Good afternoon. Welcome to Citi's 2024 Global Property CEO Conference. I'm Craig Mailman with Citi Research. We are pleased to have with us Tanger and CEO Steve Yalof. This session is for Citi clients only. If me or other individuals are on the line, please disconnect now. Disclosures are available on the webcast and at the AV desk. For those in the room or on the webcast, you can go to LiveQA and enter code GPC24 to submit any questions if you do not want to raise your hand. Steve, we're going to turn it over to you to introduce the company and team, provide any opening remarks, and maybe provide the audience with some top reasons investors should buy your stock today, and then we can just head into Q&A. Thanks, Craig, and thank you for hosting us today. So sitting with me up here at the dais is Doug McDonald, and to my left is a relative newcomer to the business, Michael Bilerman, who I'm actually going to turn it over to Michael and have him take you through our reasons for buying Tanger stock. When we think about our opportunity and reasons why investors that are here in the room as well as listening on the webcast, it's our ability to grow and create value from three things. It's our internal operations, our internal growth. Number two, it's intensifying the real estate that we already own. Number three, it's pursuing disciplined and prudent external growth. All of this is supported by our leasing, operating, and marketing platforms and an under-leveraged balance sheet with multiple sources of capital. Perfect. Why don't we start with the fundamental improvement you guys are seeing in demand for outlet space in general? We could hit on some lifestyle center as well as we get to Alabama, but we'll stick with the predominant part of your portfolio. Just chat with us a little bit about kind of how retailers are thinking about that channel, where they want to be, how you guys solve that problem for them, and really the benefits that you've seen in the portfolio over the last 12-18 months. Sure. Well, first of all, the outlet channel has been an important channel for retailers and manufacturers for over 40 years. Tanger was founded over 42 years ago. We've been a public company. This will be our 31st year. And really, there's been and I've been in the outlet business for many of those years, as you probably know, and there's really been no letting up. And what's been interesting is for every legacy player in outlet that's still as productive or if not more so than they were when they first started out, like I think about Coach, I think about Ralph Lauren, I think about Tommy Hilfiger and Calvin Klein, there's so many new brands that have come into the space. And still, their mission is the same. to get product in front of a new customer, perhaps acquire a new customer at the value price point and bring them up through their own retail ecosystem. It’s to clear excess inventory or move merchandise through a channel that allows them to liquidate inventory while maintaining their brand positioning, their placement, their pricing, and maintaining their brand integrity. So we like the channel. I would say over the last 12-18 months, one of the big changes, particularly with us, is that we’ve realized that our loyal shoppers are looking for more than just that bricks-and-mortar shop, their favorite brand and value experience. They’re looking for better food. They’re looking for better entertainment. They’re looking for better community space, and they’re looking for better amenities. So we’ve invested in making those changes. I think Nashville, the center that we just brought online in October of last year, is the greatest hits of all of that thinking in one place. It's a center that was designed for the retailer, giving access to the shopper to park in front of the store, giving access for the retailer to load easily in the rear of the store, and also the design, the merchandising mix, the lack of a food court, which became a staple in some of those open-air outlet shopping centers, and more sit-down QSR, quick-serve restaurants, and grab-and-go. It's a new format, and it's one that's been received extremely well. So we'll continue to raise the bar, push what outlets look like, push what outlets can be. But the most important part is retailer interest, and the velocity has been great evidenced by last year's leasing velocity of 2.5 million sq ft, probably the most we've leased in any given year since we've been a company. With Nashville, you guys had a number of new concepts come into the portfolio that you haven't had before. As you guys continue to remerchandise existing assets over time, how has that new development kind of laid out a blueprint or, for lack of a better word, a model home for some of these newer brands to come in, see what kind of productivity they can do in a Tanger center, and replicate that in other parts of the portfolio? Have you started to see that tangential demand come through yet, or is it a little bit too early? No, we have. Nashville, as a brand, is an amazing place to do business. I mean, it's a city that's pro-business. They welcomed us. They made it a real easy experience for us to build and get open in that environment. So let's start there. But also, when you're out front leasing space to retailers and Nashville is part of your pitch, you've got them listening. Nashville went from this city founded on music and local tourism to one that is a great tech city, a great city of not only music as sort of where music is created, but it's also now home to satellite radio stations and Live Nation. So there's a lot of growth and development that's happening there. And through that development, people are moving there in droves. So when we were pitching Nashville as an asset, we got a lot of attention. It was a great calling card for us when we were speaking to brand new retailers that weren't in the space yet. So we were able to do deals with Kuhn Rikon, which is an international tenant that is in the houseware space. We did a deal with Ulta Beauty, which is new to our category, so a new retailer in that space. We brought in brands like Huk and some local brands that were not yet in the outlet space and now proliferating our portfolio. And then we're also able to bring in a lot of food and beverage retailers, some local like TailGate Brewery, who did a sit-down brewery and pizza restaurant. They have a number of them in the Nashville market and a very successful outpost in the Nashville airport, as well as international restaurants, Shake Shack, who is really front and center in the center. It's just Nashville has been a great calling card. We've been able to use that to get people more interested in outlet in our platform, and we've taken those brands throughout our portfolio. I don't know if it's too early yet or if you need a year of data, but with Nashville and the increased F&B there, the kind of local concepts, have you been able to track whether dwell times at the center have increased, how that has kind of translated into price or sales per square foot to kind of justify maybe more redevelopment than you thought you would have had otherwise in the portfolio because it could be more economic than you would have thought? Or is it still a little bit early in the lifecycle of that outlet? Well, it's definitely we'd like to see the shopping center open for a full year. It only opened in the end of October. But we're inspired by what we've seen so far. We think that sit-down restaurants are critical. We're finding that there's a lot more cars in the parking lot later in the shopping day than we ever saw before. And a lot of those restaurants will stay open beyond the regular shopping hours, so it's extending that stay too. We just did a new restaurant, Baumhower's, in Foley, Alabama, in our shopping center there. And it's a University of Alabama football player who has an unbelievable following this restaurant. You can't get in. And that center also is extending the hours. But more importantly, it's bringing a customer that we may never have seen before in the Foley, Alabama shopping center. So the narrative of the old outlet center, the power shopping experience and having to leave to get a decent something to eat has now come to the outlet center because we've got a great food opportunity for you and perhaps stay for the shopping. So we're getting them coming and going. Upscaling the retailers in the centers. I know part of the benefit of not having some repeat Tanger-type tenants come into Nashville was maybe add a little bit more luxury like you've seen in some other tourist-type outlet destinations around the country. Are you seeing that kind of demand come in? Is there an appetite for it? And how much would it be baby steps on this type of concept to have because you don't want to go against maybe your core bread and butter Tanger customer? How do you weave some of that in as well as you're thinking about the type of customer that would maybe do certain types of F&B that may be open later at night or some type of live music, anything that kind of goes with this entertainment aspect of the center? I think it's really important that you know who your customer is in each of the markets that you serve and that you bring them the things that they're looking for because that's what's going to drive the traffic. That's what's going to drive the repeat visit. That's where you're going to build your core customer base. I think luxury, we definitely have room in our portfolio to elevate our shopper mix. I think we've done a pretty good job of doing that over the past couple of years. I think that there's a lot of opportunity and definitely upside in doing that as well. The outlet customer is an aspirational shopper. They're a shopper that may not shop luxury or higher-end retail in streets, in other brick-and-mortar venues, but see an outlet as an opportunity to get the products that they've always sought to acquire in a venue that is approachable for them. So that entry-level price point in an outlet center being far less than the entry-level price point, let's say, on Madison Avenue or Rodeo Drive, will definitely satisfy a new catchment of customer who then ultimately, maybe it's their first interaction with a brand. Once that brand gets them to buy in, it's that brand's job to now trade them up through their retail ecosystem. And we see that happening a lot. So we think about the different reasons why retailers enjoy their outlet portfolios. And part of that reason I mentioned earlier was because of that customer acquisition opportunity. Maybe to tie kind of these high-level conversations into the numbers, right? You guys have made a big push to move OCRs higher, capture that rent growth. Can you update us again on where you stand today, what that opportunity is, and kind of how that can manifest as part of your internal growth along with maybe the temp-to-perm opportunity as well, which we can expand upon after, but just kind of to kick it off with? Sure. I'm going to turn that one over to my esteemed colleague. Thank you. Senator? Yes, President. So we think about where we sit today. Our OCR, occupancy cost ratio, effectively the rent that the tenants pay us over their sales, is at 9.3%. You go back 12 months ago, it was at 8.6%. How did it go up? Steve talked about leasing almost 2.5 million sq ft. Our blended average lease spreads were up 13%. We got over 30% on our re-tenanting efforts, and we had just over 11% on our renewal efforts. And we had a significant amount last year of tenants that just renewed in place. We feel we have the ability to get that into the low double digits, which will provide a tremendous opportunity just on our permanent occupancy to drive our same-center growth profile. And then, Craig, you talked about our temporary leases, which has a mutual, generally 30-day right of cancellation. That today sits at about 10% points of our occupancy. Historically, it's probably about 500 basis points. That 10% of temp occupancy is only 2%-3% of our NOI. So we have the ability to 2x, 3x, in some cases, 4x that amount of space. And so when we step back from it, we see the potential to continue to drive OCR up and continue to convert that temporary to permanent space, providing above-average same-center growth potential. How sustainable is that, do you think? Or what's the runway on that? Is it three or four years until you can fully churn the portfolio, collapse a little bit of that temp-to-perm? And I know you said it's going to be at a premium same-store, but what do you think or what would you target Tanger to be able to do, the premium relative to your traditional open-air strip, if they're doing, call it, three-four years, given the growth components that you guys have in the portfolio? Where do you think you could be in? Do you feel like today that that's being reflected in valuation, that premium kind of growth profile? So we think about last year, we did 6.2% same-center growth, which came on top of 5.5% the year prior, which came on top of 18% the year before that. We've provided initial guidance for this year of 2%-4%. That 2%-4% growth this year is burdened by a little bit of the upside from last year that's not going to return, about 100 basis points. In addition, we've talked a lot about 2024 being a much more aggressive year of re-tenanting or remerchandising. Last year, we had a 95% renewal rate. It's great. We had tenants stay in place, very limited CapEx dollars on that. This year, we expect to probably be in the low- to mid-80s in terms of renewal rate, which we're going to get the higher upside in rents as we re-tenant that space, but there's going to be some amount of downtime in that. So we do feel that over the next few years, our steady state should be arguably ahead of that if we're able to drive OCR higher and then, over time, bring that temp-to-perm back to historical levels. We wouldn't expect a dramatic amount next year in that temp-to-perm conversion because we're going to remerchandise and re-tenant a number of tenants that have lower productive or being lower productive than our portfolio average with new tenants coming in that our hope is to do sales above our portfolio average, which will take a year of sales to eventually roll into our portfolio stats. But we care about our NOI and ultimately the cash flow, and a lot of that re-tenanting will drop to the bottom line from an FFO perspective. The other two pieces, Craig, of our growth is not just the re-tenanting and the remerchandising that is happening. It's trying to intensify that real estate that we already own. And we have a significant amount of peripheral land in many of our centers where we're able to densify and bring the things that Steve talked about in terms of restaurants and entertainment. In Savannah, if you go down to our asset there, we just literally put a Dave & Buster's at the end of the center and created some small shop space. And so targeting a lot of those opportunities will also be additive to our growth profile. As you think about funding some of that peripheral investment, you guys were able to issue a little bit of equity to help with some of the acquisitions that you did. As you stabilize the portfolio from an NOI perspective, what's the free cash flow that you guys are going to be working with year in and year out, that low cost of capital that helps you also blend in with maybe not exactly the optimal cost of equity or debt yet, but gives you a nice spread relative to the yields that you're able to achieve? Yeah. Well, let's start with where the balance sheet's positioned today. So we're about a $5 billion enterprise value company, right? 114 million shares outstanding, trading at about $29 a share. We have $1.6 billion of total debt. Now, our payout ratio, we've kept low. We're at about a 60% payout ratio dividend over our free cash flow. And when you do the math, we're producing about $80 million of free cash flow. With With relative to that base of $3.2 billion of equity, $5 billion of enterprise value, is significant. And we're starting at a leverage level of about 5.2x-5.3x debt-to-EBITDA today. So we're at the lowest level within our retail comp set, one of the lowest in REITs overall with more free cash flow. And we've provided same-center NOI guidance of 2%-4%, relatively flat G&A, so higher G&A growth. So we feel that we have the ability to run a little bit faster because the balance sheet's already so well positioned to be able to execute towards those activities. Embedded in our AFFO, we've communicated $50 million-$60 million of CapEx this year, which is in line with what we did last year over a larger base, right? We grew our portfolio last year by three centers. We invested $410 million. We grew the company almost 10%. So having that CapEx as a total, the percentage of EBITDA is actually lower. We feel like we have a significant amount of free cash flow to be able to execute towards any of these opportunities. The peripheral land opportunities is our highest return capital, given that we already own the land. I know you're going to have a rapid-fire question at the end about where we'd want to put capital. Obviously, investing in our own assets is the highest return we can get. And then that next part is where can we grow externally? And how can we use our platform, which we think is pretty unique within the open-air retail space, to expand into open-air lifestyle centers or additional outlet opportunities or centers that are literally physically adjacent to our existing outlets? When we think about sort of the returns on that incremental development, can you also talk to us about the CapEx light options with ground leases versus you guys building and owning and how you go about underwriting which to do in a particular instance and really what the opportunity set is in the portfolio to do some of this stuff? Turn that over to Doug, who has to underwrite all of our investment capital, so. Sure. Thanks, Michael. There are a variety of opportunities that we look at, Craig. Some of it, the out parcels that Michael mentioned. Some of it is EV charging or solar, things that we add at the center in terms of the sustainability initiatives. Marketing partnerships is a big piece of our other revenue line item. We invest in digital boards and billboards at times, things like that, to be able to execute on those strategies. There's varying levels of returns for each of these. Some of them are higher into the teens or even higher than that. But there's also smaller volume opportunities in terms of being able to deploy capital. So we look at the scope of investment opportunities. Obviously, we try to overweight things with above-average returns. But we also want to make sure that we are growing the business in total. When there are opportunities on the acquisition side or new development or redevelopments within the portfolio, then when those make strategic sense, when they make financial sense, we're going to explore those as well, even though that may be more in the upper single digits versus some of the mid-teens opportunities that we have at our existing centers. It's just a matter of finding the right opportunities and sourcing the capital to deploy in those opportunities. We have a question coming in on LiveQA here around tenant credit. Is anything what's included in your kind of bad debt guidance? I know you guys probably wouldn't want to talk about specific, but Express is the one that is highlighted here. What's the outlook for the tenant and the outcome? Do you want to do Express or do you want me to take this one? Look, I can just talk about the Express relationship, and these guys can talk about the balance sheet impact. But the Express, I know it's in the headlines right now, but that's not new news by any stretch of the imagination. In fact, we've got very close relationships with almost all of our retailers. And we're the first phone call when things are great, they want to do more business, and when things are, unfortunately, not so good, and they are thinking about what might lie ahead for them. We're very confident in their ability to restructure. We think that they are a great business. They exceed in our format. What our history will dictate is that brands that have had financial troubles, and we can point to at least a dozen that, coming right out of COVID, that we've had front-row seats for, have done a really good job of restructuring, have sold their businesses, have redeployed capital to reinvest in some of their stores. In a lot of instances where they've closed stores, they've done so in places where they're less productive or their OCRs are extremely high. But in the case of our portfolio, that rent-sales relationship is very strong in favor of the tenant in a lot of instances. We're hard-pressed to see an incident in a restructuring where a retailer chooses to close an outlet store. In fact, I think they see those as sort of the last places that remain open where they will continue to use them as consolidation to clear excess inventory to a customer that shops every day looking for their favorite brands of value. Want to talk about the balance sheet implications? How do we think about that? Sure. With respect to guidance, our historical average on bad debt has typically been around 0.5% or less. We provide a range on our same-center NOI growth. That range contemplates scenarios where reserves could be higher or lower than historical averages. It also contemplates various levels in terms of our leasing spreads, our retention rates, our occupancy rates, our downtime periods. All those types of things are factored into the 2%-4% same-center NOI guidance that we have out there. Perfect. Maybe transitioning to just external growth. You guys put a significant amount of capital out at the end of last year, kind of depleted your cash balance, raised a little bit of stock. Can you talk about the early days of ownership of those as you're going through and where you are kind of in your marketing or remerchandising plan there? And then also give us a sense of how many more 8.5 cap acquisitions are out there and how much more lifestyle versus outlet we should expect to see. Well, I'll give you a general answer because we're not going to talk about any of the deals that we're working on currently that aren't executed. We were very fortunate to bring three new centers into our portfolio at the end of last year with Nashville, Huntsville, Alabama, our first open-air lifestyle shopping center, and our acquisition of Asheville Outlets, now branded Tanger Outlets in Asheville, North Carolina. And thank you for mentioning our 8.5 yield. I mean, the yield rates on both of those investments were quite good. But we don't stop there. We're not buying them. We're not coupon clippers. We are asset managers. We are property operators. And we bought both of those assets because we know we can improve them. We can increase the leasing. We can increase the rents. We think that we can drive with our platform and the marketing, the management, and the operations team that we've built, we think we can increase the NOI of both of those centers and take those yield rates even higher. As we think about our portfolio expansion, I think the identifying open-air lifestyle centers as part of our mix, that's an easy transition for us. Over the past three years, Craig, since we've been talking, we've been sharing with you that we've been adding a lot of those lifestyle-type centers, sorry, type retailers, to our mix. They come in the form of Better Food and Beverage, Sit Down QSR, but also in the form of retailers that aren't necessarily outlet retailers in our outlet space. So I go back and we think about brands like Ulta, H&M, Old Navy, brands that you typically see in open-air centers. In our shopping centers and the outlet centers, they come in in their original format. Brands like Victoria's Secret that have now started to grow in leaps and bounds in the outlet, they're also staples in the open-air lifestyle. So we think that it's a natural segue for us as a company to get into that business. I think vice versa. I don't think the open-air lifestyle ownership companies can make such an easy transition into outlet. I just think outlets are far more specialized. So I think we're set up to expand there. But that's sort of how we're thinking about that, so. Talk about capital and how we're thinking about deploying it. Yeah. So look, our key focus is what we already own, right? It's driving the organic internal growth and intensifying the real estate that we have. The external growth part, the deals have to make strategic sense, and they have to make financial sense for us. And we're going to evaluate every transaction and how to capitalize that transaction at the time that it comes about. And we could look at private sources of capital or public sources of capital. And the fact that of our balance sheet of where it sits today gives us the optionality to go after transactions and know that we think about last year, being able to be an all-cash buyer in the case of Huntsville when the debt markets were in disarray and most of our competition was looking for financing or seller financing. We don't believe we were the highest bid. I think we know we weren't the highest bid, but we'll just say we don't believe we were the highest bid. We think that is an attractive perspective of our ability to deploy capital. We want to be very prudent and disciplined in growing this platform and growing the company. Given our size, we don't need to do large portfolio transactions. We can continue to be very disciplined in looking at outlets, centers that are literally physically adjacent to our outlets, and then looking at additional lifestyle centers in the core markets that we operate in. Does anyone from the audience have a question? Just going to ask, I mean, to that point, Michael, too, how are you viewing the interest rate markets now, and how sensitive are you to that? And do you need rates to come down from here or from these levels? I'm going to address it from a balance sheet, and Steve can certainly address it from a consumer perspective. Our balance sheet is 95% fixed rate at this juncture. And so we don't have a tremendous amount of exposure to floating rates, either going up or down, with only 5% of our debt being floating. But more importantly, when you look at our debt maturity schedule, so I commented before, we have about $1.6 billion of total debt at our share. Our first next major debt maturity is not until September of 2026. And so what's very unique also about our story is not only being at a low leverage level today, but we effectively now have three full years of interest rate stability where it allows us three reasons to buy our stock, right? The strong internal growth, intensifying our real estate, and pursuing external growth to really drop to the bottom line. Our company was able to produce 7% FFO growth last year on top of 7% FFO growth the year before. We provided guidance for 2024 of 3%-7% growth. And we feel the ability with that balance sheet in such a good position in terms of fixed rates that we'll have the ability to grow over the next several years. And I don't know if you want to talk about. Yeah, sure. Just from the consumer perspective, I just think during the past, I'd say 12-18 months, inflation in our channel, you've seen price deflation. I think that that's a win for the consumer. Great. Well, let's head to the rapid fire. Same-store NOI growth in 2025 for the open-air sector. An actual number? Yeah, you wrote these. How much can I do of what used to be done to me while I'm sitting up here? That's why we're turning it over to him because it's a lot more fun this way. Absolutely no leeway, Michael. What's the average for 2024 in the? This is so painfully fun. Just give me a number. Greater than it is in 2024. Wow. Whatever the average you have for 2024, we think. Give a real answer. You know rapid fire is at. I know, but I see I'm 118 rapid. I know there's only two more. We invented rapid fire. Yeah. Being a number. Well, if this year is at 3% for the retail industry at large or 2.5%, we think it's going to be greater than that. So we'll say 3%. Okay. Retail, more, fewer, the same amount of public companies this time next year? Fewer. And then you already gave the answer, but I'm going to let you repeat yourself. Best real estate decisions today. So we think investing in our own assets is number one. However, just the size of investment pales in comparison to the ability to buy. So we would put investing capital both internally as well as externally as the best two decisions to make today. Okay. We'll go with capital deployment. Capital deployment. All right. Do you have another wrapper? We have 27 seconds. I know. You're dragging out to the end. Thank you very much. Thanks, everyone. Thanks, Craig. Thank you. Thanks, Michael.