THE TANGER EXPERIENCE Management Presentation | August 3, 2021 TangerOutlets dependence on rental income from real property; our dependence on the | --- | --- | --- | --- | |-------|----- ...

Revenue Performance - Rental revenues for Q2 2021 reached $96.824 million, a 55.4% increase from $62.273 million in Q2 2020[27] - Total revenues for the six months ended June 30, 2021, were $201.967 million, up 15.0% from $175.623 million in the same period of 2020[27] - Total revenues for the three months ended June 30, 2021, increased to $101.273 million, up 58.2% from $63.990 million in the same period of 2020[41] - Rental revenues rose to $96.824 million, a 55.4% increase compared to $62.273 million in Q2 2020[41] - Total revenues for the three months ended June 30, 2021, were $22.6 million, compared to $16.5 million for the same period in 2020, representing a year-over-year increase of 37.9%[83] - Rental revenues increased by $34.6 million in the 2021 period, totaling $96.8 million compared to $62.3 million in 2020, driven by existing properties[164] - Rental revenues increased by $23.5 million in the 2021 period, totaling $194.291 million compared to $170.831 million in 2020[181] Net Income and Earnings - Net income attributable to Tanger Factory Outlet Centers, Inc. for Q2 2021 was $2.478 million, compared to a net loss of $22.688 million in Q2 2020[27] - Comprehensive income for Q2 2021 was $4.198 million, compared to a comprehensive loss of $21.031 million in Q2 2020[30] - The company reported a basic earnings per share of $0.02 for Q2 2021, recovering from a loss of $0.25 per share in Q2 2020[27] - Net income for the six months ended June 30, 2021, was $6,938,000, a significant improvement compared to a net loss of $52,009,000 for the same period in 2020[37] - Net income for the three months ended June 30, 2021, increased by $26.5 million to $2.6 million compared to a net loss of $23.9 million in the same period of 2020[163] - The net income for the six months ended June 30, 2021, was $9.8 million, compared to a net loss of $2.6 million for the same period in 2020[83] Assets and Liabilities - Total assets decreased to $2.131 billion as of June 30, 2021, from $2.190 billion at the end of 2020[25] - Total assets as of June 30, 2021, were $2,130,357,000, down from $2,188,967,000 as of December 31, 2020[39] - Total liabilities decreased to $1,606,872,000 as of June 30, 2021, from $1,830,084,000 at the end of 2020[39] - Total debt reduced to $1.369 billion as of June 30, 2021, down 12.6% from $1.568 billion at the end of 2020[25] - Total debt as of June 30, 2021, was $1,368,602,000, a decrease from $1,567,886,000 as of December 31, 2020[39] Cash Flow and Liquidity - Cash and cash equivalents increased to $107.612 million from $84.832 million at the end of 2020, reflecting improved liquidity[25] - The company provided $91,605,000 in net cash from operating activities for the six months ended June 30, 2021, compared to $14,244,000 in the same period of 2020[37] - The company reported net cash provided by investing activities of $4,009,000 in 2021, a change of $20,830,000 from the net cash used in investing activities of $(16,821,000) in 2020[215] - The company experienced a net decrease in cash and cash equivalents of $22,454,000 for the six months ended June 30, 2021, compared to a net increase of $321,907,000 in 2020, reflecting a change of $(299,453,000)[215] Impairment and Expenses - The company experienced a significant reduction in impairment charges, with no charges reported in Q2 2021 compared to $45.675 million in Q2 2020[27] - Total expenses decreased to $74.682 million in Q2 2021, down from $68.370 million in Q2 2020, reflecting improved operational efficiency[41] - Interest expense decreased to $13.338 million in Q2 2021 from $16.943 million in Q2 2020, indicating lower borrowing costs[41] - Property operating expenses increased by $3.1 million to $31.3 million in the 2021 period compared to $28.2 million in 2020, primarily due to lower costs in 2020 during mandated store closures[168] - General and administrative expenses rose by $4.1 million in the 2021 period, reflecting higher compensation costs and professional fees[171] Shareholder Actions - The company issued 2,810,503 common shares, raising $52,221,000 during the reporting period[35] - The company declared a cash dividend of $0.1775 per common share payable on August 13, 2021, to shareholders of record on July 30, 2021[143] - The company authorized a share repurchase program of up to $80,000,000, which replaced a previous authorization that expired in May 2021[209] - The company intends to use the net proceeds from the ATM Offering for working capital and general corporate purposes[110] Joint Ventures and Investments - The carrying value of investments in unconsolidated joint ventures as of June 30, 2021, was $88.9 million, with total joint venture debt of $70.8 million[73] - The total assets of unconsolidated joint ventures as of June 30, 2021, were $442.7 million, with total liabilities of $342.1 million[82] - The company recognized total fees from unconsolidated joint ventures of $2.7 million for the six months ended June 30, 2021, compared to $2.2 million for the same period in 2020[77] Future Outlook and Developments - The company is in the initial study period for potential new developments, including a site in Nashville, Tennessee, and has restarted marketing efforts for this development[220] - The company believes it has access to necessary financing to meet short-term liquidity needs, including existing cash and relationships with financial institutions[97]

Financial Data and Key Metrics Changes - The company reported a 2.7% increase in domestic traffic compared to 2019 levels, with sales per square foot for the three-month period ended April 2021 showing double-digit growth on a same-center basis compared to the same period in 2019 [5] - Consolidated portfolio occupancy increased by 40 basis points to 92.1% as of May 30, 2021, despite recapturing 27,000 square feet due to bankruptcies and brand-wide restructuring [5][6] - The company expects to recapture 200,000 square feet for the calendar year, with 18,000 square feet already recaptured by the end of May [5] Business Line Data and Key Metrics Changes - The company is broadening its tenant mix beyond apparel and footwear to include categories such as food and beverage, interactive retail, home decor, and sporting goods [6][7] - A 14% year-over-year increase in other revenues was reported during the first quarter, driven by various business development opportunities [8] Market Data and Key Metrics Changes - The company is experiencing increased retailer interest, with leasing activity steadily building since the fourth quarter of the previous year [5] - The company is actively engaging local retail agents and brokers to support leasing efforts in major markets [8] Company Strategy and Development Direction - The company aims to achieve sustained growth by focusing on core business operations, accelerating leasing efforts, and reshaping operations [6][9] - The company is expanding initiatives to monetize out parcels and peripheral land adjacent to its centers, targeting food and beverage and entertainment users [7] - The company is digitally transforming its marketing strategy to enhance shopper engagement and drive connections with the brand [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term prospects of the business, emphasizing the importance of enhancing core business operations and maintaining a conservative financial position [9] - The company is optimistic about the recovery of tenant demand and the overall business environment [35] Other Important Information - The company has welcomed Sandeep Mathrani to the Board of Directors, indicating a commitment to future growth and strategic vision [9] Q&A Session Summary Question: Can you discuss the ancillary revenue opportunities and management changes? - Management highlighted the importance of ancillary revenue sources and community-driven initiatives, emphasizing local market canvassing for sponsorship opportunities [11][14] Question: How has the outlet business changed over time? - Management noted that both shoppers and retailers have evolved, with a focus on providing value and a diverse mix of tenants to enhance the shopping experience [15][16] Question: What is the company's view on balance sheet strength and capital deployment? - Management discussed the importance of maintaining a strong balance sheet and the successful execution of an ATM program to reduce debt and improve leverage [19][21] Question: What is the vision for the company in three years? - Management envisions continued evolution in the outlet business, with a focus on non-standard outlet tenants and enhancing customer experience through new offerings [25][26] Question: What are the expectations for rent inflection points and market values? - Management indicated that while rent spreads are currently negative, there is progress being made, and they are optimistic about future leasing opportunities and unlocking value [32][29]

Financial Performance - Total revenues for Q1 2021 were $100.694 million, a decrease of 9.3% from $111.633 million in Q1 2020[28] - Net income attributable to Tanger Factory Outlet Centers, Inc. for Q1 2021 was $4.133 million, compared to a net loss of $26.882 million in Q1 2020[28] - Basic and diluted earnings per share for Q1 2021 were $0.04, recovering from a loss of $0.30 per share in Q1 2020[28] - Comprehensive income for Q1 2021 was $10.450 million, compared to a comprehensive loss of $39.615 million in Q1 2020[31] - Net income for the three months ended March 31, 2021, was $4,342,000, a significant improvement from a net loss of $28,119,000 in the same period of 2020[39] - Total revenues decreased to $100,694,000 in Q1 2021 from $111,633,000 in Q1 2020, representing a decline of approximately 9.3%[44] - Total expenses for the three months ended March 31, 2021, were $80,254,000, down from $126,303,000 in Q1 2020, indicating a reduction of about 36.5%[44] - Comprehensive income for the three months ended March 31, 2021, was $10,979,000, compared to a comprehensive loss of $41,528,000 in the same period of 2020[47] Assets and Liabilities - Total assets increased to $2.259 billion as of March 31, 2021, up from $2.190 billion at the end of 2020[26] - Total liabilities decreased to $1.776 billion as of March 31, 2021, down from $1.831 billion at the end of 2020[26] - Equity attributable to Tanger Factory Outlet Centers, Inc. increased to $461.081 million as of March 31, 2021, compared to $341.390 million at the end of 2020[26] - The company’s total debt decreased to $1.543 billion as of March 31, 2021, from $1.568 billion at the end of 2020[26] - Total debt decreased to $1,542,760,000 as of March 31, 2021, from $1,567,886,000 at the end of 2020, reflecting a reduction of approximately 1.6%[42] Cash and Cash Equivalents - Cash and cash equivalents rose significantly to $201.721 million from $84.832 million at the end of 2020[26] - Cash and cash equivalents at the end of the period were $201,564,000, down from $600,359,000 at the end of the previous year[54] - The company reported a net cash provided by operating activities of $31,276,000 for the three months ended March 31, 2021, compared to $27,282,000 in the same period of 2020[39] - Net cash provided by operating activities for the three months ended March 31, 2021, was $31,201,000, compared to $27,340,000 in the prior year[54] Dividends and Shareholder Returns - The company declared cash dividends of $16,924,000 in Q1 2021, down from $33,034,000 in Q1 2020, indicating a decrease of about 48.7%[39] - The company declared a cash dividend of $0.1775 per common share in January 2021, payable on February 12, 2021[107] - The Company declared a cash dividend of $0.1775 per common share in January and April 2021, payable to shareholders of record on January 29 and March 31, respectively[191][192] Impairments and Reserves - The company reported an impairment charge of $45.675 million in Q1 2020, which was not present in Q1 2021[28] - The company continues to assess the impact of COVID-19 on its operations, including potential future impairments and the ability to collect rent[66] - As of March 31, 2021, the company recorded a $1.6 million reversal of rental revenue reserves, with remaining reserves totaling $2.6 million, representing 39% of total deferred rents from 2020[70] - The company achieved approximately 95% collection of contractual fixed rents billed, amounting to $85.6 million in the first quarter of 2021[71] Joint Ventures and Investments - As of March 31, 2021, the carrying value of investments in unconsolidated joint ventures was $89.5 million, with total joint venture debt of $70.8 million[77] - The company’s share of net income from unconsolidated joint ventures was $1.769 million for the three months ended March 31, 2021, compared to $1.527 million in 2020[83] - The outstanding debt of unconsolidated joint ventures totals $329.2 million, with the company guaranteeing $21.9 million of this debt[223] Debt and Financing - The company guarantees the Operating Partnership's unsecured term loan, which had a principal amount of $325 million as of March 31, 2021[84] - Total long-term debt maturities as of March 31, 2021, amount to $1,542.76 million, with significant maturities in 2024 ($580.14 million) and thereafter ($655.705 million)[93] - The company paid down $25.0 million of borrowings under its $350.0 million unsecured term loan in March 2021[92] - The Company completed a partial redemption of $150 million of its senior notes in April 2021, leaving $100 million outstanding[212] Operational Metrics - As of March 31, 2021, the company owned and operated 30 consolidated outlet centers with a total gross leasable area of approximately 11.5 million square feet[56] - The company was the lessor to over 2,100 stores in 30 consolidated outlet centers as of March 31, 2021, under operating leases expiring from 2021 to 2035[140] - As of March 31, 2021, the total square footage of consolidated outlet centers was 11,456,030 square feet, with an overall occupancy rate of 92%[154] - The company had 216 lease renewals during the trailing twelve months ended March 31, 2021, covering 1,129,000 square feet[158] Future Outlook and Plans - The company plans to pursue new developments, including a potential site in Nashville, Tennessee, and may utilize joint ventures for funding[203][204] - The Company anticipates sufficient liquidity to meet its obligations for at least the next 12 months, with estimated monthly cash expenditures of approximately $26.3 million[209] Accounting and Compliance - There were no material changes to critical accounting policies in the quarter ended March 31, 2021[224]

Financial Data and Key Metrics Changes - First quarter core FFO available to common shareholders was $0.40 per share, down from $0.50 per share in Q1 2020 [38] - Same Center NOI for the consolidated portfolio decreased by 8% for the quarter, reflecting rent modifications and store closings due to bankruptcies [39] - Collections of contractual fixed rents billed in Q1 2021 were approximately 95%, with 96% of deferred 2020 rents collected by April 30, 2021 [18][40] Business Line Data and Key Metrics Changes - Consolidated portfolio occupancy was 91.7% at the end of the quarter, up 20 basis points from the end of 2020 [15] - Blended average rental rates decreased by 2.8% on a straight-line basis and 8.5% on a cash basis for all renewals and re-tenanted leases [16] - Revenues from non-rental transactions, such as paid media and sponsorships, increased by 14% year-over-year [29] Market Data and Key Metrics Changes - Domestic traffic to open-air centers returned to 97% of 2019 levels in Q1, with April traffic exceeding 2019 levels [19][20] - In Canada, stores were closed under government mandate through mid-February, impacting leasing activity [21] Company Strategy and Development Direction - The company is focused on rebuilding occupancy, driving leasing, and curating merchandise mix to maximize shopper frequency [14] - There is a strategic initiative to expand tenant mix beyond apparel and footwear, including food and beverage and experiential categories [24] - The company is exploring selective growth opportunities and restarting marketing efforts for planned developments, such as in Nashville [37][84] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the improving retail environment and traffic trends, supported by vaccination rollouts [9][10] - The outlook for 2021 remains unchanged, with expectations of continued pressure from vacancies and potential store closures [46] - Management anticipates that the positive traffic and sales trends will support better rents in the long term [17] Other Important Information - The company is implementing a comprehensive materiality assessment to address ESG issues important to stakeholders [33] - A charge of approximately $14.1 million is expected in Q2 2021 due to early redemption of senior notes, impacting net income and FFO but not core FFO [43][44] Q&A Session Summary Question: Factors leading to maintaining occupancy - Management noted that leasing activity began to pick up in Q4 2020, with new deals contributing to occupancy stability [52] Question: Recovery in tenant sales with increased foot traffic - While tenant sales are not currently reported, management indicated that retailers are experiencing better-than-anticipated results [54] Question: Decision to keep guidance unchanged - The guidance remains unchanged due to positive trends in foot traffic and sales, offsetting the dilution from equity issuance [59][60] Question: Update on Nashville project - The Nashville project is moving forward with marketing efforts, but ground will not be broken until a 60% leasing threshold is met [84] Question: Leasing spreads and future expectations - Management is encouraged by narrowing leasing spreads but did not provide specific guidance on when they might turn positive [88] Question: Impact of domestic tourism on sales - Management expects that increased domestic tourism will drive sales for tenants, particularly in open-air shopping centers [98]

Company Overview - Tanger Factory Outlet Centers owns or has interest in 36 centers[108] - The company's properties are located in 20 states and Canada[108] - The total leasable area is approximately 136 million square feet, housing over 2,500 stores operated by more than 500 brand name companies[108] - The company's market value was $16 billion as of March 31, 2021[12] - The enterprise value was $31 billion[12] Financial Performance & Metrics - The company's occupancy rate was 917%[18] - Blended straight-line rent spreads decreased by 28%[18] - Same Center NOI decreased by 80% year-over-year[18] - Secured financing represents 7% of square footage, while 93% is unencumbered[60] - Variable rate debt is 5%, while fixed rate debt is 95%, totaling $1,4764 million[62]

Portfolio Overview - As of December 31, 2020, the consolidated portfolio consisted of 31 outlet centers with a total gross leasable area of approximately 11.9 million square feet, 92% occupied, containing over 2,200 stores representing approximately 400 store brands[27] - As of December 31, 2020, the consolidated portfolio consisted of 31 outlet centers totaling 11.9 million square feet located in 19 states[142] - The company operated 31 consolidated outlet centers as of December 31, 2020, down from 32 in 2019[201] - The company had a total of 12,923 thousand square feet in consolidated outlet centers as of December 31, 2018, which decreased to 11,873 thousand square feet by December 31, 2020[223] Financial Performance - Total revenues for 2020 were $389.99 million, a decrease of 18.5% from $478.35 million in 2019[201] - Net loss for 2020 was $38.01 million, compared to a net income of $92.73 million in 2019[201] - Cash flows from operating activities were $164.75 million in 2020, a decline from $220.45 million in 2019[201] - Real estate assets before depreciation decreased to $2.79 billion in 2020 from $2.90 billion in 2019[201] - Total equity fell to $358.88 million in 2020, down from $456.11 million in 2019[201] - The company had a total debt of $1.57 billion as of December 31, 2020, which was relatively stable compared to $1.57 billion in 2019[209] Rent Collection and Tenant Operations - Rent collection rates improved significantly, with approximately 63% of second quarter billed rents collected, 91% in the third quarter, and 95% in the fourth quarter of 2020[33] - The company experienced a negative impact of approximately $47.3 million on earnings due to write-offs related to bankruptcies and uncollectible accounts during the pandemic[35] - A significant number of tenants have either closed their businesses or operated with limited operations due to COVID-19, adversely affecting their ability to maintain profitability and make rental payments[106] - The company is closely monitoring changes in the collectability of tenant receivables due to adverse financial consequences from COVID-19, which could lead to material modifications in future revenues[106] Impairment and Asset Management - The company recorded a $45.7 million impairment charge in March 2020 and an additional $19.2 million in December 2020 related to the Foxwoods outlet center[41] - The company recorded impairment charges of $67.2 million on outlet centers in Mashantucket, Connecticut, and Jeffersonville, Ohio, for the year ended December 31, 2020[210] - The carrying value of one outlet center is approximately $122.5 million, with an estimated fair value significantly less than this amount, but no impairment charge was recorded as the carrying amount is believed to be recoverable[96] Leasing Activity - The company renewed 209 leases in 2020, covering 1.1 million square feet, with an average annual straight-line rent of $25.01 per square foot[224] - In 2020, the company executed 70 re-tenant leases averaging 350,000 square feet with a net average annual straight-line rent of $20.90 per square foot[224] - The average annual base rent per square foot decreased from $26.10 in 2016 to $21.10 in 2020, reflecting a decline in occupancy and rent modifications due to tenant bankruptcies[157][158] - The average rental rate for renewed leases in 2020 was $27.23 per square foot, reflecting a 7% decrease compared to previous years[161] Strategic Plans and Market Expansion - The company aims to build shareholder value through a conservative plan focused on increasing rents, renovating existing centers, and expanding into new markets via developments or acquisitions[61] - The company plans to continue its strategy of market expansion through the development of new outlet centers and acquisitions[144] - New outlet centers are targeted in markets with at least one million residents and an average household income of $65,000, with centers typically designed to accommodate 60 to 90 stores totaling 250,000 to 350,000 square feet[64] Employee and Diversity Initiatives - As of December 31, 2020, the company employed 262 full-time and 265 part-time employees, with a turnover rate of 28%, significantly below the industry average of 39%[84] - The company is committed to diversity, with 72% of field employees being female and 22% of the workforce being ethnic minorities as of December 31, 2020[83] Risks and Challenges - The COVID-19 pandemic has negatively impacted tenant operations, leading to requests for rent deferrals and potential bankruptcies, which could reduce cash flows and affect dividend payments[105] - The company faces competition for the acquisition and development of outlet centers, which may increase prices and reduce profitability[99] - The company is dependent on rental income from real property, and any decrease in rental rates or tenant defaults could adversely affect income and funds for distribution[110] - The company faces risks associated with climate change, which could lead to volatile demand for retail space at certain properties[116] Debt and Financial Covenants - The company had $401.4 million of debt and nine interest rate swaps with an aggregate notional value of $390.0 million outstanding that were indexed to LIBOR as of December 31, 2020[128] - The financial impact of the COVID-19 pandemic could negatively affect compliance with financial covenants and result in defaults on debt agreements[108] - The company is required to distribute at least 90% of its net taxable income each year to maintain its REIT status[133] Future Outlook - The company expects continued challenges due to the COVID-19 pandemic affecting financial results and operations[218] - Future plans include potential developments, expansions, and acquisitions of outlet centers, contingent on market conditions[219]