TANGER INC. Q1 FY2025 earnings call

• Tanger started 2025 with positive momentum, delivering a robust first quarter with same-center NOI growth. - Traffic has been strong, especially over the past two months. - The company's strategy of merchandising, replacing less productive tenants, and evolving the portfolio has led to sales of $455 per square foot for the trailing 12-month period. - Leasing activity remains solid with strong renewals and new transactions. - Acquisitions like Pinecrest and the Promenade at Chenal were executed. - The company launched the Tanger Deal Days campaign and will have Summer of Savings with back-to-school sales starting in June.

Tanger's first quarter core FFO increased to $0.53 per share, driven by a 2.3% rise in same-center NOI. Sales for the trailing 12-month period averaged $455 per square foot for the total portfolio. Occupancy ended the quarter at 95.8%. Leasing activity was solid with 2.5 million square feet executed 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. Ancillary revenues continued to grow, and the company executed on its external growth strategy with acquisitions like Pinecrest and the Promenade at Chenal.

• Reaffirmed full-year same-center NOI growth and core FFO guidance. - Core FFO expected to be $2.22 to $2.30 per share, representing 4% to 8% growth. - Same-center NOI growth expected in the range of 2% to 4%. - Maintained ranges for interest expense, G&A, and CapEx. - Updated EPS outlook to account for non-cash impairment charge related to the Howell Center disposition.

• Macro environment uncertainty which could impact temp occupancy and inventory expectations. - Potential impact on same-center NOI from changes in tenant sales and overage rents, though overage rents are a small portion of total revenues.

Q: It would be helpful to hear your thinking on what the impact to temp occupancy could look like if this macro uncertainty persists. So maybe can you just talk about how temp tenants behave during previous downturns or periods of uncertainty?

A: For Tanger, temp occupancy is a strategy. Pop-up stores are used by retailers to test the outlet business. Brands like Vineyard Vines and UGG started as pop-ups and became long-term retailers.

Q: First, I wanted to ask about occupancy. I realize the occupancy impact from seasonality is largely a 1Q phenomenon, but do you anticipate an additional impact related to proactive re-merchandising or any additional vacate activity in the second quarter that you can speak about? Or should we expect occupancy to begin building back next quarter from here? Do you have a target for year-end occupancy that's embedded in the guidance?

A: Occupancy impact is from re-merchandising. There are ongoing re-merchandising efforts with new retailers like LEGO and Marc Jacobs opening. Rent spreads are strong, and the company is repositioning space to set up for long-term growth. Year-end occupancy target is not explicitly stated but is part of the guidance context.

Q: I wanted to ask you about the impact on your same-store results this quarter of the disposition of the Howell asset.

A: Howell is in the non-same center pool, so it's out of the same center NOI. Howell was our smallest asset, less than 1% of NOI. If included, it would drop less than 10 basis points to 2.2% same center NOI.

Q: Maybe following up on some of the previous points from earlier in the call, I think one concern is that there won't be enough excess inventory to then bring product to outlet centers. So, I was wondering, do you know how much of your tenant product is made for outlet? How that might have changed over time? Is that a concern of yours? And do you hear anything about this from your retailers yet?

A: We haven't heard concern from retailers. Outlet channel has seen high sales performance post-COVID as excess inventory from full price season flows into outlet. Retailers are optimistic about inventory flow to outlet channel.

Q: Yes. Hey, I guess you talked about moving the back-to-school sales to June. I was wondering if there's anything seasonal to call out in terms of revenues or expenses from the shift?

A: There may be some timing of marketing spend throughout the year as the company promotes different strategies, but it doesn't have a meaningful impact overall to the year range of 2% to 4% same-center NOI growth.

Q: Could you discuss trends in foot traffic since the tariff uncertainty heightened on April 2nd and consumer confidence took a hit? I'm just curious if you notice any material changes in consumer behavior or shopping patterns in the past few weeks.

A: January and February traffic were lackluster due to weather and slow shopping month. March end and April traffic have been extraordinarily strong, with April traffic numbers positive.