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 first quarter 2025 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 website, Tanger.com. Please note that the 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 our 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, May 1st, 2025. 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 re-queue 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.

Good morning. I'm pleased to report that Tanger has started 2025 with continued positive momentum, delivering a robust first quarter that builds on our outstanding performance from last year, and we are reaffirming our full year same center NOI growth and core FFO guidance. Our first quarter core FFO increased to 53 cents per share driven by a 2.3% rise in same center NOI. Strong revenue growth was partially offset by higher snow expense in the quarter and certain expense refunds that benefited our results in the first quarter of 2024. Traffic, particularly over the past two months, has been strong, and we are encouraged by this positive momentum leading into our very important summer selling season. Sales for the trailing 12-month period averaged $455 per square foot for the total portfolio, up from the prior quarter and year, due in part to the execution of our strategy of merchandising, replacing less productive tenants, at evolving our portfolio. We ended the quarter with occupancy of 95.8%, which reflects an anticipated seasonal decline from year end, and further reflects our strategy to add new, in-demand retailers and uses, replacing poorer performers. Much of this modest decline in occupancy is the result of timing between old tenants leaving and new tenants taking possession. We continue to expand it to new categories and welcome new brands as we diversify our offerings and create environments that encourage more frequent visits, extended stays, and drive increased spend across a broader customer profile and age range. Our strategy is resonating with our widening shopper demographic. Although executing this strategy may yield lower near-term occupancy, we are delivering solid same center NOI growth while positioning our portfolio for continued growth in coming years. Leasing activity remains solid. We executed 2.5 million square feet over the trailing 12 month period representing nearly 550 transactions. Renewals executed or in process through April 30th of 2025 totaled 57% on space scheduled to expire during 2025 compared to 47% over the same period last year. With our 13th consecutive quarter of positive rent spreads, our brand partners continue to show confidence and invest in expanding their presence within our Tanger centers. Ancillary revenues continue to grow as our tenants and other national consumer brands see the value of utilizing our platform to reach sought-after shoppers. Additionally, as we've continued to optimize our digital capabilities, we're gaining enhanced customer insights and analytics that enable us to partner with our retailers to deliver targeted, real-time promotions that best resonate with shoppers, ultimately driving increases in both traffic and sales performance. We continue to execute on our external growth strategy. As previously announced, during the first quarter, we acquired Pinecrest, a lifestyle center in Cleveland, which followed the purchase of the Promenade at Chanel in Little Rock in December. In recent years, we've made significant strides in differentiating our platform to maximize growth potential within our existing portfolio, while capitalizing on value-creating opportunities through strategic expansion. Our first quarter results reflect the ongoing execution of this strategy to elevate and diversify our centers with the retailers, restaurants, and entertainment that shoppers want. As uncertainty grows within the broader macro environment, we remain confident in Tanger's positioning and our differentiated model. First and foremost, we've established a field-led organization that we believe provides for the ideal combination of scale and flexibility. We prioritize how we show up every day for our retailers and our shoppers. And by staying close to them, we remain nimble against an evolving consumer landscape. Additionally, Tanger's value positioning continues to resonate with consumers. Today, we will launch our Tanger Deal Days campaign. In partnership with our retailers, this marketing initiative will reinforce the value and great brands messaging at Tanger Centers leading to our Summer of Savings launch in June where every day of summer offers back-to-school sales encouraging our guests to shop earlier in the season. Our high-quality assets are strategically located in metropolitan areas that serve both tourist destinations and local communities which continue to benefit from demographic tailwinds and employment growth. validating our market positioning, value proposition, and expansion strategy. We maintain unwavering confidence in our ability to deliver compelling value to both retailers and consumers. Our well-positioned, conservatively leveraged balance sheet, combined with our consistent generation of strong free cash flow, provides stability and the flexibility to pursue opportunistic growth. On behalf of the entire Tanger team, I want to thank Dave Henry for his nearly 10 years of service on the Tanger board, including his time spent as our lead director. Dave will be retiring from the Tanger board after our annual meeting next week. I also want to extend my sincere appreciation to our dedicated Tanger team members, retail partners, loyal shoppers, and financial stakeholders for your ongoing support and confidence. I'd now like to turn the call over to Michael.

Thank you, Steve. Today, I'm going to discuss our first quarter financial results and balance sheet, and then provide an update on our outlook for the remainder of the year. The first quarter, we delivered core FFO of 53 cents a share compared to 52 cents a share in the first quarter of the prior year. Stain Center at Hawaii increased 2.3% for the quarter, driven by higher rental revenues from the continued strong retailer demand and leasing activity, as well as the ancillary revenues that we derive from our portfolio and platform. As we had anticipated and discussed in our last call, our first quarter same-center NOI growth was impacted by higher snow expenses this year and certain expense refunds that we received in the first quarter of last year. In February, we completed the acquisition of Pinecrest in Cleveland for $167 million. using cash on hand and draws in our line of credit. We've also further improved our portfolio through the recent sale of a non-core center in Howell, Michigan in April for $17 million. In conjunction with this sale, we recognized a non-cash impairment charge of $4.2 million in the first quarter. Our balance sheet remains well positioned for stability and funding of our internal and external growth initiatives with low leverage, largely fixed rate debt, ample liquidity through our lines of credit and undrawn forward equity, and the additional free cash flow we produce after dividends. At quarter end, our net debt to adjusted EBITDA RE was 5.2 times, and it was even lower with a full 12 months of EBITDA from the recent acquisitions and sale of Howell. From a liquidity perspective, we ended the quarter with $16 million of cash, $481 million available on our unsecured lines of credit, and $70 million of proceeds that are available from the potential settlement of our forward ATM agreements. Additionally, in April, we refinanced the mortgage of Tanger Outlets Memphis, increasing the borrowings by $10 million, and extending the maturity date from October 2026 to April 2030 with no change to the interest rate. Our next significant debt maturity is in September of 2026. We also continue to manage our interest rate exposure, entering into $75 million of new forward-starting swaps that will begin next February when $75 million of swaps expire. These new swaps pick SOFR at 3.3%, which is down 20 basis points from the maturing swaps at 3.5%. These new swaps will expire in April of 2028. In April 2025, the Board of Directors approved a 6.4% increase in the dividend from $1.10 to $1.17 per share on an annualized basis. The dividend remains well covered with a 53% dividend payout ratio as a percentage of our funds available for distribution in the first quarter. Now turning to our guidance for 2025, we are updating the EPS outlook to account for the non-cash impairment charge that I discussed earlier related to the Howell Center disposition. And from a core FFO perspective, we continue to expect core FFO of $2.22 to $2.30 per share, which represents growth of 4% to 8%. We continue to expect same-center NOI growth to be in a range of 2% to 4%, and we've maintained our ranges for interest expense, G&A, and CapEx. For additional details on our key assumptions, please see our release issued last night. We're also excited to continue to engage with our financial stakeholders at conferences and property tours, as there's no better way to get an appreciation for Tanger and how we are executing on our strategy than by touring our centers and meeting with our teams. We'll be hosting a tour of Tanger Outlets Charleston on May 8th in connection with Wells Fargo's Real Estate Securities Conference. We are attending BMO's North American Real Estate Conference in New York on May 13th. We'll be touring Ridge Street Town Center in Huntsville, one of our recent lifestyle acquisitions, on May 14th in connection with Evercore ISI's Multi-Reap Property Tour. We'll also be at ICSC from May 19th through May 20th. We'll be hosting a tour of Kanger Outlets National Harbor on May 28th. as part of B of A's DC Retail Tour. We'll be presenting at Near East Wheat Week in New York from June 3rd to the 5th. And finally, we'll be touring Tanger, Nashville on June 11th with BMO. And we hope to see many of you over the next few months. With that, operator, we can take our first question.