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Tanger Inc. 2024 Q3 Filing Summary

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended September 30, 2024, for Tanger Inc. (the "Company") and Tanger Properties Limited Partnership (the "Operating Partnership"). The Company is a fully-integrated, self-administered, and self-managed Real Estate Investment Trust (REIT) focused on developing, acquiring, owning, and operating outlet and open-air retail centers in the United States and Canada. As of September 30, 2024, the portfolio consisted of 31 consolidated outlet centers and one open-air lifestyle center (12.7 million square feet, 97% occupied), plus partial ownership in six unconsolidated centers.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Total revenues increased 13.3% in Q3 2024 and 14.4% in the nine-month period compared to 2023. This was driven by higher rental rates, a strengthened tenant mix, and the inclusion of new centers (Nashville, TN; Asheville, NC; Huntsville, AL) acquired or opened in late 2023.
• Net Income Decline: GAAP net income decreased 10.2% in Q3 and 4.9% for the nine months ended September 30, 2024. The decline is primarily attributed to significantly higher interest expense due to new interest rate swaps (fixed rate 3.90% vs. 0.40% previously) and increased depreciation/amortization from new assets.
• Interest Expense: Interest expense rose 32.5% in Q3 and 26.5% for the nine months, reflecting the impact of the new swaps and higher utilization of lines of credit.
• Capital Expenditures: Cash basis additions to rental property decreased to $73.4M for the nine months ended September 30, 2024, compared to $120.1M in the prior year, as major development costs for the Nashville center were incurred in 2023.

Guidance, Outlook, and Risks

• Dividends: The Board declared a quarterly dividend of $0.275 per share for Q3 2024 (paid August 15) and Q4 2024 (payable November 15). The Company maintains a payout policy consistent with REIT requirements.
• Liquidity: The Company maintains $620.0 million in unsecured lines of credit (with an accordion feature up to $1.2 billion) and $195.1 million remaining under its At-The-Market (ATM) equity offering program. Management believes current sources of capital are adequate for the next 12 months.
• Leasing Activity: Rent spreads for executed leases in the trailing 12 months were 15.0% for comparable space. As of September 30, 2024, 72.5% of space scheduled to expire in 2024 had renewals executed or in process.
• Risks: Key risks include rising interest rates impacting debt service, inflationary pressures on operating costs, potential tenant bankruptcies, and the impact of macroeconomic conditions on consumer spending. The Company is monitoring the Atlantic City center for potential impairment, though current analysis indicates the asset is recoverable.

Investor Verification Checklist

• Interest Rate Hedging: Verify the impact of the new $325M interest rate swaps (effective Feb 2024) on future cash flows and the specific maturity dates (2026-2027).
• Debt Maturities: Review the debt maturity schedule, noting significant principal payments of $407.4M in 2026 and $625.0M in 2027.
• Same Center NOI: Confirm the 4.8% year-over-year growth in Same Center NOI for the nine-month period to assess core operational performance excluding new acquisitions.
• ATM Program Usage: Monitor the utilization of the remaining $195.1M ATM authorization and the average share price achieved in recent issuances ($30.53 in Q3 2024).
• Joint Venture Liabilities: Review the negative carrying values of certain unconsolidated joint ventures (Charlotte, National Harbor, Galveston/Houston, Columbus) and the Company's commitment to provide further financial support.