Good morning. I'm Ashley Curtis, Assistant Vice President of Investor Relations, and I would like to welcome you to Tanger Inc's Second 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, August 2, 2024. 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, and if time permits, we are happy for you to reach you 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.

I'm pleased to announce another quarter of strong performance and an increase in our full-year guidance. Our same center NOI grew by 8% from the prior year while FFO per share was up 13%. These results demonstrate the continued execution of our strategy and our focus on optimizing our value proposition for both retailers and shoppers. We are elevating the retail mix in our centers and creating a community experience to drive traffic and increase engagement. Our centers are well located in fast-growing markets that benefit from an attractive mix of tourists, seasonal and local residents. We are delivering a personalized and engaging experience to target each of these audiences. Year-to-date traffic held to last year's levels with growth in May and June. We've also seen continued positive momentum in sales with another sequential quarterly increase in our sales productivity for the trailing 12 months. We continue to enhance the value of our centers for our customers by curating the right mix of brands, food and beverage, and entertainment uses, and elevating and creating an exciting and dynamic shopping experience. This strategy has led us to achieve our 10th consecutive quarter of positive rent spreads, which drives total rent and NOI growth. Demand for our space continues to be strong, driving robust leasing activity. We've executed 2 million square feet of leases over the trailing 12 months at an average spread of 15%, which we believe demonstrates the importance our retailers place on being in a Tanger center. We ended the quarter with 96.5% occupancy. As of quarter-end, we had renewals executed or in process for 66% of the space expiring this year ahead of last year's pace. We continue to believe in our real estate and focus on optimizing our merchandising mix, whether through renewals or re-tenanting where appropriate. We are very pleased with the execution of our strategy to enhance and diversify our retailer mix with more productive brands. In addition to growing relationships with our existing tenants, we've seen approximately half of our re-tenanting activity come from new-to-portfolio brands over the past year and a half. And many are seeing success and expanding. For example, we've executed leases for six new Sephora stores, five of which are under construction and will open in the coming months. We're also activating peripheral land with concepts that draw additional traffic. Our new tenant pipeline is strong, and we are encouraged by the momentum going into next year as we grow relationships with new and innovative brands. As publicly announced, Rue21 and Express both recently went through bankruptcy proceedings. We maintain proactive relationships with all of our tenants and we are prepared for these situations and work expeditiously to a resolution. Out of the 50 combined stores in our portfolio, only one was rejected, and we elected to recapture three other locations with near-term expirations to immediately re-tenant at greater rents. The Rue21 stores closed while they went through their ownership change and they have begun to reopen and will all be open prior to the holiday selling season. In May, we published our 2023 ESG report, which discusses our focus on enhancing our sustainability metrics, resource efficiency, stakeholder engagement, and return on these investments. A few highlights include our notable increase in renewable energy production and the further rollout of electric vehicle charging stations, our initiatives to foster a healthy workplace culture and community involvement, and our commitment to diversity, governance, and investor engagement. In June, we were honored to receive the 2024 Nareit Investor CARE Gold Award for communication and reporting excellence. I want to thank the entire Tanger team, our customers, and all of our stakeholders for their continued support. I'd now like to turn the call over to Michael to discuss our financial results, balance sheet, and outlook for the remainder of the year.

Thank you, Steve. Today I'm going to discuss our second quarter financial results, our balance sheet activity, and our increased guidance for the year. In the second quarter, we delivered Core FFO of $0.53 a share compared to $0.47 a share in the second 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 8% for the quarter, driven by higher rental revenues from the continued strong retailer demand and robust leasing activity, leading to increased base rents as well as higher expense recoveries. Our second quarter same center NOI also benefited from flat operating expenses versus last year, in part based on the timing of our operating expenses throughout the year. Within our non-same center pool, we are pleased with the performance at our three recently added centers in Nashville, Huntsville, and Asheville. They are performing in line with our expectations and we are continuing to execute on our leasing, merchandising, and marketing strategies at each center. Our balance sheet remains well positioned to support our internal and external growth initiatives with low leverage, a largely fixed-rate balance sheet, almost full availability on our lines of credit, essentially no debt maturities until late 2026, and ample free cash flow after dividends given our low dividend payout ratio. At quarter-end, we had $1.6 billion of pro rata and net debt with a weighted average interest rate of 4.1%. Our net debt to adjusted EBITDAre was 5.4 times for the 12 months ended June 30 and pro forma for a full year of adjusted EBITDA for the three new centers that we added in the fourth quarter, we estimate that our leverage ratio would be between 5.1 times to 5.2 times, still one of the lowest in the retail and REIT sectors. As previously announced, during the quarter, we also extended the maturity, increased the borrowing capacity, and reduced our pricing on our unsecured lines of credit. At quarter-end, we had $585 million of availability under our lines and $20 million of cash and cash equivalents. In April, our Board approved a 5.8% increase in our dividend to $1.10 per share annualized, with the shares yielding approximately 4% today. 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 increasing our core FFO per share expectations to a range of $2.05 to $2.12 from a prior range of $2.03 to $2.11, implying 5% to 8% core FFO growth. We are increasing our same center NOI growth expectations by 75 basis points at the midpoint to a range of 3.25% to 4.75%, up from 2.25% to 4.25% last quarter. The increases are due to the better than expected performance in the second quarter and our outlook for the balance of the year. For additional details on our key assumptions, please see our release issued last night. And now, I'd like to turn the call for questions.

Good morning. It's Andrew Reale on for Jeff. Thanks for taking our questions. Could you just discuss in a little more detail the property expense timing benefit in the period? I guess, what specifically saw the benefit? And are there any timing impacts to be aware of in the second half?

Thanks, Andrew. Yeah, when you look at our operating expenses between what we spend on our common area maintenance as well as our marketing expenses, those could be variable through the year, but in part, it impacts what was spent in the year prior in terms of that year-over-year comparison. So when we look at our operating expenses in the second quarter, they were flat year-over-year. And as we think about the full year, that sort of blends into our expectations of same center NOI, which we raised at both the low and the high end. We just have some variable timing as that expense flows through each quarter, affecting that year-over-year on a quarterly basis impact.

Okay. Thank you. And then guidance suggests some meaningful deceleration in the same center NOI growth in the back half. Is that just largely due to more downtime as you ramp up re-tenanting efforts, or are there other factors to call out there? Thank you.

We look at our business on an annual basis. And when you look at where our guidance is moving, what you've seen is both that low-end coming up and the high end moving up. And so, on a quarterly basis, just going back to that first question, that quarterly impact from the same center perspective is going to get impacted by the timing of that expenses year-over-year. But in aggregate, for the year, our business is producing very well, as we've continued to see that growth. I would say on the revenue side, there is a little bit of downtime associated as those Rue stores reopen, but that's not a significant impact. And all of that has an exit rate as we go into next year as all those stores will be open.

Good morning. I have a question about the Rue21 leases. You had 20 before, and now 18 are ongoing. Could you discuss the financial aspects of those leases compared to where they stood previously? Will all 18 stores open before the holiday season, or will some be opening in the third quarter as well?

Good morning, Floris, and thank you for your question. Regarding Rue21, we initially had 20 stores, and we'll have 18 reopened before the year's end, many of which are already open. While we won't go into specifics about each deal, we did mention that we decided to reclaim two of those stores because we could quickly fill them with higher-paying tenants, which helps offset some of the expenses. After COVID, we made some favorable agreements with tenants in bankruptcy, focusing more on the over-rent aspect. We believe that with the new leadership, Rue21 will provide a good return for us. Our customers really enjoy that brand, and we anticipate excellent outcomes from those stores under the new management. The first store to reopen in our portfolio with the new leadership was in our Mebane, North Carolina Center, close to our corporate office, where I was the first customer. It was a fantastic shopping experience, and the stores look incredible.

Thanks, Steve. Can you provide some insights on the transaction markets and what trends you're observing? Are we likely to see the addition of another lifestyle center, or is there sufficient opportunity in the outlet sector to add another outlet before the end of the year?

Thanks, Floris. By practice, we only get to announce deals when they're executed. I think we are very active in the marketplace looking across each of the strategies that we're after and deals will come about. It is a competitive marketplace. The lens that we are looking through is where can we add value in deals that we want to bring into the Tanger portfolio, where we can create that value from our leasing, our marketing, and our operations to really drive value over time for our stakeholders. And the balance sheet is extraordinarily well positioned with low leverage and a lot of liquidity to be able to act. Opportunistically when deals come about, we're going to remain very prudent and disciplined on our external growth. And we have a lot of internal opportunities as we continue to grow our same center NOI and activate a lot of our peripheral land.

Hi, thanks. Good morning. I wanted to follow up on the same store and timing of expenses just to help understand the quarterly cadence in the second half. I think you spoke previously about the full-year expense recovery rate being in the mid-80% range, maybe slightly better, which would suggest a very steep decline or drag from net recoveries in the second half of the year. Does the updated guidance and same store forecast include an update to the recovery rate for the full year that you're anticipating? Or is that sort of middle mid to maybe high-80% range still the right place to be for the full year?

Yeah. Thanks, Todd. And I think you hit it right, which is our expense recovery rate because our TAM is largely fixed and because we have variable expenses, and those expenses tend to be heavier from variable expenses in the back half than they are in the first half, just naturally, the percentage is going to be lower in the second half, right? And so we continue to believe, you saw the expense recovery rate in the first half averaged about 90%. And we continue to expect to be in the mid-80s for the full year, which would imply sort of high-70s, low-80s in the back half from a recovery rate as TAM is largely fixed and that expense load will be a little bit variable in the second half.

Okay. As we look ahead to 2025 in relation to this year, how should we approach net recoveries going forward? I understand that there are some leasing initiatives in progress, and that you've mentioned changes to the lease structures and the tenant base. Can you maintain this high rate of expense recovery? Is there still potential for improvement, or might it become a challenge next year when we consider year-over-year comparisons?

So we're not prepared to give 2025 guidance, but stay tuned for that for next February. But our strategy is we continue to push rent. You see the leasing spreads that we disclose in the supplemental that pushes both base rent and expense recoveries. So we're trying to grow that amount and we're trying to operate as efficiently as possible in terms of our expenses. And so these trends, I mean, that's what we're trying to keep on driving NOI growth. That's the whole name of the game is trying to drive NOI and cash flow growth. And so, that's what we'll continue to try to push each and every day.

Hey, good morning. Steve, I think adding Sephora to the portfolio was a great move. I'm just wondering if you've seen an increase in inquiries or interest from tenants you've been engaging with, or even new tenants you haven't contacted yet, since that announcement. Are there any who are looking to open their first outlet or are now more interested in Tanger due to it?

Yes, we can say that half of our new leasing in the last 18 months has been from retailers new to the Tanger platform. They are responding to various factors, primarily the transformation of our shopping centers. We are moving from solely outlet retail to incorporating better food and beverage options, entertainment, local businesses, and enhanced amenities. This approach appeals to both local customers and tourists, leading to longer stays, increased foot traffic, and heightened visit frequency. The addition of Sephora exemplifies this strategy, as their loyal shoppers are likely to visit our centers more often than they would traditional outlet stores. We believe this synergy will foster further discussions with brands looking to connect with customers they may not otherwise reach through their typical channels.

Can you provide an update on the blended OCR compared to the target of 10% to 12%? How many of your centers have already reached that target and which ones still need more work? It would be helpful to have a breakdown of this information, as it can sometimes be overlooked in the averages.

Sure. It makes sense. And look, I would say, we disposed of a few non-core assets over the past two or three years. Most of the remaining centers in our portfolio are all positive contributors. So currently, we're at about a 9.4% OCR. We only started talking about this several years ago. We were at an 8%, and said that we've got opportunity to get into the double digits. It takes time to get there because we certainly don't touch every single lease every year, but the spreads are great contributors to us growing our rents. We have a strategy of replacing versus renewing. Our retention rates have been historically 95% over the past few years. We're leaning a little bit more heavily into replacing some of the retailers that need to either be right-sized or just aren't as productive as they might have been with far more productive retailers, evidenced by the Sephora brand that you just mentioned and a number of others. So we think all of those will lead to us to continue to drive rents, grow our productivity in each of our centers on a sales-per-square-foot basis, and make our shopping centers far more interesting for the customers that come and visit us every day.

Hey, good morning. I just want to follow up on your comment regarding activating peripheral land. Can you give us any details in terms of how much space is left to add outparcels or just kind of entitlements on square footage? Any sort of detail you can provide in terms of what the opportunity set is on that peripheral land would be appreciated.

Sure. Well, first of all, we've said in the past, and I'll reiterate that over half of our shopping centers have some peripheral lands attached to them. Most of that land is already approved by virtue of being on a retail footprint already. So the improvements are there, the parking facilities are there. So that peripheral land activation is a great source of revenue for us because it requires relatively low capital and relatively high returns. There are some instances where we all have a pad or two, and other instances where we have acres of land that were earmarked for either a Phase 2 of one of our productive shopping centers or some alternative uses, some of which that we've executed to in recent years are hotel pads, entertainment uses like Dave & Buster's, sit-down restaurants, from Cracker Barrel to Texas Roadhouse, and most recently, our most recent executed lease in Savannah, Georgia, where we've added a Planet Fitness. So we're looking to monetize that land, but also create important destinations for the local catchment as well as the tourists that shop in our shopping centers.

Okay. I do think that we investors may appreciate a little more disclosure in terms of where money is being spent on that peripheral land, expected yields on that, how much is available. But, as my follow-up question, just looking at the Huntsville occupancy…

Greg?

Yeah.

Page 10 of our supplemental includes all the money we spend on our activities, encompassing our portfolio investments, new developments, and all the TAs, as well as our operating CapEx, so all the figures are available there.

Yeah, no, I appreciate that. Just some details on the projects would be appreciated. Just for the follow-up on the Huntsville occupancy, it seems like there's been a couple of declines over the last few quarters. I'm just curious what's driving that? How touring's going for that property? What you expect that kind of on the long-term lease up and over the next few years, what kind of tenants you're trying to add in? And what might be happening on the occupancy front?

Sure. Well, we closed the deal with an occupied Bed Bath & Beyond that we knew was going to close. We had a number of retailers interested in that box. We're under contract with one right now. Initially, our strategy was re-tenanting where that location was, but we're moving forward with a deal that's currently in process, and that'll get the occupancy number up because that's really what that material decline or the decline that you're talking about was really due to that one space, pretty big space relative to the size of the shopping center. But with regard to leasing, we've added Warby Parker. We just executed a lease with Starbucks, and there's a number of new brands to come. That shopping center was a great buy for us at the going-in yield, but there's a lot of opportunity as spaces will start to turn over the next couple of years to re-tenant it and upgrade the retailer mix. There's a lot of interest in the property. And as is our practice, we don't typically mention retailers until we've executed those leases. So there'll be some really good news stories coming out of Huntsville, Alabama in the next coming months and quarters.

Good morning. Steve, could you provide more insights on sales and traffic? You mentioned this briefly in your comments, but what have you observed in July regarding sales and possibly traffic on a sequential basis, especially considering the challenges consumers are facing with inflation and a slowing economy? I'm looking for more details on this. Thank you.

Yeah. Well, we reported that our sales have grown sequentially the last two consecutive quarters against relatively flat traffic numbers, anticipating July, probably to follow the similar trend. The good news part of that story is with very little new retail development, we still have a very active queue of retailers that are lining up to take space in our shopping centers. Now, there's been a lot of activity in the outlet business, all of which we think is really good for our industry. L Catterton's investment in a European outlet company, the high occupancy at which Nashville opened, Tulsa, which is the premium center that will open in the coming weeks, we understand will open at a very high occupancy, really speaks to retailer interest in our space and the demand that's pushing the rents.

Yeah, I think that there's definitely from a retail fundamental perspective, which is really across all the different formats. There certainly is interest and combined with the overall rate environment, I think that could unlock some opportunities. And we'll just be prudent and disciplined as we go about them, and expect more stuff done, hopefully, will be on the market, and we have a big pool to fish in.

Hi, good morning. I have some follow-up questions on the topics we've discussed. I'm surprised the leasing activity page showed that the number of re-tenanted leases was similar to last year, even though the square footage increased, possibly due to the halfway point of the year. Can you share what the year-to-date retention has been and how the downside fits into that? Additionally, can you clarify the timeline of when you began taking a firmer stance on renewals, when you started signing those leases, and whether we’ve seen any outcomes from that yet?

We discussed our retention rates in 2022 and projected them to be around 95% going into 2023. Most retailers are reluctant to close stores that generate positive cash flow, especially after making the initial investment. If they need to shift that cash flow elsewhere, it will require additional capital. Given this, we are pleased with our high retention rate, as we've been able to increase rents by 10% to 12%. Conversely, in terms of re-tenanting, our spreads are significantly higher. Our team recognizes that there is limited space available in outlet centers, while demand from tenants in our shopping centers remains strong. This situation presents a great opportunity for us to bring in exciting new tenants and brand storage centers at rents that are notably higher than those of the retailers they are replacing. Moving forward, we plan to introduce new brands and encourage existing brands that are underperforming to either invest in their stores or downsize. We believe that many brands that may be too large for our portfolio can maintain or enhance productivity with a smaller footprint. Through our strategies of retention, resizing, and necessary replacement, we aim to increase the variety of shopping options for our customers and grow rent and productivity organically. We see significant potential for growth in this area.

Got it. And obviously, the ability to do that depends on the leasing pipeline. And I feel like so far in the call you guys have given a few points of commentary on making it seem like there is that opportunity. I know somebody asked if Sephora had prompted new leases and you said the discussions at least the answer was yes. But I guess, is there any other stats, Steve, that you or anybody else could provide to talk about the leasing pipeline? And when you do have a vacancy or a location that you're trying to backfill, like is there necessarily competition for that space? I get that it totally depends on the exact center in the space, but is there generally competition? Or how are you seeking that new user and like how deep is that pool that you're going to, and who's receptive to that interest in the space?

There will always be competition from established players in the market who want to maintain their presence. It's essential for us to implement a leasing strategy that attracts better-performing retailers to fill available spaces. In the past, we focused on pure outlet stores, but now we have diversified by inviting various brands and types of tenants into our centers, significantly broadening our potential market for new tenants. This includes entertainment venues, restaurants, and brands like Sephora and Ulta that haven’t previously been part of our mix, which not only attract new shoppers but also encourage more frequent visits. Importantly, this also appeals to other retailers who may not have considered our centers before. Statistically, we are seeing an influx of retailers interested in our platform, and we are being strategic about our tenant selection while working to enhance our rental income and recovery figures. This approach ensures we operate our shopping centers effectively in the current market while also increasing our net operating income. I believe we are successfully executing on all these aspects.

Yeah, hi. As it relates to acquisitions you've talked about focusing on properties where you can add a lot of value with your platform. So out of curiosity, what are the types of centers that you don't think work well on the platform that you tend to pass on?

Yeah, Mike, obviously, we're within the outlet sector. That's straight up for what we do. Our open-air lifestyle centers, similar tenants, similar operations, that's a natural extension. As we think about our adjacencies, when we can expand the retail pie of what we already own and that provides some ability to have attachment area. There are things like we're not going to do workouts. We really want to drive value creation in anything that we buy. So we want to try to stick to the retailers that we do business with and try to find those opportunities where our platform can be driven overall. We prefer not to discuss our pipeline, but we are actively engaged in the marketplace, exploring some intriguing new markets where we believe we can make a significant impact. As an operating company, we have a unique position in this space because we handle our marketing and leasing operations internally rather than outsourcing them. Our strong team and excellent operational track record play a crucial role in this. At Tanger, we are in talks with several potential partners about opportunities that include outright purchases or joint ventures. There are numerous prospects available to us now that we might not have encountered in previous years, largely due to our successful execution on the Palm Beach project with Clarion and our pioneering Huntsville, Alabama lifestyle shopping center. We are confident that our operational team can add substantial value in these areas.

Thanks guys. Just a couple of quick follow-ups. Your temp percentage historically has been around 10%. Is that still at those elevated or more elevated levels, or is it subsiding closer to the 5%, which I think is what your long-term historical average has been?

Look, temp leasing is a strategy for us. When we brought the temp leasing responsibility in-house to each one of our general managers and all of our shopping centers, we've increased the number of people that are thinking about temp leasing. Embedded in those temp leasing numbers even at that 10% number is frictional vacancy between a retailer leaving a space and when the new retailer is going to occupy that space, it's incumbent on that management team in each one of our shopping centers to keep that space occupied. And so whether it's a local retailer or one of the seasonal retailers that are national in scope that travel our shopping centers from center to center or space to space, we're going to keep that space occupied. So if there's a one square-foot of vacancy or opportunity in our center, we're going to try and keep that occupied by a temp retailer. And I would say, we're doing a great job of increasing our permanent occupancy. But again, there's always going to be some frictional vacancy and we're always going to keep that occupied.

Right. And it doesn't quite get to the answer I was hoping to get, but I understand the strategy. So another question, perhaps in terms of your, how you define your 95% retention, which is very high, obviously. When you downsize a tenant, does that count as a retained tenant?

No. When we downsize a tenant and move them to another location, it's a new lease, it's a new deal.

Hi. This might be able to be answered when we go back to the transcripts, but in case it's not, I figured I'd ask again. But just in terms of Express, but I think, it might actually be more related to Rue21, what you were talking about. It sounds like they had all the original stores in the portfolio, it sounds like you took a total of four back, or got four back. But the other Rue stores, it sounds like maybe they closed and they're reopening. But can you just flush that out a little bit about where you started kind of in between? And then the outcome later in the year, the moving pieces there.

Well, the Express stores, all but one remained open. The Rue stores, all closed of the 20. Two, we took back. The other 18, over half of them have reopened already, the balance of which will open by the end of the year.

With no further questions in the queue, we will conclude today's conference. You may disconnect your lines at this time. And thank you for your participation.