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Operator: Good morning. I’m Ashley Curtis, Assistant Vice-President of Investor Relations, and I would like to welcome you to Tanger Inc.’s Third Quarter 2024 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 could 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. 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, November 7, 2024. At this time, all participants are in listen-only mode. Following management’s prepared comments, the call will be opened 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 requeue 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.

Stephen Yalof: Thank you for joining us today. I’m pleased to share that Tanger has delivered another quarter of strong results and we are increasing our full-year guidance. Core FFO for the quarter reached $0.54 per share, an 8% increase from the prior year period, supported by a 4.3% increase in same-center NOI. This growth is attributed to the continued execution of our strategic plan to drive rents, add new retailers and uses and operate more efficiently, leveraging our scale and our talented team. These results are especially encouraging because they reflect the sustained demand for space in our centers, our success in curating and exciting a new mix of retailers and restaurants that resonate with our shoppers, coupled with effective marketing that focuses on connecting with our shoppers, both on center and off through our enhanced digital channels.

We continue to successfully elevate the shopper experience by attracting sought-after brands while diversifying our tenant mix, which is helping drive consistent traffic to our centers. We’ve also seen positive momentum in sales as average tenant sales productivity has remained steady at $438 per square foot for the trailing 12 months. Additionally, we continue to replace less productive stores with newer and more productive ones, and we anticipate positive sales momentum as their sales annualize. I’d like to expand on how we’re positioning our centers to meet evolving consumer preferences and demand. Our center remerchandising efforts are aimed at attracting a broader, younger and more affluent demographic, while maintaining our value proposition.

Our leasing team continues to sign leases with aspirational brands, many that are new to our channel, as well as grow our base of food, beverage and entertainment uses. Further, our targeted digital marketing capabilities and community engagement initiatives allow us to communicate more directly to a younger generation of shoppers who are seeking their favorite brands at the best possible price and have demonstrated their desire to shop in our open-air centers. The success of this strategy is evident in our leasing activity and occupancy growth, ending the quarter at 97.4%. Our leasing team executed 543 leases totaling 2.6 million square feet over the trailing 12 months. Importantly, we achieved our 11th consecutive quarter of positive rent spreads, delivering a blended increase of 14% on comparable space.

This consists of re-tenanting spreads of 46% and renewal spreads of 12%. I want to take a moment to address our response to the recent hurricanes in the Southeast. Several of our centers were in the path of Hurricanes Helene and Milton. I’m thankful that our team members and their families remain safe and that we experienced only minor physical impacts across our portfolio. Our Asheville Center did close temporarily due to utility disruptions from Hurricane Heline but has since fully reopened. During the center’s close days, Tanger Asheville immediately became a crucial staging location for first responders and relief organizations who literally camped out on our site, providing life-saving support to the surrounding community. Our common areas became the home for K9 rescue teams, which provided vital early assistance to our community members in distress.

We continue to support the Asheville community’s recovery efforts through our fundraising and volunteer efforts across our enterprise, exemplifying our core value to consider community first. Looking ahead, we are confident in our strategy and excited about the opportunity we see to further enhance our portfolio and drive sustainable growth. We remain focused on growing the value of our open-air centers through our in-place portfolio, as well as potential external opportunities. The robust demand for space in our centers combined with our strong balance sheet, operational execution and strategic initiatives gives us confidence in our ability to continue delivering solid results. We are very excited to welcome Sonia Syngal to the Tanger Board for nearly 30 years of retail industry experience and leadership, including her term as CEO of Gap Inc.

will strengthen the capabilities of our Board as we look forward to her many contributions in the years ahead. I also want to thank our dedicated team members, particularly those who have worked tirelessly in response to the recent weather events, as well as our retail partners and shareholders for their continued support. I’ll now turn the call over to Michael to discuss our financial results and outlook in more detail.

Michael Bilerman: Thank you, Steve. Today, I’m going to discuss our positive third quarter financial results, our well positioned balance sheet and our increased guidance for the year. In the third quarter, we delivered core FFO of $0.54 a share compared to $0.50 a share in the third quarter of the prior year as we saw continued core growth along with the contributions from the three new centers that we added in the fourth quarter of last year. Same center NOI increased 4.3% for the quarter, driven by higher rental revenues and modestly lower operating expenses. On the revenue side, we continue to see strong retailer demand and robust leasing activity and our team continues to push total rents with higher base rents and increased expense recoveries.

Our balance sheet remains well positioned to support our internal and external growth initiatives with low leverage, a largely fixed rate balance sheet, full availability in our lines of credit, essentially no debt maturities until late 2026 and ample free cash flow after dividends given our low dividend payout ratio. Our net debt to adjusted EBITDA per rata share was 5 times for the 12 months ended September 30, down from 5.8 times at the end of last year, which reflected the late year funding of our acquisitions and development without the full year benefit of EBITDA of those assets. As we indicated last year, our pro-forma leverage would have been 5.2 times to 5.3 times versus that 5.8 level assuming a full-year of EBITDA from those assets.

As we disclosed in our release last night, we estimate that our pro forma leverage at September 30th would be 4.8 times to 4.9 times versus 5 times at September 30th, which reflects the continued positive same-center growth, retention of free-cash flow and capital markets activities. To that end, during the third quarter and subsequent to quarter end, we sold 1.3 million shares under our ETM program at $31.59 per share, generating gross proceeds of $41 million, which reduced all of the borrowings on our lines of credit and put us in a modest net cash position. At quarter end, we had $1.6 billion of pro rata net debt with a weighted average interest rate of 4.1% and full availability on our $620 million lines of credit. In October, our board declared our quarterly dividend, which is 5.8% higher than last year on an annualized basis.

And our quarterly cash dividend remains well covered with a continued low payout ratio providing free cash flow to support our growth. Now turning to our increased guidance for 2024. We are raising and narrowing our core FFO per share expectations to a range of $2.09 to $2.13 from a prior range of $2.05 to $2.12 and now representing core FFO growth of 7% to 9%. We are increasing our same center NOI growth to a range of 4.25% to 5% up from 3.25% to 4.75% due to the better than expected performance in the third quarter and our outlook for the fourth quarter. For additional details on our key assumptions, please see our release issued last night. And now I would like to open the call up for your questions. Operator, can we take our first question, please?

Operator: Certainly. When I’ll now be conducting a question-and-answer session. [Operator Instructions] Our first question is coming from Jeff Spector from Bank of America. Your line is now live.

Jeff Spector: Great. Thank you. And congratulations on the quarter. My first question, it might be tough to answer, but Stephen, given all your years of experience in retail, the market is panicking here on tariffs, lower US consumption. I don’t know if you have any thoughts here on that. I know you’ve seen a lot in your career.

Stephen Yalof: Obviously, the business is cyclical. And we’ve survived many cycles, Jeff. But the early read on is the holiday shopping. I don’t know if you’ve been out, but we have. As of November 1st, the holiday decorations are up. And people are shopping, and people are shopping early. And what we’re hearing, what we’re reading, and particularly speaking to a lot of our retailers, is that the discount channel is going to probably be a big contributor to their sales this year across a lot of the retailers that we’re working with. So that being said, I think we’re probably well positioned, if not better positioned than anyone, to enjoy customers coming through our centers to get what they’re looking for. And that’s great brands, a great value every day. So we fit right into that sweet spot.

Jeff Spector: Thank you. And then I know for this past year, you touched on it in your opening remarks on the retaining efforts, bringing in aspirational brands. Can you talk a little bit more about the progress you’ve been making in 2024, what you’ve learned, and then your thoughts heading into 2025? Thank you.

Stephen Yalof: Sure. Let’s use Sephora as a case study, because I think it’s really important. We announced last quarter that we had done a number of leases with Sephora, which is a brand new brand to our shopping centers. And excited about a number of prospects for that brand. First of all, they drive a much younger customer, which I talked about in my opening remarks being one of our goals. Number two, an aspirational customer. They carry high low as far as their brand and their merchandising is concerned. So not only do they attract our core customer, but I think they bring in new shopper into our centers. Also, we talked about our local initiatives. So I take a look at a brand like Sephora again and think, wow, they’re going to be a great resource for a lot of the folks that live in the local community, but also for that tourist that comes and visits our shopping center.

And then we talk about our marketing and our marketing initiatives and how important that is to leverage off of some of these new aspirational brands that we’re bringing to the centers. And so, I believe it was two weeks ago we did a day of beauty across our portfolio where we highlighted not only Sephora but Ulta, a cosmetics companies were the best cosmetic and health and beauty retailers we had in our portfolio and it was one of the great traffic days leading up to the holiday shopping season. So I think the mix of strategy of bringing in these brands, coupled with going after that local catchment with our marketing efforts, getting that tourist, and not alienating our core customer, which is so vital to our success. Now, this strategy seems to be working in the early stages, and we’re optimistic about rolling this out further with other brands that we’re currently working with.

And you know, we sign leases, but we don’t talk about the new deals that we’ve done until they put their sign up on the door and they’re ready to open.

Jeff Spector: Thank you.

Operator: Thank you. Next question today is coming from Todd Thomas from KeyBank Capital Markets. Your line is now live.

Unidentified Analyst: Hi, good morning. This is [indiscernible] on for Todd Thomas. I just had a couple of quick ones. In terms of leasing spreads, do you expect to be able to generate similar blended leasing spreads in 2025? And is this a pace you expect to be able to maintain?

Stephen Yalof: Thanks for the question. Our leasing spreads, which we are reporting, we continue to be in a low OCR at 9.5%. We feel that there’s still opportunity to grow that into low double digits, which reflects the fact that we believe that our current tenants are under market, and those that are coming to join us in the portfolio from the re-merchandising and re-tenanting efforts, which you can see on a trailing 12-month basis, those spreads were very positive. So we believe that we’ll continue to see positive lead spreads as we continue to move forward.

Unidentified Analyst: Got it. And in terms of your acquisition pipeline, are you seeing any more opportunities? And if you are, are they more non-outlet or outlet in nature?

Stephen Yalof: So say on the investment front, there continues to be both marketed transactions, as well as off-market transactions across both outlet, as well as open-air lifestyle centers as well as adjacencies around our assets. And that continues to be active overall.

Unidentified Analyst: Got it. Thank you.

Operator: Thank you. Next question is coming from Hong Zhang from JPMorgan. Your line is now live.

Hong Zhang: Yes, hey. So expense recoveries have been a pretty strong contributor to both NOI and same store growth this year. I guess looking toward next year, how do you expect the dollar amount to trend from 3Q?

Stephen Yalof: Thanks for the question. So the expense recovery rate has got two factors going on. The numerator, which is us driving rent, and the denominator, which is our total operating expense load. So the first part is our leasing strategy when we are signing leases is to drive all of the elements of revenues. And so we are getting increased base rents and we are getting increased expense recoveries from our tenants largely on a fixed TAM basis. So that’s why you’re seeing the growth on the revenue side in both base minimum and in fixed TAM. On the expense side of the house, we continue to be a very operating efficiency and seeking ways to minimize as much of our expenses as possible. We’ve talked a little bit about the seasonality of our expense load this year relative to last year, where we expected a larger OpEx level in the second half of the year.

A lot of that’s in the fourth quarter, just given the timing of marketing, the timing of holiday, the cost of that marketing, the cost of operating our centers relative to last year. Tenant recovery rate this year, we talked about being in the mid-’80s. We may be a tad higher than that mid-’80s level for the year. A big part of that is just continuing to drive the lead spreads, which we talked about in the last question, and continuing to operate as efficiently as possible. And we’d expect that to continue into next year.

Hong Zhang: Got it. Thank you.

Operator: Thank you. Next question today is coming from Caitlin Burrows from Goldman Sachs. Your line is now live.

Caitlin Burrows: Hi. Good morning, everyone. Maybe another one on the re-tenanting kind of process or pipeline. Given the — could you give some details on the amount of new brands you’re bringing in, kind of the outlook for increasing that further, and how deep they’re going in the portfolio?

Justin Stein: Good morning, Caitlin. Thank you for the question. This is Justin. So every day that we wake up, leasing is focused on four things. Four things, it’s driving rents, it’s diversifying the assortment, it’s increasing our occupancy and activating our peripheral land. And when it comes to diversifying the assortment, we’ve talked about a lot of the new brands that have entered our portfolio. And what we found, and a great example is a tenant like Birkenstock. They started with us in two centers. They’ve been extremely successful out of the gate, and now we’re working on stores three and four with them. And so as tenants enter our channel, as they enter our portfolio, and as we prove success with them, partnering with them not only on the leasing side but the marketing side of the business and they’re successful, we see that opportunity to grow throughout all 40 of our assets.

Caitlin Burrows: Okay. And then, Justin, there you brought up the activating land point. I’m wondering if you or somebody else can talk a little bit more about that. I know it’s something you guys have been focused on for a while. So would you say that it’s kind of at a steady state now, or is that still growing, or what are the kind of near-term opportunities there, medium-term?

Stephen Yalof: Caitlin, it’s Steve. So, we mentioned that probably half of our properties have opportunity. Again, it’s really capital allocation. So as we see opportunities with brands or restaurants or other uses that are looking to take our peripheral lands, we’re looking at the return on that investment. So there’s plenty of opportunity out there, but field needs to make sense. That said, we do have a team of people that are only focused on monetizing that land. So it’s less of a rush to get it done and more of a really thoughtful process, making sure that bringing the right tenants will be complementary to our shopping center and so that we can execute this long-term growth, which we think will have a lot of opportunity and upside in the coming years.

Operator: Thank you. Next question is coming from Floris van Dijkum from Compass Point. Your line is now live.

Floris van Dijkum: Hey, good morning, guys. First question is, I guess, to follow up a little bit on the new leasing spreads. Presumably what you guys are — can you tell us about the occupancy costs you’re targeting on new tenants coming into the portfolio?

Justin Stein: Floris, it’s Justin. Thank you for the question. So, how we focus — every center has its own market rent, and that’s driven by the demand within each center. What we’ve been able to execute to this year is occupancies in the 10%, 11%, 12% range as tenants come into our portfolio.

Floris van Dijkum: So, Justin, just to make sure that I understand that correctly, your new lease spreads are plus 40%. I think they were 45% this past quarter. That means that those tenant sales, once they start to anniversary and you report them, will be 45% or greater than the average tenant sales you’re reporting today. Is that the right interpretation?

Stephen Yalof: I don’t think it’s about sales, Floris. I think it’s really about the rents that we’re able to generate. We’re replacing tenants, so many of which have been in our portfolio for a long period of time, that are paying relatively low rents based on the productivity of the center, our ability to continue to build occupancy in those centers, the center demographics, all of the sort of ingredients that go into generating better market rents. You’ve got to couple that with the fact that there’s not a lot of new development that’s happening in the country these days. And we believe that our real estate is becoming more valuable every day as more brands want to be in our space, more retailers, restaurants and alternative uses want to populate our shopping centers. And because of that demand, we’re able to raise our retail rates accordingly.

Floris van Dijkum: Great. Thanks, Steve. If I can have one follow-up question, maybe talk a little bit about the acquisition environment. I know you haven’t announced anything, but you’re essentially getting a green light from the market to grow externally. Maybe talk a little bit about what you’re seeing in terms of trends, cap rates, and there’s an expectation that cap rates for retail are going to compress, how do you think about investing dollars today and where do you see greater opportunities? Is it in lifestyle centers or is it in other avenues?

Michael Bilerman: Floris, thanks for the question. When we’re looking at our acquisitions in terms of pipeline and the assets that we’re evaluating, the first ask is, where can we add value? Where can we add value from our leasing, our operating, and our marketing platform in the assets that we’re buying that our hope is to bring assets into the portfolio that are both strategic and financially accretive to the platform. And I’d say — to comment earlier in the call, we’re active on all fronts. It’s a competitive market. And we’ll announce transactions as we close them. But there’s certainly more product both being offered in the market as well as things that we’re chasing down on our own.

Floris van Dijkum: Thanks Michael.

Operator: Thank you. Next question is coming from Greg McGinniss from Scotiabank.

Unidentified Analyst: Hello, this is Victor [indiscernible] Greg McGinnis. First of all, congrats on the strong leasing quarter. And only a few centers experienced some noticeable occupancy decline. Hilton Head and Rehoboth Beach were among those. So I just wanted to get some detail about which tenants departed, why, and how is re-tenanting process going?

Stephen Yalof: Yes, I think some of the occupancy declining you’re mentioning is really frictional vacancy. So we’ve said at the beginning of the year, and even we go back to the beginning of the last quarter of last year, we said that we’re going to strategically think about replacing retailers that are less productive with more productive retailers. What comes with that trade is some downtime and some frictional vacancy. So I think in those particular assets, which are really very strong assets in our portfolio, you’re seeing some of that frictional vacancy as existing tenants leases expire, and new tenants get ready to take delivery possession in those locations.

Unidentified Analyst: Got it. Then probably just a small follow-up on kind of your capital deployment opportunities. So I wanted to ask about redevelopment opportunities or greenfield development. Probably now they are not pencilling for you since you haven’t started anything, but what needs to happen kind of for these to be viable options for you?

Stephen Yalof: Sure. So if you look at the construction environment, construction costs still remain very high. And so, we find today the opportunity to buy existing product at a substantial discount to replacement cost is much more attractive than new development. That doesn’t mean we’re not looking at potential opportunities to find potential void markets or other ways. We just find that the acquisition environment today provides better risk adjusted returns overall. There is a lack of supply in the marketplace, and the demand for space is high. And so that makes it a good environment today and looking at assets.

Unidentified Analyst: Got it. Thank you.

Operator: Thank you. Next question is coming from Craig Mailman from the Citi. Your line is now live.

Unidentified Analyst: Thanks. It’s a [Nick Joseph] (ph) here with Craig. Michael, just following up on that last comment. Understand on the greenfield side, but how about on out parcel of development starts?

Michael Bilerman: Sure. So on peripheral, we talked a little bit about that half of the portfolio had some form of opportunity. We’re trying to find the right uses to bring that to the centers. From a capital deployment standpoint, that’s not a large endeavor because we already own the land and typically we’ll look at a variety of different structures depending on the use that we’re bringing but it’s something that we’re focused on in terms of intensifying the real estate. And I think we’re going to be doing this tour in Phoenix right after [NARI] (ph). That is examples of activating a lot of that out parcel. A little while ago, we had bought parcel land from the Arizona Department of Transportation, which abuts our asset. And we’ve begun to activate that. We had Texas Roadhouse, which had opened last quarter. And when you’re there post-NARI, the investors that will join will be able to see a lot of that activation emblematic of what’s going on around our portfolio.

Unidentified Analyst: Thanks. And then, are there any early takeaways from either on dwell time or sales from the Sephora openings?

Stephen Yalof: Well [indiscernible] great question on dwell time. We’re at the new metric that we’re starting to focus really heavily on. Our dwell time numbers have been anecdotal, but now with a lot of technology that’s available to us, we’re going to start to get a little bit more scientific around that because we think the longer we keep people on the property, obviously, the more money they’ll spend, and that’ll add a lot of value to our centers. That said, just going back to that Sephora example that I gave, just judging from the frequency in which a customer comes and shops at Sephora. We’re starting to see the same car shop our centers more frequently, which in the old days of outlets, the same car shopping an outlet maybe was once, twice a year.

But when you’re in the middle of the community, you serve as the shopping center for that community, and we continue to bring in more sit-down restaurants, more entertainment uses, and in this particular case, Sephora or in Ulta, we’re seeing that customer, once again, shop us far more frequently. So our centers are starting to take on more of that category of sort of an open air shopping center that is central to the geographies that they serve and ones that the customers are looking at and prefer to shop first when they think about a center that they’re going to go visit in their community.

Unidentified Analyst: Thank you very much.

Operator: Thank you. Next question is from Caitlin Burrows from Goldman Sachs. Your line is now live.

Caitlin Burrows: Hi again. Just going back to the hurricanes, I know you guys mentioned that you have business interruption insurance, but wondering if there was anything in particular that we should be expecting for 4Q? Perhaps there’s like a timing mismatch. But yes, so anything we should be thinking for the model in 4Q and I guess going into 2025 that might offset it or is the timing coincidental and there should be no impact?

Stephen Yalof: Yeah, there was nothing that stands out. We were closed for a few days in Asheville about a week and a half, but retailers, they were opening during the course of that time in [indiscernible] warehouse, which is on the site in Asheville. That store never closed. So as stores continue to open, retailers continue to pay rent. So I don’t think there’s anything that needs to go in your model.

Caitlin Burrows: Okay, got it. And then maybe just another one on the kind of acquisition capital deployment side. I don’t think it came up recognizing that today leverage is under 5 times than you used your ATM. I guess, could you just remind us on your target leverage range or maybe the range that you’re comfortable with?

Michael Bilerman: Thanks, Caitlin. We’ve targeted a net debt to EBITDA of 5 times to 6 times. We’ll float around that range depending on our deployment and being a little bit lower today with basically reducing the amount that was drawn on our line of credit at 630 through the modest equity raise that we did.

Caitlin Burrows: Thanks.

Michael Bilerman: Thank you.

Operator: Thank you. We’ve reached the end of our question-and-answer session. And ladies and gentlemen, that does conclude today’s teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.