we're not looking to sell out Parcels, we're looking to lease them.

But uh, typically the investment that we're going to make in an out parcel, but whether it's a, a, a bill to suit or a ground, uh, a ground lease deal, we don't make the investment until after the lease is executed. So it's a, uh, we they're typically High teams to low double digit returns, but we've already had those deals executed. Before we, we commit the capital from a risk profile point.

Michael Bilerman: No, that is super helpful. Maybe just to like, I mean, how many of these have you completed over the last, I don't know, one to two years? Is that, you know, I am just trying to get a sense of how, you know, how many of these times, you know, is this going to move the NOI needle?

no that that that's super helpful maybe just to like I mean how many of these have you completed over the last on a 1 to 2 years and is that you know I'm just trying to get a sense of how

You know, how many of these teams and, you know, is this going to move the noi needle?

Greg Mcginniss: Yeah, Vince, this is Justin Stein. Over the last one to two years, we've had a handful come online and start red-paying, but we've really pinned our ears back and focused on this business. What we can share with you is we have deals coming online over the next 12 to 18 months with brands like Portillo's and 7 Brews. We opened up a Chick-fil-A up in Ottawa. Shake Shack is opening up more stores with us on the peripheral end. We're doing deals with First Watch and 151 Coffee. We have a lot in the pipeline. We have a lot that are going to be coming and monetizing and cash flowing over the next year, year and a half. We're really excited about the prospects of this business.

Michael Bilerman: No, thank you for all that detail. That is helpful. Last question for me. Could you just discuss high-level the re-tenanting economics and ultimate NOI upside, from the former 21 spaces? I know you comment in terms of how many were already leased. I am not sure if those are all permanent or temp deals, but I just know they paid so little rent prior to bankruptcy. I would imagine there is a pretty sizable mark-to-market opportunity there, but not sure that compares to the suite size and if you have to demise in certain cases. So, I would just love to kind of hear how you view the opportunity there with those boxes.

Yeah Vince this is Justin so um say over the last 1 to 2 years, we've had, you know, a handful come online and start renting but we really pinned our ears back and focused on this business. And um you know what we can share with you is you know we have deals coming online uh over the next 12 to 18 months uh with with Brands like Portillos and 7 bruise, we opened up a Chick-fil-A up in Ottawa. Shake Shack is opening up more stores with us on the peripheral land. We're doing deals with first Swatch and 151 coffee. So we have a lot in the pipeline, we have a lot that are going to be coming, uh and and monetizing and cash flowing over the next year, year year and a half. And we're really excited about the prospects of this business.

Ashley Curtis: But temporary leasing those boxes quickly was a great trade for us because the rents being as cheap as they were, we were able to at least maintain or grow the rents on that near-term basis as we are making those decisions that you just talked about. You know, do we replace the complete box? Or based on the positioning in the shopping center, do we break them in half and re-demise them? We will make those decisions based on the ability to generate rent and get exciting tenants into the space. We are working with a number of tenants and a lot of deals currently. I think there is a lot more rent that you can get from smaller to least smaller spaces. So where that makes sense, we will make that trade. So I think we are in a pretty good position.

No, thank you for all that detail. That's helpful. Um, and then last question for me, could you just discuss high level the, you know the retention in economics and ultimately noi upside? Um from the former 21 spaces? I know you comment in terms of how many were already leased and not sure if those are all permanent or temp deals but I just know they paid. So little rent prior to bankruptcy, I would imagine there's a pretty sizable, you know, Mark to Market opportunity there but not sure that, you know, compares to the sweet side and if you have to, you know, demise in certain cases. So yeah, I just love to kind of hear how you view the opportunity there with those with those boxes.

But I can please see those boxes quickly. It was a great trade for us because the rents, being as cheap as they were, allowed us to at least maintain or grow the rents on a near-term basis. As we're making those decisions that you just talked about, do we replace the complete box?

Ashley Curtis: I have said it a couple of times on the call. I will repeat it again. I think our real estate becomes more valuable every day as there is less new space being added to the market. As retailer demand continues to increase to be in our portfolio, we are going to make sure not only that we choose the best retailers to fill the space, we are going to make sure that they are going to be the most productive retailers, and we are going to bring in retailers that are going to draw new traffic and new shoppers to our centers. I think all of those things together, all ships rise, and ultimately, that is how we are going to grow our value and NOI over time.

Good position, you know, I've said it a couple of times on the call. I'll repeat it again. You know, I think our real estate is becomes more valuable every day as there's, um, less loose space being added to the market. And as there's retailer demand continues to increase to be in our portfolio. We're going to make sure not only that we choose the best retailers to fill the space. We're going to make sure that they're going to be the most productive retailers. And we're going to bring in retailers that are going to draw out new traffic and new Shoppers to our centers. I think all of those things together, All Ships, rise. And, and, uh, ultimately that's how we're going to, uh, grow our, um, our value and, and noi over time,

Michael Bilerman: Great. Thank you.

Great. Thank you.

David Brown: There are no further questions at this time. This concludes the question and answer session and today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

There are no further questions at this time. This concludes the question and answer session and today's teleconference, you may disconnect your lines at this time. Thank you for your participation.