Tanger Q2 Earnings Call Highlights

Key Points

• Tanger raised its 2026 outlook after Core FFO per share increased 10.3% year over year to $0.64 and same-center NOI grew 3.5% in the second quarter. Full-year Core FFO guidance is now $2.45–$2.52 per share, with same-center NOI growth expected at 2.75%–4.25%.
• Leasing and tenant demand remained strong, with 650-plus transactions covering 3.3 million square feet, a 10.5% blended rent spread and tenant sales up 5% to $487 per square foot. Occupancy was 96.6%, despite the recapture of Saks OFF 5th locations.
• Recaptured Saks space offers longer-term upside: about 70,000 square feet remains vacant, and permanent replacement rents could reach two to four times temporary rents, with most benefits expected in 2027–2028. Tanger also acquired Levis Commons, maintained net leverage at 4.7 times adjusted EBITDA and raised its dividend 7% year over year.

Tanger NYSE: SKT raised its full-year 2026 outlook after reporting second-quarter growth in funds from operations, same-center net operating income and tenant sales, supported by leasing activity, tourism, marketing initiatives and acquisitions.

Core FFO rose 10.3% year over year to $0.64 per share in the second quarter, while same-center NOI increased 3.5%, according to Michael Bilerman, Tanger’s executive vice president, chief financial officer and chief investment officer. The company attributed the NOI gain to higher base rents, tenant reimbursements and growth in other revenue streams.

Management raised its full-year Core FFO guidance to $2.45 to $2.52 per share from $2.42 to $2.50 previously. The new midpoint would represent 7% growth from 2025. Tanger also increased the low end of its same-center NOI growth outlook to 2.75% from 2.25%, while maintaining the high end at 4.25%.

Leasing activity and tenant demand

President and CEO Stephen Yalof said quarter-end occupancy was 96.6%, in line with the year-earlier level but modestly below the first quarter because of Tanger’s recapture of Saks OFF 5th locations. The company has backfill deals in its pipeline and is using temporary tenants in selected spaces while it pursues long-term leases.

Over the past 12 months, Tanger executed more than 650 leasing transactions covering 3.3 million square feet. Blended rent spreads were 10.5%, marking the company’s 18th consecutive quarter of positive rent spreads. Tanger said it has completed or is working on renewals for 70% of its 2026 lease expirations.

Yalof said the company is replacing less productive tenants with brands and uses intended to broaden traffic and spending. He cited Sephora as an example, noting Tanger now has 14 Sephora locations across its portfolio and has replaced some retailers generating about $200 per square foot in sales with retailers producing more than $1,000 per square foot.

Tanger’s trailing 12-month average tenant sales reached $487 per square foot, up 5% from a year earlier. Its occupancy cost ratio was 9.7%, which management said provides room for additional rent growth. The top 25 tenants, representing more than 60 brands, accounted for about 50% of rent, down from more than 60% five years ago. Over that period, Tanger’s portfolio of brands has expanded to more than 800 from approximately 500.

Saks space expected to provide longer-term upside

The company recaptured 150,000 square feet of Saks OFF 5th space, which reduced second-quarter occupancy by about 45 basis points sequentially. About half of the space is occupied by temporary tenants and about 70,000 square feet is vacant, Bilerman said.

Doug McDonald, Tanger’s senior vice president of finance, capital markets and treasurer, said the former Saks rents were similar to temporary rents in Tanger’s portfolio. He said permanent replacement rents can often provide a two- to four-times multiplier compared with temporary rents, though Tanger did not provide specific lease rates for the locations.

The company expects some spaces to be filled by single tenants and others to be subdivided for multiple users. Management said temporary tenants are effectively replacing most of the rent Saks had been paying, but permanent leasing will take longer because the boxes average roughly 25,000 to 30,000 square feet. Yalof said the impact from permanent replacements is likely to be weighted toward the back half of 2027, with a larger contribution in 2028.

Consumer traffic, marketing and merchandising

Yalof characterized Tanger’s consumer as resilient, citing increased domestic travel, World Cup activity and strong traffic during the summer. He said the company is seeing a younger customer base and has tailored leasing and marketing efforts toward that group.

Tanger said traffic remained positive during the second quarter and continued into July and the back-to-school shopping season. Management said its TangerClub loyalty program has more than 12 million members and that personalized, AI-powered communications have contributed to higher email open rates, wallet downloads and shopper visits.

The company is also expanding food, beverage, entertainment and service offerings. Executives said these uses can keep customers at centers longer and complement traditional retail tenants. Tanger cited additions including Dave & Buster’s, Dave’s Hot Chicken, Shake Shack, Sandbox virtual reality, swim schools and Coach Coffee Shop locations.

Justin Stein, executive vice president and chief revenue officer, said Tanger is seeing demand from brands that historically had not operated in outlet centers. He cited Sephora, Ulta, Victoria’s Secret, Serena & Lily, Pottery Barn and Williams-Sonoma among brands expanding in the portfolio.

Acquisition and balance-sheet activity

During the quarter, Tanger acquired Levis Commons Town Center, an open-air lifestyle center in the Perrysburg submarket of Toledo, Ohio. The company expects a first-year return of roughly 8.5%. It is the seventh open-air center and fourth lifestyle center Tanger has acquired during the past three years.

Bilerman said Tanger’s acquisition pipeline is active, though competition for retail assets has increased and cap rates have compressed. The company intends to remain disciplined and focus on transactions where it can use its leasing, operating and marketing platforms to create value.

At quarter-end, net debt to adjusted EBITDA was 4.7 times, flat with year-end 2025 and below Tanger’s target range of five to six times. The company said all debt was fixed-rate, including swaps, with a weighted average interest rate of about 4% and a weighted average maturity of 3.3 years. Tanger ended the quarter with approximately $1 billion of liquidity and plans to use available capital to redeem $350 million of unsecured bonds maturing in early September.

Tanger’s board authorized a quarterly dividend of $0.3125 per share in July, a 7% increase from the prior year. Bilerman said the payout ratio remained in the low-60% range.

About Tanger (NYSE:SKT)

Tanger Factory Outlet Centers, Inc NYSE: SKT is a real estate investment trust specializing in the ownership, development and management of outlet shopping centers. The company's portfolio comprises more than 40 outlet properties anchored by leading fashion and lifestyle brands. Tanger's centers are designed to offer off-price retail experiences in open-air, community-oriented settings, providing value-focused shoppers with access to premium brands at reduced prices.

Founded in 1981 by Stanley K.

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