Tanger (NYSE:SKT) released first-quarter financial results and hosted an earnings call on Friday. Read the complete transcript below.

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Summary

Tanger reported strong leasing demand across both their outlet and lifestyle platforms, with significant sales and traffic increases.

The company has managed to backfill spaces affected by recent bankruptcies and closures, maintaining a guidance range of 2.25% to 4.25% growth.

Management emphasized strategic expansions and acquisitions, leveraging their strong balance sheet and liquidity without needing to raise additional equity.

Operational highlights include high demand for new tenant categories like food, beverage, and entertainment, with a focus on retenanting for growth.

The company is optimistic about organic portfolio growth and leveraging existing assets amid favorable market conditions and supply-demand dynamics.

Full Transcript

OPERATOR

Our next question is from the line of Juan Sanabria with BMO Capital Markets. Please proceed with your questions.

Juan Sanabria (Equity Analyst)

Hi, good morning. Just hoping you could talk a little bit about the bankruptcies or closures and how that may affect results or the trend 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.

OPERATOR

Our next question is from the line of Greg McGinnis with Scotiabank. Please proceed with your questions.

Greg McGinnis (Equity Analyst)

Hey, good morning. So it's no secret that the acquisition environments particularly competitive right now. But we've also seen your weighted average cost of capital improve with the higher equity value. Strong balance sheet. Could you give a little more color on transaction market? Are you seeing much worth acquiring? What makes an asset attractive to you today and what sort of cap rates or IRRs are you targeting? 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? Okay, thank you everyone.

OPERATOR

Our next questions are from the line of Caitlin Burrows with Goldman Sachs. Please proceed with your questions.

Caitlin Burrows (Equity Analyst)

Hi, good morning everyone. 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 condition would make you issue again, given where leverage is, is it really dependent on acquisitions or. Yeah. What could drive that in the future? Yeah, it's all 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 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 for the last three years. We've only, we've raised a 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 term. So we feel good about where we are and we would look at equity at that time, depending on where the market is. thank you.

OPERATOR

Our next question is from the line of Todd Thomas with Keybanc Capital Markets. Please proceed with your questions. Our next Questions are from the line of Floris Van Dyke with Ladenburg. Please proceed with your question. The next questions are from the line of Mike Muller with JP Morgan. Please proceed with your questions. Our next question is from the line of Nichelle Shah with Green Street. Please proceed with your questions.

Nichelle Shah (Equity Analyst)

Great, thank you. Hi, this is Nyshel on for Vince today. Thanks for taking the question. 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 fairly lumpy line item and one to maybe elevated given the snow removal costs, but any call you could provide would be helpful. Thank you. Thank you.

OPERATOR

I'll now turn the call back over to Steven Yalov.

Steven Yalov

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 the 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 you remain an advisor to Tanger. Now I'd like to turn it over to Mr. Tanger.

Tanger

Good morning. Next week, as previously announced, I will retire from Tanger's board and step into the role of Chair emeritus chairman, 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.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.