Good morning. This is Cyndi Holt, Senior Vice President of Capital Markets, and I would like to welcome you to the Tanger Factory Outlet Centers Fourth Quarter and Year-end 2021 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 Investor Relations website, investors.tangeroutlets.com. Please note that during this conference call, some of management's comments will be 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, including funds from operations, or FFO, core FFO, same-center net operating income, adjusted EBITDAre, and net debt. 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, February 18, 2022. On the call today will be Steven Tanger, our Executive Chair; Stephen Yalof, Chief Executive Officer; and Jim Williams, Executive Vice President and Chief Financial Officer. I will now turn the call over to Steven Tanger. Please go ahead, Steve.

Good morning, and thank you for joining us for our fourth quarter and year-end 2021 earnings call. We ended 2021 in a meaningfully stronger position than we entered with improvements in traffic, tenant sales, and occupancy at our open-air shopping centers. We are also entering 2022 with a well-positioned balance sheet, which we proactively strengthened in 2021 in anticipation of higher interest rates and inflation. Our long-term strategy is to increase cash flow and the value of our real estate. I want to thank our entire team for their hard work and focus on driving this success. I will now turn the call over to Steve Yalof, to provide additional details.

Thank you, Steve. The fourth quarter punctuated a year of continued improvement as consumers demonstrated their desire to shop at Tanger Centers and retailers recognized the benefits of being in our open-air shopping centers. In the fourth quarter, we delivered positive results across each of our key metrics. Domestic traffic during the quarter exceeded 2019 levels, was up 12% from the fourth quarter of 2020. Occupancy recovered to 95.3%, representing a sequential increase of 90 basis points and a 310-basis-point year-over-year increase. Tenant sales reached an all-time high for our portfolio at $468 per square foot, a 17.6% increase over 2019 and generated significant percentage rental growth. And cash blended rent spreads improved 220 basis points sequentially and 650 basis points year-over-year as renewal rent spreads turned positive. Taken together, all of these metrics helped generate year-over-year same-center NOI growth of 5.6% for the fourth quarter and 16% for the full year. Additionally, throughout the year, we took a number of proactive steps to further enhance our balance sheet and liquidity position, extend our maturities, reduce our leverage, and position us to execute on our capital plan and growth opportunities. Since the beginning of 2020, we recaptured over 1 million square feet of space due to COVID-accelerated bankruptcies and brand-wide restructuring. During 2021, we executed 337 leases, totaling over 1.4 million square feet, recovering 310 basis points of occupancy and filling space with more productive tenants. These include high-quality footwear and apparel retailers, elevated fashion brands, and diversified uses such as food and beverage, specialty grocery, home and experiential concepts. We continue to benefit from our temporary leasing program, led by our field organization. Temporary tenants diversify our offering and add new concepts and uses that ultimately drive revenue. Additionally, our temporary tenant program helps draw new customers to our shopping center, increases visit frequency, and extends stays that ultimately yield higher sales per customer visit. Our goal, when appropriate, is to convert select tenants from temporary to permanent. Percentage rentals during the fourth quarter, again, outpaced our expectations, led by ongoing tenant sales strength. Our strategy of exchanging value for value while we renewed and restructured deals during the height of COVID proved fruitful. Deals where we reduced base rents for larger percentage rent shares drove ratably larger percentage rent revenues. In many cases, this strategy produced total rent that exceeded the prior contractual fixed rent, growing our core FFO. As these deals come up for renewal in 2022 and 2023, we are focused on converting most of the variable upside into fixed rents to provide longer-term certainty. These restructures, along with the proactive deferrals we employed during the pandemic, have proven to be effective, and we are in a favorable position as we emerge from the challenges of the pandemic. Sales and traffic momentum is supporting our ability to increase rents. Cash blended rent spreads for comparable leases executed in 2021 improved significantly, and renewal spreads turned positive, an important milestone. In-place rents at year-end represented an occupancy cost ratio for 2021 of 8.1%. This is meaningfully lower than other retail distribution channels and provides an opportunity for rental rate upside. Currently, we have renewals executed or in process for 39% of the space expiring in 2022, compared to approximately 45% of the 2021 expirations at the same time last year. Our fourth quarter results have given us the ability to better price our real estate, and we are now accelerating our renewal activity. We are also encouraged by our discussions with prospective new tenants and with current tenants looking to expand, and we are pleased that we are seeing an increase in the number of opens to buy for new outlet stores. Non-store revenues remain a strong contributor to our earnings growth, as evidenced by other revenues line item, which increased over 40% during the fourth quarter compared to the same period of 2020 and over 50% compared to the fourth quarter of 2019. Our high-traffic open-air shopping centers provide an opportunity for our retailers and national brands to connect with our shoppers outside of the four walls of their store through marketing partnerships, on-center sponsorship, and digital and static media. In 2021, we hosted major activations for such brands as Heineken, Tesla, Unilever, GEICO, and Hilton, just to name a few. As this strategy has proven to drive measurable results for retailers and sponsors, we will expand this business and grow the revenue-generating platform over time. We continue to invest in our people and systems in order to scale our business. Last year, we brought on Justin Stein as EVP of Leasing, and we promoted our EVP of Operations, Leslie Swanson, to Chief Operating Officer. Additionally, we added a Chief Commercial Officer, Andrew Wingrove, to our management team. This is a new role for Tanger, and it demonstrates our commitment to commercializing our business through digital transformation, modernizing our loyalty programs, and creating an experience through all touchpoints that engage our customers. Andrew has extensive experience in elevating marketing programs, loyalty strategies, and customer centricity at companies including Macy's and Delta Airlines. We are investing in technology and business systems to enhance our core business capabilities. Our investment in, and implementation of a new ERP system will support our ability to effectively scale further. We remain laser-focused on sustaining the internal growth that generated strong cash flow in 2021. Additionally, we are pursuing a number of value-enhancing investments, including solar, electric vehicle charging stations, and other projects to reduce energy and water usage, all underscoring our commitment to sustainability. Our peripheral land team is aggressively pursuing opportunities to monetize our outparcel portfolio, unlock new opportunities to enhance our offering, generate new revenue streams, and create long-term portfolio value. Tenant interest in our Nashville project has been strong, and we are on track to break ground in the first half of this year, with a grand opening in fall of 2023. I'm extremely proud of the entire Tanger team and the results that they achieved for 2021. I would also like to thank the hundreds of retailers and merchants so vital to the success of Tanger for their great results on our platform. The value proposition of our open-air centers is being validated by shoppers, tenants, and the communities we serve. I would now like to turn the call over to Jim Williams, to take you through our financial results, balance sheet, and outlook for 2022.

Thank you, Steve. I am pleased to report that our results for the full year 2021 exceeded our expectations, and we delivered full year core FFO of $1.76 per share, above the high end of our guidance range. Our outperformance was due to better-than-expected contributions from percentage rentals, occupancy gains, and other revenues. These factors also drove a year-over-year increase in same-center NOI for the total portfolio of 5.6% for the quarter to $82.8 million. Our balance sheet is well-positioned due to the proactive capital market steps we took during the past year. We amended our lines of credit, extended our maturities, and executed a successful ATM equity issuance strategy to significantly reduce our leverage and enhance our liquidity. We have no significant debt maturities until April 2024. And as of year-end, our net debt to adjusted EBITDAre improved to 5.5x for the trailing 12 months compared to 7.2x for the comparable 12-month period. As of year-end, 93% of our outstanding debt was fixed. We have always prioritized maintaining a strong financial position and a disciplined and prudent approach to capital allocation. For the full year, our dividend was well-covered, with an FAD payout ratio of 53%. Our Board will continue to evaluate dividend distributions alongside earnings increases and taxable income distribution requirements. Our priority uses of capital are investing in our portfolio to grow NOI and evaluating selective external growth opportunities. I would like to highlight a few changes we have made to our disclosures with our year-end reporting to improve comparability with other open-air retail center REITs. We have added our pro rata share of JVs to certain metrics to provide a more comprehensive view of our portfolio. We are now providing leasing spreads on an executed basis rather than a commenced basis to provide a more forward-looking metric. But during this transitionary quarter, we also provided these on a commenced basis. We are introducing our guidance for 2022. We expect core FFO to be in the range of $1.68 to $1.76 per share and are pleased to reintroduce guidance for same-center NOI growth at a range of 1.5% to 3.5%. Included in our guidance are the investments that Steve discussed to support our growth, which are primarily reflected in our G&A expectation of between $69 million and $72 million. This includes investments in building the team and technology, critical to executing our core strategies of reshaping operations, accelerating leasing, and growing our commercial strategy. Additionally, as part of our commitment to our employees, we reevaluated our benefits packages and have improved our employee health insurance program, which will have an approximate $1 million impact on G&A. Finally, due to the capital markets activity in 2021, our guidance assumes 2022 weighted average diluted common shares of approximately $110.5 million or FFO per share compared to $106.8 million in 2021. For additional details on our key assumptions, please see our release issued last night. I'd now like to open it up for questions. Operator, can we take our first question?

Our first question today is coming from Katy McConnell from Citi.

I was wondering if you could walk us through some of your expectations for noncore line items embedded within guidance this year that could be impactful, including straight-line rent, FAS, lease term fee income, and new bad debt expense for this year?

Good morning, Katy. We have provided in our guidance range what we believe are the key factors influencing the results, which include same-center NOI increases of 1.5% to 3.5%. I want to mention that there will be a slight dilutive effect due to the equity offerings we completed last year. The shares issued will be outstanding for the entire year this year, unlike last year when they were only outstanding for part of the year. This will result in a diluted impact of about one to two cents this year. Regarding the other items you've mentioned, we won't provide specific guidance as there isn't anything significant to highlight compared to year-over-year in those areas.

Okay. That's helpful. And then what's your outlook for free cash flow generation this year? And maybe if you could walk us through how you're thinking about the major sources and uses of capital for this year, including your higher CapEx expectations? And what you plan to spend on the national project?

As for our capital expenditure, we recently provided guidance of about $55 million, which represents the recurring expenses necessary to lease and maintain our properties. This figure is somewhat higher than what we typically see, where the range over the past three years has been around $35 million to $40 million. It's worth noting that we have a larger number of renewals anticipated. Last year, we spent far less on tenant allowances as part of our strategy to avoid entering long-term leases in a declining market. However, we are observing improvement in these trends, and many of the shorter-term leases will transition into 2022. Given the increase in traffic and sales, we're feeling more optimistic about finalizing renewals and establishing more permanent leases, which could result in higher expenditures in that area. Additionally, we have four or five projects within our portfolio that will undergo extra renovations to enhance the overall appeal and experience for our customers.

And then just on the free cash flow expectation?

On the free cash flow expectation?

If you can give us any sense for what you're expecting this year?

I think if you look at our expected current payout ratio after dividends, it will be pretty healthy. I believe we'll still be in the 50s, which positions us well as we approach 2022.

Our next question is coming from Samir Khanal from Evercore ISI.

Steve, can you provide a bit more information on the guidance, what you're assuming for tenant sales, which have certainly rebounded at this time, just to kind of get to the low end or the high end of guidance?

The low end of our guidance assumes little to perhaps a reduction in tenant sales, and the high end of our guidance takes into consideration improvement in tenant sales. But personally, we're optimistic about tenant sales. We feel pretty good about the momentum that we have coming out of the fourth quarter going into this year. And with inflation, we've just found in past years that inflation values our channel and the discount channel.

And in terms of just looking at guidance, again, one of the drivers for growth has been that other revenue line, which is the paid media and marketing you talked about. I mean, at this point, when you look at that line, it's clearly about 30% over what we saw in 2019. I guess, how much more is there you can do on that line as we think about your outlook range for '22 that you provided?

We started this business about 1.5 years ago, and it continues to grow from a very low starting point. We believe it will become a more significant part of our business in the coming years, and we plan to invest in it further. Part of that revenue comes from digital media. As we invest in digital media boards, we see a return on that investment while pursuing marketing opportunities with retailers in our shopping center portfolio and other media partners like Unilever and Heineken. They want to showcase their products to the 125 million to 150 million people who visit our shopping centers each year.

Your next question is coming from Todd Thomas from KeyBanc Capital Markets.

Steve, you talked about the deals that you got during the pandemic, where you reduced breakpoints and traded fixed rent for higher variable rent, and that seems to be paying off. What percent of the tenant base is not paying full freight today or fixed rent? And what's the uplift that you're expecting on average as you convert those tenants back to fixed rent, which I think you said would generally take place in '22 and '23?

We have a significant number of renewals expected this year, and we view this renewal group as a chance to increase rents. When our leasing team meets with our tenants, we first discuss sales and traffic, which have been improving steadily over recent quarters. This improvement allows us to adjust our real estate pricing and raise our rents, which is our strategy going forward. Regarding the temporary leasing we engaged in over the past year, we are looking at it as an opportunity to replace some of the short-term leases with longer-term permanent leases at market rates and full-paying base rents with triple net leases. Additionally, we have allocated funds in our budget for tenant allowances due to our expectations of a significant increase in longer-term commercial permanent rents.

Okay. If you exclude those tenants with whom you made deals during the pandemic from the renewal bucket, what does that look like compared to the rest of the renewal activity you are experiencing?

It would probably be more of a normalized renewal year.

Okay. But what is the increase in rents and the spreads you are observing from those tenants?

Well, again, I think we're going to go after what we consider to be market rents with every renewal that comes in front of us. And we think our real estate is worth it. We reported an 8.1% occupancy cost, which we believe is the lowest in any retail channel. So there's great value. There's opportunity and upside for us to push those rents. I don't think we get a tremendous amount of pricing resistance from the retailers because we're still that one value channel from a retailer pricing point of view, but also from sales volume point of view, I think we're probably one of the most profitable for the retailers as well.

Okay. And if I could just follow up on Samir's question a bit, related to the G&A increase and the investments in technology and the commercial businesses that you've described, the marketing and sponsorship. How big of a business could this be for Tanger? And Jim, what's in the guidance for that business segment in '22?

Todd, this is Jim. We're excited about the team we've assembled and the progress we've made. We've been targeting top-tier tenants and employees who contribute to this team, and we're seeing positive results in various areas, particularly in driving additional income and enhancing our specialty leasing and temporary tenant programs within the core organization. We believe there's room for further improvements as our team gains more experience. All these factors are integrated into our same-center NOI guidance.

Todd, I'd say one thing. Just as we look at the G&A number as it relates to building these businesses, we're setting up an infrastructure in order to help us monetize these businesses in a way that we've never had before. Again, I mentioned when Samir asked the question, that this marketing partnership business and this paid media business is kind of a brand-new business for us. But because we've gotten such great traction and it continues to build, we're now going to put systems in place so that we can do a better job of managing it, managing our inventory and getting out in front of the tenant a lot faster. We think the faster we can execute to getting in front of tenants and getting deals done, we can generate even more revenue. And that's our plan. So we're investing today to make sure that we're setting up the systems in order to ultimately execute to a much bigger bucket on a going-forward basis.

Next question is coming from Floris Van Dijkum from Compass Point.

I want to address some of the issues you've mentioned. Could you provide an overview? I understand that 18% of your rents are due in 2022, while the typical figure is closer to 10%. So, is the 8% attributed to percentage rent deals? Additionally, could you share the average rent of the leases expiring in 2022 compared to the new rents you're signing at around $30? It would be helpful to give some reassurance about potential spreads.

I can't say that we're providing guidance on spreads, but I can express optimism that our renewal spreads have turned positive, which is definitely a good sign. We believe we will achieve positive spreads as we move into this year, and that's our goal. We've recently appointed a new Executive Vice President of Leasing who is inspiring the team like never before. We're enhancing our leasing strategies and analyzing our retail performance based on sales per square foot on a daily basis, adjusting our real estate pricing accordingly. We view our 8% occupancy costs as a significant opportunity, especially with 18% of our leases coming due this year, which we also see as a chance. Our strategy is to replace that short-term leasing, which proved essential to our success last year, with permanent leasing and price our real estate accurately based on its current value. With prices reaching an all-time high at $468 per square foot across the portfolio, we believe our real estate also reflects a record-setting price per square foot, and our intention is to capitalize on that.

And, Floris, this is Jim. I would like to add that as we move into 2022, our tenant health is in a significantly better situation than in previous years. Our watch list is shorter than it has been, and there are not many tenants on it anymore. We do not anticipate any store closures. Thus, we are not required to focus on occupancy gains as we have in the past. With the improvement in tenant health, along with positive trends in traffic and sales, we feel more optimistic about our potential for increasing rent brands in 2022.

And if I can ask one more question, I guess, maybe if you can talk about your leased versus occupied spread and what percentage of your occupied is temporary?

There's about a 30 basis points spread between leased and occupied right now, Floris. The temporary tenants are in the low double digits, which reflects the strategy we've employed. We aimed to ramp up that program to drive revenues and enhance experiences. Additionally, in the fourth quarter, there's typically a rise due to the seasonal tenants that usually open for the holiday season. I believe you'll see those close in the first quarter of 2022.

Jim, by low double digits, you're talking about below 15%?

Yes.

Next question is coming from Caitlin Burrows from Goldman Sachs.

Maybe just a quick follow-up on that tenant health and watch list topic. Jim, I know in recent years, you had like a buffer in guidance so that if there were some unknown closures that guidance could absorb that, and then if there wasn't, there was upside. So could you just tell us whether this year's guidance assumes something like that, where if there is possible unexpected closures it could absorb it or not given the health of the tenants?

So, Caitlin, I believe that within our range, we can handle some of that, but we don't have a significant buffer because based on what we're observing and hearing, the trends have improved, and we are in a much better position than we were in the past.

Okay. Yes. No, that makes sense. And then just maybe on the external side. I think, in the past quarter or two, you guys have talked about there possibly being attractive acquisition opportunities. And I know you've done a lot of work over the past year so on the balance sheet side. So could you give an update on what you're seeing on the front of possible acquisitions that could occur in '22?

Yes, we prefer not to disclose any details until a deal is finalized. However, there are certainly intriguing opportunities in the market. The Tanger brand is well-known for outlet shopping, and we enjoy excellent brand recognition both domestically and internationally. We see significant potential to develop outlet centers and introduce our TangerClub loyalty program along with the various services offered at Tanger shopping centers to other properties.

Our next question is coming from Craig Schmidt from Bank of America.

I wanted to discuss gas prices. In the past, you've mentioned that rising gas prices haven't affected traffic, but we are hearing predictions that gas prices could reach $5 this summer. If the situation between Russia and Ukraine worsens, prices could even rise to $7. What are your thoughts on whether these increases might have an impact? Or do you believe traffic will remain as anticipated?

You really should consider getting an electric car. We're currently making significant investments in e-charging stations, and by the end of the year, each of our properties will have one. Regarding gas prices, the outlet centers today are quite different from those 20 or 25 years ago. I don't want to age myself, but in our markets, especially in drive-to resort areas that also serve as popular second home locations, many people are spending more time in these areas thanks to flexible work arrangements. We're noticing increased traffic at our shopping centers during the week, which indicates that more people are living closer to them. The distance that used to separate shopping centers from residential areas has greatly decreased. Many of our shopping center locations from 10, 15, or 20 years ago have evolved into key residential hubs that are experiencing substantial growth. For instance, Savannah is a perfect example; while we're located outside of downtown, the area of Pooler is rapidly expanding. Our Westgate Shopping Center in Arizona has also seen remarkable performance, largely due to the growing permanent population. As we explore new opportunities and invest in our existing properties, we're focusing significantly on areas where the permanent population will drive future growth for our shopping centers.

Okay. And then just what is the pre-leasing that's done at Nashville?

We stated that we won't start construction until we have 60% committed, and we're planning to begin in early second quarter. So, we will not commence without that commitment.

Okay. So you're either very close or already there?

Yes.

Next question is coming from Mike Mueller from JPMorgan.

Following up on Nashville, can you give us some rough stats and parameters for the size or the economics of the project? And how you think your tenant looked like you moved to the average Tanger center today?

Yes. The Center will be about 300,000 square feet, which is slightly smaller than a typical Tanger center. With regard to the tenant mix, we know that we're in an extremely competitive market, so we're not really releasing the names on the tenants, but that will be forthcoming. The important part of the geography of that shopping center, we're on the south side of the market. We're also part of a mega pad that is part of a $1 billion investment, not only in infrastructure, but in residential housing, hotel. It is on the same site as the practice facility for the professional soccer team in Nashville. It's directly across the street from the professional practice facility for the hockey team. So we think, not only will we benefit from the permanent population, to Craig's point earlier, but also as folks come in for soccer tournaments and hockey tournaments, there's a huge hospital that also sits on that same mega pad. We just think being part of a mixed-use development. It's a little bit different than how we've pursued real estate in the past. This has a built-in client base for our retailers, but also its proximity to Nashville will give us a great draw for the tourists that visit in that booming market.

Got it. And any rough color on anticipated economics returns?

Yes, it'd be a typical return for us. We always look going in at a 7% to 7.5%, third year stabilized. There may be some upside in that, as that market gets increasingly more competitive for retail space, we can push rents.

Our next question is a follow-up from Caitlin Burrows from Goldman Sachs.

Just a quick one. I don't think it was brought up, but just wondering on the idea of the temp tenants, totally get the strategy there. But wondering if you could just clarify what portion of the portfolio they made up in the fourth quarter?

We said at the end of the third quarter that we were just over 10%. I think it got a little bit higher in the fourth quarter, but a lot of that was just seasonal temp tenants. That's pretty typical. Holiday pop-ups and things of that nature.

Maybe like 11% or 12%?

I don't think it was that high.

We reached the end of our question-and-answer session. I'd like to turn the floor back over to Mr. Tanger for any further or closing comments.

Thank you, everybody, for your interest in our company. Steve, Jim, Cyndi, and I and our entire team would be happy to answer additional questions after this call. We look forward to seeing some of you in person, hopefully, at the upcoming Citi conference in a couple of weeks. Be well, and have a great weekend. Goodbye.

Thank you. 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.