Tanger Inc.

Good morning. This is Cindy Holt, Senior Vice President of Capital Markets, and I would like to welcome you to the Tanger Factory Outlet Center's 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, poor FFOs, same-center net operating income, adjusted EBITDA RE 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. 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 to allow as many of you as possible to ask questions. If time permits, we're happy for you to re-queue for additional questions. On the call today will be Stephen Tanger, our Executive Chair, Stephen Yaloff, Chief Executive Officer, and Jim Williams, Executive Vice President and Chief Financial Officer. I will now turn the call over to Stephen 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 Yala to provide additional details.

Thank you, Steve. The fourth quarter punctuated a year of continued improvement as consumers demonstrated their desire to shop at tanner 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 and 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 positions. extend our maturities, reduce our leverage, and position us to execute on our capital plan and growth opportunity. 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 F&B, 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 a new customer to our shopping center, increases visit frequency, and extends stays, and ultimately yields 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 rateably larger percentage rent revenues. In many cases, this strategy produced total rents that exceeded the prior contractual fixed rents, 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 rent. 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 upsides. 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 are pleased that we are seeing an increase in number of opens to buy for new outlet stores. Non-store revenues remain a strong contributor of 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 touch points 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're 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're 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 out parcel 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 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 in 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.