Tanger Inc.

Good morning. I'm Ashley Curtis, Assistant Vice President of Investor Relations, and welcome to Tanger Inc.'s third quarter 2026 earnings call. Yesterday, we issued our earnings release, supplemental information package, and investor presentation, which are available on our IR website, investors.tanger.inc. Today's column may contain forward-looking statements which are subject to risks and uncertainties described in our earnings release and SEC filings that could cause actual results to differ materially. We assume no obligation to update any forward-looking statements except as required by law. We will also discuss certain non-GAAP financial measures with reconciliations to the most directly comparable GAAP financial measures included in our earnings release and supplemental information. This call is being recorded for replay and management's comments include time-sensitive information that may only be accurate as of today, November 5th, 2026. Following prepared remarks, we will open the call for questions. Please ask only one question and one follow-up and re-queue for additional questions. On the call today are Stephen Yalof, President and Chief Executive Officer, and Michael Bilerman, Chief Financial Officer and Chief Investment Officer, along with other members of our leadership team for Q&A. With that, I will now turn the call over to Stephen Yalof.

Thank you, Ashley, and good morning. I'm pleased to report another quarter of solid financial and operating performance, reflecting continued momentum across our portfolio and execution of our strategic plan. Our strategy is straightforward. Leverage our differentiated leasing platform, digital and local marketing capabilities, and best-in-class operations to drive organic growth across our portfolio while maintaining a disciplined approach to external growth and capital allocation. This strategy is producing results, and based on our performance and outlook, we are raising our full-year guidance. The operating environment remains productive, retailer demand continues to be resilient against a backdrop of very limited new retail supply, and at the same time, our active approach to merchandising, reinvestment and operations is improving the productivity and relevance of our centers. Combined with our strong balance sheet, this gives us significant flexibility to pursue both internal and external growth opportunities while remaining disciplined on returns. We ended the quarter at 97.3% occupancy, an increase of 70 basis points from June. Over the last 12 months, we signed more than 560 leases representing approximately 2.6 million square feet with blended cash rent spreads of 11%, extending our track record of positive rent spreads to nearly five years. Importantly, we continue to make progress well ahead of lease expirations. We have renewals executed or in process for 73% of our 2026 expirations and we are further ahead on next year's expirations than we were at this point last year. That visibility, combined with strong demand that is fueling our retenanting, limited new supply and stronger retailers, provides an attractive foundation for continued organic growth. The current retailer environment plays to Tanger's strengths as an active owner-operator. Retailers are selective about where they reinvest and they favor centers where owners reinvest, improve their merchandising mix, and give shoppers reasons to visit more often, stay longer, and ultimately spend more money. Brands that once focused on larger metropolitan areas are increasingly moving into mid-tier markets where Tanger operates. Department store consolidations, limited retail development, and continued above-average population growth have created opportunities in our markets and retailers see productive open-air centers like ours as the way to reach customers. Our re-tenanting strategy creates a powerful organic growth flywheel. Better brands and uses drive greater traffic and sales, greater productivity lifts demand for space, and stronger demand combined with limited supply lets us improve rents and merchandising over time. As the quality and productivity of our portfolio continues to improve, we believe that flywheel will drive sustained growth. We are deliberately expanding the range of uses at our centers including food and beverage, entertainment, service and wellness across a variety of concepts and price points. Our progress in food and beverage leasing has been particularly strong this year with multiple openings since the second quarter. Shake Shack, for example, opened its first South Carolina store at Tanger Charleston and last week, North Italia at Bridge Street Town Center in Huntsville, Alabama. Bridge Street, which we acquired in late 2023, provides a clear example of how our platform creates value. Since acquisition, the market has continued to grow around us, including recent investments in hotels, apartments and office, adding new permanent and transient customers to the market. We have leveraged our platform capabilities to improve the asset, and it has evolved from a retail shopping destination into a truly experiential district. We have added new-to-market brands including Lego, EloBeam, Warby Parker, Madewell, North Italia, and Shake Shack, reflecting local consumer interest in diverse premium shopping and dining destinations. Occupancy has increased more than 400 basis points from a year ago, and we are generating a strong return on our invested capital. This demonstrates the value creation model we are replicating across new assets and our existing portfolio. Retailer performance during the third quarter was more brand-specific than category-driven. Brands offering newness, relevance, and compelling product continue to perform well while emerging categories such as beauty are bringing younger and more frequent shoppers into our centers. At the same time, value remains fundamental to our customers' proposition. Brands use the outlet channel in different ways depending on their broader business strategies. Whether it's aimed at reducing inventory exposure or capturing a new aspirational customer where they shop, these strategies can evolve over time while the customer proposition remains consistent. Desirable brands at price points that fit the budgets drive shopper engagement, increased visits, and ultimately sales. In the current environment, we believe this combination of brand, experience, and value remains highly relevant to the consumer. Average tenant sales were $487 per square foot for the trailing 12 months, an increase of 2.5% from the prior year and consistent with last quarter. Our occupancy cost ratio remained low at 9.7%, which we view as an important indicator of the health of our retailer base and, over time, an additional source of organic growth potential as we continue to mark rents to market. Marketing is another increasingly differentiated component of our platform. Traffic increased during the quarter while our customer database grew to approximately 13 million subscribers. That scale allows us to connect consumers with relevant brands and offers across their preferred channels while our local marketing programs, community events, tourism initiatives, and new store openings create additional reasons to visit our centers. We are also using technology and AI to make those interactions more relevant and our organization more efficient. Our AI-powered communications help match subscribers with appropriate brand messaging, supporting engagement and visits. AI-enabled customer service tools now handle a majority of guest inquiries, and we are expanding these capabilities into additional areas of the organization. It is about using technology to automate more routine activity and improve decision making, thereby allowing our teams to spend more time on high value opportunities with retailers, shoppers, and other stakeholders. Turning to external growth, the transaction environment remains competitive and we continue to be disciplined in how we deploy capital, particularly in the current interest rate environment. We added Levis Commons earlier this year and maintained an active pipeline and engaged with owners and capital sources across both outlet and open-air lifestyle centers. Looking ahead, we believe we're well positioned for the holiday season. Tanger's a destination for consumers seeking the brands they want and compelling value. Black Friday every day has returned for the full month of November, and we have numerous upcoming events across our portfolio, including our popular tree lighting celebrations, featured at many of our centers. These programs are designed to create community and tradition, encourage earlier visits, extend dwell time, and inspire customers to return throughout the season. Summing up, this quarter's performance reinforces the strength of our strategy and importantly, the scalability of our operating platform. Differentiated leasing, sophisticated digital and local marketing, and best-in-class operations are driving productivity and organic growth across the portfolio. The thoughtful investment in our existing assets and external opportunities gives us additional avenues for growth and our strong balance sheet provides the flexibility to execute while maintaining our focus on long-term returns. We believe this combination positions Tanger to compound growth and create sustainable long-term value. I want to thank our dedicated Tanger team members, our retail partners, our shoppers, and our shareholders for their continued support. I'll now turn the call over to Michael. Thank you, Steve.

For the third quarter, core FFO was $0.64 a share, compared to $0.60 in the prior year period, an increase of 6.7% driven by a 4.2% increase in same-center NOI and the accrete of external investments over the past year. Our ongoing NOI growth is being driven by our focus on increasing total rents with increases to both base and minimum rents and higher tenant reimbursements while also resetting our sales breakpoints to lock in additional fixed rent while maintaining the opportunity to participate in the upside as tenant sales increase. Notably, our other revenues continue to grow, increasing 11% in the quarter as we drive additional revenues beyond the traditional lease line. Operating expenses were up modestly in the third quarter and continue to be more variable quarter to quarter and year over year, given the timing of marketing, CAM, and the overall activity at our centers. We continue to focus on our annual NOI growth, which we have increased to three and a half to four and a quarter percent for the year. Our balance sheet remains in a strong and flexible position with low leverage and more than enough liquidity to meet all of our debt maturities over the next three years. Net debt to adjusted EBITDA was at 4.6 times on a trailing 12 month basis at the end of September. which is down from 4.7 times last quarter and below our five to six times target range which is being driven by the continued increases in EBITDA and the retention of free cash flow. The balance sheet at quarter end reflects the capital markets activities that we set in motion at the beginning of the year when we issued a convert and extended and upsized our unsecured term loans. During the quarter, we repaid the $350 million of notes that matured in September, which was funded with cash on hand and the remaining $150 million that we drew on our delayed draw term loans. We ended the quarter with $1.8 billion of pro-rata debt and over $650 million of immediate liquidity. Against this liquidity, we only have $415 million of consolidated debt maturing over the next three years. And this includes the $115 million secured loan at Tanger Kansas City at Legends, which we intend to prepay this December, and the $300 million of unsecured notes that mature next July. Given our low leverage position, we have a full range of capital raising opportunities in terms of type, duration, and rate. We are in the enviable position with limited maturities over the next three years, a lot of liquidity, and the continued retention of free cash flow with a low 64% dividend payout ratio We are retaining approximately $90 million a year, which equates to a 2% free cash flow yield that compounds over time. At quarter end, our weighted average interest rate was at 4.1%, and our weighted average term to maturity is 3.8 years. About 93% of our debt is fixed or swapped. From an external growth perspective, Our approach to acquisitions remains consistent. We are looking for assets where we can apply the same operating capabilities that have driven improvements across our existing portfolio while generating attractive long-term risk-adjusted returns and our low leverage balance sheet and liquidity gives us the capacity to act. In October, our board authorized a quarterly dividend of 31.25 cents per share. representing a 7% increase over last year. Looking ahead, we are raising our full year 2026 guidance. We now expect core FFO of $2.49 to $2.53 per share, up from $2.45 to $2.52 per share previously. This represents 8% growth at the midpoint. We raised the low end of our same center NOI growth range to 3.5% from 2.75%, while the high end remains at 4.25%. Guidance for G&A remains unchanged, and we tightened our ranges for net interest expense and recurring capital expenditures. Guidance does not assume any additional acquisitions, dispositions, or financing activities. Our focus remains on maintaining this momentum while prudently managing our capital to support both our current operations and our future growth opportunities. We look forward to seeing many of you in Atlanta in a couple of weeks at NAIRI. And with that, operator, we now would like to open up the call for questions.