SKT

Leasing and Merchandising Execution

• 18th consecutive quarter of positive blended rent spreads, with 10.5% blended rent spreads over the last 12 months across over 650 completed transactions totaling 3.3 million square feet
• 70% of 2026 lease expirations are already executed or in process for renewal, with ongoing progress retenanting less productive space
• The portfolio has expanded to include more sought-after brands, food and beverage, and service/entertainment concepts; demand is growing from retailers expanding into mid-tier markets where most Tanger centers are located, driven by department store consolidation, limited new retail development, and strong population/tourism growth in Tanger's markets
• After taking back 150,000 square feet of SACS store space, backfill deals are already in the pipeline, with the temporary tenant program used to bridge vacant space while executing long-term deals; these spaces are located in top-performing assets, offering opportunity for higher rent and better returns with new higher-productive tenants

Consumer Traffic and Sales Trends

• Positive traffic in Q2 2026, with momentum continuing into July and the back-to-school shopping season, supported by strong domestic and international tourism and major local events like the World Cup
• Increased engagement from younger consumer cohorts, who prioritize in-center experiences and relevant brand offerings; strong sales from new, experience-focused tenants driving longer center visits
• Overall consumer demand has remained resilient despite expectations for headwinds from higher gas and interest rates, with strong box office performance supporting extended center hours and increased foot traffic for on-center restaurants and retailers

Marketing and Technology Initiatives

• The personalized, multi-channel Tanger Club loyalty program has over 12 million members, with AI-powered tools improving marketing relevance, driving higher open rates, wallet downloads, and shopper visits; AI-enabled customer service tools now handle the majority of customer inquiries, streamlining operations
• Marketing platform is a key competitive differentiator, successfully attracting younger shoppers and supporting both outlet and lifestyle center performance

External Growth and Portfolio Strategy

• Completed the acquisition of Levis Common Town Center, an open-air lifestyle center in Toledo, Ohio, this quarter; this is the seventh open-air center and fourth lifestyle center added in the past three years, with an expected first-year return of ~8.5% and upside for long-term growth
• No target mix for outlet vs. lifestyle centers; the firm evaluates all transactions based on value-add potential, and benefits from cross-platform tenant demand across both asset classes
• Population around Tanger centers has grown at roughly twice the national average over the past 15 years, outpacing MSA growth by 25%, creating long-term demand for space, rent growth, and value creation opportunities
• Peripheral land activation and in-center expansion are active growth opportunities: many centers were built with excess land, and ongoing residential migration to mid-tier markets allows monetization of this land for additional uses, with several expansion and renovation projects currently underway

Balance Sheet and Capital Structure

• Conserves leverage with net debt to adjusted EBITDA of 4.7x, flat from year-end 2025, below the firm's 5-6x target range
• 100% of debt is fixed-rate, with a weighted average interest rate of ~4% and weighted average maturity of 3.3 years
• Total liquidity of ~$1 billion, sufficient to cover the $350 million unsecured bond maturity in September 2026 and fund ongoing internal and external growth initiatives
• Quarterly dividend increased 7% year-over-year to 31.25 cents per share, with a payout ratio in the low 60% range, supporting continued dividend growth over time

Tanger management raised full-year 2026 guidance based on strong year-to-date performance, the Levis acquisition, and positive operational momentum:

• Core FFO per share guidance is raised to $2.45 to $2.52, up from the prior guidance range of $2.42 to $2.50; the new midpoint represents 7% year-over-year Core FFO growth
• Same Center NOI growth guidance low end is raised to 2.75% from 2.25% previously, while the high end remains unchanged at 4.25%
• Guidance for G&A and recurring CapEx remains unchanged from the prior quarter; net interest expense guidance is modestly higher due to the Levis acquisition, interest earned on cash holdings, and changes in interest rate forward curves
• Guidance does not assume any additional acquisitions, dispositions, or financing activity

Tanger Inc. reports combined results for its outlet center and open-air lifestyle center portfolio, with no separate segment financials provided in the transcript. For Q2 2026, Core FFO was 64 cents per share, a 10.3% increase from 58 cents per share in the prior year period. Same Center NOI increased 3.5% year-over-year, driven by higher base rents, increased tenant reimbursements from strong leasing activity, and growing other revenue streams. Trailing 12-month average tenant sales reached $487 per square foot, a 5% year-over-year increase. The overall portfolio occupancy cost ratio remains low at 9.7%. Non-apparel GLA now accounts for 32% of total portfolio GLA, up from 19% several years ago. The top 25 tenant groups (representing over 60 brands) comprise approximately 50% of total rent, down from over 60% five years ago, while the total number of brands in the portfolio has grown to over 800 from approximately 500 over the same period.

The call notes that forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from projected results, with detailed risk discussion provided in the firm's SEC filings. The only specific operational risk discussed on the call is competitive pressure in the transaction market, with more capital chasing high-quality retail properties leading to compressed cap rates, requiring the firm to maintain disciplined underwriting to avoid overpaying for acquisitions.

Q: How resilient is the current consumer, and have you seen any shifts in customer behavior amid higher gas prices?

A: Management says the consumer has been more resilient than expected this year. Higher travel costs have led more consumers to take domestic vacations, boosting foot traffic at Tanger centers this summer. Strong box office performance has extended center visiting hours, and the firm's merchandising to younger consumers, with popular brands and experience offerings, has driven robust summer traffic.

Q: What opportunity exists to re-tenant former SACS spaces, and what is the expected timeline for rent recapture?

A: Former SACS spaces have very low existing rents, offering opportunity for 2x to 4x rent multiple when re-tenanted to market rates. Half of the 150,000 square feet of taken back space is already occupied by temporary tenants, which cover nearly all of SACS's prior rent. Most permanent re-tenanting impact will be seen in 2027 and 2028, with strong expected returns on any required CapEx for space reconfiguration.

Q: Is there a theoretical upper limit to lifestyle center exposure in the portfolio, and how should we think about the risk profile of lifestyle vs outlet centers?

A: Management says the firm has no set target mix for outlet vs lifestyle centers. All transactions are evaluated individually based on their value creation potential. While the tenant base differs modestly, the two asset classes are synergistic, with cross-pollination of tenants across platforms, and Tanger's existing marketing and operational platform built for outlets translates well to lifestyle centers. Tanger continues to target accretive opportunities in both categories.

Q: How is demand from brands new to the outlet channel today compared to prior years, and what types of brands is Tanger targeting?

A: Management reports that demand from brands new to the outlet channel is very strong currently. Tanger is seeing growing interest from hard goods, beauty, food and beverage, and entertainment brands that historically did not use outlet channels. Tanger targets brands that align with local community demand, with a focus on attracting younger consumers, and uses data analytics to inform merchandising decisions per center.