Tanger Factory Outlet Centers, Inc. Stock

Good morning. I am Ashley Curtis, Assistant Vice President of Investor Relations, and I would like to welcome you to Tanger Inc.'s Second Quarter 2026 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 IR website investors.tanger.inc.

Please note, this 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 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. 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, August 5, 2026. [Operator Instructions] On the call today will be Stephen Yalof, 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&A.

I will now turn the call over to Stephen Yalof. Please go ahead.

Thank you, Ashley, and good morning, everyone. I'm pleased to report another strong quarter for Tanger reflecting the continued strength and durability of our proven leasing, operating and marketing platforms and our accretive external growth initiatives. This momentum shows up directly in our results and gives us confidence to raise our full year 2026 guidance. Quarter-end occupancy of 96.6% is in line with a year ago and, as expected, a slight moderation from the first quarter reflecting our proactive recapture of the Saks Off 5th space we discussed last quarter.

We're taking a strategic approach to these closures. Backfill deals are already in our pipeline and we're leveraging our temp tenant program to bridge select spaces while we work to execute new long-term deals. These boxes sit in some of our top performing assets and we see them as real opportunity to add more productive uses and in-demand retailers with meaningful upside in rents and return on our invested capital. Our leasing results demonstrate the successful execution of our merchandising strategy and the continued demand to be in our centers.

Over the last 12 months, we've executed over 650 transactions totaling 3.3 million square feet. Blended rent spreads were 10.5% marking our 18th consecutive quarter of positive rent spreads. We have renewals executed or in process for 70% of our 2026 expirations and continue to make progress re-tenanting less productive space. We continue to expand and elevate our roster with popular and highly sought-after brands, food and beverage concepts and service and entertainment uses, driving ongoing improvements in the quality and diversity of tenants seeking space in our centers.

Notably, retailers once focused on major metros are now increasingly adding stores in mid-tier markets where many of our centers are located. This demand is created by the continued consolidation of the department store business, the lack of new retail development across the country and the substantial permanent population growth in our markets coupled with strong tourism activity. As we grow our lifestyle portfolio, we are broadening our retailer base and seeing demand from brands native to each of our platforms along with increasing opportunities for cross-platform growth.

The successful execution of our initiatives has resulted in a more diverse and productive tenant roster where the Top 25 tenants, which represents more than 60 brands, now comprise approximately 50% of our rent, down substantially from over 60% 5 years ago. And in the same time period we've grown our portfolio to over 800 brands, up from approximately 500. This quarter, we saw the benefit of increased international and domestic tourism. The World Cup demonstrated our ability to capture opportunity and traffic from major events in our markets.

And we're excited to see even more sports and entertainment activity coming to our adjacencies, including the new Chiefs Stadium in Kansas City and the Sphere development at Nashville Harbor. Through our early back-to-school promotions, our outlet centers have become the destination for this important shopping season and we're particularly encouraged by continued engagement we're seeing from younger customers. Our marketing platform remains a real differentiator for Tanger enabling us to reach shoppers where they prefer to engage with personalized offers delivered through their preferred channel.

This approach is driving higher subscriber and engagement activity while we also continue to build on our TangerClub loyalty cohort. Our investments in AI further strengthen these efforts. Our AI-powered communications match our subscribers with relevant messaging from the brands they select and contribute to increased open rates, wallet downloads and shopper visits. Beyond marketing, our AI-enabled customer service tools now handle the majority of all inquiries and the volume continues to grow.

Looking ahead, we're focused on expanding these initiatives to streamline operations, sharpen our marketing and consumer engagement and free up our team for higher value work. The value of this engagement combined with the impact of our on-center events, activations and partnerships is directly visible in our results. Traffic remained positive in the second quarter and the momentum has continued into July and the important back-to-school season. Average tenant sales reached $487 per square foot on a trailing 12-month basis, up 5% year-over-year.

This performance reflects our strategic improvements to the portfolio through new development, acquisitions, dispositions and peripheral land activation along with our continuous merchandising across both existing and newly added centers and we still have continued runway for growth with a relatively low occupancy cost ratio of just 9.7%. Our disciplined external growth strategy continued this quarter with the acquisition of Levis Commons Town Center, an open-air lifestyle center in a vibrant mixed-use district in the Perrysburg submarket of Toledo, Ohio.

This market-dominant center has an expected first year return of roughly 8.5% with room to grow over time. This is the seventh open-air center and the fourth lifestyle center we've added in the past 3 years and across all of them, we've proven our ability to apply our platforms and drive real growth. Across our portfolio, we continue to benefit from favorable demographics and population growth in the markets we serve. Over the past 15 years, the areas around our centers have grown at roughly twice the national average and growth within a 10-mile ring of our centers has exceeded their MSAs by about 25%.

We expect that trend to continue driving incremental demand and traffic over time, reinforcing our centers as the anchors of the thriving communities they serve and creating additional long-term opportunities to increase rents, invest capital and unlock value. Our balance sheet gives us the flexibility to take advantage of this growth and we remain conservatively levered with substantial capacity to fund both our external growth and our reinvestment in the existing portfolio. I want to thank our dedicated Tanger team members, retail partners, shoppers and shareholders for your continued support.

And I'll now turn the call over to Michael to discuss our financial results, capital market activity and updated guidance in more detail.

Thank you, Steve. For the second quarter, core FFO was $0.64 a share compared to $0.58 a share in the prior year period, an increase of 10.3% driven by our strong internal growth and our accretive external growth. Same-center NOI increased 3.5% for the quarter driven by increased base rents and tenant reimbursements from our continued strong leasing activity along with ongoing growth in our other revenue streams. Our tenant watch list remains at low levels and we are encouraged with the momentum that we're seeing in our business and we have raised our FFO and same-center NOI guidance.

Our balance sheet is extremely well positioned with low leverage, ample liquidity and a largely fixed rate debt structure. At quarter end, net debt to adjusted EBITDA was at 4.7x, flat with year-end '25 and that provides us capacity relative to our 5 to 6x target. 100% of our debt is at fixed rates, including swaps. Our weighted average interest rate is just about 4% and our weighted average term to maturity is 3.3 years. We ended the quarter with approximately $1 billion of total liquidity. This includes $355 million of cash, short-term investments and our delayed draw term loan commitments; the full availability in our $620 million unsecured lines of credit; and $24 million of proceeds available to us from the forward equity that we issued under our ATM program.

This liquidity gives us the capital that we need to redeem the $350 million of unsecured bonds maturing in early September as well as to be able to continue to fund our internal and external growth initiatives. In July, our Board authorized a quarterly dividend of $0.3125 a share, which reflects a 7% increase over last year reflecting our continued FFO growth and the confidence in the durability of our cash flow. Our payout ratio remains at low levels in the low 60% range. providing additional liquidity to fund our growth and serve as a basis to continue to grow the dividend over time.

Based on our year-to-date performance, the acquisition of Levis and our outlook for the balance of the year; we are raising our full year '26 guidance. We now expect core FFO per share of $2.45 to $2.52, which is up from $2.42 to $2.50 a share previously and our new midpoint represents 7% growth over last year. We have raised the low end of our same-center NOI growth guidance to 2.75% from 2.25% previously with the high end remaining unchanged at 4.25%. Our guidance for G&A as well as recurring CapEx are unchanged from last quarter while our expectation for net interest expense has increased modestly due to the acquisition of Levis, the interest earned on our cash and changes in the forward curve.

Our guidance does not assume any additional acquisitions, dispositions or financing activity. And for additional details on our key assumptions, please see our release issued last night. We look forward to seeing many of you at the NYSE Real Estate Investor Access Day in August and at the Evercore Barclays and BofA Securities conferences this fall. Finally, I encourage you to take a look at the photos and video that we've embedded in our investor presentation on our website. They give a visual sense of much of what we've discussed today, including the quality of our centers, our tenant base and platform that continues to set Tanger apart.

And with that, operator, we'd now like to open the call for questions.

[Operator Instructions] Our first question will come from Michael Griffin from Evercore.

Steve, I'm curious if you can comment at all about the health of the consumer that you're seeing in your portfolio. It seems like leasing has really kept pace despite the elevated gas prices that we've seen over the past couple months. I mean have you seen a shift in the customers that are coming to your centers, maybe some of the folks that might fly somewhere for vacation or driving to Hilton Head instead. Just curious if you can give us some sense of where the consumer stands in the portfolio.

Sure, Michael, and thanks for the question. We see the customer -- we think the customer is quite resilient especially this year. We had anticipated some headwinds at the beginning of the year; higher gas prices, higher interest rates; but that's really caused a lot of folks to stay domestic this year. Couple that with the World Cup and we've seen a lot of folks coming through shopping centers this summer in addition to what we had anticipated. We're finding a much younger customer come and shop our centers as well and I think that that's a really important cohort. It's one that we've done a great job of marketing to. But more importantly, we've been leasing space to brands that these younger customers are looking for.

So I think the combination of all those things has led to a really robust customer traffic this summer. I'll layer in one more thing, the movie business. The movie grosses right now are back to the numbers that they were pre-COVID. The 3 movies that are out currently right now largest box office ever. We're seeing extended hours in a lot of the movie theaters. So our centers are enjoying customers coming lot earlier, staying a lot later. And with the restaurants and other services that we brought into the mix in both our outlets and lifestyle centers, we're seeing that as a great draw. People are coming early to enjoy the shopping, staying late enjoying the dining. And that flywheel that we've created in the new merchandising mix has really been a great customer draw.

That's certainly helpful. Maybe one for Michael on the transaction market opportunities. Clearly, you closed the Levis deal this quarter at a pretty attractive year 1 yield. What does the competition set look like for both outlets and lifestyle centers? And how do you think Tanger is well positioned to potentially capitalize on future external growth opportunities?

We're pleased that we have the balance sheet capacity to act. And what we've been able to demonstrate through the 7 deals that we've bought over the last 3 years is where we can leverage our platform to create value is really where we're able to create long-term stakeholder returns. And so when we look at transactions, really where can we leverage our leasing, operating and marketing platforms to create value that others may not see? I would say the other aspect of our store growth strategy is being able to look at both outlets and look at our lifestyle centers in a lot of mid-tier markets where there may not be as much robust competition, allowing us to transact. It is a competitive marketplace. There's more capital chasing retail as evidenced by fundamentals which are strong, limited supply and the attractive growth opportunities, and we're going to stay prudent and disciplined in our efforts.

Our next question will come from Greg McGinniss from Scotiabank.

On the Saks locations, how far below market were those leases and what type of large format customers do you think is going to be additive to the centers where you bought back the leases? And then if you could also touch on the CapEx needs, that would be appreciated.

Sure, Greg. It's Doug. The one that we acquired, we felt provided a considerable opportunity to mark those to market. We haven't discussed exactly what those are, but I'd say that the rents that were in place were similar to the temporary rents in our portfolio and we said before that those provide an opportunity for often a 2 to 4x multiplier on the new rents. Some of these will be single-user replacements, some will be multi-tenant. There we're trying to find the best fit for each of these centers and we are in advanced discussions on some of the centers. The CapEx needs are going to depend on the use and whether we're splitting boxes, but the overall economics we felt provided a really significant return on our investment and we're excited about the value creation opportunity going forward on those.

Okay. And then in looking at your occupancy, there's plenty of centers with over 98% occupancy. Is there excess land where you can capitalize on potential ground-up development opportunities in these proven locations or do acquisitions make more sense to use that balance sheet capacity from a risk and cost-adjusted perspective?

Well, I think both provide great opportunities for us. With regard to the existing portfolio, a lot of these centers when they were built years ago, a lot of excess land was acquired. And we've been speaking over the past few years about our peripheral strategy where we've been monetizing that peripheral path. And one of the great shots in the arm that a lot of our centers, particularly in the outlet space, have seen is the fact that permanent population is now moving closer and closer into centers that were originally built far away from department stores and other wholesale sensitivity issues.

Now with this great wave of folks moving out of bigger cities, moving into some of these mid-tier markets, places like Myrtle Beach and Pooler, South Carolina; our centers, they want to be more things to more people giving us the opportunity to really monetize a lot of that external land opportunity. We got a lot of case studies that we could share with you of things that we've done. With regard to expanding existing centers, a number of these centers were similarly built with expansion opportunity and that's something that we're leaning pretty heavily into right now.

We're currently under construction in a couple of our centers across the portfolio to renovate, rehabilitate, but also expand those centers to create more upside, more opportunity and create the space that today's retailers and restaurants are looking for in modern presentations of shopping centers.

Our next question will come from Akhil Guntupalli from JPMorgan.

This is Akhil Guntupalli on for Michael Mueller. It's been nearly a year since you made the Legends acquisition in Kansas City. Can you give us an update on any significant changes or upgrades that are underway?

Sure. We've been really happy with the performance there so far. It's a great asset. We're excited about the market, all the demand drivers in that market. We've had some good traction on the leasing side. We've been able to find some efficiencies on the operating side. And we're really excited about the value creation opportunities that will continue to present themselves at that center as we keep executing.

Got it. One more question from my side. When you look at your tenant roster and lease expirations for next year, how are you thinking about bad debt levels and how could they trend compared to what you're seeing this year?

We'll continue to approach the market conservatively and evaluate things on an ongoing basis. Our watch list today, as I mentioned in the comments, remains at low levels as some tenants have rolled off. And so the overall demand levels are positive, but we continue to make sure that we understand our credit levels.

Our next question will come from Juan Sanabria from BMO Capital Markets.

Can you hear me?

Yes.

Great. Happy I was able to figure that out. Just with regards to the ancillary income line and the various drivers of that. Just curious if you could size the opportunity on a long-term basis on marketing events, loyalty, all the various different initiatives you have and what's kind of at the forefront of driving growth over the near to medium term?

It's been an area that we have focused on to create additional value beyond the lease line. You look at that other revenue stream, it equates to almost $0.5 million per center on average. And we feel that there are opportunities to continue to grow those line items. We have the opportunity certainly at the deals that we acquired. Doug just talked about Kansas City. One of the things that was very evident, and I think you were on our tour last year, was just the signage, old static advertising that we can enhance.

And so not only in the core portfolio where we continue to find opportunities to drive value in selling our assets as marketing mediums and then adding other sources of additional revenue as we've grown our loyalty program, as we've put additional services, whether they're EV charging or solar or any other way to generate additional income from just beyond leasing, those are the things that we're flexing. And I would say that opportunity within our acquisitions is one part of the value creation that we see from our platform.

And then if we could just go back to Saks and just more broadly the occupancy expectations. How should we think about the trends in occupancy to help drive same-store NOI for the balance of the year? And is there any incremental drag from the second quarter to the third from Saks or actually a pickup with some of the boxes at least being temporarily filled?

Great. We focus on NOI, cash flow and value creation. Occupancy is just the metric and obviously we care about driving ultimately EBITDA per square foot. So as you saw this quarter, the impact of Saks sequentially was about 45 basis points. We took back 150,000 square feet of Saks stores, about half which are currently temped and the other half which are vacant, about 70,000 square feet. We would expect our occupancy to seasonally build as it normally does through the balance of the year. And with our roll next year, we'll continue to look at opportunities to continue what we've been doing, which is actively remerchandising our space, weaving out lower productive and bringing in higher productive tenants that can pay higher rents.

Our next question will come from Floris Van Dijkum from Ladenburg Thalmann.

A follow-up I guess on the impact of the Saks re-tenanting. Maybe if you could talk a little bit about the impact of potential re-tenanting on your cruising speed, i.e., your fixed annual rent bumps. Presumably Saks was paying not only a low rent, but also with very low escalators. Maybe talk about how you expect your cruising speed to increase and also what you're achieving in terms of your fixed CAM bumps these days?

So in terms of fixed CAM, we do get higher bumps on our fixed CAM relative to base anywhere from 100 basis points to 200 basis points greater. And then as you think about cruising speed or embedded growth, the Saks deals were very low rent paying as Doug outlined. And so the opportunity now is to take 150,000 square feet that's paying -- it's basically no impact this year, very limited and turn that into fully productive rent-paying space at market for those boxes. So that will just be part of the continuation of growing our NOI base. We do have about 20% roll every year and that serves as an opportunity to remark our space to market.

We've been running at about 80% renewal rate and so depending on our leasing for next year, that will all effectively roll into our growth outlook. Right now our rents relative to sales continue to be low at only 9.7% and our sales have increased pretty meaningfully. And so our ability to capture that upside either by bringing in higher productive tenants or capturing the sales upside that our tenants are receiving and flowing that into our business and then trying to operate our centers the best that we can and drive as much upside in our revenue base as possible to continue to grow our NOI and value for stakeholders.

Let me try asking the question another way, Michael. Your tenant sales I think improved 4.7% this past quarter. Are you able to get those kinds of increases in your lease contracts or how much room do you have to push the annual escalators in your new contracts?

If you look at our strategy, we kept our renewals shorter, right? The average term, if you look at the supplemental on Page 12, our renewals have averaged 3.5 years. Our new leases have been an average of 9 years. And that sales productivity number reflects the tenants going out and their lower sales productivity as well as the tenants that are rolling in. Obviously those that are rolling out may have a higher occupancy cost than those that are lower. It may not be working for them. So I wouldn't correlate exactly one to the other. But over the long term our NOIs have a gravitational pull towards the overall sales level. And so we feel our mark-to-market given our shorter duration is really what's driving NOI rather than the contractual rent bumps when we have so much rolling as well as still about 10 percentage points of CAM.

Our next question will come from Richard Hightower with Barclays.

Sorry about dialing in from phone here. Hopefully, you can hear me. You guys hear me?

Yes.

Okay. Great. Yes. Maybe just following up on a similar line of questioning. Given the composition of what you've got rolling in the next couple of years and granting that there is obviously a range of sort of tenant sales and sales growth within that. I mean is it reasonable to assume that continued double-digit spreads are achievable kind of given the moving parts as we understand them today?

Yes. We think our rents have a lot of run rate left in them for sure. If you think about the tenants that we keep on adding into the center, we're replacing poor performing retailers with better performing retailers. We just did our third round of Sephora deals. We're up to 14 Sephora stores across our portfolio where we replaced older poor performing $200 a square foot retailers with retailers doing business over $1,000 a square foot. That creates this great flywheel of growth.

Our sales performance across our portfolio is up over $100 a square foot over the past 5 years. And as you look at occupancy cost ratio, the occupancy cost ratio is a reflection of our sales and rents. So if we've managed to keep our occupancy cost ratio pretty flat at that 9.7% number, but all the while growing our sales performance across our platform, embedded in that is our ability to continue to push our rents forward.

Okay. That's very helpful. Maybe one on capital allocation as well. But obviously there's been a noticeable shift kind of in favor of more lifestyle center exposure in the portfolio. Is there a theoretical upper limit on what that might look like over time? And then maybe from our seat over on the analyst side, how should we think about sort of the risk of lifestyle versus traditional outlet in different economic environments? How should we think about cap rates? How do you guys think about kind of the risk and return profile just on a go-forward basis?

Yes. We don't have a target in mind. We're trying to buy the best centers, whether they're outlets or open our lifestyle centers. There's not an ideal mix. We approach every transaction and what value we can add to the asset and what value the asset adds to our portfolio. We're conscious of the difference in tenant base modestly. But I would say that we've benefited dramatically, as Steve talked about in his opening comments, about the cross-pollinization of tenants. Tenants that are in our outlet portfolio that find value in our lifestyle centers and vice versa, those that are in lifestyle finding us in the outlets.

And so we underwrite risk appropriately and we believe the complements of the 2 asset classes are very synergistic given the tenant base is largely the same. The assets operate and have the same level of operating intensity. And the marketing aspect we feel is a really competitive advantage that we have built on the outlet front that has lent itself extraordinarily well to the lifestyle centers that we've acquired. And so we'll continue to evaluate the opportunities and ultimately to create value for stakeholders.

Our next question will come from Andrew Reale with Bank of America.

Maybe if we could just jump back to the consumer and tenants for a second. I'd just be curious any more detail on what you've been kind of hearing from retailers in conversation just in terms of early indications on how back-to-school has been and sort of what retailer outlooks are for the balance of the year maybe through the holiday season?

We look at our outlet platform as the destination for back-to-school shopping. Back-to-school is the second biggest shopping holiday of the year. A lot of our promotional dollars, particularly in the outlet space, are geared towards driving that customer into our centers for that period of time. The customers that shop our centers particularly in the outlet space are looking for their famous brands, but for the best possible price. And a lot of the initiatives that we're doing around back-to-school and early back-to-school shopping gives those shoppers not only the values that you get in store, but additional value for being members of our club; our loyalty club and our TangerClub, which is over 12 million people right now.

So the consumer is definitely going in with their dollars. Our traffic has been up for the quarter. Our sales performance continues to grow. And we continue to bring the brands to the consumer that they're looking for, younger brands for a younger consumer. We're finding that Gen Alphas and the next generation of consumers are the cohort that want to shop in center the most right now. So brands like Sephora, Ulta, Miss A, which we've just added a couple of Miss A stores. They're looking for health and beauty products at a price point that makes sense for them. They continue to shop Athleisure. We've got a whole host of Athleisure brands and continue to grow that cohort of brands as well.

And then they're looking for experience and experience can come from the entertainment that they get in the movie theater or in a swim school such as one that we just put in our center in Huntsville, but also from places like Coach Cafe, which offer a unique spin on their coffee and pastry offering that makes for Instagrammable moments for the folks that are coming in. We just put our first in our center that opened this quarter in Phoenix and just to incredible -- it's drawing incredible crowds. So our responsibility using our marketing to drive customers into our shopping center, our leasing team is doing an amazing job of bringing relevant brands to the center as well as uses that these folks are looking for has really created the opportunity for us to continue to be the destination for back-to-school shopping this summer and we don't see it slowing down going into the third quarter.

Got it. Maybe sort of a follow-up on that. I mean I saw in the presentation non-apparel GLA is now 32%. That's up from about 19% several years ago. I guess what's the target mix for non-apparel tenants in terms of GLA? And how do non-apparel tenants, how they impact the productivity and traffic at your centers?

Yes, I think it's the diversity of uses that's really driving the traffic to the centers. And I think each center is unique because there's going to be markets like Sevierville, Tennessee that we reside on a street full of restaurant and entertainment. Our shopping center is very pure play. So that mix of alternative uses will probably be less than you might find in a Savannah where we seem to be the dominant shopping center in that market. We just added a Sandbox virtual reality. We just added the David & Buster's.

So by center, we're going to merchandise those centers for the market, for the mix, for the crowd. We're going to listen to our customer, listen to what they want and we're going to execute accordingly. And our plan is to constantly drive new brands, new uses, new amenities, new fashion in order to create the best mix that's going to drive the most amount of traffic. I think we've been doing a really good job to date. And with the retailer open to buys don t seem to be slowing down, I think we're going to continue to do a great job into the coming quarters.

Our next question will come from Todd Thomas with KeyBanc Capital Markets.

I wanted to go back to Saks if I could. First, for the 3 boxes currently occupied by temporary tenants, are those temp tenants in occupancy at economics that would sort of equate to a similar 2 to 4x multiplier once permanently tenanted as you mentioned, Doug, or is there a greater opportunity from these boxes specifically? And then by definition, I suppose the temp tenants are expected to vacate too. When might you expect to recapture those 3 spaces?

Sure. The good news is that even with temp tenants, we're able to effectively replace most of the rent that Saks was paying. So there is still a strong opportunity on the permanent re-tenanting from those boxes. From a timeline perspective, we're going to continue to evaluate the best options and not only on pure economics, but the merchandising fit for the center and how these new tenant prospects can help drive traffic and drive other leasing efforts around the center. I think you'll see a bigger impact on the '28 numbers than you will in '27 from the new permanent tenants coming in, but we're excited about the runway and the opportunity there.

Okay. That's helpful. And regarding the time frame to re-tenant vacant spaces, I guess you just mentioned '28. You've talked about the speed and efficiency of re-tenanting space in the outlet format generally. But yes, these were larger spaces. You talked about potential plans to split some of these. So I guess the realistic time frame to recapture rent, would you expect any impact in 2027 or is this mostly 2028?

'27 can have a minimal impact. But typically with our average square foot being around 5,000 feet, those are the ones that we can turn pretty quickly, 60 to 90 days to build out, get open. But with these boxes averaging 25,000 to 30,000 feet, it's just a longer time frame and it's also we want to make the right decision. If there's landlord work involved in splitting boxes, that adds to the timeline. There will likely be some permanent rent coming out of certain of these boxes next year, but it will be more weighted towards the back half of the year with a bigger impact felt in '28.

Okay. And then just back to acquisitions. I was just wondering if you could talk a little bit about how the acquisition pipeline looks today. Just curious if the opportunities that you're seeing are improving? And can you also speak to cap rate trends, whether there's been any change in pricing as you're looking out at new opportunities?

I'd say the pipeline is very active. There is more things on the market today and we continue to build our off-market pipeline, looking for ways that we can leverage our platform to create value for stakeholders, whether the seller wants to stay in or not. We feel we have a really big competitive advantage with the platform that we've built. To your second part, it is competitive. You've seen cap rates compress and so that just means we have to be very disciplined in finding the deals that work for our stakeholders that ultimately create both financial and strategic value. And we are very pleased to have purchased Levis this past quarter and to have deployed almost $1 billion over the last 3 years at very accretive spreads. And that's what we'll continue to be focused on targeting both outlet, open-air lifestyle centers in both our existing and new markets.

Our next question will come from Naishal Shah from Green Street.

On the retailer demand side, I was curious if you could speak to how the pipeline for brands new to the outlet channel today compares versus prior years. Are you seeing more brands that historically haven't played much in this space look to increase their exposure to the outlet channel?

It's Justin. We are seeing tremendous demand in the outlet channel from new brands. The reality is that we are spending a lot of our time meeting and sitting with tenants that historically have not been with us in the outlet channel and educating them on how our evolution is going. As Steve has mentioned in the past, we continue to lifestyle our outlets and bring in brands. We talked about Sephora and Ulta and Victoria's Secret. We've added hard good brands like Serena & Lily, Pottery Barn, Williams-Sonoma continues to expand into our portfolio.

And I think the one category where we see tremendous amount of runway, Naishal, is in the food, beverage and entertainment sector. Steve mentioned the swim school that we're adding and also Dave & Buster's -- Dave's Hot Chicken and more Shake Shacks. So everything that we're doing is trying to keep people on campus longer because we know the longer they stay on campus, the more they're going to spend. And we feel like we're doing a really good job educating the tenant community on how the outlet channel can provide that opportunity for them.

And as you sit down with these retailers, is there a certain price point you target? Are you targeting kind of more in the middle market? Are you looking at semi-aspirational labels? Is there a certain kind of consumer that you'd like to get in your centers moving forward that are new to the outlet space?

We're always looking for a younger demographic consumer. But no, there's no exact target. At the end of the day, we have our ear to the ground on what the community wants in the centers that we operate in because it's really important. Those are the people that are going to come shop our centers. And so we are a very data-led leasing team. We rely on our data analytics to help drive our leasing decisions. And so at the end of the day, our strategic merchandising decision is geared towards that and we feel we do a really good job at leasing and merchandising to what the communities want.

Our next question will come from Tayo Okusanya from Deutsche Bank.

Great quarter. I wanted to talk a little bit about again some of the marketing initiatives and some of the technology initiatives that you guys are undertaking to just drive more foot traffic to the outlets on the lifestyle centers. Curious when you guys are thinking about making these investments, how do you think around the kind of ROI or return hurdles before you kind of do a green light on any of these initiatives?

Sure. Well, let's start with the outlet business because I think it's really unique. A lot of the brands in the outlet business aren't using their marketing capital to get the consumer to come and shop their brand off-price. Because of that, traditionally the outlet developer has long been relied on in order to drive traffic to the shopping center. Because we've been in the business as long as we've had, we've done a really good job of building those muscles. The big evolution that we've seen in our company over the last 4 or 5 years is that evolution to more digital marketing.

And I think the digital marketing is where we see the ROI because when you have digital messaging, you can be far more personalized, you can go after the customer that you're looking for. You can meet that customer where they consume that advertising information. But more importantly, there's attribution associated with a lot of that marketing so that when the customer receives messaging from us, they bring that messaging back when they shop, whether it's a coupon or it's a digital coupon or it's a QR code. We can then tie that sale, that purchase back to where that individual consumes that information and then we're able to apply a return on what we invest in that particular line of marketing.

Our next question will come from Caitlin Burrows with Goldman Sachs.

Maybe I was wondering if you guys could comment on TIs in the quarter and more broadly I know you guys, as you just discussed, have been shifting some of your mix over time. So wondering to what extent that is coming through in the necessary TI spend and/or what could be timing related going on also?

So I think if you focus on Page 10 and 12 in the supp, just from an overall TA second-gen CapEx, our second quarter was more elevated as we finished out a lot of the leasing that Justin talked about in terms of openings and we've reiterated our guidance for the year of $65 million to $75 million, which is about mid-teens percentage of our NOI, which has been relatively consistent over the last couple of years. When you look at the executed transactions on Page 12, you can see the net economics have been relatively steady with strong renewal spreads and TAs that are equivalent to just over a year of rent with very low capital cost on the renewal activity.

The other aspect is we do do a lot of noncomp leasing, which is why spreads are only one part of the equation. When you look at Page 12, you can see that we did 3.3 million of total leasing relative to $3 million of comp. which means there's another 300,000 square feet that we're re-tenanting whether there is either vacancy or a temp in that space. And so that incrementally obviously is driving some tenant allowance on those deals, but is driving significant upside given that mark-to-market opportunity that exists.

We'd expect the second half of this year to moderate from a total basis given that we're at about $37 million year-to-date. And as we re-lease some of the boxes, we should stay in that mid-teens to upper teens level with very strong returns on that investment. And overall, our capital as a percentage of our NOI remains very low relative to other forms of real estate and the retail peer set.

Got it. And then another one that comes up frequently on the call so the answer might be related to timing. But it looks like both property and operating expenses and tenant reimbursements were high in the quarter even excluding the operating -- the extra expense related to tax. So I was wondering if you could talk about those 2 line items, if there was something driving them, if they stay high, new normal or more timing related?

So these numbers will bounce around quarter-to-quarter. I'd say on an expense recovery basis, we should be in that high 80s, low 90s for the entire year. So we were just maybe a tad more elevated in the second quarter. And you are correct in the property operating expenses, one that was that $1.3 million lease buyout fee and so that obviously doesn't reoccur as we go forward and we expect that tenant recovery rate to come down a little bit in the back half because our operating expenses are much higher in the second half than they are in the first half given all the holiday spend, all the marketing and all the things that we do in the fourth quarter when our centers are the most active from a traffic perspective.

As there are no more questions, this concludes today's call. Thank you for joining. You may now disconnect.

Hello, everybody. I'm Juan Sanabria, Senior REIT analyst at BMO Capital Markets. I am pleased to have Tanger joining us today, sitting to my left so in the middle, Stephen Yalof, President and CEO; to his right, my left, Michael Bilerman, Chief Financial Officer and Chief Investment Officer; and all the way to my left is Doug McDonald, SVP, Treasurer and Head of Investments. Stephen, I'll hand it off to you to maybe say a few words to tell the audience who Tanger is and what you're all about.

Thanks, Juan. I think we flipped the coin and Bilerman actually won the toss, so he's going to give us the setup today.

Face-off, I believe.

Yes, face-off, exactly. So we're Tanger. We're a $4.3 billion equity, $6.1 billion enterprise value REIT. We own and operate 42 open-air shopping centers across the country, including 2 up in Canada. That's comprised of 38 outlet centers. Has anyone shopped at an outlet before? Okay. Two hands. Everyone loves value. And 4 open-air lifestyle centers, which we've acquired over the last number of years.

The company is positioned for sustainable growth, and that's really coming after a number of years of positive both earnings, cash flow and top line growth. And a lot of that's being driven by 3 pillars, which is driving our internal growth, continuing to push both our revenues and managing our operating expenses.

It's intensifying the real estate that we already own. We have a significant amount of peripheral land around our centers. So being able to activate that with new uses and new retailers is another component. And the last piece has been external growth. And over the last number of years, we've deployed about $1 billion into 8 new assets, 4 which were outlets, 4 which were lifestyle centers, 7 that we bought and 1 that we built.

And all of this is backed by a fortress balance sheet. And so when I talked at the beginning, over $4 billion of equity, $1.8 billion of net debt, we're running at 4.7x debt to EBITDA, which is the lowest level in our 42-year history as well as the lowest in our sector. And that capacity provides not only security against volatility, but it provides significant opportunity to deploy capital. And most recently, we announced a $60 million acquisition last week at a very attractive 8.5% going-in yield.

And we're positioned for future growth, not only from that balance sheet capacity, but as a REIT, we do pay a dividend. Our dividend today is at $1.25, which has seen very strong growth over the last number of years. But our payout ratio is only at 55%. So when you look at other REITs, the sector is running at about 75% to 80% dividend over free cash flow. And so not only do we have the underleveraged capacity, but we are retaining more of the free cash flow that we generate to be able to reinvest in our business and drive additional growth. With that, Juan, we're happy to take questions.

Thanks, Michael. And if there's a question from the audience as we go, just raise your hand. I guess just generally speaking, how is the business performing with the question marks, again, on the consumer with higher gas prices? And I guess, where does Tanger try to meet the customer to deliver what they're seeking out in value, et cetera? If you could just comment on that.

Sure. Well, first of all, the retail business seems to be extraordinarily resilient, especially in 2026. We entered the year thinking that we're going to have a number of really significant tailwinds. U.S. travel was anticipated to be far more domestic this year. At the beginning of the year, as we all recall, there was the crisis in the Caribbean, and there were some issues with folks that were traveling to Mexico had thought that this was going to be a year where we're going to see a lot more domestic tourism coming to our shopping centers.

And that one seems to be proving out. The higher gas prices is obviously sort of counter to that domestic travel. But what we're finding is, particularly in the outlet sector, the customers are investing in the trip. And I think where folks would look at outlet centers, if we're going back 15, 20 years, that those are really destination properties that required a real thoughtful visit.

Now I think what we've seen, particularly post-COVID, is that a lot of the geographies where these shopping centers were built. And they were built at a time where they were purposely built far away from the regional malls, far away from the other cities. And now as we see most folks, this demographic shift of population where people are moving closer and closer to those geographies, our centers have become sort of the regional mall of the geographies in which they sit, places like Myrtle Beach and Hilton Head; Savannah, Georgia; Charleston, South Carolina.

So markets like that, we've engaged in adding a host of new retailers and brands and uses into those centers, which have really activated them not only for that tourist that's coming to shop us, but really for that local consumer that's looking for a more diverse experience when they come to the centers themselves.

So as leasing demand, you guys just came off of ICSC. Is that diminished at all? Is there more leases sitting in committee? Or how is the forward pipeline of opportunities?

Yes. No, I think there's a tremendous amount of opportunity. And a couple of drivers of that opportunity, first of which is the lack of new shopping center development that's happening in the country right now. That curve has sort of flattened out substantially. And with the exception of a few markets, there's really not a lot of new development. I think the economics of acquisition are far more supported than the economics of a new development.

In fact, we built a center about 4 years ago in Nashville, Tennessee. That was about $400 a square foot to build a new center, plus now you have to lease 300,000 square feet from a 0 base. When you can buy a new center at $200 a square foot, which is something like 20 -- 40% to 50% of the replacement value, we're finding the economics of acquiring are far better than the economics of developing today.

So that seems to be one of those big demand drivers, coupled with the shifting population, coupled with a consolidating department store business. I mean we all saw the Saks OFF 5TH which were big drivers to a lot of the geographies where we have shopping centers. And now retailers are looking for a place to get their product in front of the consumer.

So that's caused a big shift of retailers that were principally East Coast, West Coast based, now looking at places like Cleveland, Ohio, where we just signed a deal with Aritzia, a fashion retailer that you've seen pop up all over New York and L.A. is now looking for mid-tier markets such as where our shopping centers reside. And so we're getting a look at much better quality retailers coming into our business right now.

And for the tenant health, how is that at this point? I know there were some closures you mentioned Saks. So just curious on how that's impacting the business and the ability to backfill space...

First of all, I think the watch list -- we have a pretty -- pay very close attention to retailers. And it starts with -- if I'm walking a center today and I see no inventory in a store, I'm picking up the phone and calling these guys and saying, "Hey, are they paying their bills?" So we're pretty active and proactive. We're looking at what's going on. I think our watch list right now is the smallest it's been. The 3 tenants that just came off the watch list are those that just filed for recent bankruptcies. Francesca's, which has about 2,000-square-foot store; Eddie Bauer, which is probably a 4,000-square-foot store; and then the Saks OFF 5TH stores, which we can talk about in greater detail.

But again, in a high demand where retailers are looking for stores to get back product of 2,000 or 4,000 square feet, we're having far less trouble re-leasing that space than we might have in an environment where there was a lot of new shopping centers being developed and popping up.

And how should we think about that impact for Saks and the closures relative to kind of your first quarter same-store NOI trend and how that should trend through the cadence -- through the balance of the year?

Yes. That was a pretty complex deal for us. Doug was actually on the front end of that. You want to sort of take the group through the Saks OFF 5TH transaction?

Sure. From an NOI and occupancy standpoint, we typically peak in the fourth quarter, trough in the first quarter, build back up throughout the year. There could be a little bit slower ramp throughout the summer this year as we work through some of those backfills on the larger boxes, but we look at the NOI coming out the back end as a considerable improvement versus where we were previously with those stores.

Yes. Let me just sort of add a little bit more color. I mean the Saks OFF 5TH boxes that we had in our portfolio, there was a lot of opportunity in those boxes. Again, you go back to a supply-constrained environment and now 25,000 square foot of Saks OFF 5TH is that's an anchor in an outlet center. It's not like a 250,000 square foot anchor department store. Our average store size is about 5,000 square feet.

Those old anchor boxes that were built at a time where we were building new centers 15 or 20 years ago, they encumbered a lot of space. They had a lot of lease rights. They paid very little rent. So with the -- aside from the fact that there's great mark-to-market on that space, the lease terms that came with an anchor box, just the ability to free that up, whether it's years and years of options or no build zones or exclusive provisions to get rid of those provisions is really part of -- it's really a big win. The mark-to-market is what Doug is talking about, and that's where there's going to be a lot of that NOI upside in the future for us for sure.

Is there any sort of range of mark-to-markets that you can provide on what you'd expect as you release that space?

I set you up for that one...

Basically, backfilling in the short term with temp tenants can replace the existing rent that we were getting. And we've talked about oftentimes with temp, we can go 2x to 4x the rent that they're paying when we put a permanent in there. I wouldn't expect the situation to be much different from that.

Yes. The Saks boxes were in our best centers. And our best centers are the ones that carry the highest occupancy. They're the ones with the most retailer demand. Now it could take some time to backfill some boxes because we have to make some smart choices who we want to put in. There's some work that we have to do in order to create them and make them ready for the next retailer to come in. But if you're playing the long game, those are great boxes to invest in.

And then from a same-center NOI perspective, the first quarter had no impact from what we're talking about for those -- I mean it snowed everywhere in the U.S. in the first quarter. So we talked about on the first quarter call how our operating expenses are variable, and most of our rent is fixed and growing. And so we were -- we had higher snow removal costs in the first quarter, which dampened same-center NOI. As our expense growth was 4% year-over-year, we would not expect that expense growth to end up in that space, which is why we reiterated our guidance despite these headwinds from bankruptcy that always happen and are largely offset, as Doug talked about, our temp program. These anchor boxes also sit those that have walked our assets, these are not separate anchor boxes that are sitting.

They're literally in the lease line. And so we have a tremendous amount of opportunity to backfill those very different than a lot of the store closures that you find in big box retail, where it takes a lot of time, it takes a lot of capital, and you are very limited in being able to cut up the box because they tend to be small from the front with very large backs where we have a significant amount of frontage and the same bay depth as all of our in-line space that's on average 5,000 square feet.

And I guess how should we think about leasing spreads going forward? Your occupancy costs are below 10%. So just curious on what you think that long-term opportunity is? And has that ceiling at all changed as you've introduced more food, beverage and entertainment to increase the dwell times at your centers?

So we think about internal growth and our ability to drive NOI. And from a revenue perspective, we are currently at a health ratio rent over the tenant sales of 9.7%. We feel that we can push that into the double digits. So assuming everything stays the same and we don't touch anything on our retailers, we feel that there's growth there.

However, a big part of our strategy has been remerchandising and effectively eliminating the poor performers, which some of it's our choice, some of it's the retailers' performance and replacing them with tenants that can do much higher productivity. So when you look at our portfolio, pre-COVID, we were $385 a foot. Today, we're $485 a foot. So even if OCR remains the same at 9.7%, we are going to be able to grow NOI as we bring more productive retailers in and see those other exit.

And a big part of driving that incremental is the food, beverage and entertainment tenants, is continued growth of our apparel, accessories, footwear, bringing in health, beauty, bookstores, the expanding amount of tenants and brands that are coming to our portfolio driven by the significant population growth in our markets, which have grown 2x the national average.

And when you look at the 10-mile ring around our assets, that growth in terms of population has been [ 1/4 ] of what the MSA is. So when you think about that, our assets over the last 15 years have had 2x the amount of population growth than the U.S. overall and where our centers are have seen 25% greater than the MSA, which effectively says these centers were built in the path of demand and that growth in demand has come, which is allowing us to really drive that leasing.

So we feel we have 2 levers being able to drive OCR and drive productivity and then continue to drive a lot of the other revenues at our centers. Right now, about 4% of our NOI is percentage rent. And as sales move up, we're able to get more on that as we share in our tenant success. The second part is a lot of the other revenues that we're able to drive at our centers by leveraging our assets as marketing mediums to be able to then make money outside the lease line as well as drive incremental traffic. And if we drive incremental traffic, sales follow.

And how big is that opportunity to the marketing medium and just taking advantage of the foot traffic and all the eyeballs you guys are generating in the dwell times?

Yes, it's pretty unique being a real estate company that's consumer-focused that has their own app. Most real estate companies are going to go pay your bills, but we have a loyalty program, and we have a text messaging program. And so being able to connect with the customer where we don't sell any product, but we're selling everybody's favorite brands at unbeatable values every day within our outlet channel.

And so a lot of those other mediums from a marketing perspective, not only through our loyalty, but when you come to our center, there's a lot of signage. And we talked a little bit about the Saks situation. They had free signage also in these deals. So being able to recapture that space on a sign, not only the mark-to-market that we're getting on the space, but that allows us to generate additional income.

When a new store opens in our portfolio, the retailer can buy into all the programs that we offer, whether it's vinyl signage on the -- what are these called? Tent signs?

The sign tents.

The sign tents. I'm still learning. That gets sold, being able to tap into our marketing and offering that. So all of that comes with additional revenue. Some of it requires investment, but we get a very high return on that investment relative to the real estate side. And right now, we're about $0.5 million on average per asset. That's been growing at a double-digit rate. Other revenues only make up 4% of our total NOI, but it's an added source of growth.

And just going back to the consumer, you guys have made a concerted effort on the food and beverage side. How are those restaurants performing? And is their OCR different than the average? How should we think about that opportunity?

The restaurant economics, aside from perhaps a little bit more capital investment on our side, the economics themselves are not dissimilar to typical rents that we're getting from tenants, particularly in the outlet space. But I think there's a tremendous amount of customer demand for that use, particularly in our centers. I talked earlier about a lot of our shopping centers that had historically shopped exclusively touristically now shop a lot more locally.

And I think that the restaurants themselves are doing a great job of driving that local consumer to our centers. It's really about customer visits. The shopping center business is all about the ability to drive customer visits because customer visits creates the flywheel that everything spins off of, sales, performance. The better your center sales performance, the more retailers are paying attention and want to come in.

The sales performance also is the main component upon which our market or asking rents are derived. So there's a lot of things that happen from that customer visit. So if you can figure out ways to get more cars in your parking lot, get them to stay there longer when they're there, get them to shop more frequently. And if you take a look at our Net Promoter Score, how likely is the consumer to say to a friend, "Hey, this is a great place to come and shop." And our Net Promoter Scores are close to the highest in the industry right now.

It's because we're creating something special with that variety, the use variety, and I think the restaurants have a lot to do with it. A lot of people who raised their hand earlier that said that they had shopped an outlet probably don't remember a great food experience in the outlets. When the outlet centers were 40 or 50 miles away in a large -- a fairly big drive, they would be so heavily weekend shopped that the restaurants couldn't really sustain that business. So that local customer is so critically important to increasing the quality of the -- not only the retailers, but also the quality of the restaurants that we bring into the centers.

Maybe if we could switch up the conversation a bit just on the investment side. Maybe if you could tell us a little bit about the asset you acquired in Toledo, Levis Commons and the history behind that deal and kind of where it fits into the overall portfolio.

Sure. So as I mentioned in the opening, we've brought on 8 additional assets into the portfolio over the last 3 years, 4 outlets and 4 lifestyle centers. The most 2 recent transactions was we bought an outlet in Kansas City in the fourth quarter, the Legends Outlets, and that has seen already a significant amount of growth from our leasing, operating and marketing platforms and then announced last week the acquisition of Town Center at Levis Commons in Toledo, Ohio. The asset sits in the wealthier suburb of Perrysburg, just south of the main part of the city.

This is where families, professionals live, shop, work and play. The center was developed about 20 years ago in a market that has seen some consolidation from the mall as well as another open-air center that was built after this one that tried to compete and wasn't able to.

And so when we look at it and the momentum that the asset has had, most recently bringing in Shake Shack, Lulu, J.Crew, Sephora, we feel that our ability to come in and continue to elevate that merchandising mix to drive further NOI based off of our national leasing team, combined with our ability to operate the center under our national contracts and then being able to really lean in from a marketing perspective to really elevate that customer experience. It sits within a 400-acre mixed-use district, which has Class A apartments, hotels, headquarters of office and so is the place to be.

And with our portfolio, we can operate single assets in a lot of markets because we have boots on the ground at every one of our assets supported by this national platform that's able to drive a lot of growth. And very similar to our acquisition in Little Rock, Arkansas, the Promenade at Chenal, aesthetically and drivers Levis fits very well to that strategy.

So is there a significant mark-to-market on the leases or densification opportunity or outparcels that you could harvest over time?

In this particular asset, yes, absolutely. I think when we took a look at this asset and even though we bought it at a pretty substantial yield, 8.5%, when we look at an asset for us, what -- we'll pick up the phone and call a number of our friendly retailer partners. And number one, the most important thing is if somebody was there and left, I want to know why because that's a red flag to me.

But more importantly, if there's a number of retailers that aren't there that never have been, I mean, the asset has been around for quite some time, what is it that's keeping them from coming into this marketplace. So we get a lot of really good intelligence from the retailers that we do business with every day. And when they raise their hand and say, well, sometimes it was just the operations themselves. There's -- we bought a number of these assets from one-off operators.

We have great scale. We will go into a shopping center, not only will we be able to bolt on our operational model, which allow us to save a couple of hundred basis points in expense right there. But that leasing team that we've developed of 15 to 20 leasing representatives that are speaking to the retailers on a regular basis, you pick up the phone and say, "Hey, this is something that we're considering buying." They're saying, well, that's definitely on my open to buy. Maybe we'll give it a higher priority if that's something that you'll invest in because they understand the quality of the asset that they're going to get when Tanger is operating that asset.

And Michael, maybe you could talk a little bit more about the broader investment market and opportunity set and kind of coming out of ICSC, we heard a lot more interest in retail and competition. So just curious on yields or cap rate trends.

Yes. I mean retail is doing well right now. Steve talked about the dearth of supply, which is not just a new phenomenon this year. You go back pretty much to the GFC in 2008, where construction starts fell from, call it, 1.5% to 2% of stock down to 40 basis points. And we've been at that level for 18 years. So there's nothing being developed. And we've gone through a number of cycles, the demand for bricks and mortar by the retailers is significant.

We get the other benefit from a consolidating department store industry where those brands need a place to connect with their direct-to-consumer. And so we've seen that tailwind combined with all the population growth in our markets. From an external perspective, retail, there is definitely more product being brought to market. There's also more competition as capital is seeking where they have historically been underweight retail now, you've seen a lot of competition.

We feel, given our unique strategy of both playing in outlets where it's a heavily consolidated industry, but being able to pick up outlets and bring them into our portfolio and drive a lot of growth is one avenue. The other avenue has been expanding our platform into open-air lifestyle centers. And the addressable market of lifestyle centers in the country is vast.

And at our size, we're $6.2 billion, doing a $60 million deal, 1% of our assets at an 8.5% relative to how we financed it, we think it is good business. And we're going to lean into where we can really find the value opportunities. And we don't look at -- we know we can't control our stock price. We know we can't control our dividend yield. The only thing we can control is our capital allocation decisions and how we market and how we operate.

So we don't look at the market sending us a signal that it's time to grow or not grow because no one controls the market. The market is not one person and to hone in on just external growth as green light, red light, it's not the way we think about it. We talked at the beginning how our balance sheet is really well positioned. If we find an attractive opportunity, we should be able to capitalize it in different sources. We shouldn't be more aggressive because the market is pricing our security at an attractive level because we want to own these assets forever. And that's the decisions, the lens that we look at when we're making an acquisition. And we're hopeful we'll continue to find transactions.

Is there any questions from the audience?

Yes, I have a follow-on, Mike, for you. What your current -- your target leverage today and what's [indiscernible]?

Thank you, David.

Repeat the question.

So the question was just about balance sheet, target leverage and floating rate debt. So right now, we're running at, I said, 4.7x, 4.8x. Our target has been 5x to 6x. So we have leverage capacity. And then as part of that, because of our free cash flow generation and strong EBITDA growth, we're pretty much generating additional leverage capacity.

I mentioned $100 million. You take that and you lever it, well, that provides capacity. And then EBITDA growth has been very strong. We've been driving about 5.5% same-center growth over the last 4 years, and our G&A has been relatively flat because we built the platform and we're getting all the synergies from it. So that means EBITDA growth has been greater.

The EBITDA growth provides an additional leverage capacity. From a floating rate debt perspective, today, we're 100% hedged. So we have swaps in place on our variable rate debt on our term loans. And we've built out a laddered swap schedule, very similar. We don't want to have any swaps burning off that are substantial. And so similar to building a position in a stock, we average dollar cost average in our swaps.

And we already have forward starting swaps because we're not -- we don't think we get paid to make an interest rate call. So we have to be -- we're trying to maintain that conservative financial profile on the right-hand side of our balance sheet.

[indiscernible]

So when you look at our balance sheet today, we completed a number of financing transactions at the beginning of the year. We did a convert, and we also did an upsized unsecured term loan, which had a delayed draw feature. Where we sit today is we have -- we're sitting on basically $270 million of cash, less $60 million that we just bought Levis for and $150 million of delayed draw term loans.

We haven't pre-swapped the $150 million of delayed draws. So when we -- if we take that on, we can make the decision whether we want to stay floating or fixed. The deals that Doug and the team did at the beginning of the year reduced our cost of capital. So we were able to reduce our spread on SOFR on our unsecured term loans, and we were also able to push out duration.

So from a balance sheet perspective, the only that we have right now is a $300 million loan coming due July of 2027. We have nothing else until 2030. So we feel we're really well positioned. We're coming off a trailing 8% FFO growth the last 3 years. The midpoint of our guidance this year is 6.3%, the highest in the sector, and we feel we're extraordinarily well positioned given our financial profile, the business dynamics. Value, everyone loves value. Value never goes out of fashion. So we want to continue to be able to provide strong cash flow and dividend growth.

I think we're at time. You dropped the mic on that -- value never goes out of style.

Yes, that's a Bilerman one now.

Thank you, guys. All right.

Thank you.

Good morning. I'm Ashley Curtis, Assistant Vice President of Investor Relations, and I would like to welcome you to Tanger Inc.'s First Quarter 2026 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 IR website, investors.tanger.com. Please note, this 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 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. 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, May 1, 2026. [Operator Instructions].

On the call today will be Steve Yalof, 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&A. I will now turn the call over to Stephen Yalof. Please go ahead.

Thank you, Ashley, and good morning. I'm pleased to report another strong quarter for Tanger, reflecting continued momentum across our leasing, operating and marketing platforms and successful execution of our growth strategy, all contributing to our increased full year 2026 guidance.

Our first quarter financial and operating results clearly demonstrate the strength and consistency of our business. Core FFO was $0.59 per share, up 11% from the prior year. Occupancy ended the quarter at 97%, up 120 basis points year-over-year. Sales productivity increased to $482 per square foot on a trailing 12-month basis, and OCR remained stable at 9.7%, providing additional room for rent growth. In April, we announced a 7% increase in our dividend supported by our earnings growth and conservative payout ratios.

These results reinforce the core point that our integrated leasing and marketing strategies underpinned by disciplined operating asset management and financial strategies are working together to drive sales, traffic, NOI and long-term value for our stakeholders. As we've shared over the past 8 quarters, we continue to execute to our center merchandising strategy. The evolution of our tenant portfolio is reflected in the progress that we've made, replacing underperforming retailers in our centers with more productive and highly sought after ones, creating a flywheel that drives traffic, sales increases and ultimately rent revenue growth. Our belief in the strength of our portfolio is evident in our continued strategy to renew fewer tenants and replace them with new concepts, retailers and uses across our platform. This is demonstrated by our leasing results.

Retailer interest across our portfolio remains strong. In the last 12 months, we executed 651 leases totaling 3.4 million square feet, representing record production for Tanger, blended rent spreads of 10.5% reflect ongoing strength with retenanting spreads exceeding 26% with little new retail development coming online and a consolidating department store business, we see this favorable supply and demand dynamic continuing. Our shoppers are demanding new brands, better food and beverage and more entertainment options, and we are delivering through a steady pipeline of elevated retail, restaurants and service users, many of which are new to Tanger.

This strategy is improving the utility of our centers and ultimately driving more shopper visits and longer dwell times, all contributing to increased sales productivity across our portfolio. Occupancy was up meaningfully for Q1 year-over-year. As is typical, the sequential change was due primarily to seasonal patterns. We are handling closures strategically with permanent backfill deals already in our pipeline and our strategic temp program, bridging select spaces until the right long-term deals are successfully executed. Our marketing platform continues to serve as a key differentiator.

We're delivering more value in new ways and to new shoppers, expanding our reach through broadened channels, and we are growing our Tanger proprietary loyalty program while providing value and personalized offers that today's shoppers expect. With over 200 on center events and activations in the first quarter alone, our community engagement events enhance the customer experience, customer visit frequency and dwell time and solidify our position as an important stakeholder in the communities we serve. These highly successful on center initiatives contributed to the growth in traffic we enjoyed this quarter.

We are also thrilled with the success of our partnership with unrivaled sports, the nation's leader in youth sports experiences and their rapidly expanding Ripken Experience platform. As their exclusive shopping center partner in our shared markets, Tanger centers are on the itineraries of thousands of young athletes and their families traveling to our markets. This is just one example of how we're capturing the momentum of sports tourism, and we are excited to continue growing these partnerships.

We continue to monetize our center traffic through our marketing partnership business. Strong demand from both retail and nonretail partners for on-center activations, digital media and experiential campaigns are large contributors to this growing revenue driving business. and we are further expanding these capabilities across our portfolio. We are increasingly leveraging technology to support and enhance our platform, enabling AI across the organization to improve workflow and drive operational efficiency.

As an example, our multilingual AI chatbot now handles more than 80% of customer inquiries, servicing our shoppers, suppliers and tenant retailers around the clock thereby, saving time, money and increasing productivity. Our asset management initiatives continue to drive value through peripheral and brand activations, merchandising optimization and investments in our centers. Population shifts and residential densification in many of our core markets is creating demand for more restaurants, service and entertainment uses. These projects enhance the customer experience, support leasing momentum and drive continued sustainable NOI growth over time.

Our strong balance sheet and low debt-to-EBITDA ratio provides the ability and flexibility to invest in our portfolio and seek opportunities for external growth. In an uncertain macro environment, Tanger's value proposition continues to resonate with shoppers and retailers alike. Our open air centers, compelling brand mix and focus on value positions us well across economic cycles Favorable market conditions supported by growing local populations, limited new retail center development and consolidation and department store business continue to contribute to broad and diversified leasing demand across our portfolio, creating an engine for sustained long-term growth.

I want to thank our Tanger team members for their hard work and dedication as well as our retail partners loyal shoppers and shareholders for their continued support. I'll now turn the call over to Michael to review our financial results and updated guidance in more detail.

Thank you, Steve. For the first quarter, core FFO was $0.59 a share compared to $0.53 a share in the prior year period, which represents an 11% increase predominantly driven by solid internal growth, contributions from our recently acquired centers and modestly higher lease termination income. Same-center NOI, which excludes lease termination income, increased 2.6% and in the quarter with revenue growth coming from higher rents, higher tenant reimbursements and higher other revenues.

While we remain disciplined with cost management, the quarter's NOI growth was impacted by elevated snow removal costs, which had been contemplated in the full year guidance range that we provided last quarter and as we discussed on our last call. Our balance sheet remains in excellent shape, and we are well positioned with the flexibility to invest in our portfolio, pursue selective external opportunities and address upcoming debt maturities. At quarter end, net debt to adjusted EBITDA was approximately 4.8x and our interest coverage remains strong.

All of our debt is at fixed rates, inclusive of our swaps and with a weighted average interest rate of about 4% and a weighted average term to maturity of approximately 4.5 years once our upcoming near-term maturities are addressed. Our leverage remains below peers as well as below our targets, benefiting from the strong continued EBITDA growth that our platform and company generates, in addition with a below average dividend payout ratio of only 53% of our funds available for distribution, we are retaining additional free cash flow after dividends supporting future growth. In January, we completed a number of significant capital markets transactions, which we discussed on our year-end call that increased our debt capacity, enhanced our liquidity and extended our debt duration lowered our pricing and expanded our bank group.

We currently have over $1 billion of immediate liquidity and this includes our cash on hand, short-term investments, the delay draw term loan proceeds and the full availability on our lines of credit, which provide us significant flexibility to fund capital investments, pursue disciplined growth opportunities, advantage our upcoming maturities, which includes the $350 million of unsecured bonds that come due this September and the potential early redemption of our $115 million mortgage in Kansas City, which matures late next year. Subsequent to the payoff of these loans, our only significant maturity will be our unsecured bonds, which totaled $300 million in the summer of 2027 and no other significant maturities until 2030.

And now just turning to our guidance. Based on our strong first quarter performance and the outlook for the remainder of the year, we have increased our full year 2026 guidance and now expect core FFO per share in a range of $2.42 to $2.50, which represents 6% growth at the midpoint. Same-center NOI growth guidance remains at 2.25% to 4.25% for the year, and our guidance does not assume any additional acquisitions, dispositions or financing activity beyond what has already been completed to date. We are encouraged by the consistency of our results, the strength of our balance sheet and the visibility into the continued growth that our leasing, marketing and active asset management can produce. We remain focused on disciplined execution and prudent capital allocation to drive long-term value for our shareholders. We look forward to seeing many of you at upcoming conferences and property tours.

And with that, operator, we'd be happy and ready to open the call for questions.

[Operator Instructions]. And our first question comes from the line of Andrew Reale with Bank of America.

First, just on the leasing side. I mean, demand seems to be continuing unabated. That's obviously supporting your remerchandising efforts. So first, do you expect retenanting spreads can continue to sort of run in this mid-20% area through the balance of the year? And then just on retention, Remind us what the retention rate is today. And when might you start to manage retention back up to historical levels?

Thanks for the question. With regard to spreads, we're very optimistic about our ability to drive rent in our shopping centers. As sales continue to perform the way sales are performing, I think that gives us the opportunity to continue to grow our rents. With regard to I guess, the second half of your question? Sorry, Andrew.

The second half. Well, you've been running reductions for.

Our current retention, we're anticipating about 80% of our to renew about 80% of our roll this year, which is probably the lowest it's been in the past 5 or 6 years. just because we see great upside and great opportunity. There's a very deep pipeline of tenants that want to be in our shopping centers. And we're going to take advantage of that opportunity. Our retenanting spreads are far higher than our renewal spreads. So in this environment, with limited new development and department stores in many of our geographies closing. We understand the retailers really want to put their brands in front of the customers, and we think our open-air shopping center platform is exactly in place that they want to do it.

Okay. And then maybe just on the same-store growth. You noted that was burdened by snow removal in the quarter, which was no surprise. But I'd be curious if you could quantify where that same-store growth would have been ex the snow removal. And then your range still implies a somewhat broad range of outcomes. So I was wondering if you could maybe speak to some of the swing factors that could still drive you to the high or low end of your same-store range through the balance of the year.

Thanks, Andrew. So the snow relative to last year you've [indiscernible] about $0.01 that impacted it year-over-year. So probably about 100 basis points to that same center growth in the first quarter. As you saw, the expense growth was about 4%, and we've been able to keep our expenses at pretty low levels. As you mentioned, that was contemplated in the full year guide, which is why the 2025 and 4.5% has maintained. At this point of the year, it's still early, and we have a lot of confidence in our business, a lot of confidence in the range. We still run a very operationally intensive business. So as we move through the year, there's going to be some variability still on sales.

As you saw in the first quarter, our percentage rents were up, but there's still uncertainty as we move through the year. There's obviously still as we are retaining a lot of space, the downtime and the ability to bring those tenants in on time. We still have an uncertain macro environment. And so there's things that could take us at each part of the range. But as we sit here today, we're optimistic that we can continue to deliver solid growth. And with the amount of leasing that we've done, we'll be able to update you in 90 days.

The next question is from the line of Craig Mailman with Citi.

I know you touched on the higher lease termination fees really just being part of that intentional remerchandising effort. Could you just walk through how much of that is sort of F&B related as you guys progress that initiative versus just traditional retail and kind of what the as you guys are looking at that, the NPVs that you're looking at to take, I know your downtime is less than others in your space, but even so the downtime, the TIs, can you just kind of walk through the economics of that thought process?

Sure, Craig. I think you hit it at the beginning that these are deals that we have to agree to. These are negotiated transactions where a tenant has a lease. And if they want to get out we have to come to an agreement of value that we want to get out of it. And if we have certain opportunities. We're going to take that advantage to get an NPV for a significant amount of the rent that's due to us under the lease.

And so in this case, there's not a lot of space but it had some term in credit, and we were able to bank that and then go ahead and release the space. Our TAs are pretty low relative to other asset classes. And so that term fee allows us to fund that and then be able to create growth with a better tenant down the road.

And then just on the F&B side, I mean part of that question was just how much of it is that initiative? And I guess, IND baseball partnership, things like that, where these sports initiatives, I'm assuming part of that appeal is the F&B part. I mean I know the retail is also interesting to them as they try to kill tie between games and things. But kind of what's the -- as you guys craft those partnerships, like how much is the move towards F&B a bigger piece of that as you guys trying to get that type of customer in the door.

So for us, I think 1 of the things we've been talking about with regard to the evolution of our portfolio over the past 5 or 6 years, was that as demographics have shifted. Our centers have become a little bit more of the go-to local shopping destination for the communities that we serve. And in light of that, we found that, that consumer is looking for a lot more than just a shopping experience when they come and they visit us. So using peripheral and, in some instances, some of the in-line space to create food and beverage opportunities has served us extraordinarily well because we're seeing customers come in and take on multiple visits.

So that would be a piece of our business has been a really important strategy. As we talk about the Cal Ripken partnership where we have a lot of overlap between where they have their setups and where we have shopping centers across the country, I get a prudent beverage part of our shopping center platforms is critically important. Because we'll get those families in between games that want to come to our properties. They'll want to shop, but they'll also want to place to dine and be entertained. So that plays perfectly into the strategy that we've been executing to for the past number of years, we can now take advantage of it because we're able to provide that customer and the families, the things that they're looking for as they have some downtime.

So it's been turned out to be quite a fruitful partnership and one1 that we're looking to grow this year and in future years.

Our next question is from the line of Michael Griffin with Evercore.

Steve, I'm curious if you can expand a bit on to any insights into shopping patterns or customer behavior you're seeing at your centers. Just given higher gas prices over the past couple of months, is there a worry that a sustained increase here could impact demand for shopping at your centers? Or have you not seen that so far?

Well, I'm really impressed with how resilient our customers have been. We went into 2026, thinking that we had a whole host of tailwinds that we're going to serve as a great increase to both traffic and sales. And I guess with the crisis of the Middle East and gas prices being what they are, that being we still were able to drive an increase in sales and an increase in traffic in the first quarter. So the resiliency of the customer has been a wonderful thing. I think it goes back to what I said to Craig in the previous question, we're no longer just reliant on that drive to tourist customer coming to our centers where that gas price issue was a much bigger issue in years past.

Now because we're part of that local shopping experience for a lot of our customers. I think the gas issue as far as where they choose to travel has been somewhat mitigated. Obviously, everybody is still competing for share of wallet. So as gas prices go up and our customer becomes more constrained. Thankfully, our shopping centers or from value every day. And I think that value proposition where our customers, which are typically an aspirational customer, they're looking for the brands they love at the best possible price every day, and that's what we offer across our portfolio.

Steve, that's very helpful. Maybe switching to external growth next. Michael, I'm curious, it looks like the balance sheet is primed to go on offense, given the capital markets execution at the beginning of the year. Can you talk a little bit about the opportunity set in the transaction market today? Are you seeing more deals on outlets versus lifestyle centers? And can you talk about what returns you're underwriting to maybe relative to your cost of capital?

Thanks. Our pipeline remains active, and it remains active across the two unique verticals that we are active in, which are both complementary and synergistic to each other between the outlet business and the open-air lifestyle business. And where we're really leaning in is where our platform can add value. Where can we see value from our leasing, operating and marketing platforms and what can we do to drive value of that asset from an asset management perspective. We're optimistic that we can continue to find opportunities but we're not programmatic. It's a big country, and we'll announce deals when we do them. What we're really looking for, Griff, is the ability to go into an asset.

It's not that initial yield. It's the growth that can be attained over time so that we're driving an attractive return on our invested capital. I would say there's more product coming to market as I think retail overall, there's a lot of positives that you're seeing from a demand perspective. Obviously, you know about the low supply and generating the returns relative to other asset classes, there's definitely more interest. We think we are pretty unique as an owner operator to be able to come in to certain assets and drive growth overall.

To share a little bit on the leasing between the two platforms. Yes. So from the standpoint of just -- look, we have a tremendous amount of demand in both platforms. And being involved in the lifestyle platform has absolutely opened up the ability to bring some of those brands that historically have not been in the outlet channel into the outlet channel. And as you know, Michael, we are hybrid-ing some of our assets on the outlet side. And we're seeing great sales increases. We're seeing, as Steve mentioned, an increase in traffic, and that has to do with us having that blend of both full price and all.

Our next question is from the line of Juan Sanabria with BMO Capital Markets.

Just hoping you could talk a little bit about the bankruptcies or closures and how that may affect results or the trends of growth in same-store and otherwise, for the balance of the year, given what's been announced today and how we should incorporate that in our forecast.

Thanks, Juan. As we discussed last quarter, our range contemplated range, our guidance range had a range of credit outcomes. And at that point, we obviously knew about any Bower, Francesca's and Saks. I think you saw some of that impact in the first quarter. where those bankruptcies happened, but the other part is if you look at our leasing activity, we've already executed more of our renewal activity than we did last year.

And as Steve talked about in the opening comments, we've already executed backfield deals either on a permanent basis or a short-term temp basis for a lot of that space. And so our guidance range of 2.25% to 4.25% still contemplates and takes into account all of these risks. And I would just say from a cadence perspective, we would expect 2Q to have most of the brunt of that those tenants have come out, we put temper firm as those come into the back half of the year. And so you may just see a little bit of a different seasonal impact as we move through the year, but coming out with pretty attractive growth at 3.5% at the midpoint.

Okay. So the cadence of the second quarter it would be both on occupancy and same-store NOI or just to confirm.

You see it more on same center than you will in occupancy because occupancy is period end, and we may have temp in there, but just from the timing during the quarter, you may see some of that from a revenue perspective as we build that firm and rent basis through the end of the year.

Great. And then just as a follow-up, you mentioned the closures of department stores as a benefit to your centers. Just curious if you have any case studies what a department store closure in your trade area where there's an overlapping Tanger Center has meant for sales or for traffic? Anything that you could highlight as -- and as an output of what we're seeing with the consistent kind of closures and whittling down of the department stores?

Yes. Look, when we saw -- particularly in the Southeast, where we have most of our shopping centers, we saw over the past couple of years, closing some of the majors, those brands are looking for a place to replace that sales volume. In some of the markets, the only place to do so is in one of our shopping centers. places like between Hilton Head and Myrtle Beach, Daytona, Florida, Charleston, Savannah, A lot of those centers were built 15 or 20 years ago where they didn't have sort of proximity to the large regional shopping centers because the retailers wanted to -- we're concerned about that wholesale sensitivity.

Now what we're finding is people are moving closer and closer to those geographies and looking for those particular brands and the stores that they were shopping have started to close we see either retailers getting bigger in our centers or opening up new stores and taking their footprint -- making their footprints larger and larger across our portfolio.

Our next question is from the line of Greg McGinniss with Scotiabank.

So it's no secret that the acquisition environment is particularly competitive right now, but we've also seen your weighted average cost of capital improved with the higher equity value, strong balance sheet. Can you give a little more color on transaction market? Are you seeing much worth acquiring? What makes the asset attractive to you today? And what sort of cap rates or IRRs are you targeting?

Thanks, Greg. The market is competitive, but at the same time, there's more product on the market. And so I think you have those two things going at the same point. And at our size, we don't have to do a lot. We're just over a $6 billion company. And if we're able to find really interesting, unique assets that fit our platform and when you look across our 41 assets, we're in a lot of places that other people aren't. We operate with boots on the ground at every single one of our assets.

These are very operationally intensive assets that are supported by a national platform that has deep experience from a leasing, operating and marketing perspective. And we think that's a big competitive advantage when we look at assets within the outlet side of our business as well as open air lifestyle, and we're optimistic that we'll be able to continue to find product to grow this platform accretively. And as you said, our cost of capital has improved, but at this point, we're sitting on significant both leverage capacity being down at 4.7%, 4.8% from a debt-to-EBITDA perspective. but also from just a pure liquidity perspective, with over $1 billion of immediate liquidity, we have the ability to deploy capital without the need to raise additional at this juncture.

Okay. And then where do you see the biggest opportunities kind of within the portfolio to improve tenant offering over the next few years? And given the level of demand that you're seeing, does this open up additional potential densification or redevelopment opportunities? And I guess following along with that, where do you see as the kind of minimum underwriting threshold for that type of investment?

I'll let Michael talk about the investment side, but just the opportunities. I think we still have a lot of opportunity in our organic portfolio. So as we're incredibly active out in the acquisitions market right now, as Michael just talked about, the ability to take whether it's a Saks box or repurpose some of these stores that have closed due to bankruptcy or as I talked about at the beginning of the call that we're at an all-time low in terms of our retention rate we're creating these new opportunities across our portfolio because we're at a point in time where retailer demand is high and demand and supply of space is low.

So where our retenanting spreads far ops renewal spreads and we've got the opportunity to leverage our capital in order to make some of these changes across our portfolio, we're extraordinarily active. Leasing at 3.4 million square feet over the past year is an all-time high. I think that's reflective of the tenant size market. So we're very active. We're playing in that arena in a big way. And from an organic point of view, I think there's a lot of growth potential for us downstream.

Yes, Greg, I think we -- as the portfolio has continued to improve from a merchandising standpoint, that gets more opportunity. And the other factor that's coming in is the markets that we operate in have seen significant population growth. When you look at our entire portfolio, we've grown the national average and within the local parts growing even faster than the MSA. So as we invest capital, we see a very positive double-digit returns as we invest that capital to either densify, whether it's on our peripheral land or redevelop within the center to create even more space for our tenants.

Our next question is from the line of Caitlin Burrows with Goldman Sachs.

I guess you just went through how you don't need to raise equity at this point, which makes sense. I'm just wondering if you could go through maybe what situation or conditions would make you issue again, given where leverage is, is it really dependent on acquisitions? Or yes, what could drive that in the future?

Follow about being prudent and disciplined and depending on the level of external growth, we would look to obviously maintain a conservative balance sheet. As we sit here today, as you know, we're generating between $80 million and $100 million of free cash flow after our dividends. We're growing our EBITDA. So there is natural built-in leverage capacity or capital capacity even if we don't raise equity. And if you think about, we've deployed $800 million over the last 3 years, we've only -- we've raised small amount of equity relative to that size as we've taken advantage of that free cash flow and EBITDA growth and actually over the last number of years, we've actually delevered a half a turn. So we feel good about where we are, and we would look at equity at that time depending on where the market is.

Okay. Got it. And then maybe, again, on the leasing side, you guys talked about how you're kind of managing retention because the interest in the tenants is so high. Could you give some more color on which kind of tenants that are driving that retenant and activity? And then as you think of all the properties you own, are you seeing that interest kind of trickle down further into maybe some of the properties that are not your top performers?

Yes, Caitlin, it's -- we talked about our -- we have about 67% of our renewals done, and that was a strategic and surgical approach this year because we have tremendous demand with new brands that want to be in our portfolio. And so we jumped out in front of it. We got a lot of it done. So the team can focus on the new business. And as you know, we've put a lot of effort and time and power behind our expansion with food, beverage and entertainment. If you go back to 2019, where our portfolio was very heavy, footwear and apparel is about 80% of our tenant mix.

It's now down to 70%. It's because we're going after entertainment brands. We're going after health and beauty brands, we mentioned food HomeGoods is a growing category in our portfolio. So there's a lot of demand. We're going after the retenanting, the returning spreads, as you know, are higher than our renewal spreads. So that's where our strategy is. And we're going to continue to go after that because that's where we see the greatest opportunity to grow NOI.

Our next question is from the line of Todd Thomas with KeyBanc Capital Markets.

I guess sticking with that last line of questioning or the discussion there, Justin, can you talk a little bit more about that mix today between some of the traditional outlet retailers and mixing in some of the full price or non-outlet retailers, what that mix looks like today, how it's sort of evolved over the last, say, 2 years or so? And then how much does that equation tilt over time across the portfolio toward non-outlet or full-price tenants?

Yes. So we look at every one of our properties on a market-by-market and case-by-case basis. You take an asset like Deer Park, Long Island, where it's a very densely populated community that we serve. That property has the opportunity to be more hybrid in nature versus you take a center like severe ville, Tennessee, where that is a power shopping outlet experience. So we look throughout our portfolio, to, and we're going to determine which centers have the opportunity to be more hybrid and bring in some more of that full price mix.

But we also have to keep in mind, it's very important. Our consumers come to our centers and they're looking for the world's best brands at the best possible value. So that's on us to determine the right mix type of full price in the outlet channel, and we're going to do that on a case-by-case basis throughout the portfolio.

Okay. And does this change the way we should think about the portfolio's occupancy cost ratio target over time? I think we used to talk about the portfolio sort of being in the maybe 12% or 13% range. It's 9.7% today. As we think about that long-term target bringing in more non-outlet retailers does that sort of change the formula for the way we should think about the portfolio and potential for rent upside over time?

Yes, it does. I think at 9.7%, I think there's still a lot of headroom for us to continue to grow rents. You got to remember, our 9.7% has stayed flat, but our sales performance has gone up. So that still means that our NOI continues to grow, but we're going to continue to push rents. We see that opportunity by replacing a lot of the underperforming retailers with better performing retailers. We talked I guess, a year ago about Sephora coming into our portfolio, and they are delivering on the sales line. And if you take a look at who they replaced, we're seeing great sales upside opportunity. that sales per square foot is the number upon which the OCR is based.

And as we continue to grow our sales performance on a per square foot basis and drive rents, it has a multiple effect on our ability to grow NOI

Right. What have OCRs look like on like new lease deals, say, over the last 12 months on a trailing 12-month basis? Is there a way to quantify that and help us just kind of understand where new lease deals are getting executed?

Todd, it's going to be a range of different OCRs there depending on the type of industry or use of these tenants, depending on the center, depending on how we view the tenant at the center. There's a lot of different factors that are going to go into that. And so it's hard to give an average on those, but we definitely see upside opportunity relative to the in-place OCR across the portfolio.

Our next questions are from the line of Floris Van Dijkum with Ladenburg.

Pretty fulsome answer so far. Maybe a question on your assets, I think, that are going to see some significant as a landlord, you always want other people to invest right next to you. As you think about your Kansas City and your National Harbor assets. Maybe you can talk a little bit about what you're seeing there and what the potential is. And what you might -- what that might do to those centers? And what kind of investments you could contemplate as the Kansas City Chiefs build their stadium next to the legends -- and as the sphere gets built right next to the National Harbor outlet.

Floris, thanks a lot for that question. I talked earlier about organic growth. Organic growth means taking advantage of opportunities on the the existing portfolio. And in the case of Legends, we just closed on a pad right at the entry as an existing restaurant. We see great long-term upside opportunity on that pad. Similarly in National Harbor, we're working with our partners, who we co-own that shopping center with on some future development there as well in light of the fact that the sphere is building on the adjacent property at the MGM in that marketplace.

But that's just 2 of 41 centers in our portfolio. And we spent a tremendous amount of time looking at the future opportunities. If you look at Foley, Alabama, we're in the process of doing a remodel and redevelopment of that center because it enjoyed over the last 4 or 5 years, great permanent population growth. And where that center typically serves a tourist market, we're seeing huge upside in the Ripken partnership in the sports tourism business, but also as the local population continues to grow, and that customer relies on that shopping center to be the place where they do most of their shopping we're finding adding additional uses, restaurants, entertainment uses will give the customer the opportunity to come and shop with us far more frequently.

That narrative is playing out across our entire portfolio. It's been a strategy of ours for the past 5 or 6 years. We've been executing to it. Justin talked about the new uses that we're putting in the shopping centers. And I think we're going to continue to see that helped us continue to drive NOI long term and sustained in that existing portfolio.

The next question is from the line of Mike Mueller with JPMorgan.

I guess first, are there any outlet development opportunities on the horizon? Or is it just nothing making sense for you today? And I guess, similarly, you bought some chunkier lifestyles. Are there any meaningful expansion or outparcel opportunities with those?

Football, I think there's a number of great markets where -- and outlet centers are coming closer and closer to the main markets it's opened the door for a number of great markets to build outlet shopping centers, evidenced by our center that we built a few years ago in Nashville. The economics right now of building new versus acquiring just our added imbalance -- so we think it's a better use of our capital to acquire in this current market.

But that doesn't mean we won't maintain our pipeline of future locations -- so when that dynamic changes, we'll have an opportunity to perhaps get back into some development. With regard to the outparcel business, here, we are proactively seeking out parcels in adjacencies across our entire portfolio. Most notably is the one that we did in Arizona just a couple of years ago where ADOT put a large chunk of land that's immediately adjacent to our Glendale asset. And we took that down. We've now fully brought that space online with a number of different uses a multiple multi-tenant building that helps us take advantage of new food and beverage and entertainment opportunities that are not only adjacent to our property, but literally sit on the same campus as State Farm Arena and Glendale Entertainment District.

The synergy of which has created a great flywheel for us to maintain growth and continue to grow that as one of our most productive assets in our portfolio.

Got it. Okay. And I guess second, how big is the pool of temp tenants that you look to backfill with? And is there a rule of thumb for -- that we should be thinking of in terms of a split between tenants that you'll line up that are using it for incubator test base versus others that just may make kind of a recurring business out of these shorter-term stores?

Yes, there's a number of different uses. But we talked about the strategy of 10 years. Obviously, the cheapest rent in our portfolio is a temp tenant that goes in on a 30-day lease and will move from space to space, and keep spaces occupied while we have some frictional vacancy and we're waiting for new tenants to come in. The most expensive leases in our portfolio are the ones where the retailer wants to come in for the Halloween season or the holiday season, and we take advantage of those opportunities if we have vacant space to bring tenants in for that, too.

But I think what you're referring to is the pop-up strategy, look, there's a lot of barriers to entry in the outlet business for retailers because many of those retailers aren't ready to sign a 10-year lease, day 1, not knowing how much excess inventory they have or if they'll be able to continue to flow goods into a store to create a sustainable business. In that connection, we've done a really good job working with retailer partners to give them the opportunity to sort of try before they buy using that pop-up strategy to see if they'll be successful. And we've had some great results doing that.

We've also tried some retailers where it simply didn't work out. But some of the great results are our partners inventory burgers, our partnership with Vineyard Vines, with UGG, and some of these stores that start out as short-term pop-up leases that ultimately convert into higher paying rent tenants over time that proliferate across our portfolio.

Our next question is from the line of Naishal Shah with Green Street.

This is Naishal on for Vince today. I was just curious if you could shed a little bit more light on what is expected for property operating expenses for '26 versus last year? I appreciate this is probably a very lumpy line item and once you may be elevated given the snow removal costs. But any color you could provide would be helpful.

Hi, Naishal, we guide same center NOI. We don't break out sort of expense relative to revenue in part because there's different strategies. And as you said, the OpEx is more variable, and we will be able to provides as we drive overall NOI growth, you'll see continued growth overall in the top line, and we try to mitigate as much of that expense pressure through just cost containment measures ultimately to drive as much long-term NOI growth within our business.

And I think you look for the last -- for 5 years, we've been able to drive pretty attractive same-center NOI growth and we continue to see opportunities to grow our revenues, as Steve talked about, still being at 9.7% OCR, the leasing demand that we're seeing, the growth in our other revenues. And then from a sales perspective, you've seen our sales now go over 84 a foot, yet our OCR is still very low. And so we feel like that provides us continued opportunity to drive revenue. And then we look at every one of our operating expenses to try to mitigate as much of that expense growth as possible, some that's in our control and obviously some that were holding to the macro environment.

Great. And then maybe just a quick follow-up. On the occupancy composition today, could you shed maybe a little bit more light on [indiscernible] portfolio today as a percent or as a proportion of total occupancy and how this compares with previous years?

Sure. We're about 10% today. We came down a little bit coming out of the fourth quarter which is always a seasonal high. And as we move -- will probably have a little bit higher temp as we move through some of the bankruptcies in the near term and then exit the year into '27 with a higher permanent base.

Thank you. I'll now turn the call back over to Stephen Yalof.

Thank you very much. As many of you are aware, Mr. Tanger will be retiring from our Board next week. And I'd like to take a moment to say thank you. Thank you for building this foundation of this great company, and thank you for your years of leadership and mentorship to me and our management team. I look forward to our continued relationship as we remain an adviser to Tanger. And now I'd like to turn it over to Mr. Tanger.

Good morning. Next week, as previously announced, I will retire from Tanger's Board and step into the role of Chair Emeritus. An opportunity, I am honored to accept. Since taking Tanger Public 33 years ago, this journey has been defined by the support, trust and friendship of the investor community, and I am deeply grateful to each of you who has been part of that history with us.

I have great confidence in the strength of our board, our leadership and the entire Tanger team, I know the future of this company is in very capable hands, and I could not be more excited about the path ahead. Thank you again for your continued support of Tanger.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may now disconnect your lines at this time, and have a wonderful day.

Hello, everybody, and welcome to Citi's 2026 Global Property CEO Conference. I'm Craig Mailman with Citi Research. I'm pleased to have with us Tanger and CEO, Steve Yalof. This session is for Citi clients only and disclosures have been made available at the corporate access desk. [Operator Instructions].

Steve, I'm going to turn it over to you to introduce your company and team provide any opening remarks, tell the audience the top reasons for investors to buy your stock today, and then we'll jump into Q&A.

Sounds great. Thanks, Craig. Thanks for having us here, and good morning, everybody. I'm Stephen Yalof, I'm the President and CEO of Tanger, and I'm here today with Michael Bilerman, who's our CFO and Chief Investment Officer; Doug McDonald, who's our SVP and Treasurer; and Kasey Ennis, who is on our Investor Relations team.

So Tanger's a leading owner and operator of outlet and open-air retail shopping destinations with a 45 years of expertise in the retail and outlet shopping industries. We've been listed on the New York Stock Exchange since 1993. Today, we have 41 centers across the U.S. and Canada, comprised of 38 outlet centers and 3 open-air lifestyle centers. We have over 3,000 different stores in our portfolio and over 800 brand name retailers.

Tanger delivered another quarter of really strong results, capping off a productive year and positioning us for continued growth. Our differentiated and best-class leasing operating and marketing platform is powering our ability to drive sustained growth across our portfolio. We're supported by limited new retail development and consolidation of the department store business and a favorable demographic and economic trends in the markets and communities that we serve. We're executing across all facets of our business, including record-breaking leasing production this year at over 3 million square feet and are integration of our recent acquisitions in Little Rock, Cleveland and Kansas City and disciplined expense management across our enterprise, which contributed to core FFO growth this year of 9.4% and same-center NOI growth of 4.3% for the full year.

We've also strengthened our balance sheet by completing several financing transactions in January, which I would say that our Georgia Bulldog did an unbelievable job I'd say that, that transaction is an MIT meets HBS case study and how to refinance your balance sheet. It address upcoming bond maturities, strengthen our liquidity position and mitigated our refinancing costs. Our well-positioned balance sheet now provides us the flexibility to reinvest in re-tenanting and our existing portfolio and align our assets with growing opportunities in our markets, while pursuing selective growth across the country.

Craig, you asked us for our top reasons why investors should buy our stock. I think #1 is sort of a positive macroeconomic trend. Obviously, very little retail real estate being built across the country right now. Coupled with that department store consolidation, I think our retailer partners are looking for growth, and we're a great place for them to come.

Second, there's a significant value creation opportunity through Tanger's leasing our operating and marketing platform. And I think we're doing a really good job of marking to market our real estate and bringing in better best quality retailers that drive better sales performance on a per square foot basis and to attract more people to our shopping centers.

Third is the attractive financial profile. We're low leveraged, we're liquid. We have a flexible balance sheet. We have great access to capital that gives us opportunity to continue to grow our platform, which is a real big focus of ours, particularly going into 2026. And we've got a great management team, I think, that's focused on driving sustained growth for our shareholders. And I guess with that, I'll hand it back to you.

Great. Thanks, Steve. You mentioned you guys have had really good momentum here on the leasing front, driving better pricing, merchandising, just kind of curious how the pipeline looks for the next quarter or two from addressing expirations, hitting temp space, and the remerchandising that you're doing also you can hit on Legends. I know that's a multi-parter, but take it deconstructed as you wish.

I will. So look, I think there's a lot of things that are giving us a great tailwind going into 2026. I talked about the contraction of the department store business and particularly in the off-price business, a lot of our brands are merchants that principally sell in the wholesale channels. And when that contracts those brands are looking for places to replace some of that opportunity. And they find that particularly in our channel.

Second of all, the big demographic shift of folks from outlet shopping centers that we've built over 25 years ago were built 2 and 3 concentric ring roads out because it was incumbent on those shopping centers to be far enough away from full price retail or permanent population basis because their brands wanted their consumers to shop their full-price channels. But what's since happened, and I think COVID really pushed a lot of this is that folks started to move closer to where our shopping centers are, places like Daytona, Florida; Savannah, Georgia; Charleston, South Carolina, we're seeing huge population shift in big population boom, and that permanent population is driving 7-day a week business into our centers.

Using that as an influence, we've got ahead, and we've released a number of our centers to bring in other uses, whether they're service-oriented uses, better food and beverage, entertainment, things that cater to that 7-day a week population that we typically didn't see in some of those geographies when they were originally bought. And for us, what that does is it's a 400,000 square foot shopping center, if we dedicate a percentage of that retail space to alternative uses really densifies that retail -- the core retail offering, which makes the space a lot more valuable over the past 4 or 5 years, we've decreased our renewals from 95% of the annual roll, down to 80% of the annual roll. And we did so for a number of reasons.

First of all, we've recognized that in order for us to encourage a younger and newer consumer to come into our centers, it's important that we bring the brands that they want. So we've done a really good job of flowing the new brands, employing newness into our centers and creating positive energy across our portfolio. But more importantly, the brand, the younger consumer desires because it's important for them. It's important for us to make sure that we're catering to what it is that they're looking for. They like to shop in store. We want to make sure that we've got the stores they want when they come and they visit us.

Similarly, we found that our ability to re-tenant or bring in new tenants, we've gotten significant growth in our rents. And you see that in our NOI performance. So we'll renew -- most retailers don't want to give up spaces. Obviously, it's we're in a retail challenged environment. There's not a lot of newness -- not a lot of new retail centers being delivered into the marketplace. And a retailer that has a cash flowing store that's fully amortized, last thing they want to do is replace it.

Well, for us, we have to make some tough decisions, and those decisions really pay off when we take an older retailer that stopped investing in their brand and replaced them with one that started to -- and that's investing in their brand that's growing retail that has a sales performance per square foot that continues to grow and drives a lot of newness into our centers.

And maybe an update on where you are with Legends. I know you haven't owned it that long, but -- and it's a big center. So maybe set expectations about time it's going to take to really bring it up to what you underwrote and where you are in the progress so far?

Yes. So we bought the Legends asset in Kansas City on the Kansas side of the Kansas City market. We brought that into our portfolio this year. My history, I worked on the retailer side for a substantial portion of my career. And I put a number of brands in Legends when I was on the tenant side. It's a shopping center, I always believed in, but it was always a core outlet type shopping center. Now that the West Village market where that center exists is really come to life. With all the -- between Kansas City Motor Speedway and the Minor League Baseball Stadium and the hotels that are popping up, the residential development, Mattel is under construction to put a new theme park.

It really has become quite the destination in that center in our hands, I think, is going to have a lot of long-term sustained growth over time, principally because there were a number of retailers that were never in that center. I think when a non-outlet specific developer or property owner manages a property, there are certain things they don't think about that we think about because of our scale, because of our marketing ability, just how we understand the outlet business. So it's not a uncommon for a retailer to say to ask, hey, if that's something that you owned, yes, that would be something that we'd be interested in leasing space and coming and joining you.

And then obviously, the last major shot in the arm is the Kansas City Chiefs, who are looking to replace Arrowhead with a more modern stadium picked that West Village Market where we have our center and said, hey, that's where they're going to invest and put that stadium. So I think that's going to be another great growth driver for us over time. And we're extraordinarily optimistic in our ability to continue to drive rents perhaps hybrid that center in a way brings in nonconventional outlet retail, but adds another retailers into the marketplace as that consumer that starts to sort of work, live and play in that marketplace wants to come and shop us more frequently.

And do you guys have more of an operating kind of model than some of the other retail peers, you have more akin to a mall, but its crossover with the open air guys, right? And so you've talked in the past about Tanger Loyalty Club and -- or Tanger Club loyalty and the rebranding of that and some digital initiatives you're doing? One of the things you talked about a lot is with AI, right?

And so how are you guys trying to tie in either Agentic commerce or smarter marketing campaign to some of these people, where it feels like you have a real opportunity to drive traffic. Where are we in your evolution of that? Where are we in the technology to do that? And how big do you think the opportunity could be for you guys?

Look, I would say about 10% of the customers that shop us a year are. We've got information on them that they've opted into either our Tanger Club or our Tanger Loyalty Program. somewhere around 12 million people. And I think that, that's a really good cohort of individuals that we can market to.

One of my biggest pet peeves is when I am inundated with e-mails that have absolutely no bearing on my life whatsoever it gives me great joy to just delete them without reading them. And my whole feeling with my e-mail and marketing team is how do we send out bespoke e-mails that speak to our consumer base, so we train them to open the e-mails and not get that great joy when they delete them. And I think AI is really going to be able to help us because if we know that Craig Mailman is one of our customers in our loyalty program and his favorite 3 brands are Under Armour, Nike and Ralph Lauren, I'm not going to send him Let Creuset offers because if I do, he's not going to open that e-mail. But if I consistently send them offers to brands that I know that he wants to shop and there's value in the messaging and every time he opens it, I know that I'll know when he opens, he's opted into my program.

But more importantly, if I send you a digital coupon that you put in your wallet and you come into my center, I know when you're there and when you use that coupon, it's attributable. So I'm able to now use the data that I sent you something, you used that, and then I was able to attribute that to a sale. So I know what works for you. And I think that AI is really helping us far more rapidly, create the marketing, the art work that goes with that. And then without -- with great speed, make sure that you and the similar cohort to you, I'm sure of that 12 million people, there's probably a number of people that fit in that same grouping. We can market specifically to you, get that bespoke e-mail out to you and make sure that we get you into our shopping center.

Our retail -- in the outlet space, I think this is a really important part of the story line. In the outlet space, the retailers don't spend a lot of their marketing capital to tell the consumer to come to outlet. That's just they don't -- they want to get their consumer to go to their full price stores. But they give us a marketing budget to go ahead and do that marketing for them. And we're putting those marketing dollars to great use to drive traffic. And you see it in our traffic increase numbers. You see it in our sales performance. And ultimately, you see it in our same center growth.

It feels hard to quantify, but clearly, foot traffic leads to sales is at least the higher rents for you guys. I mean how do you measure the success of the ROI on some of these initiatives to tell you this is where we need to go deeper. This didn't really work, right?

Well, look, digital marketing has gone a long way in making your marketing spend attributable right? So you know when you send something to you and you come back in and you scan it. I know that you're there. So we know what's working and what's not working. I would say that's probably 30% to 40% of our marketing initiatives have some sort of attribution attached to them. I think that, that's only going to get better and greater in time. And I think AI is definitely going to support that. So that's kind of how I think about that.

And what partners are you guys using? I guess -- and this goes beyond just the digital marketing, but internally, kind of how are you guys looking at it from either an efficiency standpoint on reporting or however, you guys feel it could help Tanger on the kind of efficiency side of this.

I mean what I'm sharing with you externally is really how we're using it in our marketing initiatives, and that's not where -- that's -- that's a very outwardly facing piece that's easy to talk about. We also use chatbots, and we're using a program called Yellow.ai. It's one of our big partners, a vendor partner of ours. And we use them for customer service. So our customer service is facilitated presently with the back of house group of folks that sit in the room and field phone calls when consumers call us or text us or e-mail us during the course of the day, with questions, problems, things.

Our AI, which is now multilingual, and that's this year, is able to facilitate over half of those interactions. AI will start with all of the interactions. If they can't get through, then they'll go to a real-life living, breathing person during the operating hours of the center. So I think that's a real breakthrough for us, and I think it's really helping us in a way that customers are starting to become a little bit more comfortable interacting.

Then from a backhouse point of view, I mean, obviously, the things that we're able to do from a research point of view, the information that's available to us, the speed at which we're able to process and deposit, both payments and receivables, I think, is really going to help us. And look, when you're talking about 3,000 stores paying you rent, the faster you can process and put that money to work for you that better off the company is.

How effectively are you guys able to do it on the leasing side with documentation or legal? Where -- you do have a lot of leases, right? So that's a lot of paperwork for your folks.

Yes. I think it's really -- it's made our legal team a lot smarter and a lot more efficient. That's for sure. Look at the Saks leases is just an example. We all know what's going on with Saks right now. And for us, we want -- there's a lot of lease processing that needs to happen. We want to make sure we understand each of the used clauses because if they're if there's a sale of a Saks lease, we want to make sure that we have the right. Which -- in which leases do we have the right to challenge a potential user and others? Where can we work with the potential users so that we can make sure that we -- we see some upside in some of those transactions? So it's one of those things that might have taken us 2 or 3 weeks to process, and we're able to put that together in a relatively short order.

And you mentioned Michael and Doug's execution on the balance sheet side. That obviously helped fund the plan, pay down debt maturities coming up. As you guys look at what the available capacity you have internally for external opportunities is -- what does the pipeline look like? What is the appetite for additional investment when you are digesting things like Legends, which is a big asset with some capital needs. How much do you want on your plate of maybe some unstabilized or more needing remerchandising versus some kind of more stabilized lifestyle or something else that's more...

So, I'll give you the sort of the tip of the iceberg, and then I'll hand it off to Michael and Doug, who can take you through a little bit more in detail just our capacity. But look, for us, our -- we think we can add a lot of value. We're an operating company. And we're shopping center owners that have great skilled leasing, marketing and operating our properties. And we think we can put that to work at a tremendous amount of property types across our channel.

Outlet obviously, we're built for outlet. It's something that we can specialize in. And I think an outlet company, can, with very little friction get into the lifestyle business as we have, I think that those folks in the lifestyle business, there's a lot more friction getting into outlet because the marketing muscle is so critically important, particularly in the outlet side of the business. So we're presently evaluating. There's not that many outlet centers that aren't either owned by us or one of our competitors.

And because of that, that the population of existing outlets today isn't so grand that, that's going to give us what we would consider enough runway to continue to build our portfolio. Hence, our moving into that full price lifestyle center, which we think is right up our alley. So Michael is the Chief Investment Officer. So it's something that's very near and dear to him. So I'll kind of turn it over to him to give you a little bit more of an update on how that's going.

I was just going to ask you all the questions. I thought that would be more fun. But -- the -- from a capacity standpoint, we'll start with that because we're at 4.7x debt to EBITDA today which is almost a turn lower than we were 5 years ago. So we've been able to grow compound annual FFO of 7.5% over the last 4 years, yet delever in the process. So we feel relative to our targets of 5x to 6x, we have some capacity to lever up. The second point is we will constantly delever because of the way we're set up from a financial profile perspective, where we're retaining $80 million to $100 million of free cash flow a year.

And why is that so substantial, it's because our CapEx as a percentage of our NOI is much lower than our retail peers. We operate today about 15% CapEx as a percentage of NOI our peers are 20% to 30%. So for every dollar of NOI, we're keeping $0.85. And then our dividend today is set at about 60% of FFO, and so -- of AFFO. So we're retaining 40% of that higher cash flow, and we continue to see strong EBITDA growth. We have $1.1 billion of capacity today, which is $300 million of cash. $150 million that we have available under delayed draws for the term loan. So we've access to 150 that we're not diluting shareholders today with, and we have a full untapped line of credit.

Nothing about the recent deals gives us any pause about doing other deals. If anything, the success that we've had across the three outlets that we bought and one outlet that we developed in the three lifestyle centers, has demonstrated to us the value of the platform that we've created. And that's where we feel that we can lean in and find opportunities where we can drive leasing drive efficiencies in operating and really leverage this marketing platform that we have. And we'll continue to work on things, both off market as well as on market and be very disciplined with that capital allocation because our view is we can't control the stock price.

All we can control is the decisions we make to allocate capital, how we manage our balance sheet and then how we asset manage and operate. And we feel that we've built a very competitive operating platform that is very attractive to other owners to bring us in for ability to operate as well as bring capital, and we think that provides a lot of opportunity for us in the future.

And Steve, I want to circle back to the balance sheet in a second. But you had mentioned there's not a lot of outlets that either you or your peers don't own, right? Like is it less than 10%? Like how should we think about that opportunity versus how lifestyle could trend over time as a percent of the portfolio?

Yes. Look, as the markets continue to pivot and change and geographies continue to shift, things that we might have passed on 3 years ago might be things that become interesting again to us in 3 years. So it's probably a fungible number, probably less than 20. I would be comfortable saying. The economics of building right now don't make sense when you can buy for $0.40 on the dollar.

So we're going to be seeking acquisition opportunities over land and development opportunities. It doesn't mean we're going to not pursue a development opportunity should something have the economics that we could substantiate moving forward. But for us, we've built a pretty good operating team, and I think that we add value. The projects that we'll choose to pursue will be those that we can add value.

And Michael, going back to the balance sheet quickly. I know when you guys bought Legends, there was an encumbrance there that becomes pre-payable. What's the plan there? Kind of what's the earnings power, especially as debt spreads for REITs have kind of compressed there?

So raising the capital that we did, so I said $300 million on the cash, and we have $150 million on delayed draw. That matches up pretty much perfectly with the $350 million bond in September. And then the Kansas City mortgage as a November '27 maturity that opens up for prepayment with no penalty this November. The cash rate on that CMBS was 7.57%. We marked that to market on a GAAP basis at 6%, and so our intent is to unsecure pay off the mortgage and use our unsecured capacity that is -- if we think about the term loan capital, it's about 100 basis points over SOFR.

We have swaps in place that effectively fix that debt in probably the mid-4s. So we'll see as we think about '27, just that benefit from that refinancing. And then the only piece of debt that we have to refinance is going to be the July '27 bonds, which are $300 million at just under 4%. And then we have nothing into 2030. So we're in this really good spot right now over the next 4 years to continue to grow our NOI because our rents are still low relative to the tenant sales at 9.7%. We think that there's a tremendous opportunity to continue to upgrade the tenant mix with higher productive tenants that, therefore, pay us higher rent at the same occupancy cost.

We continue to find ways to manage our operating expenses. And then if we have the ability over the next few years to accretively deploy this capacity that not only we have today, but that will continue to build each year, we don't have a deleveraging plan. We have a leveraging up plan to take all of this capacity and hopefully be able to deploy it in attractive opportunities. And because we are not -- we don't need a market presence because of the way we operate with boots on the ground at every one of our assets and a national platform, we can go to a lot of places that others can't. That would be very synergistic with our current portfolio.

That's helpful. Any questions in the audience?

Circling back to fundamentals a bit. Michael, you just noted the OCR still around 9.7%. I think over the last couple of years, you guys have said, over time, depending on the asset, you get somewhere to 10% to 12% would be pretty good bogey. And even with the rent spreads that you guys have been pushing through, you still haven't been -- you're still a little bit of ways from even 10% at the low end.

Just kind of curious, as you are remerchandising, you are improving sales per square foot, how quickly can you get there? Is this just runway we should think about for the next several years that gets you that premium same-store that you guys have been posting, premium FFO growth you guys have been posting, it's just algorithm just sustainable because of you guys are constantly chasing rent higher because of what you're doing on the ground?

Well, interestingly, the way that math works is if somebody does $500 a square foot and pays us $50, they're at a 10% OCR. That same retailer, we do $600 a square foot pays us a $60, we're still at a 10 OCR. So the metrics kind of work. They're a little wonky the way the metrics were. So we can maintain a flat OCR, but in a sales improving environment, we continue to drive additional NOI. So it's been -- when we first sat down together at the first -- I guess, Michael was on that side of the room at the time, we were about 8% OCR, and it's taken us about 5 years to get up 150, 160 basis points.

So I think there's a lot of runway. But with that came a lot of expansion in our sales performance. So we were at 8%, but at $385 a square foot. Now we're at 9.7% at $475 a square foot. So I just think that if we maintain that 9.7% or approach 10% in sales increasing environment, I think we definitely achieve what it is that we're looking to achieve, and that's same center NOI growth across our portfolio.

And this doesn't even necessarily take into account. You guys are running closer to 10% temporary tenants, right, which we've talked about is historically, maybe you were 5%, but it's a little bit strategic what you guys are doing just the quality has frictional vacancy. But those tenants are paying 1/3 or maybe I guess, to go full price, you're 3x to 4x what your temp guys are paying.

Look, short-term tenancy takes on a number of different forms in our portfolio. What you're referencing is like sort of the mom-and-pop tenants that feel frictional vacancy, very short-term leases. They're the cheapest. The lease that has the least amount of lease rights is the cheapest lease in your portfolio. And that's one where we have the right to terminate or move a tenant on 30 days written notice, right?

Most expensive leases in your portfolio are going to be the ones that only want to be opened seasonally during the high season. So those are the most expensive leases you'll have. So you've got short-term leases that run the gamut from the cheapest to the most expensive. And we also use short-term leases and experiment. Outlet is there's many barriers of entry for retailers to enter the outlet space because they don't know if they're going to have enough excess inventory to sign a 10-year lease, so many retailers want to try before they buy.

So we engage them in our pop-up strategy. And we're often asked, well how much of your short-term tenants are going to convert to long-term tenants most of our pop-ups do because once they get a taste of the traffic, the buying power that we've got a shopper base that is looking to sort of buy into these brands that they love at a low price point, but get traded up throughout the brands ecosystem. I think there's a number of reasons why retailers want to be in that outlet space. And I think then the core vacancy over time, we find that we can replace some of those short-term leases. Usually, there's 3x to 4x the value.

Yes. And I was getting at your sales per square foot are skewed lower because you have this 10% that may be less productive because you're...

Perhaps. Look, I think the aspirational shopper that shops our centers finds great opportunity to come in and engage with retailers across our portfolio at a great going-in price point. I think that's a really important part of our story. So when we get retailers that want to come in, like I'll give you a great example. We'll use Lulu Lemon as an example. They've got a number of full price. They've got a number of stores across our portfolio, particularly in the outlet space. All of which, they select us inventory. That's their model in the outlet space. When they open up a store, a new store with us, it's always going to be a short-term lease because they want to make sure that, that market can support a full-term deal.

We have a very high hit rate of converting Lulu Lemons from short term to permanent. But that's an important part of their strategy. We embrace it because we want them to be successful. We know the conversion rate is really high.

We run out of time, but I want to quickly ask because Agentic Commerce has been a big talking point with retail. You guys obviously sit at a different value proposition in retail with a different consumer base. I'm kind of curious how you see this trend impacting maybe your lifestyle centers, but also the outlet business.

Well, look, I talked about earlier, just the Agentic e-commerce for us is it's how the consumer is going to engage product. At the end of the day, whether they're using their AI agent to say, I'm going to a wedding that casual chic, and you don't know what casual chic is, and they come back and tell you what you're supposed to wear. Will they tell you to go shop at Tanger? I mean one day, I think that, that's probably going to be something that we're going to see. Where can I buy that outfit closest to me? Where can I buy that outfit for the least amount of money? And I think that over time, we're probably going to see some of that information shared directionally.

I don't think we're quite there yet. But we're going to continue to engage. We're going to stay very, very close to it. And if there's an opportunity to ultimately monetize we're going to be -- that's something that we're going to invest and we're going to make sure that we're sitting in the front row.

And then rapid fires here. Same-store NOI for the retail group next year.

3 to 3.5.

More fewer or the same amount of companies in your space this time next year?

Fewer.

Favorite song in your playlist.

How do you like me now.

All right. Great. Well, thank you guys so much.

I would have said Scarlett. But that's it.

Great. Thank you, guys.

Good morning. I'm Ashley Curtis, Assistant Vice President of Investor Relations, and I would like to welcome you to Tanger Inc.'s Fourth Quarter and Full Year 2025 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 IR website, investors.tanger.com.

Please note, this 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 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. 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, February 25, 2026. At this time, all participants are in listen-only mode. Following management's prepared remarks, the call will be open for your questions. We request that everyone ask only 1 question and 1 follow-up question.

If time permits, we're happy for you to requeue for additional questions.

On the call today will be Stephen Yalof, 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&A.

I will now turn the call over to Stephen Yalof. Please go ahead.

Thank you, Ashley, and good morning. I'm pleased to report that Tanger delivered another strong quarter, capping off a productive year and positioning us for continued growth. These results demonstrate how our differentiated platform is powering our ability to drive sustained growth across our portfolio, supported by limited new retail development, consolidating department store business and favorable demographic and economic trends in the markets and communities we serve.

Fourth quarter Core FFO was $0.63 per share, growing 17% over the prior year period, 9% for the full year and ahead of our guidance. We attribute this strong performance to our focused execution across all facets of our business, including record-breaking leasing production, the accretive integration of our recent acquisitions and disciplined expense management across our enterprise, which contributed to a robust Core FFO and Same Center NOI growth.

Turning to leasing. We achieved leasing volume over 3 million square feet, our highest annual production on record. Occupancy at year-end was 98.1%, a 70 basis point sequential increase and we delivered another quarter of positive rent spreads and extended lease terms for both renewals and new deals. Tenant sales productivity remained high at $473 per square foot, up 7% from the prior year, and OCR remains at 9.7%, providing additional runway for growth. We have proactively addressed our 2026 lease roll. And as of the end of January, we've addressed over 40% of the space scheduled to expire this year, providing an opportunity to focus on the tenanting opportunities, and center merchandising initiatives. These metrics demonstrate the sustained retailer demand for our open-air outlet and lifestyle centers.

We remain laser-focused on our core strategy of adding new uses and categories and replacing or performing tenants, allowing for continuous refreshment of our merchandising and offer. This strategy has served to deliver improved retailer sales performance and has been a significant driver of traffic growth, increased customer visit frequency at our centers and NOI growth. Favorable market conditions supported by both a lack of new retail center development and a consolidation in the department store business has contributed to strong leasing demand across our portfolio which we expect will continue.

Growing local populations robust retailer open to buys and our focus on diversifying our tenant mix to meet our growing customer base, create a flywheel for sustained long-term growth across our portfolio. During the holiday season, we saw positive traffic performance as we leverage print and digital channels to communicate retailer messaging, compelling value and offers and community events. We anniversaried our successful proactive holiday selling season marketing campaign, highlighted by our everyday as Black Friday promotion starting the first week of November.

Our holiday social media marketing initiatives furthered our engagement with younger shoppers keeping everyday value pricing at their favorite brands across our platform. Additionally, this important cohort are increasingly discovering it and engaging with our growing Tanger Club and loyalty platform to enjoy even better deals during their shopping visits. Our ability to grow NOI through multiple avenues is key to Tanger's sustained success. 2025 was a notable year for intensifying and upgrading our real estate through peripheral land activation, center innovations and the strategic addition of food, beverage and entertainment uses. These initiatives contribute to the elevated dining and entertainment experience that our customers enjoy when they visit our centers.

Better on center experiences have proven to support our ability to attract more elevated brands that today's consumers demand. Across our portfolio, we are experiencing substantial population growth as families and businesses relocate to our growing markets. This is fundamentally changing the customer base, which creates sustained demand and drives traffic throughout the week across all seasons and will continue to be a positive tailwind for our business. The strong population in domestic tourism growth in many of our markets has been widely recognized as major attractions and economic drivers that flags in our communities. Recent examples include the announced sphere development adjacent to our National Harbor Center in the Washington, D.C. MSA. The Kansas City Chiefs Stadium relocation to the Village West Entertainment District, home of our newly acquired Tanger, Kansas City at Legends and the announced relocation and development of Space Force on the Redstone Arsenal campus in Huntsville, Alabama at the interchange shared by our Bridge Street Town Center.

These announcements only reinforce our center's positioning as the center of the thriving dynamic communities and offer long-term opportunities to invest additional capital, grow NOI and increase value for stakeholders. We are making significant advancements in our tech initiatives, leveraging AI across our enterprise, enhancing operational efficiency, communicating with our shoppers and Tanger Club members and supporting our customer service programs. For example, our multilingual AI chatbot successfully handled more than half of our customer service interactions last year. Tanger's enhanced technology platform positions us to unlock even greater opportunities for innovation transformation and actionable insights for the future.

We've strengthened our balance sheet by completing several post-year-end transactions, which addressed upcoming bond maturities strengthened our liquidity position and mitigated refinancing costs. Our well-positioned balance sheet provides us the flexibility to reinvest in retenanting our existing portfolio and align our assets with the growing opportunities in our markets, while pursuing selective external growth opportunities.

As the retail landscape continues to evolve, Tanger's value proposition remains highly relevant, combining desirable shopping and valued brands and experiences in thriving communities. We're creating the shopping destinations that resonate with the consumers of the future while delivering consistent value to our retailers, shoppers and shareholders.

Finally, I'm very proud that Tanger was recently named by Newsweek as 1 of America's greatest workplaces for culture, belonging community in 2026 as well as 1 of America's greatest workplaces for women, which recognize companies that have made an inclusive workplace environment, the foundation of their organizational success. I want to thank our dedicated Tanger team members, retail partners, loyal shoppers and shareholders for your continued support as we build on this momentum in 2026.

We I'll now turn the call over to Michael to discuss our financial results, recent capital markets activity and 2026 guidance in more detail.

Thank you, Steve. We delivered Core FFO of $0.63 per share in the fourth quarter, representing a 16.7% increase compared to the $0.54 per share in the prior year period, and we ended 2025, delivering Core FFO of $2.33 per share, up 9.4% and from the $2.13 we produced in 2024. This growth was driven by solid Same Center NOI growth of 4.3% for the year, which reflects the success of our leasing operating and marketing strategies, along with contributions from our accretive external growth activity.

Our full year results came in just above the high end of our recent guidance on modestly higher same-center NOI growth. and better performance from our acquisitions. Leasing activity across our portfolio continues to be positive, allowing us to capture total rent growth through a combination of improved base rents and increased tenant reimbursement. We also continue to grow the contribution from other revenues while remaining disciplined with cost management. Our tenant watchlist remains at manageable levels, and we weren't surprised by the recently announced tenant bankruptcies which we believe provide attractive opportunities for remerchandising over time.

Turning to our balance sheet. We completed a number of significant capital markets transactions in early January raising and refinancing $800 million of debt, which improved an already strong balance sheet by enhancing our liquidity, increasing our flexibility extending our debt duration, lowering our pricing, expanding our bank group and importantly, reducing risk. We thank our lenders and investors for their support.

So let me just spend a couple of minutes dealing these transactions and how they fit into our overall capital structure and forward liquidity. Now at the end of 2025, we had $1.8 billion of pro rated debt with $350 million of unsecured debt coming due this September at 3.125%. We also had $44 million drawn on our $620 million lines of credit, and we had an overall debt duration of under 3 years. Pro forma for the upsized term loans and the exchangeable that we completed in January, the company now has over $1 billion of immediate liquidity, which includes $270 million of cash, another $150 million available to us under delayed draws on the new term loans and the full availability on our $620 million lines of credit. This capacity provides us with significant financial flexibility to invest in our portfolio explore external growth opportunities and have the capital to repay the unsecured notes that mature in September.

Through these transactions and assuming we pay off the September bonds and the Kansas City mortgage in '27, we will have extended our debt duration by 2 years, locked in forward rates for the next 5 to 7 years and lowered our weighted average interest rate by approximately 10 basis points.

Now in terms of the deals, we first closed on $550 million of unsecured term loans due in 2030 and 2033, which increased our total term loan capacity by $225 million with $150 million of that increased capacity on delayed draw features over the next 4 to 7 months. Blended these new term loans are priced at just over 100 basis points over SOFR at our current ratings grid, and we have swaps in place to fix this debt attractively. We were also able to remove the 10 basis point credit spread adjustment on the term loans and our lines of credit.

At the closing in early January, we borrowed $400 million of the $550 million, which increased our term loan borrowings by $75 million from year-end.

Second, we issued $250 million of 5-year exchangeable Senior Notes, which carry a coupon of 2.375%, while the conversion price was set at $41.55 per share, which was up 22.5% from the close on January 7. The company entered into cap call transactions, which raised the effective conversion price to $47.49 per share [indiscernible]. The effective yield on the notes rises to the mid-3% range over the next 5 years. The $250 million of par value notes are to be settled in cash with the premium above par paid in shares or cash at our option. Overall, these refinancing moves underscore our long-term focus, positioning the balance sheet with conservative leverage metrics that provide the company with significant financial flexibility to support both our operational needs and our strategic growth initiatives to drive value for stakeholders.

Our leverage remains below peers and our targets, providing additional capacity with net debt to adjusted EBITDA at pro rata share of only 4.7x at year-end, which is benefiting from our continued strong EBITDA growth and the retention of free cash flow after dividends with our growing dividend, only representing 61% of our funds available for distribution. Pro forma for the financing transactions 100% of our debt is at fixed rates, inclusive of our swaps. And our pro forma weighted average interest rate stands at about 4% with a weighted average term to maturity of 4 years rising to 5 years, assuming the payoff of the September bonds in Kansas City Mortgage.

Note that we've added a pro forma debt chart to our supplemental on Page 18, and 1 in our investor presentation on Page 15 to provide additional details.

Now turning to our inaugural guidance for 2026. We expect Core FFO per share in the range of $2.41 and to $2.49 a share, which is up over 5% at the midpoint, reflecting the continued organic growth and the contribution of our external growth activity. We expect strong Same Center NOI growth in the range of 2.25% to 4.25% with only Pinecrest in Kansas City remaining in the non-same center pool. In addition, as we've discussed, our quarterly Same Center NOI can vary given the timing of our operating expenses throughout the year against fixed CAM recoveries, which are more evenly distributed throughout the year. Also following usual seasonal patterns, our occupancy peaks at year-end and then rebuilds throughout the year.

We expect recurring CapEx in the range of $65 million to $75 million which reflects the growing size of our portfolio, our focus on retenanting and reinvestment with CapEx overall remaining in the mid-teens as a percentage of NOI. For additional details on our key assumptions, please see our release issued last night. One housekeeping note. We do plan to file our 10-K tomorrow after the close, which will also be filed by the filing of an updated shelf, which reaches its 3-year term in 2026, the resale agreement for our convert and we'll also be refiling our ATM, where no issuances have occurred since late 2024.

We are greatly looking forward to seeing many of you at upcoming events over the next few months. Please reach out to the respective firms, if you'd like to join and meet with us.

And with that, operator, I'd now like to open the call up for questions.

[Operator Instructions]

Our first question today comes from Andrew Reale of Bank of America.

First, you've previously highlighted success in recapturing underpaying space to bring in better use tenants. And it sounds like Saks would be no different this year. But with Saks potentially rejecting leases this year, how should we think about the '26 CapEx implications just in terms of timing and magnitude? And is a range of Saks outcomes fully contemplated in the CapEx guide?

Andrew, I'll speak first to Saks' plan and strategy with those stores that rejected any of the leases. And we certainly don't anticipate them of doing so. I mean if they do, obviously, we've spoken about the fact that there's great upside for us long term. With regard to how we plan the capital, Michael, you want to...

Yes. I would say at this juncture, any spend, depending on if and when we get those stores back, we would underwrite there wouldn't be much CapEx this year, so that's not embedded in the $65 million to $75 million CapEx that we've given.

Okay. And then just a follow-up. Just be curious to hear the latest from your conversations with retailers. First, if there's been anything on tariffs, just given some very recent headlines. And then second, how retailers might be thinking about sales and the promotional environment this year versus last.

Well, I think first of all, the last year ended very promotionally. I think when tariffs were announced in April, of last year. I think a lot of retailers, we're strategic and the ones that were most nimble and able to move their distribution and their manufacturing around. So a great success of getting product into the stores. So much so that even in the fourth quarter, we saw an excess of inventory, particularly in our outlet channel. We speak to our retailers frequently. We do our plan for 2026. A lot of that is informed by the growth strategies that the retailers have. They're open to buys, which don't seem to be decelerating by any stretch of the imagination.

And we also speak to them with regard to what their sales expectations are going to be for that year so that we can work in content with them because as you know, overage is an important part of our business, too.

The next question is from Juan Sanabria of BMO Capital Markets.

Just hoping you guys could talk a little bit about the leasing trends, the spreads, if I look at the comparable numbers came down in 25%, 24%, but the CapEx spend for those leasing was pretty good and that like the term you're getting, the length of the leases has increased. I'm curious if the longer term is something you guys are proactively looking for something that retailers want given the limited amount of space available in the markets with little supply coming?

Yes. Well, look, Juan, I would say that re-tenanting is clearly a far more profitable program for us in renewing leases. If you take a look at our trend over the last 5 years where we were renewing tenants at a rate of 95%. And this year, we'll renew tenants at a rate about 80% because that gives us a lot more opportunity to go after that renewal, which obviously brings more growth to our portfolio. I have to remind us that we're operators every decision that we make is in service of long-term growth. And I think that's important to note as we think about the tenants that we choose to renew versus the tenants that we go to replace as we add new brands, entertainment, restaurants to diversify the mix of our properties, which just increases the utility over time.

And then just a follow-up. Do you have any statistics you've talked about it historically on increasing -- trying to increase the length of stay of customer visits and adding the food and beverage and entertainment component. But just wondering if there's any statistics you can share with regards to those metrics?

Yes. We've mentioned in previous quarters that we're in the early innings. I think 12x what we're talking about, and that's a pretty important metric for us. We're starting to measure well time now. But when I say early innings, we have to create a baseline before we can figure out how to build upon that baseline. Anecdotally, we've got management teams on all of our shopping centers. So we know when our parking lots are full. We know when customers are there for a long period of time. We just -- we live and breathe on those centers. Anecdotally, I can tell you that restaurants definitely add not only to the dwell time of the individual, the customers coming to visit us, but we see a lot of later business, too.

So we're increasing traffic at key times during the shopping day where we're seeing a lot more customers at night. And ultimately, the longer people stay in our centers, the more they'll spend and that will help us continue to drive sales through our platform.

The next question is from Craig Mailman of Citi.

It's Sydney McEntee on for Craig. Just curious on the acquisition side. Private capital continues to provide competition for available assets. Just what's been the volume of deals you guys have seen so far in 2026. And are the transactions you're looking at mainly marketed or off-market deals?

Thanks, Sydney. Our pipeline remains active. We're going to really lean in to assets where we can create value. I think we're pleased with the assets that we've bought, and we have case studies now of how we can use our platform to create value. There are competition in the market. I think that is against a backdrop of very little retail new development and very positive retail fundamentals, which is good thing overall for the marketplace. And then for us, it's really where we can find value in the 2 channels, whether it's outlet or open-air lifestyle centers, which we believe, gives us a competitive advantage and then the synergistic nature of these 2 verticals together, which through the acquisitions that we've done have really proven out the growth potential of our platform.

Great. And then maybe 1 more for me. Just with the ongoing remerchandising efforts, I'm curious if you've continue to see like any shift in the customer demographic at some of your outlets? And then maybe just an update on consumer health overall today.

Sure. I would say definitely. I think a lot of things are contributing to seeing a shift in consumer demographic. I think number 1 is our shopping centers with the population shifts and a lot more people moving into the markets where we have centers, we're seeing more families come and shop with us, and we're seeing a younger consumer, too. And if you take a look at the brands and the categories that we're really successful at the end of last year, family apparel, the health and beauty category. And a lot of those younger driven consumer brands. We've enhanced our digital marketing and our local marketing initiatives in such a way to really speak to that local customer, and the digital initiatives, whether it's the TikTok and the Instagram that we're using right now to get in front of our customers is really resonating with that much younger customer.

The younger customer also likes our loyalty program. And we have a loyalty program that incents the customers to come back and shop with us more frequently and they're rewarded for doing so with additional discounts to their favorite brands. that's increasing traffic. We see a lot of younger consumers taking advantage of that as well.

The next question is from Rich Hightower of Barclays.

Michael, I think in the prepared comments, you gave us the sort of the sequential occupancy cadence for 2026, but just help us understand any other sort of variations seasonally that we should think about in terms of the modeling to get to the full year number? And the perennial question, what set of circumstances gets you to the high end versus the low end, if you don't mind.

Thanks, Rich. I'd say from an occupancy perspective, what we try to highlight is not every point of occupancy is worth the same. So you can't just assume we get to a certain occupancy or we drop a certain occupancy that it has a direct correlation one-for-one relative to NOI as evidenced last year during our numbers. Now there is a cadence just given the seasonal nature where we do peak at the end of the year for the holidays and then typically in the first quarter where we do have most of our role. You look back at our long-term history, it's averaged about 150 basis points coming off of that fourth quarter.

We talked about in the release, we're ahead of our '26 role in renewals. We continue to see very strong demand, and we're at record leasing volumes.

In terms of the second part of your question, the Same Center NOI range of 2.25% to 4.25%. As part of NOI, there are variables related to sales, or RCD, our rent commencement dates, tenant credit, the downtime, our operating efficiency. And so when you roll spreads and timing all into the mix, each 1 of those variables could have a positive or a negative impact, and we weight all of these variables to provide a range of about 200 basis points in same center that we feel very comfortable with at this juncture, knowing all of the things today that we know.

Okay. That's very helpful. I guess maybe bigger picture question, sort of a follow-up to a prior question as well. But as you think about potential future M&A on top of what you guys have already done in the last couple of years, I guess, we've heard anecdotes from certain peers in retail that they're having active conversations with retailers about specific centers that the retailer might want to expand to under different ownership. And I'm wondering if you have any sort of color on those sorts of conversations from Tanger's end?

Look, I mentioned earlier that we are in conversations with our retailers all the time. I think our retailers have really gotten behind what we've done as an organization to grow our business, grow dwell time, how we market to the consumer. And because of that, when we pick up the phone and call a retailer and say, hey, this is a prospective shopping center that we're looking at, something that you're in or something that you're not in, what are your thoughts, we usually get positive feedback. I think our brands are definitely rooting for us. They like the fact that we've gotten into that second vertical of lifestyle shopping centers, they believe and we've proven that we add value when we take ownership of those centers.

We've got a very clear strategy. We work well with our retailer partners. And I think they're supporting our growth. And when we mentioned a particular market that we're interested in, whether it's an acquisition, or even if there's a greenfield development opportunity across the country, we work closely with them to make sure that they're on board. So we're making really smart decisions from the very beginning of any transaction.

The next question is from Hong Zhang of JPMorgan Chase.

Michael, I think you talked about CapEx being in the mid-teens this year. Is that something we should expect as kind of a run rate going forward? Or is there any room for your CapEx IOC spend to fall given customer retention.

Thanks, Hong. We expect it to continue in this mid-teens range, which is for our channel, much lower relative to others, right? So if you look at your models, up where 20% to 30% CapEx relative to NOI. And so we feel really good at our levels to be able to generate positive return on invested capital. And given a payout ratio of only 60%, be able to have that free cash flow to reinvest in our business.

The next question is from Greg McGinniss of Scotiabank.

This is Viktor Fediv with Greg McGinniss. So coming out of the holiday season and your kind of Black Friday, everyday campaign, what is your current read on the health of your consumer and overall profitability of your retail partners and potential expansion of them within your centers.

Well, thanks for the question. As far as the health of the retailers, there has been no deceleration with regard to retailers and open to buys. We see the retailers are looking to expand but there's not a lot of new retail space being built across the country. And there's been a consolidation in department store business. We're seeing it most notably, Saks OFF 5TH. Brands need to expand. They're looking for places to expand a lot of our markets really support a lot of that growth and that planned growth.

So we're definitely optimistic about open to buy and about the upside and opportunity that we have with the retailers. With regard to the customer, look, particularly in our outlet space, we provide value every day. And I think in -- whether it's uncertainty caused by tariff noise in the marketplace or interest rates or inflation or pricing. I think that the customer is always going to think where can I get brands I want at the best possible price. And that's what we offer every day in the 38 outlet shopping centers across our portfolio, and we see that customer. That's why our traffic numbers were up as much as they were this year, particularly in the fourth quarter.

So we'll continue to drive traffic into our shopping centers through our marketing initiatives, where our social media campaigns. But I think the customer when they have the chance to vote, they vote to the cash register and looking for their favorite brands and value pricing. And again, if you want that, you shop Tanger.

The next question is coming from Floris Van Dijkum of Ladenberg.

Maybe if you guys -- could you update your temp tenancy? I know that historically, it's prior to, I guess, the retail organic was around 5%. It's been around 10% more recently. Has there been any movement? And where do you expect that's going to -- how that's going to trend? Because obviously, that also has an impact on your I think Michael talked about the profitability for occupancy. It's permanent occupancy twice as profitable as temp occupancy. If you can give some comments on the trajectory of your temp that would be great.

Sure. Well, first of all, I think we continue to grow NOI. And we continue to grow our business, and you see it in our ability when we bring in new retailers as we continue to renew our existing tenants. But we get space back. We talked about Saks. We'll use it as an example. Should some of those Saks spaces be rejected, we feel that our temp strategy in place, we can go ahead and fill those Saks boxes almost immediately and retain that cash flow while we think about a long-term strategy to replace that tenancy, whether it's to divide some of those up in order to add multiple tenants or if there's a big box retailer that we think we'd like to see in our shopping centers, that's going to add to the variety, the mix and the overall long-term growth of that property.

So to us, short-term leasing is a really important strategy, that 10-ish percent that you're talking about. I don't think that that's ever going to be -- it doesn't necessarily have to decrease in such a manner because there's always going to be flexible vacancy strategic vacancy across our entire portfolio that when a retailer goes out, we're going to make sure that we've got a 10 tenant that's going to come in and backfill it until that next retailer with the long-term lease comes in and backfills behind it. So I think we've been really successful using that as a strategy.

Just 1 last point to make, when we started here about 5 years ago, if you do 1 or 2 people working in short-term leasing. So there wasn't -- it wasn't -- there wasn't that much of a focus. But now that we've sort of given the keys to the -- we made our General Managers of our shopping centers responsible for their P&Ls they're making sure going out into their local markets, and they're doing a lot of that short-term leasing for us. A lot of those brands become future brands that we take across our portfolio. gives us an opportunity to try new uses, give us the opportunity to pop up retailers and give them an opportunity to be successful in our properties.

But by doing that, we've added 41 new leasing representatives in the short-term game alone. And that's always going to add to velocity, maintain our occupancies and keep them high. We say all the time, we love this, but I think our customers that shop our centers certainly know the difference between a close store and open store. But some of these short-term tenants really provide a lot of utility to our centers, a lot of value to the customer, and we're going to continue to use that as a strategy. Thank you for that question, Floris.

No worries. Maybe my follow-up just having walked the property last year in Kansas City, and obviously, there was rumors at the time that the chiefs might be moving there. What kind of investments do you foresee happening potentially at that center. Obviously, I think it's still a couple of years out before the stadium gets built, but what kind of opportunities do you see for Tanger in redoing the -- your Legends assets and repositioning that.

When we purchased that shopping center we did so with the mindset that we also had a capital plan that we're going to continue to invest in that center. And that investment already started. I think now that the Kansas City Chiefs move and all of that infrastructure and all of that capacity that's going to move to the Kansas side of Kansas City. I think it only has our phones are ringing with retailers that are more anxious to come here that might not have been here before. We think that there's opportunity for our peripheral land for us to continue to develop and grow on that. .

There is some development opportunity in that shopping center that we're going to take advantage of. And I think it's very top of mind. That's why we talked about it in our opening remarks, very top of mind for this company. We think it's a center -- a number of our centers that are -- have an outlet profile have also attracted nontraditional outlet retailers that see value in being where the consumer is and where the customer is going. And I think that the customer is only going to continue to grow and build in this market, and we're going to make sure that we bring that customer not only the value that they want, but the retailers they want, the experiences they want the food and beverage that they want across that portfolio.

And we see Legend as being not only a great buy that we made 1 of the great growth vehicles for this company going into the future.

The next question is from Caitlin Burrows of Goldman Sachs.

This is Harrison Slater on for Caitlin. What does guidance assume for bad debt in 2026. To what extent does that incorporate sort of known versus the unknown headwinds at this point?

Thanks, Harrison. So as I mentioned before, our guidance range contemplates a range of credit scenarios. It does take into account what we know today. So within that range, we've taken into account be announced and different projections of how those will manifest themselves as well as a normal credit reserve. I would say, our watch list remains at very manageable levels. None of the recent bankruptcies were a surprise to us. And importantly, it creates long-term opportunities to grow NOI. And as Steve talked about, our tenth strategy, in many cases, we're able to mitigate some of that exposure because we're able to backfill on a short-term basis, number 1.

And then number 2 is the ability to grow over time by bringing in a new permanent tenant or working with the existing tenant to bring them along.

Got it. That's helpful. And then just a quick follow-up. Leasing spreads were lower '25 than '24, in part due to tougher comps in the lease expirations. To what extent do you think tougher comps will continue to limit sort of reported leasing spreads and ultimately Same Store NOI growth.

Thanks, Harrison. So I think when you look at our leasing spreads and when you look at Page 12 in the supplemental, a greater percentage of our growth is coming from remerchandising, whether that's retenanting space, and you can see how we almost tripled the amount of square footage that we leased at almost 30% spreads with lower tenant allowances. But then what we're leasing on a noncomp basis where we're either replacing vacancy or a temp, and that added another 300,000 square feet, which has significant impact on NOI growth. sometimes metrics will contradict each other.

We don't take metrics to the bank. What we think to the bank is cash flow and Same Center NOI growth, and all of that is supportive of where we stand. So -- we look to being able to drive the spreads, work with our retail partners to continue to grow the enterprise, keeping our renewals short and keeping the new deals attractive on a return on invested capital basis.

Your next question is from Naishal Shah of Green Street.

This is Naishal on for Vince today. So it feels like we have recently seen an uptick in retailer bankruptcies and store closures thus far in '26. Eddie Bauer another name that's been struggling. And it sounds like they may also close some locations. I was curious if you could provide their share of total portfolio GLA and their annualized base rent.

Thanks. So none of the tenants that have announced are in our top 25. So each of them are small I mean, obviously, you can -- all of our centers are open, so you can go to those centers. And we have, I think, 14 Eddie Bauer stores in the portfolio. And as we just -- we've been talking about on the call, none of these are a surprise to us. This is typically the season post holiday where you see it. Our watch list remains at very manageable and low levels. And while we focus on these things, it's the opposite that we're really excited about, which is all the demand.

When we have record leasing activity, increasing occupancy the demand side of the equation is so much stronger than the bankruptcies and that's part of retail. It's the best thing that you constantly reinvent and we can't control people's capital structures or their margins, but we can drive traffic to our centers and do as much as we can do to help their performance.

That's helpful. And maybe just a quick follow-up. So every quarter over the last year, the number of new lease deals signed has increased in the Tanger portfolio. And I was curious, is there a certain category of tenant from which you're seeing an increasing level of demand?

Yes, this is Justin. So it's not 1 specific category. But like Steve mentioned earlier, the family category like all the Gap brands they're doing extremely well. The Athleisure brands are starting to do more deals throughout our portfolio. And obviously, we love health and wellness. We also spoke a lot about our focus on food, beverage and entertainment and activating and monetizing our peripheral land. And so I think you're going to start to see a lot more of that throughout our portfolio. I mean for those of you that went to NAREIT in December in Dallas, and you saw our peripheral strategy in action.

And when you walk that asset, you saw a Portillo, you saw the rate barrel -- excuse me, the cracker barrel that you won 51 coffee and the Wagar under construction. That's just 1 center where we're focusing on food beverage and entertainment. And I think you're going to start to see that category expand throughout our portfolio in multiple centers around the country.

Our next question is from Tayo Okusanya of Deutsche Bank.

Yes. Good morning, everyone. Wanted to talk a little bit about the changes you've kind of been making over time for the loyalty program. I'm trying to understand a little bit more around how that kind of widening your customer base kind of getting younger customers, exactly how you're measuring that and how you see that kind of translating to better sales productivity at percentage?

Well, thanks for the question. So first of all, the loyalty program is an opt-in program. And we reward our loyal customers with digital discounts and initiatives to come into the center, all of which have attribution. So when we send a digital coupon to a particular customer in our loyalty program, -- that customer then once they come back to the shopping center and make that purchase in the store, we know via the attribution that they came back. So it gives us an opportunity not only to our customer is speak to a customer in a way that they are interested in getting -- or consuming their shopping center information, rewarding them for their loyalty, so our rewards -- we don't have a product, but in the outlet channel, we're able to give additional discounts in partnership with the retailers, so that we can reward our customers with additional discounts and stackable discounts on top of the best deal that they can get in any particular store, our rewards gives them an opportunity to even do better.

And there are different levels of -- in our loyalty program. There's the entry level, and then there was a level where if you've achieved a certain amount of sales in any particular year, then you're entitled to a number of different services as well as additional discounts. So I just think the gamification of loyalty is really important, particularly to a younger consumer because they're not only looking for their favorite brands, but they're looking for the best possible price.

And when you go to 1 of our shopping centers and you see a number of young consumers walking around with a bunch of bags from their favorite stores, what's as important to them is look what I just bought at this store is, look, how much I got for the money that I spent. And I think that, that's a really important part of the conversation, particularly in our outlet yet.

Is there any data out there just about how membership in general is growing and whether it's like the 18 to 25 age group that's growing faster. So just anything you can give us about how that's performing?

Nothing I'm prepared to share on the call right now, but we certainly have the data. We track the data. We communicate with these customers. I mean it's a data-driven program, perhaps in the coming quarters, we'll give some more information on loyalty. It's a great question. But I'm still unfortunately not prepared to share anything that have in front of me right now.

The next question is from Todd Thomas of KeyBanc Capital Markets.

All right. I wanted to go back to the operating results in the quarter and sorry if I missed this, but what specifically drove the beat in the quarter versus guidance, which drove full year results above the high end of the range. I know there's a lot of seasonality in the business in general in the fourth quarter in particular, but just curious if you could sort of highlight exactly where the beat versus your budget was?

Thanks, Todd. So coming out of the third quarter, we had updated guidance of FFO of $2.28 to $2.32 and Same Center NOI of 3.50% to 4.25%. We ended at $2.33 a Same Center NOI of 4.3%. So the NOI came in basically at the high end, just a tick higher. And a lot of that had to do with the performance in the fourth quarter from a revenue perspective as we sales drove our percentage rent and the leasing activity driving our base rents as well as our recoveries.

The other upside that we got relative to our expectations, was just the performance of the acquisitions that were in the non Same Center pool. And so we got a little bit more FFO out of that bucket, Kansas City Pinecrest, and Little Rock, which all contributed to that end of year performance.

Okay. And then I wanted to ask about the sort of the bankruptcies or some of the tenants that have been discussed on the call. We've seen the results of bankruptcy-related lease auctions over time. And in the last few years, we've seen a lot of tenants stepping up at these auctions. Demand has been fairly strong in some instances. So whether Saks or otherwise, how would lease auctions -- how would that process work and the approval process work in your portfolio? Is it any different than it would be in the traditional portfolio and would Tanger be active or aggressive in lease auctions to retain control, just given sort of a below market rents in some cases?

I think the answer is yes. I mean, look, we want to control our real estate. We want to make the leasing decisions, we make the merchandising decisions. I think as operators of shopping sectors, I think we've proven that we're probably best when we're in control of the property that we have. I think a lot of the leases, particularly those Saks leases that you're talking about, sure, there's value in those leases. And the leases were written in such a way that definitely give the Saks creditor some control.

So at the end of the day, if those leases get rejected, we'll see that as a great opportunity for us. If they don't get rejected and they get bought at auction by retailers, then we'll be looking forward to working with these new retailers and bringing them into our property.

And Todd, the other part, just thinking about bankruptcy relative to our portfolio, we have a small tenant portfolio. We got over 3,000 stores, 16 million square feet. Our average tenant size is 5,000. So outside, we don't have a lot of big boxes, you shopped our centers the Saks situation is unique in that regard where most of the other bankruptcies, as you've seen over the last number of years, we're able to manage through that. Those leases generally don't have a lot of term with them. So those don't really happen and we're able to re-lease this space either on a temp basis or then a perm basis and continue to drive NOI. So these bankruptcies are not creating a headwind. It creates more headlines than actual impact.

Okay. But are there certain restrictions around the auction process and tenant stepping up? I would assume in an outlet center -- or value-oriented center, there are certain restrictions. I mean how does that work in your portfolio, yes, can you just kind of run through that process a little bit and how it might differ?

Todd, it boiled down to lease quality. And really, it's the acquiring retailer will stand in the shoes of the exiting retailer, and we'll have to live with the terms of those leases with regard to the term, the rent and given the use case. So if there's consistency in the used class, that's 1 thing. If there's inconsistency between what the user wants to do with that space and the use clause, then that creates some of that conflict you're talking about.

There are currently no additional questions. Thank you for your participation. You may disconnect your lines, and have a wonderful day.

Good morning. I'm Ashley Curtis, Assistant Vice President of Investor Relations, and I would like to welcome you to Tanger Inc.'s Third Quarter 2025 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 IR website, investors.tanger.com.

Please note that this 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 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. As such, it is important to note that management's comments include time-sensitive information that may be only accurate as of today's date, November 5, 2025. At this time all participants are in listen-only mode. Following managements 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.

On the call today will be Stephen Yalof, 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&A.

I will now turn the call over to Stephen Yalof. Please go ahead.

Thank you, Ashley, and good morning, everyone. I'm pleased to report another quarter of strong financial and operating results, contributing to an increase in our full year guidance.

Our third quarter results reflect robust execution across all aspects of our business, with our best-in-class leasing, marketing and operations platform, combined with accretive and strategic external growth, driving strong financial performance and positioning us for the future.

Core FFO was $0.60 per share, which represents an 11% increase over the prior year period, driven by solid same-center NOI growth of 4%. We achieved record leasing volume with more than 600 transactions, totaling 2.9 million square feet over the trailing 12 months. This contributed to our quarter end occupancy of 97.4%, an 80 basis point sequential increase.

Our portfolio reached sales productivity at an all-time high of $475 per square foot. We posted blended rent spreads of over 10%, our 15th consecutive quarter of positive rent spreads, while increasing our lease term durations for both renewals and new deals. We have seen a 50% increase in re-tenanting activity over the trailing 12 months ended September 30 compared to the prior year period.

Limited retail development nationally has contributed to a robust leasing environment for our open-air outlet and lifestyle centers, providing a strategic opportunity to replace underperforming tenants, right-size larger stores, diversify merchandise assortments, and encourage reinvestment from existing tenants. These initiatives are allowing us to add more productive stores plus new uses and categories that create variety and vibrancy, which in turn drive more frequent shopping trips, longer stays and ultimately, bigger spend.

We are largely complete with our 2025 lease roll, which is aligned with our leasing strategy of increased re-tenanting activity and renewals targeted around 80%. We are already actively working on our 2026 lease roll and see continued opportunities to drive rent, elevate and diversify our centers' merchandise mix.

Our shopping centers have evolved into 7-day a week destinations due to substantial changes in demographics and the outward population migration from urban to suburban markets. This has contributed to strong traffic creation in our markets, where residential growth continues at unprecedented levels. This dynamic has fueled the need for more service, F&B and entertainment uses in our centers. And as we continue to deliver these new uses, the shoppers are responding. We are providing a well-rounded high-quality shopping, dining, and entertainment experience that is attracting new retailers and new shoppers alike, contributing to the record sales results we posted this quarter.

Our third quarter performance was further bolstered by our early back-to-school and summer of savings campaigns that targeted new shoppers, younger consumers, and our Tanger Club loyalty members with digital, social, and SMS messaging. Tanger team members, influencers and crowd-sourced content creators reached millions of shoppers and created hundreds of millions of impressions through TikTok, Instagram, and Facebook, calling out our new store openings, sharing our best deals and their latest halls.

Over the summer, Tanger deal days featured our early back-to-school promotions, and shoppers with concerns over tariff impact on product pricing and availability were encouraged to shop early and were incented to do so with great offers from our participating retailers. This momentum continued through the summer and the rest of the third quarter, and we have already kicked off our holiday selling season, anniversarying our successful 'Every Day is Black Friday' campaign, which started November 1.

Across our business, we continue to leverage AI technology to optimize customer service, enhance our data and analytics predictive functionality, and enable more efficient use of resources across our enterprise. We advanced our external growth strategy during the quarter with the acquisition of Legends Outlets, an open-air outlet center in Kansas City, Kansas. This acquisition demonstrates our commitment to disciplined external growth as we have added 6 open-air centers over the past 2 years, including 3 outlets.

Legends Outlets has been rebranded Tanger Kansas City at Legends, and aligns with our strategy to acquire well-located retail centers supported by strong residential and economic market fundamentals along with dominant entertainment destinations. Tanger, Kansas City is the only outlet center in Kansas, and it anchors the state's premier entertainment district. Is surrounded by numerous traffic-driving attractions, including the Kansas Speedway, Great Wolf Lodge, a new Margaritaville Hotel, Nebraska Furniture Mart, Major League Soccer and Minor League Baseball stadiums, a large youth sports complex and a professional soccer training facility. The area continues to grow rapidly with Topgolf and the state's first Buc-ee's under development as well as additional hospitality, entertainment and residential projects. We are excited to enhance the center's productivity through our proven leasing, operating and marketing platforms, and to further leverage the area's expanding traffic drivers.

Kansas City is one of our many markets where sports is a key traffic driver, and we continue to harness the growing momentum of this category in our marketing initiatives. In that connection, we're excited to announce this quarter our new partnership with Unrivaled Sports, the nation's leader in youth sports experiences to be their exclusive shopping center partner in our shared markets. This partnership offers exceptional cross-promotional opportunities and will put our centers on the itinerary for thousands of young athletes and their families when they travel to these markets for experiences and tournaments hosted by Unrivaled Sports. This is just the latest example of how we are pursuing the strategy of creating compelling partnerships to drive traffic and sales and deepen local engagement in our communities.

In today's dynamic retail environment, Tanger's value proposition continues to resonate strongly with both shoppers and retailers. Our record results demonstrate the strength of our platform, while our strategic evolution continues to create new growth opportunities. The strength of our balance sheet with conservative leverage and ample liquidity provides us the flexibility to continue to pursue selective external growth opportunities while investing in our existing portfolio.

We remain confident in our approach and in our ability to deliver compelling results for all stakeholders. I want to thank our dedicated Tanger team members, retail partners, shoppers and shareholders for your continued support.

I'll now turn the call over to Michael to discuss our financial results and updated guidance in more detail.

Thank you, Steve. For the third quarter, we delivered core FFO of $0.60 per share, representing an 11% increase compared to the $0.54 per share in the prior year period. This strong performance was driven by solid same-center NOI growth of 4%, reflecting the success of our leasing and operational strategies across the portfolio and the contributions from our external growth activity.

Reflecting the tenant demand that we're seeing, we continue to drive our total rents, reflecting both higher base rents and higher tenant reimbursements, and locking in percentage rent on renewals. We are also seeing growth in our other revenue businesses, successfully selling our assets as marketing mediums and creating additional sources of revenues at each of our assets. We also continue to seek and achieve operating efficiencies, driving our overall NOI growth.

Our balance sheet remains strong with conservative leverage metrics that provide us with significant financial flexibility to support both our operational needs and strategic growth initiatives, including selective acquisition opportunities, like the recent Kansas City acquisition. We acquired Legends Outlets in Kansas City for $130 million using available liquidity and the assumption of $115 million CMBS loan that matures in November 2027.

In conjunction with the closing of the acquisition, we settled approximately $70 million of previously issued forward equity using those proceeds to pay down our line and hold some cash in escrow for the Kansas City loan assumption. We estimate that the center will deliver an 8% return during the first year with potential for additional investment and growth over time.

At the end of the third quarter, our net debt to adjusted EBITDA was at 5x, benefiting from the strong EBITDA growth and the retention of free cash flow after dividends, while our growing dividend only represents 58% of our funds available for distribution. Pro forma for the recent transaction activity, we estimate that our leverage would be approximately 4.7x at quarter end. From a liquidity perspective, we had approximately $581 million of total liquidity at quarter end, including $21 million in cash and $560 million available on our lines of credit. At quarter end, 97% of our debt was at fixed rates, inclusive of our swaps, and our weighted average interest rate stands at 4.1%, with a weighted average term to maturity of 3.1 years. The next significant debt maturity will be our unsecured bonds next September 2026.

Based on our strong performance year-to-date and our positive outlook for the remainder of the year, we are raising our full year guidance, and we now expect core FFO per share of $2.28 to $2.32 a share, and this represents core FFO growth of 7% to 9%. We've lifted same-center NOI growth to 3.5% to 4.25%, which is up from 2.5% to 4% previously. We've also incorporated the modest 2025 accretion from the acquisition of Legends, which raised interest expense, as well as raising our weighted average shares outstanding from the settlement of our forward equity. Our guidance does not assume any additional acquisitions, dispositions or financing activities. For additional information and assumptions, please see our release issued last night.

The strength of our financial metrics, combined with the operational improvements that Steve outlined, reinforces our confidence in our strategic direction and our ability to generate long-term value for stakeholders. Our focus remains on maintaining this momentum while prudently managing our capital to support both our current operations and our future growth opportunities.

We are pleased to welcome analysts and investors to Kansas City last month, showcasing our recent acquisition and how our external growth, leasing, marketing and operating platform creates value for all stakeholders. We look forward to seeing many of you in Dallas in December for Nareit, homes at Tanger Outlets Fort Worth, as well as in Miami for the Jefferies Real Estate Conference in a few weeks.

With that, operator, we can now open the line for questions.

[Operator instructions]. Our first question is from Craig Mailman with Citi.

Just as we look, occupancy was up 80 bps in the total portfolio. You guys are now at 97.4%. You guys are getting pretty close to -- I don't know where you would assume frictional vacancy is. But can you just talk about the opportunities from maybe shifting the temp space? I know you guys are about 10%, would have liked to keep some of that in there for strategic reasons. But just walk us through kind of from 97.4%, where you think the portfolio could go from here and what the earnings power may be if we start to think about that 10% moving subtly towards that 5% historic average?

As we look at temp tenancy, it's really very strategic in our portfolio. I mean you go back to the historic 5% pre-COVID temp number. And at that time, this organization had 1 or 2 people working on temp tenancy. The way we're structured currently, every one of the general managers in our shopping centers, our leasing representatives as part of their core responsibility and owning the P&L of their shopping center, they're responsible to make sure that any space that becomes vacant gets tenanted with a short-term lease while we're waiting for that appropriate long-term lease to come in and take that space. So we've basically gone from 2 leasing representatives in short-term leasing to 40 representatives in short-term leasing. So of course, that is going to be a more significant part of our business. In many instances, we bring in retailers that may have never been introduced to our platform before, that become really important part of not only the shopping center where they open, but part of our growth strategy. And in fact, our full-term leasing team has a representative on that team whose job it is to take the best short-term tenants and make sure that we can bring them throughout our portfolio in the form of longer-term leases. So we think the short-term tenancy is very strategic.

Now in this leasing environment, where we continue to grow occupancy, where we continue to add more -- better long-term tenants. We've talked about a lot of those great retailers that have just joined our portfolio that are producing higher sales per square foot volumes, that are signing long-term leases; we're going to be very strategic how we add them. And we're also equally strategically replacing some of these retailers who have lost some market share or in some instances, have declining sales productivity. We're downsizing retailers that creates a lot of that frictional vacancy.

So I think the important metric is our ability to continue to grow our net operating income. Our ability to continue to grow our business to continue to drive our sales performance on a per square foot basis and using that short term or that temp tenancy as a lever to introduce new people to the platform, bringing great seasonal retailers as we need to for different holidays, whether it's Halloween or Christmas, but also fill that vacancy because we've said before, most of our customers don't know the difference between a short-term tenant and a full-term tenant, but everybody knows the difference between a closed store and an open store. We want to keep lights on. We want to keep the properties cash flowing, and we want to set ourselves up for the great new brands of the future.

Great. And just pivoting, you guys have done a good job sourcing acquisitions here, with Legends being the most recent. And just with what's going on in the debt market with term loans in sort of the -- in the mid-4% at this point, I mean, what does the pipeline look like of deals? And how do you view using some of that term debt, if available, to kind of finance it to get premium spreads versus your peers given where you guys are going on initial yields?

Thanks, Craig, for the question. Our acquisition strategy is not programmatic. We are very focused on what value we can bring to the table. And so, the market remains active. There's a lot of product. The capital markets, as you mentioned, whether it's debt or equity, are supportive. But at our size, we really want to lean in where we can add value. And I think you look at the 5 acquisitions that we've done is how can we bring our operating, our leasing, and our marketing platform to bear to be able to drive value for stakeholders. From a leverage perspective, we're at low leverage today. And I think there is a wide variety of sources of capital that would allow us an ability to accretively deploy.

Our next question is from Jeff Spector with Bank of America.

Steve, can you talk a little bit more about -- you mentioned more trips, longer stays, higher traffic. You talked about the early back-to-school, and then the Black Friday campaign. And it all ties to, I know your platform initiatives and marketing, and maybe some of your data initiatives. I guess, can you just talk a little bit more about that and how that's progressing and maybe anything new coming in '26?

Yes, sure. And thanks for asking that question, because I think it's a really important part of our business. I remind you that in the outlet space, marketing is critically important because most of our retail partners are driving customers to their full-price assets, and it really becomes incumbent on us as landlord to drive the customer to the shopping center in that space. And because of that, traffic generation is a huge part of our business plan. In fact, it's one of the 3 pillars of our operating platform and one that we lean extraordinarily heavily into, I probably think more than most in our space. Because of that, we have to take a look at the current environment. We have to look at the macroeconomic environment, and we have to make decisions in advance that are going to lead to traffic-generating opportunity. So in the case of tariffs being announced as early as April, we felt that our customer -- our core customer is going to be concerned about whether or not product was going to be on the shelf in the third quarter of this year, whether or not pricing was going to meet their pricing expectations and they were going to be able to afford the things that they needed for that back-to-school sales season, which is the second biggest shopping holiday of the year.

So our marketing team came up with the unique idea of early back-to-school shopping, making sure that, that customer was aware that with participating retailer partners, we were able to offer special benefits, deeper discounts, and doorbuster opportunity for those who took advantage of that early back-to-school selling period. And what happened was we saw our traffic continue to build as early as June 1, into July and August, for the customers that were taking advantage of that opportunity.

Smart retailers that participated with us used the strategy of bounce back, where they got that customer in as early as June and then used the opportunity through further discounts, particularly in the outlet channel to bounce them back later in the year. So we saw the same customer coming back. We saw them building bigger baskets, and we were really excited about the prospects of setting up that strategy to have that early back-to-school. And I think that's going to be a perennial plan that we're going to add in '26 and beyond. All levered off of that last year, there was big macroeconomic headwinds going into the holiday selling season. And we brought Black Friday forward last year to November 1.

Halloween is a very big holiday in this country these days and also in our shopping centers. Halloween decor is critically important, kids trick-or-treat in what they consider to be a really safe environment. The shopping center, the brands are participating, and we had some great traffic generation with Halloween being on Friday this year. But on that Saturday, the Halloween decor comes down, the Christmas holiday decor goes up. And the Christmas music starts playing, and we start to promote every day of November is Black Friday. It worked great for us, traffic build during the course of that November. We anticipate similar build in this November going into December, and we're looking forward to add -- keeping that as a perennial program for us in the years to come as well.

Great. Then my second question is on the retenanting. I know when you established this goal and plan, you mentioned earlier, 80% was a target for retenanting and then the other 20% upgrading tenants, and you've had a lot of success evidenced by the increase in sales per square foot. Are you evaluating that 80% and maybe even decreasing it? Or like what are your thoughts heading into next year on that?

Yes. First of all, the 80% is the renewal. And so, that leaves the rest of that space for retenanting and for new tenants. We have up 150% of our retenanting activity. So the strategy is working. I think that 80% to 85% is probably a pretty good number, especially since we've done a really good job of sort of clearing out some of the retailers that may or may not have been performing over the past few years. The fact that there's not a lot of new retail space being added to the market gives us the opportunity to really be more selective. We're looking at department store contraction. We're looking at -- and in that regard, we feel that our real estate is worth more every single day. And because of it, we're being real strategic with it.

Now when you own the shopping center, you're responsible for merchandising that center and making sure that you bring the best retailers into your property that isn't always the one that's going to pay you the last dollar in rent. But in some instances, it's the one that's going to draw the most amount of customers or it's going to draw the most amount of other retailers who see some of those great retailers as barriers that will break through to get new retailers to come into our shopping centers. And we saw that with our -- with the supportive deals that we've made. We recently made a number of deals with Marc Jacobs.

There's a lot of other luxury brands that are now paying attention to our portfolio in a way that they hadn't in the past. We're delivering the sales. These brands are excited about coming into our markets -- our mid-tier markets where they need to continue to grow their business. And because of that, we're going to make real strategic decisions on who gets renewed and who gets replaced. But as long as that queue of new retailers who are interested in our environments are paying attention and want to be in our shopping centers, we're going to make sure that they get a really good look.

So I'll go back to the fact that our job is to drive traffic. Our job is to continue to drive sales. Those 2 metrics inform that sales performance that we've shown you over the past couple of years as it continues to build. And a lot of our base rents are based on our ability to continue to drive that traffic. So I think that flywheel creates our opportunity to continue to grow long-term sustained NOI over time.

Our next question is from Greg McGinniss with Scotiabank.

This is Viktor Fediv on with Greg McGinnis. Probably building on previous question, but more specifically looking into 2026 expiration, it appears that the average rent on expiring leases is just slightly above the portfolio average. So are there any notable potential non-renewals you're aware of at this point? And overall, what spreads do you expect to achieve given the expiring and respective market rents?

From a rent perspective, we look at our leasing volume up at 2.9 million square feet. So we still have a significant amount of velocity. When you look at the average base rents, part of it is going to be a mix of what assets, what tenants are rolling. So I wouldn't read too much into sort of that level. And we want to be able to continue to drive total NOI growth, which is not only the role, but what vacancy or what temp we may be leasing and then what are we remerchandising and what are renewing and in totality, driving positive growth on that balance.

As a quick follow-up on your watch list overall. Do you anticipate any Carter's store closures, given that they are planning to close 150 stores?

Viktor, it's Justin. Listen, Carter's and Oshkosh have positive trends in our portfolio, both over the rolling 12 months and the rolling 3. So we're encouraged, and they're very productive in our portfolio. We've gotten out in front of this, just like we get out in front of all of our brands where we've been replacing some underperforming stores over the past 12 to 24 months. So where we probably see some downward pressure throughout the country, not just in the Tanger portfolio is probably more on the Oshkosh side of the business, where they have multiple stores with landlords in a center. Like I said, we've gotten out in front of that. We've already replaced a handful of them. We only have a handful left, very little exposure. So we're going to continue to work with them. They're great partners with us, and we're going to work to consolidate those brands in our centers and replace those stores at higher rents and more productive tenants.

Our next question is from Michael Griffin with Evercore ISI.

Steve, I know you talked a lot about investing in both data analytics and as well as enhancing the F&B component at a number of your centers. Can you maybe quantify whether its dwell time, customer spend that you've seen at centers where you've unlocked that F&B value? And then maybe give us a sense of the ROI that comes from that F&B component as it relates to maybe future improvement in retailer sales. Anything there would be great.

Yes. What I can share with you right now is mostly anecdotal. I think a lot of the data comes with our analytics team now using dwell time is a real important metric to determine how long folks are staying when they come and shop at our centers. And we're using that baseline that we're currently creating to inform later years, so we can come back and actually share the metric. So we understand what levers we can pull in order to drive that longer stay with the customers. However, anecdotally, we have operating folks on every one of our properties. And those people have been there for a number of years. We know when the parking lots are full. We know when the customer is carrying certain shopping bags. We see the lineups and the wait times at the restaurants on the property. So we can tell you anecdotally that restaurants and better food and beverage offer, particularly in our outlet shopping centers is really adding to creating a new destination for that traffic, but as importantly, making sure that the folks that are there that might shop the morning and then leave get them to stay.

We've got places for them that are a little bit more upscale than the offering that we've had in the past. We're seeing them stay and we're seeing them stay for that afternoon shopping experience as well. We talked about Unrivaled Sports and that partnership. It's critically important that we've got places for those families in between tournaments and games and things that they're doing with that Unrivaled Sports partnership, where we can bring them to our shopping centers. And that's not just for shopping. That's for the entertainment, that's for the amenities. And as importantly, it's for the food and beverage service. As our shopping centers become more 7-day a week destinations because of that outward migration of folks moving from the cities into those mid-tier markets, where most of our shopping centers presently reside, we're seeing that day population grow. We're seeing more people shop during the week than we have in traditional outlet shopping centers in years past. And because of it, it's supporting a lot of these new businesses that we're putting into the marketplace.

I can't share currently an ROI. The data points are -- we're in the early innings of creating a real analytical messaging as it relates to why we make these decisions and why it's more prudent to make certain investments rather than others. And we're looking forward to sharing that information with you in the coming quarters and years.

Great. Then maybe one for Michael, just on the acquisition opportunity set. Are you seeing more institutional capital interested in these deals? I realize that your centers are pretty operationally intensive from an asset management perspective. But my sense is that if you get a going-in yield in the 8% range, stabilizing above that could attract more capital to be interested in these kind of centers. So just maybe talk about the competitive set against and what you're up against relative to competition out there.

Thanks, Griffin. I think it's a good sign for retail overall that you're seeing that institutional interest in the asset class. Steve talked about the low supply environment, and you're clearly seeing retail fundamentals across all the retail asset classes perform really well. And so I think institutional capital, whether they own existing assets today or they're looking to deploy, presents an opportunity as well for us; because as you said, we are an operating platform. And we believe that where we want to be able to lean in is where can we bring that platform to bear to create value and being able to tap into different capital sources helps in that regard when we can bring more than just money.

We know our balance sheet is in great shape to be able to finance our external growth, but it really comes down to our operating our leasing and our marketing platforms to create that value. You were with us in Kansas City, you saw our team that just descended on that acquisition and is already having an impact as we bring resources from our company to bear to add that value.

Our next question is from Juan Sanabria with BMO Capital Markets.

Just on 2026, just curious initial thoughts on the bad debt or watch list of tenancies. And curious how far you are along at this point versus last year in handling or taking off lease expirations.

Thanks, Juan. Our watch list remains at manageable levels. I think as we progress through the next few months, when we'll come out in February with our guidance, we'll be able to articulate some of that. Things have been relatively stable as of late, but it is a very operationally intensive business from a retailer perspective.

In terms of lease roll, we have already begun our '26 and even looking at some further in those discussions. And you can see in the sub that we -- the role already came down, I think, about 100 basis points since last quarter, and we'll continue to make progress as we move the next few months.

Great. Then maybe just, Michael, a follow-up. Anything you'd want to flag in terms of '26 considerations as we think about earnings and some of the moving pieces and timing of stuff that happened this year versus full year impacts next year?

I give guidance in February. And so, we'll be able to lay everything out. I think our trends this year have been positive. I think you mentioned the credit side, which is always something that you have to think about in the year in terms of a range of outcomes. The other aspect is going to be our capital. And our bonds next year come due late in the year. But how we finance that, when we finance that could have some range to it relative to this year.

Glad to hear Mariah Carey's defrosting as planned.

Our next question is from Rich Hightower with Barclays.

So maybe just to go back to the prior conversation about institutional capital flows into the asset class. I mean, maybe just to turn it on its head for a second. I believe you guys haven't sold too much since 2019 in terms of the magnitude of sales. And so, are there reasons why maybe as we think about the bottom tier, of the portfolio, which is very helpfully broken out in the supplemental. Are there reasons why we wouldn't think about recycling some of that? Is it for tax reasons? Is it for descaling the company reasons? Or are there other reasons why that might not maybe pick up in future years?

If you look back over the history, we've actually sold a number of assets pre-COVID and coming out of COVID. We sold an asset in Howell earlier this year. And all of our assets are cash flowing. And what's really important is the same way that we talk about buying outlets and bringing them into our platform and the value that we can create we have that ability to create that on all the assets that we own, and that's really important. We'll always look at our portfolio for areas. And if we see significant change or not consistent, we would look to exit certain assets. But our goal is to continue to leverage this platform and grow.

Then I know you mentioned 'Every Day is Black Friday' started November 1. So we're not too far into that. But just give us a sense of what you are -- what you might be seeing so far in that campaign and just maybe help us understand how much of a window holiday sales over the next couple of months might be for -- what does that mean for the outlook for leasing and the business as we get into next year?

It's Leslie Swanson. We're very excited about getting into launching Black Friday every day just this week. We see a lot of opportunity in the future. One of the best opportunities for us is the partnerships we're seeing from our retailers as far as bringing additional value to the Tanger shoppers. So we're working with them on a weekly basis to continue to layer in more and more value opportunities. We have good inventory in our stores. We've got lots of great things happening from an eventing perspective, our annual tree lightings. We're bringing the local choirs in from the schools in our communities and really doing as much outreach as we can to bring additional traffic to the shopping centers across the holiday season.

I'd love to be a part of that and attend one of those. Any sort of broad commentary on maybe what that might mean for leasing next year as you kind of see how the campaign is performing over the next couple of months?

Yes, Rich, the campaign last year was wildly successful, and our retailers recognized it. And they want to partner with us on the marketing side and get more in depth with our loyalty program, with our marketing team. So we anticipate this to be as successful as it was last year and just like the back-to-school program was for us. So we're very encouraged by the results and our retailers and our consumers are excited as well.

Our next question is from Floris Van Dijkum with Ladenburg Thalmann.

So Michael, a question for you in terms of -- I know people have been asking about rent roll, et cetera. But talk about operating margins maybe and some of your initiatives on fixed CAM, where do you see your expense recovery and operating margins trending?

Thanks, Floris. We have been fortunate that we've been able to grow our margins really through both the top line as well as the bottom line. And so, on the revenue side, we continue to drive total NOI. That's through both our renewal and re-tenanting. But also when you look at our leasing, we have a substantial amount of non-comp leasing. And so, all of that taken together is what's driving our revenue. And as we talked about, when we are negotiating with our tenants, we're somewhat agnostic to lease structure, whether it was a gross lease or whether it's base and CAM because at the end of the day, we're just driving a total rent number. We have been pursuing a greater share of CAM in that total rent, and that's what you're seeing move up.

Then on the operating expense side, we constantly look for ways that we can become more efficient. And some of that is just rebidding our general contracts, whether that's security or our insurance. We're trying to get better on our property taxes and all of the elements that we have to run our properties, run them as efficiently as we can to grow that margin. And so, I think we'll continue to see upward trajectory as we move into 2026.

Maybe my follow-up question, this might be more for Steve. But when we toured Kansas City, I think I was impressed by the billboard opportunity at that particular asset. You've got some existing billboards, obviously, you can upgrade them. Maybe can you talk about maybe not specific to Kansas City, but also the other opportunities you see within the portfolio to increase the billboard revenue and really boost your other revenue line going forward?

Yes. Look, that marketing partnership business is a really important one for us. And it really started at almost nothing when we joined the company sort of just post-COVID. And under Leslie's leadership, we've grown to a very substantial business. We think there's a great opportunity on our shopping centers to monetize existing eyeballs. There -- most of the properties are situated on interstates that have great visibility in 2 directions that see over 100,000 cars a day, and we see that opportunity as well to really grow revenue from that off-site billboard program. But for us, I think that the real important piece of our marketing partnership business and the one that has the greatest amount of future revenue opportunity is working with our existing retailers to grow their on-site presentation.

We mentioned earlier that it's our responsibility to drive traffic to these shopping centers, which we have a machine that executes. Once that customer gets there, it's worth it to a lot of our retailers to invest in the opportunity to make sure that the -- that everybody who visits our centers knows their store is there. And in that connection, we take certain holidays, whether it's an accessories brand during Valentine's Day to do a full shopping center takeover to make sure every customer knows that they're there. We're doing a lot of that. We're working with a lot of these partnerships. We're monetizing these holidays, and we're turning them into a real revenue opportunity for us.

I also want to go back to the Unrivaled Sports partnership that we recently signed. Partnerships like this give us the opportunity to off-site drive traffic to our shopping centers on site. And the more footsteps that we can bring, the more cars we put in the parking lot, the more footsteps we can bring on center makes our product far more valuable every day. We're going to continue to grow this business. We think we're in the early innings of growing this business. And as we acquire additional shopping centers, and you saw it in Kansas City, we've got great opportunities for these brands to present their product to the customer in real unique ways in very creative ways, makes for a real entertaining experience for the customer as well because there's a lot of great creativity that these retailers bring to those initiatives.

Our next question is from Hong Zhang with JPMorgan.

Two questions from me. I guess first question, would you be able to quantify any seasonal impacts either on the revenue or the expense side as we move from the third quarter to the fourth quarter? Because I think normally, your expenses go up, and I'm not sure if there's any pull forward of revenue from back-to-school in the third quarter this year.

Sure, Hong. We've talked previously where a lot of our recovery income is effectively straight line throughout the year. but the expense trajectory is often volatile and especially going into the fourth quarter, we tend to see more traffic. It requires more janitorial, more security. The marketing is typically heavier. So we would expect to see a little bit lower recovery rate in the fourth quarter. And we do also tend to see higher overage rent in the fourth quarter and potentially some volatility in that number.

Then I guess just on the recoveries, I think you previously indicated that you expect to be around like 87% for the year. Is that still the case just because it would imply a pretty substantial drop in the fourth quarter? And how do you expect -- how much further upside do you see in recoveries in 2026?

It will probably be a little bit higher 80s. The third quarter was a little stronger than we had expected. There was just a very modest amount of out-of-period expense recoveries that came in the third quarter. So that skewed it slightly higher. But I would think a high-80s number is probably good for the full year run rate there on expense recoveries.

Hong, the other part about the expense recovery is lease structure. And so, part of what we estimated if we had just a gross lease, if we end up doing a lease where they're paying us space in CAM, it's the same rent that we're getting the same NOI. It's just showing up in a different line item. So part of that is what's growing that expense recovery rate as well as keeping our expenses low.

Our next question is from Harrison Slater with Goldman Sachs.

On the acquisition side, congrats again on the Kansas City deal. Can you go through how the deal was sourced, the upside opportunity and when some of that could be realized?

This was an off-market deal between the seller and us. This asset is one that we know well from its original development, and we work just in partnership with the owner, similar to how the Asheville deal came about. And we're able to successfully transact. We see both near-term as well as long-term upside from this asset as we bring our platform to bear. The asset today is 93% occupied. We think that there's opportunity to grow that occupancy over time. The asset also came with some peripheral land, a parcel that sits right in front of the Minor League Baseball Stadium as well as another parcel around. So there's opportunities over time to intensify the real estate. And then as we bring this asset into our operating platform, we think there's a lot of opportunities to increase marketing from our marketing platform. Floris has talked about the signage that we feel we can improve, and we think there's a lot of opportunities to bring the best of the Tanger tenant portfolio to Kansas City.

Our next question is from Naishal Shah with Green Street.

This is Naishal on for Vince. I was wondering if you could touch on co-tenancy clauses tied to the off-price stores from traditional mall anchors. Given the recent headlines surrounding Neiman Marcus and Saks, I'm curious if they were to close some other outlet locations, would the resulting NOI impact be limited to just their box? Or would it also affect some of the other in-line tenants as well?

Yes. Great question. In the outlet channel, we have very limited exposure to co-tenancy. Our tenants trust us with our merchandising strategies, and there's very little impact or exposure from that standpoint on the outlet side of the business.

Our next question is from Todd Thomas with KeyBanc Capital Markets.

I wanted to go back to some of the trends that you're seeing specifically around occupancy. So in the first quarter of this year, you experienced a little bit more occupancy loss than in prior years, and it weighed on same-store growth. As you've clawed back that occupancy now, I was just hoping you could provide some insight on early expectations around the sequential change we might anticipate sort of post holidays into the first quarter of next year, whether you think you can maintain higher year-over-year occupancy heading into '26, or if the temp tenant strategy and merchandising strategy results in just a little bit more seasonality around the holidays and post-holiday period than you've seen sort of historically?

So the first thing is just in terms of the first quarter and the occupancy decline, there was no impact really on same center from that. And the reason for that is that excess occupancy decline was really the result of 2 boxes in our portfolio, which I know we've talked about this a bit, but our average portfolio is 16 million square feet, 3,500 stores, average store size of under 5,000 square feet. In the first quarter, we had 2 boxes that totaled almost 80,000 square feet, one at our asset here in Deer Park, which was an old Christmas tree shops that was temp with a Wayfair for over a year at temp rent, and we re-leased that space to Main Event, who's taken over possession and will open next year. But that vacancy effectively in the first quarter wasn't that meaningful from a revenue perspective given the prior tenant was a temp.

The other piece was a 30,000 square foot box that was bought vacant in Huntsville that we had a Spirit Halloween at the end of the year. And again, temp rent, not a big amount, but it was 30,000 square feet. And that, too, we've re-leased LL Bean will be coming to Huntsville in half of the box, and then we have some plans for the other side. So that occupancy decline when you back out those 2 tenants at 150 basis points was exactly in line with our 20-year historical average going from 4Q to 1Q because in our channel and in our strategies, occupancy troughs in the first quarter where you come out of the holidays and you have your highest amount of lease roll and then we build sequentially each quarter, ending the year at the highest occupancy, as Steve talked about earlier in the call, we want to fill our assets and have open, vibrant options for the consumers who come shop with us. And so, you tend to get that seasonal lift as you move through the year. The rent on that space is not as much as it is on a permanent basis. And that's why in a big part, that occupancy decline in the first quarter didn't have any effect on us where we reiterated the guidance and then have been able to lift it throughout the year.

Is that -- was there a second part that I missed in the question?

Yes. No, that's sort of helpful context and kind of a reminder of the early year impact. I guess it sounds like with those box recaptures in '25, assuming that does not replicate that you might expect to have sort of a higher occupancy rate starting point for the year relative to last year. So that's helpful.

If I could shift over then, Steve, you talked about the revenue opportunity for marketing and some of the partnership opportunities here. I understand the increase in foot traffic and how that benefits tenants and Tanger broadly. But is there a more significant revenue opportunity separate from what we see today in the financials that we should consider as we think about the earnings potential for the company?

The only thing I can say is as we continue to add new properties to our portfolio, one of the great opportunities that we see across the new additions is our ability to grow that business in those markets. So I would say Kansas City is probably a good example of a shopping center where we will put a tremendous amount of focus on that sort of marketing and partnership business that we call it. I'm not going to sort of guide to how big they can be. We certainly don't want to overcrowd our shopping centers with marketing and messaging. We want to be artful. We want to be elegant. We want to be smart, but we think we're still in the relative early innings with regard to our long-term ability to grow that business and grow sustained rent revenue over time.

I guess, Michael, if there is any additional revenue that begins to flow through as a result of some of these programs or initiatives, that would fall in the management leasing and other services line on the P&L. Is that where we would start to see that reflected?

No, it's in the other revenues. So if you look at the breakdown of our revenues that appears on Page 15 in the supplemental, you'll see there's that rental revenue. And then on the face of the income statement on Page 14, you'll see the other revenues listed there, it's 3% to 4% of our total revenue base, but it's been growing at an above-average pace, which has led to enhanced revenue and same-center growth. And so that's where a lot of those activities fall.

Thank you. There are no further questions at this time. This concludes today's conference call. We thank you again for your participation. You may now disconnect your lines.