Tanger Outlets(SKT) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Fourth quarter Core FFO was $0.63 per share, a 17% increase year-over-year, and for the full year, it was $2.33 per share, up 9.4% from the previous year [4][14] - Same Center NOI growth for the year was 4.3%, reflecting successful leasing and operating strategies [14] - The company ended 2025 with a net debt to adjusted EBITDA ratio of 4.7x, benefiting from strong EBITDA growth [20] Business Line Data and Key Metrics Changes - Leasing volume exceeded 3 million sq ft, marking the highest annual production on record, with year-end occupancy at 98.1%, a 70 basis point increase [5][6] - Tenant sales productivity was $473 per sq ft, up 7% from the prior year, indicating strong retailer demand [6] - The company achieved positive rent spreads and extended lease terms for both renewals and new deals [5] Market Data and Key Metrics Changes - The company noted favorable demographic trends and limited new retail development, contributing to strong leasing demand [7][9] - Population growth in key markets is driving sustained demand and increased traffic throughout the week [9][10] - The company is leveraging technology and AI to enhance operational efficiency and customer engagement [10][11] Company Strategy and Development Direction - The company is focused on adding new uses and categories, replacing underperforming tenants, and enhancing the customer experience through food, beverage, and entertainment offerings [7][8] - Strategic investments in real estate and peripheral land activation are aimed at driving long-term growth [8][10] - The company is committed to maintaining a strong balance sheet while pursuing external growth opportunities [11][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about retailer demand and the potential for growth despite recent bankruptcies in the retail sector [14][86] - The company anticipates continued organic growth and contributions from external growth activities, with guidance for Core FFO per share in the range of $2.41-$2.49 for 2026 [21][22] - Management highlighted the importance of adapting to changing consumer preferences and enhancing the shopping experience to drive traffic [62] Other Important Information - The company was recognized by Newsweek as one of America's greatest workplaces for culture and community in 2026 [12] - Significant advancements in technology initiatives are expected to unlock further opportunities for innovation and insights [11] Q&A Session Summary Question: CapEx implications regarding Saks - Management clarified that Saks has not rejected any leases and any potential CapEx related to Saks is not embedded in the current guidance [25][26] Question: Retailer conversations and sales expectations - Management noted that retailers are optimistic about sales and open to buys, indicating a strong promotional environment [29][30] Question: Leasing trends and lease lengths - Management indicated a shift towards retenanting as a more profitable strategy, with a focus on diversifying tenant mix [33][34] Question: Consumer health and demographic shifts - Management reported a shift towards younger consumers and families, with enhanced digital marketing initiatives resonating well [43][44] Question: Future M&A and retailer conversations - Management confirmed ongoing conversations with retailers regarding potential acquisitions and developments, indicating strong support from retail partners [52][54] Question: CapEx run rate expectations - Management expects CapEx to remain in the mid-teens range, which is lower compared to industry standards [58] Question: Health of consumers and retail partners - Management reported no deceleration in retailer demand, with a focus on providing value to consumers [61][62]