TANGER INC. Q3 FY2024 earnings call

• Tanger delivered strong results with increased full-year guidance, driven by core FFO growth and same-center NOI increase. • Focus on executing strategic plan to drive rents, add new retailers/uses, and operate efficiently. • Shopper experience enhanced by attracting aspirational brands, diversifying tenant mix, and effective digital marketing. • Center remerchandising aimed at attracting younger, affluent demographic. • Response to hurricanes: Asheville Center temporarily closed but reopened, serving as staging for first responders. • Welcomed Sonia Syngal to the board for retail industry expertise.

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. Leasing activity saw 543 leases totaling 2.6 million square feet over the trailing 12 months, with occupancy ending the quarter at 97.4%. The company achieved its 11th consecutive quarter of positive rent spreads, delivering a blended increase of 14% on comparable space, consisting of re-tenanting spreads of 46% and renewal spreads of 12%.

• Raised core FFO per share range to $2.09-$2.13 from $2.05-$2.12, reflecting 7%-9% growth. • Increased same-center NOI growth range to 4.25%-5% from 3.25%-4.75% due to better third-quarter performance and fourth-quarter outlook. • Sold 1.3 million shares under ETM program, reducing line of credit borrowings and creating net cash position. • Quarterly dividend declared, 5.8% higher annualized than last year.

• Cyclical nature of the business. • Impact of external factors like tariffs and lower US consumption. • Potential risks related to hurricanes and their impact on operations, though minor physical impacts reported. • Competition in retail and real estate affecting occupancy and rents.

Q: Jeff Spector from Bank of America asked about market panicking on tariffs and lower US consumption, and Stephen Yalof responded that the business is cyclical, holiday shopping is ongoing with early shopping, and Tanger is well-positioned.

A: Stephen Yalof mentioned holiday decorations up, discount channel contributing to sales, and Tanger fitting the sweet spot of great brands and value.

Q: Jeff Spector asked about retaining efforts progress and outlook for 2025, and Stephen Yalof talked about Sephora as a case study, bringing in younger, aspirational customers, and local marketing initiatives.

A: Stephen Yalof discussed Sephora driving younger customers, local community and tourist appeal, and marketing initiatives like day of beauty.

Q: Todd Thomas' analyst asked about leasing spreads and acquisition pipeline, and Stephen Yalof responded that leasing spreads continue with low OCR and opportunity for growth, and Michael Bilerman mentioned active acquisition pipeline across outlet and open-air lifestyle centers.

A: Stephen Yalof said leasing spreads have potential to grow into low double digits, and Michael Bilerman noted active investment in both marketed and off-market transactions.

Q: Hong Zhang from JPMorgan asked about expense recoveries trend, and Stephen Yalof responded that expense recovery rate is influenced by rent driving and operating expense load, with continued focus on driving rents and operating efficiently.

A: Stephen Yalof explained expense recovery rate factors and expectation of continuation into next year.

Q: Caitlin Burrows from Goldman Sachs asked about re-tenanting process and acquisition environment, and Justin Stein talked about diversifying assortment with examples like Birkenstock, and Stephen Yalof/Michael Bilerman discussed activating peripheral land and active acquisition pipeline.

A: Justin Stein mentioned growing brands like Birkenstock across assets, and Michael Bilerman noted active acquisitions focusing on value addition.

Q: Floris van Dijkum from Compass Point asked about leasing spreads and acquisition environment, and Michael Bilerman responded that acquisitions focus on value addition, and Stephen Yalof talked about capital allocation and acquisition opportunities.

A: Michael Bilerman said acquisitions evaluate where to add value, and Stephen Yalof noted active market with both outlet and open-air opportunities.

Q: Greg McGinniss' analyst asked about occupancy decline and capital deployment, and Stephen Yalof responded that occupancy decline is frictional vacancy from replacing less productive retailers, and Stephen Yalof talked about acquisition environment being better than greenfield due to construction costs.

A: Stephen Yalof explained frictional vacancy and preference for acquisitions over greenfield.

Q: Craig Mailman's analyst asked about greenfield development and Sephora dwell time, and Michael Bilerman talked about peripheral activation and Stephen Yalof discussed focus on dwell time with new metrics.

A: Michael Bilerman mentioned peripheral activation examples, and Stephen Yalof noted focus on dwell time for increased spending.

Q: Caitlin Burrows from Goldman Sachs asked about hurricanes and leverage, and Stephen Yalof responded that hurricanes had minor impact with no material effect, and Michael Bilerman talked about target leverage range of 5-6 times net debt to EBITDA.

A: Stephen Yalof said no material impact from hurricanes, and Michael Bilerman discussed target leverage range.