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 fourth 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 this 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, February 20th, 2025. 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. If time permits, we are happy for you to re-queue for additional questions. On the call today will be Steven 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 Yeloff. Please go ahead.

Thank you, Ashley. Thank you for joining us today. I'm pleased to share that Tanger delivered a strong fourth quarter that culminated in a highly productive and successful year with full-year performance at the top end of our guidance. Full-year core FFO per share was up 8.7% from the prior year, driven by a 5.1% increase and same center NOI. Traffic grew for the quarter and for the year. Our marketing efforts proved successful by focusing on on-center events and targeted offers to our shoppers through our enhanced digital marketing channels. Comparable sales for the trailing 12-month period grew year over year by approximately 1%, and we're up 2% to $444 per square foot on a total portfolio basis. Our focus on improving the quality of our portfolio by adding new retailers, brands, categories, and new to Tanger centers continues to resonate with our growing shopper base as we diversify our mix and create a fun and engaging experience that influences more frequent trips, longer visits, and bigger spends for a wider age group. New and expanded tenant categories, including sought-after restaurants, beauty and home brands, have contributed to this success. We ended the year with center occupancy at 98% up 70 basis points year over year and 60 basis points for the quarter. For the same period, same center occupancy was 98.2% up 90 basis points for the year and 80 basis points for the quarter. We have reported positive rent spreads for 12 consecutive quarters. For the year, we completed 473 transactions across 2.1 million square feet with total rent spreads of 50%. This includes 38% spreads on retenanted space and 13% spreads on renewed space as retailers continue to reinvest and grow, demonstrating the value Tanger Centers have on their retail store portfolios. We continue to evolve and build on our digital marketing capabilities. Membership in our well-established Tanger Shopper Club and Tanger Loyalty Program continues to grow, and the interaction with these valued customers provides us clear insight and analytics, enabling us to strategically target our marketing initiatives, which in turn drive sales and traffic growth. With regard to external growth, over the past two years, we've added five centers consisting of four through acquisitions and one new development. which have added approximately 2.2 million square feet of GLA to our portfolio and over $50 million of first-year NOI. Two of these open-air centers were acquired since our last call, the Promenade at Chanel in the growing Sunbelt Market of Little Rock, Arkansas, and Pinecrest in one of the most desirable suburbs of Cleveland, Ohio. The Promenade at Chanel is 270,000-square-foot upscale open-air lifestyle shopping center which we acquired in December 2024 for $73 million. This property is Central Arkansas' prominent destination for shopping, dining, entertainment, and lifestyle, and boasts a lineup of highly sought-after national brands, such as Lululemon, Sephora, and Athleta, and the state's only Apple, Anthropologie, and Urban Outfitter stores. These are complemented by regional and local retailers, as well as a variety of elevated and casual dining options and an AMC IMAX theater. This center sits in the middle of a rapidly growing community that includes new office, residential, hotel, and medical uses, adding to the market's regional drawing power. Pinecrest is a 640,000 square foot open-air mixed-use center anchored by Whole Foods which we acquired for $167 million earlier this month. As Northeast Ohio's premier retail and entertainment destination, Pinecrest has become the first choice for retailers seeking entry into this upscale market. The impressive tenant roster includes a curated mix of top national, regional, and local brands, including Alo Yoga, Madewell, Sephora, and Warby Parker, as well as an expansive roster of entertainment and dining options. Pinecrest is also home to upscale residential apartments, high-end modern offices, an AC hotel, and is adjacent to a newly developed RH mansion and restaurant, contributing to seven-day center foot traffic. Our scalable platform has positioned Tanger for continued growth through our existing portfolio and newly acquired centers. Our high-quality, well-positioned assets in MSAs that serve both tourist trade and local populations should continue to benefit from outsized population and employment growth over time, validating our strategic positioning, value proposition, and ability to grow our footprint across our existing platform. Our external growth strategy is focused on targeting the dominant open-air specialty retail center in the market, where we can create additional value by leveraging our strengths across leasing, marketing, and operations. Our confidence in the outlet channel is unwavering and has proven to deliver an unmatched value proposition for both retailers and shoppers. We will continue to pursue and invest in opportunities across the open-air landscape that meet our disciplined investment criteria and provide for sustained growth over time. Our well-positioned low leverage balance sheet, coupled with our track record of delivering strong annual free cash flow, provides us with the flexibility to pursue these new opportunities. Over the past few years, we've made tremendous progress in differentiating our platform to unlock the embedded growth potential within our existing portfolio, while capitalizing on real estate value creation opportunities through external growth. I want to thank our dedicated Tanger team members, retail partners, shoppers, and financial stakeholders for your 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 fourth quarter financial results, which came in at the high end of our expectations, our active external growth and balance sheet activity, and then outline our inaugural 2025 guidance, which represents 4% to 8% core FFO growth. In the fourth quarter, we delivered core FFO of 54 cents a share compared to 52 cents a share in the fourth quarter of the prior year, leading to core FFO of $2.13 a share for 2024, representing 8.7% growth over 2023. Our strong financial results were driven by robust internal and external growth offset by the swap maturities earlier last year. Same Center NOI increased 3% for the quarter, driven by higher rental revenues from the continued strong retailer demand and leasing activity, which has led to increased base rents and higher expense recoveries. Our full year Same Center NOI was up 5.1%. We've been active on the external growth front with the acquisition of the Promenade at Chenal in Little Rock in December for $73 million. and the acquisition of Pinecrest in Cleveland last week for $167 million. Both acquisitions were made with cash on hand and available liquidity. We are excited to add both centers to our portfolio and estimate that these centers will deliver an approximate 8% return during their first year with future growth over time as we leverage Tanger's operating, leasing, and marketing platforms. From a balance sheet perspective, pro forma for both acquisitions, our net debt to EBITDA would be between 4.9 and five times versus ending 2024 at 4.8 times and ending 2023 at 5.3 times pro forma for a full year EBITDA from the three centers that we added in late 2023. During the fourth quarter of 2024, We sold 2.6 million shares under our ATM at a weighted average price of $35.57 generating gross proceeds of $91 million, which includes approximately $16 million that we issued in October that we previously announced with 3Q results. For the full year, we sold 3.4 million common shares generating $116 million of gross proceeds. In addition, during the fourth quarter, we entered into forward sale agreements under our ATM for 1.9 million shares at a weighted average price of $36.40, representing $70 million of future gross proceeds. All of these shares remain unsettled and can be drawn down over the next 12 to 15 months, providing us with future liquidity. From a sources and uses standpoint, we ended the year with low leverage and prorated cash and cash equivalent of $56 million and full availability under our 620 million unsecured lines of credit. This year end liquidity reflected the $73 million cash purchase in Little Rock. And last week, we used cash on hand and our line of credit to complete the 167 million acquisition of Pinecrest. Overall, our balance sheet remains well positioned to fund our internal and external growth initiatives with low leverage, largely fixed rate debt, ample liquidity through last year's upsized lines of credit, and the $70 million of undrawn forward equity and additional free cash flow after dividends. Our annualized $1.10 cash dividend remains well covered with a continued low payout ratio ending 2024 with a 61% dividend payout as a percentage of our funds available for distribution. Now turning to our guidance for 2025, we are introducing a core FFO per share range of $2.22 to $2.30, which represents growth between 4% and 8%. This guidance includes the recent Pinecrest and Chenal acquisitions, but does not assume any additional acquisition or financing activity. We expect SANE Center NOI growth to be in a range of 2% to 4%. And note, for 2025, our SANE Center NOI pool now includes Nashville, Asheville, and Huntsville. Our expected G&A will remain at consistent levels relative to the last two years, while interest expense is estimated at 63.5% to 65.5% For additional details on our key assumptions, please see our release issued last night. And just before we open the call for questions, we are excited to continue to engage with our financial stakeholders at conferences, property tours, and various events. We will be participating at Citi's 30th Annual Global Property CEO Conference in Florida in early March, Bank of America's Retail Executive Summit in New York in late March, A tour of Tanger Outlets Charleston on May 8th in connection with Wells Fargo's 20th Annual Real Estate Securities Conference. We'll also be attending BMO's North American Real Estate Conference in New York in mid-May. And then a tour of Bridge Street Town Center in Huntsville on May 14th in connection with Evercore ISI's Multi-Property Retour. And with that, Operator, we can take our first question.