Tanger Inc. Q2 FY2025 earnings call

• Driven by internal and external growth initiatives, core FFO was $0.58 per share, up 9.4% y-o-y with same-center NOI growth of 5.3%.
• Merchandising strategy effective with open-air outlet and lifestyle centers attracting new brands/categories, appealing to younger demographic while maintaining core value-seeking shoppers.
• Digital capabilities and marketing initiatives driving traffic and sales, including loyalty program TangerClub expansion, and successful Summer of Savings/back-to-school campaigns.
• Leveraging AI technology for customer service and analytics. Strong balance sheet allows flexibility for external growth while investing in existing portfolio; recent acquisitions assimilated quickly.

Core FFO was $0.58 per share, a 9.4% increase over the prior year, driven by robust same-center NOI growth of 5.3%. Operating metrics were strong with occupancy at 96.6% and blended leasing spreads of 12% over the trailing 12 months. Tenant sales were up 6.2% to $465 per square foot on a trailing 12-month basis, and traffic to centers was higher compared to the prior year. Revenue contribution percentages aren't explicitly broken down by product segments in the provided transcript but focus on overall portfolio performance.

• Raised full-year core FFO per share guidance to $2.24 to $2.31, representing core FFO growth of 5.2% to 8.5%.
• Lifted same-center NOI growth to 2.5% to 4%, up from previous 2% to 4%.
• Guidance doesn't assume additional acquisitions, dispositions, or financing activities.

• Macro-economic uncertainties such as persistent inflation and shifting consumer sentiment.
• Tariff uncertainties impacting retailers.
• Tenant credit risks, though watchlist tenants are manageable with minimal exposure to top tenants' significant base rent.

Q: Jeff Spector from Bank of America asked about the merchandising strategy and its tie to sales per square foot.

A: Stephen Yalof discussed remerchandising bringing new brands, increasing traffic, and how that leads to sales growth.

Q: Greg McGinniss from Scotiabank inquired about the remerchandising process and long-term expectations.

A: Stephen Yalof stated remerchandising is ongoing with constant engagement with new retailers, using examples like Sephora.

Q: Craig Mailman from Citi asked about growth algorithm and AFFO/same-store growth.

A: Stephen Yalof and Michael Bilerman discussed rent spreads, value creation from internal/external growth, and balance sheet strength.

Q: Caitlin Burrows from Goldman Sachs asked about renewals vs. retenanting and acquisition deals.

A: Doug McDonald mentioned 65% renewal rate with 80% of expiring space addressed, and Stephen Yalof talked about active acquisition efforts with competitive advantage.

Q: Todd Thomas from KeyBanc Capital Markets asked about base rent growth and straight-line rent.

A: Stephen Yalof discussed signed not occupied pipeline and straight-line rent cadence related to occupancy and tenant build-outs.

Q: Hong Zhang from JPMorgan asked about same-store NOI growth in H2 and forward equity use.

A: Stephen Yalof mentioned uncertainty in macro environment affecting guidance range, and Stephen Yalof stated forward equity can fund internal/external investments.

Q: Floris Van Dijkum from Ladenburg Thalmann asked about internal growth prospects and fixed CAM.

A: Stephen Yalof and Michael Bilerman talked about temp tenancy, total rent potential, and diversifying remerchandising.

Q: Rich Hightower from Barclays asked about occupancy swing factors and remerchandising runway.

A: Stephen Yalof mentioned Forever 21 as a swing factor and remerchandising can continue due to low new retail development and retailer demand.

Q: Tayo Okusanya from Deutsche Bank asked about guidance drivers and tenant credit.

A: Stephen Yalof discussed range assumptions including occupancy and tenant credit, and Michael Bilerman noted watchlist tenants are manageable.

Q: Vince Tibone from Green Street asked about outparcel opportunity and re-tenanting economics of former 21 spaces.

A: Justin Stein talked about outparcel deals in pipeline, and Stephen Yalof discussed re-tenanting former 21 spaces for rent growth and traffic attraction