Tanger Q1 2025 Earnings Report

Tanger EPS Results

• Actual EPS: $0.53
• Consensus EPS: $0.53
• Beat/Miss: Met Expectations
• One Year Ago EPS: $0.52

Tanger Revenue Results

• Actual Revenue: $129.29 million
• Expected Revenue: $128.24 million
• Beat/Miss: Beat by +$1.05 million
• YoY Revenue Growth: +9.70%

Tanger Announcement Details

• Quarter: Q1 2025
• Date: 4/30/2025
• Time: After Market Closes
• Conference Call Date: Thursday, May 1, 2025
• Conference Call Time: 8:30AM ET

Tanger (NYSE:SKT) (NYSE: SKT) is a leading owner and operator of outlet and open-air retail shopping destinations, with over 43 years of expertise in the retail and outlet shopping industries. Tanger's portfolio of 38 outlet centers, one adjacent managed center and one open-air lifestyle center comprises over 15 million square feet well positioned across tourist destinations and vibrant markets in 20 U.S. states and Canada. A publicly traded REIT since 1993, Tanger continues to innovate the retail experience for its shoppers with over 3,000 stores operated by more than 700 different brand name companies. Tanger is furnishing a Form 8-K with the Securities and Exchange Commission ("SEC") that includes a supplemental information package for the quarter and year ended December 31, 2023.

Tanger Q1 2025 Earnings Call Transcript

Key Takeaways

• Core FFO reached $0.53 per share in Q1, driven by 2.3% same-center NOI growth, and the company reaffirmed its full-year NOI and FFO guidance.
• Leasing metrics remained strong with 2.5 million square feet executed over the past 12 months, a 57% renewal rate for 2025 expirations, 13 consecutive quarters of positive rent spreads, and portfolio sales of $455 per square foot.
• Tanger closed on the $167 million Pinecrest acquisition, sold the non-core Howell center for $17 million, maintained a net debt/EBITDA ratio of 5.2x and roughly $550 million in available liquidity, and locked in new interest rate swaps at SOFR 3.3%.
• The company is rolling out the Tanger Deal Days and Summer of Savings campaigns and leveraging enhanced digital analytics to deliver targeted promotions aimed at boosting traffic and purchase frequency.
• Management emphasized the resilience of the outlet model amid macro uncertainty—highlighting field-led execution, a strong value proposition, strategic locations in growth markets, conservative leverage, and flexibility for future growth.

Presentation

[Ashley Curtis, AVP - IR at Tanger]

Good morning. I'm Ashley Curtis, Assistant Vice President of Investor Relations, and I would like to welcome you to Tanger Inc. First Quarter twenty twenty five 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, tango.com.

[Ashley Curtis, AVP - IR at Tanger]

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.

[Ashley Curtis, AVP - IR at Tanger]

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, 05/01/2025. 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.

[Ashley Curtis, AVP - IR at Tanger]

On the call today will be Steven Yalov, President and Chief Executive Officer and Michael Bilerman, Chief Financial Officer and Chief Investment Officer. In addition, other members of our leadership team will be available for Q and A. I will now turn the call over to Steven Yalla. Please go ahead.

[Stephen Yalof, President and CEO at Tanger]

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 $0.53 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 twenty twenty four. 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.

[Stephen Yalof, President and CEO at Tanger]

Sales for the trailing twelve 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 and 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 poor 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 into 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.

[Stephen Yalof, President and CEO at Tanger]

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 2,500,000 square feet over the trailing twelve month period, representing nearly five fifty transactions. Renewals executed or in process through 04/30/2025, totaled 57% on space scheduled to expire during 2025 compared to 47% over the same period last year. With our thirteenth consecutive quarter of positive rent spreads, our brand partners continue to show confidence and invest in expanding their presence within our Tanger centers.

[Stephen Yalof, President and CEO at Tanger]

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 are 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.

[Stephen Yalof, President and CEO at Tanger]

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.

[Stephen Yalof, President and CEO at Tanger]

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.

[Stephen Yalof, President and CEO at Tanger]

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 ten 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.

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

Thank you, Steve. Today, I'm going

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

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 $0.53 a share compared to $0.52 a share in the first quarter of the prior year. Same center NOI 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 on 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 $167,000,000 using cash on hand and draws on our line of credit.

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

We've also further improved our portfolio through the recent sales of non core center in Howell, Michigan in April for $17,000,000 In conjunction with the sale, we recognized a non cash impairment charge of $4,200,000 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 EBITDAre was 5.2 times and it was even lower with a full twelve months of EBITDA in the recent acquisitions and sale of Howell. From a liquidity perspective, we ended the quarter with $16,000,000 of cash, $481,000,000 available on our unsecured lines of credit and $70,000,000 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 $10,000,000 and extending the maturity date from October 2026 to April 2030 with no change to the interest rate.

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

Our next significant debt maturity is in September of twenty twenty six. We also continue to manage our interest rate exposure entering into $75,000,000 of new forward starting swaps that will begin next February when $75,000,000 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 twenty twenty eight.

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

In April 2025,

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

the Board of Directors approved a 6.4 increase in the dividend from $1.1 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 $2.3 per share, which represents growth of 4% to 8%. We continue to expect same center NOI growth to be in a range of two to 4%, and we've maintained our ranges for interest expense, G and A and CapEx.

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

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 is 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 8 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 13.

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

We'll be touring Bridge Street Town Center in Huntsville, One of our recent lifestyle acquisitions on May 14 in connection with Evercore ISI's multi REIT property tour. We'll also be at ICSC from May 19 through May 20. We'll be hosting a tour of Tanger Outlets National Harbor on May 28 as part of BofA's DC Retail Tour. We'll be presenting at NAREIT's Wheat Week in New York from June. And finally, we'll be touring Tanger Nashville on June 11 with BMO.

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

And we hope to see many of you over the next few months. With that, operator, we can take our first question.

[Operator]

Thank you. We will now be conducting a question and answer session. Thank you. Our first question comes from the line of Andrew Reel with Bank of America. Please proceed.

[Andrew Reale, Equity Research Analyst at Bank of America]

Hi, good morning. Thanks for taking my questions. 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?

[Stephen Yalof, President and CEO at Tanger]

Good morning, Andrew. Thanks for the question. Look, for Tanger temp occupancy is a strategy and it always has been. But I think some of the best examples of temp occupancy particularly in our portfolio is our pop up stores. Understanding the outlet business which is our primary business, outlet retailers there's a lot of barriers to entry before you get into the outlet business.

[Stephen Yalof, President and CEO at Tanger]

Business. First of all, a lot of these brands don't know how much excess inventory they're going to have. And if they're using it strictly as a clearing model, they're going to want make sure that they pop up first, try to see how much velocity there is, how much product they can move, how long it's going to take before they'll sign up for a long term lease. So in the case of tenants in the pop up arena, we've been speaking to a number of retailers that are very interested in being in the outlet business or speaking to us about possibly going in on a short term basis to understand what the outlet business is, how it can help their brands, how it could get their shoppers to convert into their ecosystem, get to understand their brand at a price point that they can afford going in. And it's just a great tool, great strategy.

[Stephen Yalof, President and CEO at Tanger]

We've used it and we've talked about it for a number of quarters in the past. Vineyard Vide started that way, UGG started that way and we've turned those into long term retailers across our portfolio today.

[Andrew Reale, Equity Research Analyst at Bank of America]

Okay. Thank you. And maybe just as a follow-up, just curious if you've conversations with retailers about inventory expectations for the second half of the year. Just curious if they've shared any thoughts or if you have any thoughts on their ability to source inventory for back to school or the holidays? Thank you.

[Stephen Yalof, President and CEO at Tanger]

Yes. As you probably are aware, we're in front of all of our retailers on a regular basis. We're speaking to our top retailers. Inventory so far, what we're hearing is that there has not been much of an inventory issue. Again in the outlet channel we'll see a lot of that excess inventory will flow through our channel as new inventory will go into the full price arena.

[Stephen Yalof, President and CEO at Tanger]

So what we're doing though this summer is in anticipation of perhaps some retailers who might consider getting their sales going earlier in the season. We're promoting our back to school sales starting with June 1. So we as we said earlier today we launched summer deals, new promotion across our channel, but we're starting with a campaign starting as early as June 1 much like our November Black Friday sales started on November 1 this year just to get the customer who's thinking about getting into the stores earlier and starting to build their baskets much earlier. We're also doing the same thing with back to school shopping, which is typically an event that we host at the end of the summer. We're going to start to pull that forward to the beginning of the summer so that if folks are concerned that there might be less inventory or less choice and selection available to them, later they can stock up and buy those products earlier.

[Andrew Reale, Equity Research Analyst at Bank of America]

Okay. Thank you.

[Stephen Yalof, President and CEO at Tanger]

Thank you.

[Operator]

Our next question comes from the line of Todd Thomas with KeyBanc Capital Markets. Please proceed.

[Todd Thomas, Managing Director & Equity Research Analyst at KeyBanc Capital Markets]

Hi, thanks. Good morning. 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 remerchandising or any additional vacate activity in the second quarter that you can speak about?

[Todd Thomas, Managing Director & Equity Research Analyst at KeyBanc Capital Markets]

Or should we expect occupancy to begin building back next quarter from here? And do you have a target for year end occupancy that's embedded in the guidance?

[Stephen Yalof, President and CEO at Tanger]

Well, we're If you think about our current run rate of occupancy, a lot of that to your point Todd is definitely in the remerchandising. We were just talking earlier about LEGO, which is going to take we had a legacy tenant in our Huntsville, Alabama shopping center that shut. Lego opens up in two weeks. We had our first Marc Jacobs. We've done a number of Marc Jacobs deals.

[Stephen Yalof, President and CEO at Tanger]

Our first Marc Jacobs store just opened up in an old legacy tenant location in Washington DC. And think one of the bigger impacts is BetaVent, which will be taking over a space that was recently vacated by Wayfair in Deer Park. So I think there's a lot of that timing noise in those numbers. I think as we continue to merchandise and that's a remerchandise and I think that's an important part of our strategy. I mean, if you take a look at our rent spreads, Todd, we're over 30% on retenanting, we're over 10% on renewal.

[Stephen Yalof, President and CEO at Tanger]

And a lot of instances where we have the opportunity to replace a poor performing retailer with a much better somebody new to the portfolio, somebody that will grow with us across our portfolio, we're going to take advantage of that. I think the fact that there's very little new retail space coming online in The United States right now, particularly in the outlet space, we have a unique opportunity to take advantage of the fact that there's retailer demand for our space and we're going to try and reposition as much of that space as we can to set ourselves up to long game for the future.

[Todd Thomas, Managing Director & Equity Research Analyst at KeyBanc Capital Markets]

Okay. Are you able to provide an update for Forever twenty one or any updates around timing to recapture some of that space? And are you able to share any backfill plans and timeline for that?

[Stephen Yalof, President and CEO at Tanger]

Sure. So the Forever twenty one store closures we'd anticipated for quite some time. We're in constant communication with that brand. When we knew that they were going to be closing stores, we had already had lined up some temp replacement for most of those spaces. Now, as you probably know, retail stores, there were nine of them, about 100,000 square feet.

[Stephen Yalof, President and CEO at Tanger]

But from a rent point of view, they're relatively low rent payers. So our temp rent replacements will not be a material decline in what they were currently paying. And we think that there's a tremendous amount of upside in all of those boxes. As I said to you earlier, I mean, there's not a lot of new space available on the market right now. There is increased demand, particularly from retailers that are not only willing to pay much higher rents, but also doing much better sales performance.

[Todd Thomas, Managing Director & Equity Research Analyst at KeyBanc Capital Markets]

Okay. If I could just sneak one more in here. I understand the value proposition of the outlet channel, but I and I think you mentioned that some of your retailers, they clear access merchandise. I think you were referencing a lot of the pop ups and I know a bunch of others do too, but a lot of retailers, I think some of the bigger apparel chains in particular, I believe have separate made for outlet channels. And I was just wondering if you have a sense for that product, whether they plan to pass through higher prices to customers at the outlets.

[Todd Thomas, Managing Director & Equity Research Analyst at KeyBanc Capital Markets]

And I was just wondering if you could talk about that a little bit as we move further into the year and the impact from tariffs might change sort of the pricing or value proposition dynamic a little bit at some of your centers?

[Stephen Yalof, President and CEO at Tanger]

Yes. Well, think the retailers, particularly in the outlet space, use those stores for a number of different reasons. So if you take a look at the biggest athletic footwear player in the marketplace, every product in that store is excess inventory. There's no manufacturer for that business. Then there are other brands that do do some manufacturing for that business.

[Stephen Yalof, President and CEO at Tanger]

And my feeling is retailers in the outlet space can change pricing relatively quickly. So where in their full price businesses, their plans are probably far more set to meet budgets during the course of the year. In the outlets, if they have excess inventory flowing into their channel, they can move that good move those goods by quick price and promotion. So I'm not familiar with all the retailers pricing strategy as it relates to outlet and for the going into the next quarter in the back half of the year. But I do know that they're going to be using that business extremely strategically because it's going to be the opportunity for them to move through excess inventory.

[Stephen Yalof, President and CEO at Tanger]

If goods aren't flowing into the stores right now, goods are going to be late hitting some of their full price businesses. They're going to want to have to turn that inventory into cash. And the best way to do it is in front of a consumer that wants to shop value. And that's who the 125,000,000 people that shop Tanger Outlets, that's who those that's who that customer is.

[Todd Thomas, Managing Director & Equity Research Analyst at KeyBanc Capital Markets]

Okay. Thank you.

[Operator]

Thank you. Our next question comes from the line of Steve Sakwa with Evercore ISI. Please proceed.

[Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI]

Yes, thanks. I guess I just wanted to ask maybe on Nashville. It's the most recent center you've opened that was built. Maybe a little surprised that it kind of ranks, call it middle of the pack if you will within the portfolio. So just curious any thoughts you've had kind of on that center since it's opened as you kind of think about the merchandise mix and maybe what's worked and maybe what's been disappointing?

[Stephen Yalof, President and CEO at Tanger]

I think a lot shopping centers take a couple of years to build even the best centers in the country have taken ten or fifteen years to get to the sales productive volumes where they are right now. We always say when we open a center, we don't build it for opening day, we build it for the generation. And the important part of that is we learned. We put a number of retailers in that center right off the bat, some local. It just didn't work.

[Stephen Yalof, President and CEO at Tanger]

But we also have replaced a number of retailers. We just opened a Kate Spade store and they were one of the most recent retailers to come into that shopping center. They're doing a great business there. We've merchandised that center with a number of food retailers as well. I think the national food is doing extraordinarily well, but one of our best food performers is a local restaurant chain that has several stores in the Nashville area.

[Stephen Yalof, President and CEO at Tanger]

So I think we have the opportunity to move some of these retailers around. I think we also one of the things that we did was some of the stores are just a little bit too big. In a 300,000 square foot shopping center where we have about 65 stores probably could have had 75 to 80 stores in that shopping center. And if that were the case, we'd be far more dense and the sales productivity for each of the stores would be much greater because of it. So I think that those are sort of the early reads on Nashville.

[Stephen Yalof, President and CEO at Tanger]

We're extraordinarily pleased with the business. We think the local community is definitely shopping that center. We're starting to see that tourism traffic pick up with our tourist traffic initiatives. We're in this for the long game. So we think that center will be a really important part of our business as we go forward.

[Stephen Yalof, President and CEO at Tanger]

And the center, if you've seen it, beautiful looking shopping center is definitely the model for what centers will and should look like going forward.

[Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI]

Okay, thanks. Maybe secondly, you guys obviously sold Howell, probably not high dollar value. I don't know if you have provided a cap rate on that, but just how do you think about the kind of lower tiered part of the portfolio today? I guess I'm thinking centers 28 to 33 and just ultimate monetization of those and redeploying that capital.

[Stephen Yalof, President and CEO at Tanger]

First of all, we'll take Howell separately. All of our centers cash flow positively. All of our centers, particularly the outlet shopping centers are filled with national credit retailers. So Howell was built a long time ago. It was built at a time when outlet shopping centers were 50 or 75 miles away from regional malls.

[Stephen Yalof, President and CEO at Tanger]

In many of our geographies, those markets have grown up and have become extraordinarily important to those communities. Population has built, demographics have built, other uses have developed around it. So in the case of Howell, that was slow to come. And so a lot of the retailers that have since replaced national outlet retailers are more vocal in nature, perhaps not the same credit. And that's not the business that we're in.

[Stephen Yalof, President and CEO at Tanger]

So we elected to sell Howell because that center is definitely going to take on a different life under new ownership. But as an outlet center, that's our focus. And we're in a national tenant, high credit, high rent paying, fixed rent business. And I think Howell moved away from that. As far as other shopping centers, there are very few centers that actually fit the Howell bill.

[Stephen Yalof, President and CEO at Tanger]

Think that a number of our centers are really important in the communities and we think there's great upside in that part of the portfolio. That doesn't mean if there's an opportunity to sell a center because it's a deal we can't pass up. But currently there's nothing on our list that we want that we are looking to dispose of. And I think there's we've got a lot of upside in portfolio going forward.

[Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI]

Thanks.

[Stephen Yalof, President and CEO at Tanger]

Operator, if there's a follow-up, we can't hear the question.

[Operator]

Steve, your line is unmuted. It looks like he

[Stephen Yalof, President and CEO at Tanger]

He can read too if he's got a follow-up question.

[Operator]

All right. Our next question comes from the line of Emily Barish with BMO. Please proceed.

[Emili Berisha, Equity Research Associate at BMO Capital Markets]

Good morning and thank you for taking my questions. I wanted to ask you on the Howell asset, what was the cap rate on the disposition? And was this removal already contemplated in the prior guidance? And can you please speak to its impact on your same store results this quarter? Thank you.

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

Thanks, Emily. So the Howell sale in the original guidance wasn't contemplated. It's currently in the updated range that we've maintained. As Steve talked about, it's really not a cap rate type of transaction. It's embedded in the non same center pool.

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

So there's a certain amount of NOI that comes out when we deploy the cash proceeds to repay our line. That's sort of where we are. And the second part of your question, Emily, I missed them. Can you just repeat it?

[Emili Berisha, Equity Research Associate at BMO Capital Markets]

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

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

So Howell is in the non same center pool, so that's out of the same center NOI. Howell was our smallest asset, less than 1% of NOI. That NOI hasn't been trending down and certainly our view towards the future was where the contraction was. And so we had 2.3% same center NOI. If if Howard were to include it, it would drop less than 10 basis points to 2.2.

[Emili Berisha, Equity Research Associate at BMO Capital Markets]

Thank you. And same store NOI, do you feel more comfortable at the lower end of the guidance range for 2025? Or should we expect the same store NOI to accelerate through the rest of the year?

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

So our guidance is 2% to 4%. We talked a lot when we provided that guidance that the range has differing assumptions related to credit, our downtime, our rent spreads, sales. So there's a lot of variables that go into it. We continue to feel comfortable in that 2% to 4% range. And there's a number of things that can help us as we move through the year, as we report our second quarter, less of the uncertainty will be removed and we'll be able to update that guidance over time.

[Emili Berisha, Equity Research Associate at BMO Capital Markets]

Okay. Thank you.

[Operator]

Thank you. Our next question comes from the line of Craig Mailman with Citi. Please proceed.

[Craig Mailman, Managing Director & Equity Research Analyst at Citigroup Global Markets Inc.]

Hey, good morning. Just wanted to circle back. I know you guys mentioned timing lags as a driver of the occupancy decline. Specifically, Huntsville saw an occupancy dip. I know, Steve, you had mentioned LEGO is going to open there.

[Craig Mailman, Managing Director & Equity Research Analyst at Citigroup Global Markets Inc.]

But could you guys just talk about what drove the sequential decline, and what the backfill timing is going to be? And then just more broadly on that asset, I know you guys bought an ACAP going in and talked about yield upside over time. With the remerchandising you guys have done so far, where are you in the process of that? Like where does the yield today sit pro form a maybe some leases you have on the come versus the initial eight cap?

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

Thanks, Craig. So it was an 8.5 cap going in and we talked about the additional growth over time and a lot of that growth is coming from that remerchandising activity that you're starting to see coming through and that we're talking about. So we've mentioned that logo store, but the big part of the occupancy was that former Bed Bath and Beyond box, which was 30,000 square feet. Now that 30,000 square feet, we had temped for a bit. We got some leases out for that space and we'll be really excited to tell you once those are signed and what those are.

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

And so that 30,000 square feet was six twenty five basis points of Huntsville occupancy and almost 25 basis points of that sequential occupancy decline combined with that main event that Steve talked about at Deer Park. And so our expectation is, and we're going to continue to bring newness and we're really excited about the retailers that are coming into Huntsville, both from a specialty perspective, as well as a food, beverage entertainment perspective.

[Craig Mailman, Managing Director & Equity Research Analyst at Citigroup Global Markets Inc.]

And I didn't mean to shave off 50 basis points there. I guess just the other part of the question, like where is that 8.5 going to go pro form a kind of what you guys are underwriting for the Bed Bath backfill plus the Lego and some other things that have gone on? Like what's the uplift you've seen so far versus what you think could happen over the next in the medium term as other leases roll?

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

What we talk about a lot in

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

our acquisitions is we want those acquisitions to be greater growth than what our core portfolio is. Otherwise, we're not creating value. And so we had a first year, which we talked about being 8.5. And as these things come in, we'll continue to see growth in this year, thereafter and the year after that. And we're very optimistic about what type of yield on cost as we also invest some capital that this asset will be able to drive very solid return for our stakeholders.

[Craig Mailman, Managing Director & Equity Research Analyst at Citigroup Global Markets Inc.]

Okay. And then just maybe a second question here. We've seen the discount channel kind of get an influx of higher income consumers. Have you guys tracked that or seen any of that trade down in sort of the core tenancy that or core client base that you guys have had over the last three, six, twelve months, whatever timeframe you would look at it?

[Stephen Yalof, President and CEO at Tanger]

We're definitely paying attention to the customer. As you're aware, we have a loyalty program that we continue to build. We continue to sign up new members. And we continue to communicate with those customers. They opt in for the program, so they share with us their purchasing activity.

[Stephen Yalof, President and CEO at Tanger]

So we're seeing where they're coming from and we're seeing what they're buying. So we're tracking that customer. We are seeing a new customer. I think a lot of that has to do with the fact that we're also trading up our tenant base. So some of these older legacy brands that have lost some market share or haven't reinvested in their business get replaced with new brands to the channel, we're bringing out a new customer for that too.

[Stephen Yalof, President and CEO at Tanger]

And I think that higher demographic, wealthier customer that's finding the products that they like in the outlet channel and everyday value pricing is a great draw. But let's not forget generation alpha, that young consumer that's now coming to our center also for a number of brands that we've merchandised for them. I think immediately of Sephora, which is a brand that this younger customer is lining up for brands like Missou, we've done a number of stores with them as well, younger customers seeking those brands too. So we look to merchandise our shopping centers for the consumer to make sure that they come and visit us more frequently, stay longer when they're there. And when they do, obviously they build bigger baskets and we get better sales.

[Craig Mailman, Managing Director & Equity Research Analyst at Citigroup Global Markets Inc.]

Great. Thank you.

[Operator]

Thank you. Our next question comes from the line of Caitlin Burrows with Goldman Sachs. Please proceed.

[Caitlin Burrows, Vice President at Goldman Sachs]

Hi, good morning everybody. 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?

[Caitlin Burrows, Vice President at Goldman Sachs]

And do you hear anything about this from your retailers yet?

[Stephen Yalof, President and CEO at Tanger]

We haven't heard any concern yet. I think that the retailers are probably thinking that they're going to rely far more heavily on outlet than perhaps you're suggesting. If you go back to the COVID case,

[Stephen Yalof, President and CEO at Tanger]

just as an

[Stephen Yalof, President and CEO at Tanger]

example, the post COVID twenty twenty one hangers saw the highest sales performance on a per square foot basis than we've ever seen in our portfolio. As we're moving back towards those numbers, I think a lot of the reason was because lack of inventory flow and the timing of when that inventory started to flow, it missed the full price selling season and therefore found itself into the outlet channel. So I think we're far more optimistic about the flow of inventory to the outlet channel. And as we've been speaking to our retailers, I think they echo that they're not as concerned either.

[Caitlin Burrows, Vice President at Goldman Sachs]

Got it. So you're saying kind of like there might be uncertainty in the near term on those flow of inventory, but like eventually it will come, maybe the timing will be wrong then for full price and that will benefit outlets?

[Stephen Yalof, President and CEO at Tanger]

I think so.

[Caitlin Burrows, Vice President at Goldman Sachs]

Okay. Got it. And then I guess in light of the new uncertainty that feels like it would be impacting your business, but happy to hear if that's not the case. Could you guys just go through how leasing was in 1Q? The earnings release showed that was pretty good.

[Caitlin Burrows, Vice President at Goldman Sachs]

But then more importantly, how it progressed over April and kind of your outlook for ICSC?

[Stephen Yalof, President and CEO at Tanger]

Yes. I think our leasing is we're optimistic about leasing. I mentioned earlier in the call, there's not a lot of new space being developed in the country and there's a lot of demand from retailers. So there's a couple of ways to facilitate the demand. One is to replace older, less performing retailers with new retailers that want to be in the space or when leases roll, asking retailers to downsize and optimize.

[Stephen Yalof, President and CEO at Tanger]

I mentioned earlier, as we talked about Nashville, I was asked what mistakes we might have made in Nashville. And I said, I don't think we densified that 300,000 square foot shopping center or no. I think one of our leasing team strategies right now is to right size stores to maximize productivity and create more space in our existing productive shopping centers that ultimately will drive more rent, drive more variety, drive more types of uses and give us the opportunity to bring in the brands that are looking to get into our channel.

[Caitlin Burrows, Vice President at Goldman Sachs]

Got it. Any other details you or I don't know if Justin's there can give about the April leasing?

[Stephen Yalof, President and CEO at Tanger]

Sure. Thanks, Helane. Bottom line is the fundamentals of our business are strong and the open advisor there. We talked last quarter about all the tenants that have the open advisor. They're looking out not only in 2025 and 2026, but 2027.

[Stephen Yalof, President and CEO at Tanger]

All of our deal committees that we've had in the first quarter and including April were amazing. You may have noticed that we're way ahead of our renewals. This time we're about 56%, fifty seven % complete. The reason we jumped out ahead is because of all these open to buys and new brands that are looking to come into our portfolio so we can focus on that new business. The April committee was strong both from a renewal standpoint and a new business standpoint.

[Stephen Yalof, President and CEO at Tanger]

So really optimistic about the balance of 2025 and looking into 2026.

[Caitlin Burrows, Vice President at Goldman Sachs]

Thank you.

[Operator]

Thank you. Our next question comes from the line of Hong Zhang with JPMorgan. Please proceed.

[Hongliang Zhang, Vice President at JP Morgan]

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?

[Stephen Yalof, President and CEO at Tanger]

Michael, you want to talk about the revenue especially? Just to address it, I'll just address the campaign because I thought I think it was a really smart idea on behalf of our marketing department. There's

[Stephen Yalof, President and CEO at Tanger]

a lot

[Stephen Yalof, President and CEO at Tanger]

of noise in the marketplace. As Caitlin mentioned, perhaps the back half of the year, if there was going to be some shift in terms of product delivery, We thought it would just be smart if we had a call to action, particularly to drive customers into our centers far more early.

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

As far as

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

any sort of financial shift? Yes. If you think about the impact, a lot of our revenues are fixed and growing. And that's where we talk about on a quarterly basis where our operating expenses given that they're highly variable will impact that year over year, right? So we saw that obviously in the first quarter with the snow expenses and last year having the expense refunds.

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

We saw that in the fourth quarter where we had larger marketing spend in the fourth quarter of twenty twenty four relative to 2023. So there may be some timing of that marketing spend throughout the year as we promote different strategies. It doesn't have a meaningful impact overall to that your range that we've given of 2% to 4%, which obviously started the year lighter just given that comp from last year, where we continue to be optimistic about our same center range. We're cognizant of the macro factors, but all of that's embedded in to our guidance.

[Hongliang Zhang, Vice President at JP Morgan]

Got it. And I guess on the marketing spend, so it sounds like you wouldn't necessarily be more lean on the marketing channel more this year just given the economic uncertainty around tariffs and everything?

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

I mean, it's not significant driver. I mean, it's an important aspect of our business that we drive traffic and it's our teams that are coming up and creating the creative and all of the programs that we have drive traffic and sales for our retail partners and for the consumers.

[Stephen Yalof, President and CEO at Tanger]

Thank you.

[Operator]

Thank you. Our next question comes from the line of Vince Tibone with Green Street. Please proceed.

[Vince Tibone, Managing Director and Head of US Industrial & Mall Research at Green Street Advisors, LLC]

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

[Stephen Yalof, President and CEO at Tanger]

Well, yes. What's interesting is January and February traffic largely in part to weather and January being a relatively slow month for shopping as it is, we're a little bit more lackluster. We saw the build of traffic start to occur towards the March and consistent with the announcement of traffic, our April traffic numbers have been extraordinarily positive. I've heard another peer REITs in their reporting earlier this week, they'll echo the same thing. April traffic to our centers has been extraordinarily strong.

[Vince Tibone, Managing Director and Head of US Industrial & Mall Research at Green Street Advisors, LLC]

That's great to hear. And then somewhat related to that is like how should we think about the sensitivity of NOI in your portfolio to changes in tenant sales. So percentage rents have been declining, but my sense is that a function of you prioritizing fixed rates over or excuse me, fixed rents over variable rents during renewals, nothing no issues with sales. But just given the uncertain backdrop here, like tenant sales grew 2% in 'twenty five versus, let's say, falling 2% in 'twenty five, for example, like how much does that actually impact NOI for the full year?

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

Sure. Thanks, Vince. So when you look at our overage rents, what's been happening is we've been sweeping a lot of that overage rent into fixed rents as we prioritize. You look at the overage rent in totality, it's only running about 3% of our total revenues. So that sensitivity in the current year, it's part of why we have a little bit of a wider range in our business.

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

But it's not a significant enough. And what we're finding is can look at the overall sales productivity of the portfolio as we've executed remerchandising strategy, portfolio up to $455 a square foot. All of that's driving higher rents, which is much more impactful to our NOI than changes in overage from changes in sales.

[Vince Tibone, Managing Director and Head of US Industrial & Mall Research at Green Street Advisors, LLC]

No, I mean, that all makes sense. Any like quantify it? I mean, maybe not an exact example I laid out, but you see what I'm trying to get at, just like because there's operating leverage, if you will, with the overage rents because if you hit the break point or don't, that could influence how much you receive. So nothing overly worried about, but just trying to understand kind of upside downside quantitatively due to sales. But I understand it's hard to provide and it depends on the tenant and nuance, so.

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

And the range contemplates a range of outcomes relative to that overage rent piece, as you know, right, to get over the break point, they're like options, right, because you don't get anything up until the break point. And then once you get over the break point, you move up. So we have a range for that line item relative to our numbers. Last year, percentage rents were $17,500,000 in the consolidated portfolio.

[Vince Tibone, Managing Director and Head of US Industrial & Mall Research at Green Street Advisors, LLC]

Okay. No, that's fair. Thank you.

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

Thank you, Vince.

[Operator]

Thank you. Our next question comes from the line of Omotayo Okusanya with Deutsche Bank. Please proceed.

[Omotayo Okusanya, Managing Director at Deutsche Bank]

Yes. Good morning, everyone. Wanted to talk a little bit just about the jewelry category. Just a lot of conversation around diamond prices being down 30%, forty %. I think Signet actually may have warned on earnings earlier on this year.

[Omotayo Okusanya, Managing Director at Deutsche Bank]

Just kind of how should we be thinking about in the past, right, in light of one of their biggest product pricing and one of their biggest products coming down so meaningfully?

[Stephen Yalof, President and CEO at Tanger]

Hey, this is Justin. Thanks for the question. So jewelry, the jewelry category has been fairly strong for us and we've been doing a lot more business with brands like Pandora. Signet is a major player in our portfolio. They're thinking about their merchandising and how they're targeting their customers a little bit differently.

[Stephen Yalof, President and CEO at Tanger]

And we're seeing positive trends in that category, and we're happy with what we see.

[Omotayo Okusanya, Managing Director at Deutsche Bank]

Okay. That's helpful. And then, Michael, in terms of the swap, the Sonae fund that expired in August rather than the February swaps, How should we be kind of thinking about that, just kind of given you do have this unique opportunity right now to get attractive pricing on swaps given the unusual shape of the forward curve?

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

Yes. Thanks, Tayo, for the question. So when you look at our swap activity, Page 16 of the sub, so we have a $325,000,000 term loan that we have swapped from floating to fixed using the swap strategy. Those swaps, we had $75,000,000 that we're going to mature on February first of next year that we were able to effectively now put forward starting swaps that will reduce what we have fixed at SOFR at 3.5% down to 3.3%. That August '70 '5 million dollars is currently at 3.7%.

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

And we'll look at opportunities just to manage our interest rate exposure to push out those swaps to maintain that term loan is effectively fixed. And so we'll look at those opportunities over the course of the balance of the year to address any interest rate exposure that we have.

[Omotayo Okusanya, Managing Director at Deutsche Bank]

Thank you.

[Michael Bilerman, Executive VP, CFO & Chief Investment Officer at Tanger]

Thanks Tayo.

[Operator]

Thank you. There are no further questions at this time. With that, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Ashley Curtis, AVP - IR
• Stephen Yalof, President and CEO
• Michael Bilerman, Executive VP, CFO & Chief Investment Officer

Analysts

• Andrew Reale, Equity Research Analyst at Bank of America
• Todd Thomas, Managing Director & Equity Research Analyst at KeyBanc Capital Markets
• Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI
• Emili Berisha, Equity Research Associate at BMO Capital Markets
• Craig Mailman, Managing Director & Equity Research Analyst at Citigroup Global Markets Inc.
• Caitlin Burrows, Vice President at Goldman Sachs
• Hongliang Zhang, Vice President at JP Morgan
• Vince Tibone, Managing Director and Head of US Industrial & Mall Research at Green Street Advisors, LLC
• Omotayo Okusanya, Managing Director at Deutsche Bank