Tanger Inc.

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 reach you for additional questions. On the call today will be Stephen Yaloff, President and Chief Executive Officer, and Michael Billerman, 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 Yaloff. Please go ahead.

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 an exciting and 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 re-merchandising 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. 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 retenanting 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 remained safe and that we experienced only minor physical impacts across our portfolio. Our Asheville Center did close temporarily due to utility disruptions from Hurricane Helene, but has since fully reopened. During the center's closed 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 canine rescue teams, which provided vital early assistance to our community members in distress. We continue to support the Asheville community's recovery efforts for 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 Singhal to the Tanger Board. Her 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.

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 54 cents a share, compared to 50 cents 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 pro rata share was five times for the 12 months ended September 30th, 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 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 to 4.9 times versus five 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 borderings 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 percent to 5 percent, up from 3.25 percent to 4.75 percent 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?