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Good morning. I'm Ashley Curtis, Assistant Vice President of Investor Relations, and I would like to welcome you to Tanger Inc.'s Fourth Quarter 2023 Conference Call. Yesterday evening, we issued our earnings release as well as our supplemental information package and investor presentation. This information is available on our IR website, investors.tanger.com. Please note this call may contain forward-looking statements that are subject to numerous risks and uncertainties, and actual results could differ materially from those projected. We direct you to our filings with the Securities and Exchange Commission for a detailed discussion of these risks and uncertainties. During the call, we will also discuss non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP measures to the most directly comparable GAAP financial measures are included in our earnings release and in our supplemental information. This call is being recorded for rebroadcast for a period of time in the future. As such, it is important to note that management's comments include time-sensitive information that may only be accurate as of today's date, February 16, 2024. At this time, all participants are in listen-only mode. Following management's prepared comments, the call will be opened for your question. [Operator Instructions] On the call today will be Stephen Yalof, President and Chief Executive Officer; and Michael Bilerman, Chief Financial Officer and Chief Investment Officer. In addition, other members of our leadership team will be available for Q&A. I will now turn the call over to Stephen. Please go ahead.

Thank you, Ashley, and good morning. I'm pleased to report another strong quarter that closed out a milestone year for Tanger. We realized robust organic growth, the same center NOI grew 5.4% for the quarter and 6.2% for the year, which was ahead of our expectations. This was driven by record leasing velocity and positive rent spreads. We delivered earnings ahead of expectations with core FFO of $1.96 per share, which was 7.1% ahead of last year. In the fourth quarter, we executed on our external growth initiatives, adding three new centers to our portfolio in Nashville, Tennessee; Asheville, North Carolina; and Huntsville, Alabama. These assets are consistent with our long-term strategy of investing in dominant open-air retail centers in markets that benefit from outsized residential and tourism growth and can immediately benefit from Tanger's leasing, marketing, and operating platforms. Tanger Outlets Nashville, our new development in the fast growing city of Nashville, Tennessee, open to strong retailer and customer response in October. This 291,000 square foot open-air center offers shopping and dining across seven retail buildings complimented by the green, a unique place making community space. Tanger Nashville reflects our commitment to diversifying and enhancing the shopping experience for our customers with nearly one quarter of the center's dynamic assortment new to Tanger's portfolio or first to the outlet channel. In November, we acquired Tanger Outlets Asheville, a 382,000 square foot open-air shopping center in Asheville, North Carolina, a dynamic and growing tourism driven market. The center is currently occupied by a diverse mix of brands that include leading home furnishings providers as well as iconic apparel, footwear, and accessory brands. The center's sales at the time of this acquisition put this property in the bottom quartile of our portfolio. However, we believe there is great upside opportunity as Tanger Asheville will greatly benefit from the market's growth and infrastructure investments combined with the impact of our branding, marketing, leasing, and operations over time. In late November, we acquired Bridge Street Town Centre, an 825,000 square foot open-air lifestyle center that is part of a larger mixed use development in Huntsville, Alabama, which is one of the fastest growing markets in the country. The center comprises over 80 retail stores, restaurants, and entertainment venues and serves as the dominant shopping destination in the market. With occupancy just below 90%, we believe we have the opportunity to lease and merchandise the center with elevated brands and traffic generating uses leveraging the Tanger brand and platform. We continue to see positive trends across our business. Leasing activity remains strong as we grew our portfolio with new and existing tenants. Eight consecutive quarters of positive leasing spreads reflect both the value of our properties and the demand from retailers. We've maintained high occupancy as we successfully backfilled vacant spaces and elevated our tenant mix across all categories. Our diverse tenancy continues to contribute to driving more shopper visits, longer dwell times, and bigger spends, while adding to the vibrancy of our centers and enhancing the overall shopping experience. Year-end occupancy was 97.3% compared to 97% at year-end of 2022. Occupancy was down 70 basis points versus last quarter driven by the acquisitions of Tanger Asheville and Bridge Street Town Centre in the fourth quarter. 2023 was a record year for leasing productivity. We executed 544 leases totaling over 2.3 million square feet, which is 9% greater than 2022. We accomplished this while elevating and diversifying our tenant mix and driving strong rent spreads. Blended average rental rates were 13.3% up 320 basis points year-over-year with 37. 5% spreads on re-tenanted space and 11.2% on renewals. Our high occupancy and strong tenant demand allows us to be proactive and asset manage our centers, creating additional value while optimizing the tenant mix and center configurations. In 2024, we will continue this focus on tenant and brand elevation with an aim to drive our assets revenue growth while enhancing the overall center utility and shopper experience and adding amenities, restaurants, and entertainment to our user profile. In this connection, we will proactively re-tenant and select stores with more productive brands rather than renew the existing user. This may have a near-term impact on our renewal metrics, but we believe the strategic asset management is important to drive long-term sustainable rent growth while we continue to elevate the quality and value of our centers. December sales and traffic comps were positive continuing the trend of improvement we realized during the quarter and culminating with a strong holiday retail season year-over-year. Retailers employed promotional activity to create value for consumers and shoppers responded positively to these offers. While athletic, athleisure, and family apparel saw continued gains, discretionary categories were more challenged. We are encouraged by the recent sales and traffic growth and are optimistic that this trend will continue into 2024. The Tanger Digital Loyalty app that launched in 2023 continues to be an important initiative for us. Usage continues to grow and we are encouraged by the program's ability to personalize offers, drive additional shopping visits, and provide us with important information about our shoppers that helps us target our marketing more efficiently and improve the shopping experience. As we continue through 2024, our priorities remain consistent. Deliver organic growth driven by strategic leasing and proactive asset management. Maximize traffic and shopper engagement through measurable and relevant digital communications and compelling offers in collaboration with our tenants. Further intensify our real estate over time, including out parcel activation and unlocking additional other revenue opportunities. And selectively pursuing the acquisition and development of additional open-air centers, leveraging the strength of the Tanger platform and balance sheet. We are proud of the value we've generated for our shareholders and tenants. Our track record of positive results underscores our ability to unlock embedded opportunities within our existing portfolio and to selectively pursue external growth. We remain steadfast in our commitment to delivering value, fostering strong tenant relationships, and maximizing returns for our investors. I'd like to offer my sincere appreciation to our unmatched team, as well as our customers and our shareholders for their continued support. I'd now like to turn the call over to Michael.

Thank you, Steve. Today, I'm going to discuss our financial results, which came in ahead of our full year guidance, our strong balance sheet position, our external growth initiative, and I'm going to end with our 2024 guidance. Our fourth quarter results came in ahead of expectations with Core FFO of $0.52 a share compared to $0.47 a share in the fourth quarter of the prior year. For the year, Core FFO was $1.96 versus $1.83 in the prior year. The upside versus our recent guidance was the result of higher core growth and our external growth activity. Same center NOI increased 5.4% for the quarter and 6.2% for the year driven by gains in occupancy and strong rent spreads with higher base rents and higher expense recoveries, minor contributions from out-of-period income, as well as continued operating efficiencies and the benefits of a milder winter. Our proactive balance sheet management and focus on liquidity supported our accretive investment capital deployment. In total, we invested more than $400 million on three new centers, almost $300 million of which was deployed during the fourth quarter. We funded these transactions through cash on hand, our available liquidity, and common shares issued under our ATM program. During the fourth quarter, we sold 3.4 million common shares at a weighted average price of $25.77 per share, generating gross proceeds of $87.3 million. Post the transactions and our capital markets activities, our balance sheet remains well positioned to support our internal and external growth initiatives with low leverage, a largely fixed rate balance sheet, minimal debt maturities until late 2026, and ample free cash flow after dividends. At the end of the year, we had $1.6 billion of pro rata net debt and $507 million of availability on our unsecured lines of credit. Our net debt to adjusted EBITDA at pro rata share was 5.8 times for the 12 months ended December 31st. The sequential increase in this ratio reflects the external growth spending that was deployed in the fourth quarter without the commensurate benefit of a full year of earnings from those assets. Pro forma for a full year of EBITDA from the three new centers, we estimate that our leverage ratio would be between 5.2 and 5.3 times, still one of the lowest in the retail and REIT sectors. In terms of our interest rate hedges, $325 million of new forward starting swaps commenced on February 1st of 2024, the date that $300 million of our prior swaps had expired. These new swaps fixed the adjusted SOFR at a weighted average base rate of 4% compared to the prior rate of 0.5%. Since our last call, we added $75 million of swaps. And in aggregate, the $325 million of new swaps have varying maturities through January of 2027, so we've effectively fixed this debt for another two and a half years on average. And including this activity, over 1.5 billion or 95% of our debt is fixed rate and we have no significant debt maturities until late in 2026. Our quarterly cash dividend remains well covered with a continued low payout ratio providing free cash flow to support our growth. Now turning to our guidance for 2024, we expect core FFO per share in a range of $2.02 to $2.10, which is up 3% to 7% over 2023, reflected continued organic growth and the contribution of the external growth activity that we completed in 2023, moderately offset by higher interest rates from the expiring swaps. We expect same center NOI to be in the range of 2% to 4%, which benefits from the strong leasing activity to date and the impact of the proactive re-tenanting that Steve discussed, which could result in some short-term downtime. We expect recurring CapEx in the range of 50 million to 60 million, reflecting a higher re-tenanting rate in 2024 and the continued investment in our portfolio. For additional details on our key assumptions, Please see our release issues last night. And finally, we are greatly looking forward to seeing many of you at upcoming investor and analyst events later this month as well as into March. We are participating in Wolf Research's Virtual Real Estate Conference on February 28th, Citi's Global Property CEO Conference in Florida from March 4th to the 6th, a tour and management discussion at our newest development, Tanger Outlets Nashville on March 11th as part of ICR's Nashville Multi-Property REIT tour together with Highwoods, MAA, Ryman and Peak. In addition, we'll be touring Tanger Outlets National Harbor in connection with Evercore ISI's Multi-Property DC REIT tour on March 25th, and we'll be participating in BofA's New York City Retail REIT headquarters tour on March 27th. Please reach out to the respective firms if you'd like to join and meet with us at any of these events. I'd now like to open up the call for questions. Operator?

Thank you. At this time, we'll be conducting a question-and-answer session. [Operator Instructions] Our first question today comes from the line of Lizzy Doykan with Bank of America. Please proceed with your questions.

Hi. Good morning. I was just looking to get some more color on what's embedded for expense growth in the same-store and a wide guide. I mean, what should we be considerate of when modeling certain line items for '24? Like obviously there's the better, you know, weather experience last year. But then in terms of things like operational costs or marketing spend associated with ramping up your recent acquisitions and then just the general kind of cost environment. Would love to hear a bit more.

Sure. Thanks for the question, Lizzy. So a couple of things impacting 2024 are some things that happened in 2023. So as we've been talking about during the year, we've certainly had a milder winter. There was about $2 million of savings this year from this year in '23 from a not snowing and relative to 2024, our forecast assumes a normal snow year relative to the five-year average. So you got about a $2 million or call it just over 50 basis point headwind in that OpEx. There are some of the uncontrollable items like taxes and insurance which continue to go higher. And then what we are trying to do as an organization, as you've seen in our OpEx, which was relatively flat year-over-year is try to mitigate as much of that expense growth by trying to operate as efficiently as possible. And so our 2% to 4% same center range does have, obviously, some level of expense growth in it, but it all nets down to that 2% to 4% same center growth profile.

Okay, thanks. And as a follow-up question to some comments earlier on selectively pursuing acquisition and development of other centers. Do you think you could talk about kind of the, maybe these opportunities you're seeing today given you kind of seem to have your hands full on the recent deals you closed on like kind of what set of criteria might be needed to capture on such opportunities? Maybe is there a number of target acquisitions that you're seeing for outlet centers and perhaps more lifestyle open-air centers? Thanks.

Well first of all we're going to be opportunistic as we were in 2023. You know, we were very active in the space, looking at a number of different asset and asset classes between the full price open-air lifestyle as well as the open-air outlet centers. We're fortunate to find two and obviously we developed one. Our balance sheet gives us plenty of capacity. So if we should opportunistically find something in 2024, obviously we'll be in a position to move forward on that acquisition. There are a number of things that we're currently looking at and much like where we were this time last year, you know, unfortunately not ready to speak about anything until we've executed. But from a criteria point of view, we're looking for centers that are the dominant center in the marketplaces that they serve, that have great residential growth, great touristic growth, and an opportunity for us to plug and play our platform, which is really best-in-class leasing, marketing, and operations. So we bring a lot to a shopping center. We're looking forward to showing you all we've been able to do with Bridge Street at Asheville as we bring them into our platform.

Thank you.

Our next question is from the line of Floris van Dijkum with Compass Point. Please proceed with your questions.

Morning guys. Thanks for taking my question. First question, I guess, is obviously, tenant sales were down a little bit. You sort of allude to this new leasing strategy, and what can we expect, and what would that do to your average tenant sales productivity as well? Obviously your leasing costs will be a little bit higher, but maybe also talk in terms of new uses potentially that would come into the centers. And then are these concentrated mostly in your higher-end or your more densely populated centers or is this across the portfolio? If you can talk a little bit about the strategy, that would be great, Steve.

Sure, sure. First of all, our leasing strategy, yeah, we like to say it's a new leasing strategy, but it's really what we've been executing to for the past two or three years. We're constantly seeking to replace lesser productive retailers with far more productive retailers and we think we've done a really good job. We're also digging deeper and looking for alternative uses to round out the assortments in our shopping centers because we think it gives it more commercial vibrancy, draws more customers. You know, Shake Shack was a new addition to a few of our centers in 2023. And we feel Shake Shack's got this great core customer base where customers will come to our centers for Shake Shack and stay for the shopping or vice versa. They'll come for the shopping and stay for Shake Shack. So we feel like these great marquee names that we're bringing into our centers, whether they're in the home furnishings category, the health and beauty and wellness category, which is a new and expanding category for us, have really created a lot of diversity and pushed a lot of customers to come for more trips than they would typically make to an outlet center in a given year. You know, that same customer base also has full price strategy and that's why that open-air acquisition in Huntsville made so much sense for us. A lot of the retailers that we've been working with for years in our outlet platform also have full price representation in that other space. Similarly, there's a number of retailers that are in the full price space that haven't yet discovered outlet. And so from a strategic point of view, that acquisition also gives us access to retailers that either we've spoken to before and haven't had a chance to bring into our space, but now probably have a lot more connectivity to and are looking forward to proliferating them throughout our entire portfolio.

Thanks, and if I could follow-up maybe, one of your more exciting opportunities potentially is in Palm Beach, but you don't have any equity stake. I mean, would you, is that potentially on the list of things that you would look to, you know, increase your equity ownership of an asset like that? And obviously, how many other ones are there out there like a Palm Beach?

Well, Palm Beach is a unique asset. It's a wonderful asset for us and we like to call that asset Tanger Outlets Palm Beach. So when you're driving up and down 95, it is very prominently displayed. Obviously, the relationship that we have with the owner allows us to perhaps gain equity over time. We're excited about those prospects. We continue to raise the [indiscernible] that shopping center and grow the leasing base. You know, we've added a number of great retailers to that shopping center. We're building on that foundation. And much like the rest of our portfolio, we're slightly changing the use profile, adding better food and beverage and things like that. Are there other assets like that? You know, I think that the fact that the market is aware that we're willing to be nimble, entrepreneurial, and strategic with how we pursue additional assets, our phone rings and we talk about a number of these creative structures a lot. And when there's an opportunity for us to make a deal similar to the Palm Beach deal that gives us equity over time, that's something that we would consider.

Thanks, Steve.

Thanks, Floris.

Our next question is from the line of Samir Khanal with Evercore ISI. Please proceed with your questions.

Hey, good morning, everyone. I guess, Michael or Steve on same-store here, you know, there's been a lot of questions around sort of troubled tenants, right? So maybe help us understand what you're assuming for bad debt in your guidance. Thanks.

Thanks, Samir. So if you look to 2023, it was under 50 basis points of effective reserve and bad debt. And within our guidance range of 2% to 4% we effectively have you know a similar esque level at different ends of the range we feel we are reasonably protected in that way because we're constantly in discussions with our tenants. You know when things hit the news generally that's not going to be a surprise to us and it's something that we work towards and manage through during the year.

Okay. And then I guess that my second question is around sales growth. You know, when you look at sales, it's been flat over the last two years and your occupancy cost is, it's 9.3%. I mean, it's still a good level to be, but it is moving up. So what happens if sales sort of continues to be flat or slightly down and let's say occupancy cost is about 10% over the long term? What's your ability to push rents at that time? Thanks.

Well, look, growing rents is really, I mean, that is really priorities one, two, and three for this organization. And I think we've done a pretty impressive job of executing that to that, you know, eight consecutive quarters of positive rent spreads and we continue to build on that The other thing is our leasing velocity hasn't slowed down last year was a banner year for us. It was the most leasing that we've done in any given year. We also see the new acquisitions that have come with their share of vacancy. We see vacant space as an opportunity to continue to fill with retailers that are far more productive than some of the retailers that we have in our existing tenant base right now. You know, we've also are, where we've talked about temp to perm and taking a lot of that temp space and putting permanent tenants, we've done a real good job of replacing the temp space with permanent tenants. But you know, now we're also thinking about that renewal activity. Last year we renewed 95% of our tenants renewed. I mean, it's great. There's no downtime. We did so at about a 10% spread to the prior rents. But now we're going to be a little bit more strategic. And some of those tenants that might choose to renew, we may elect to replace with more productive, higher rent paying, better sales producing retailers. And that's the focus of ours and our leasing team is 100% laser focused on executing to that. We've been able to drive new tenancy into our centers, new uses, and we think that's going to help us grow our sales over time. But the most important point is the leasing velocity hasn't slowed down. And the retailers are showing that they're willing to pay more rent to be in our shopping centers.

Thank you.

Our next question is from the line of Todd Thomas with KeyBank Capital Markets. Please proceed with your questions.

Hi, thanks. Good morning. First question was on the same-store guidance, so 2% to 4% and the higher re-tenanting activity that you discussed in the year ahead, just compared to '23, which could cause some disruption. How much drag on '24 same-store do you anticipate from that? And then how should we think about the re-tenanting spreads and renewal spreads that you anticipate relative to the 37% new lease spreads and 11% renewals in '23?

Thanks, Todd. So embedded in our 2% to 4% same center guide is the earning that we have from the leasing activity that Steve talked about where we released upwards of 20% of our portfolio of 13. And then as we think about what happens in '24, the range contemplates different scenarios in terms of where our tenant retention will be. And there are different strategies in terms of getting to both ends of the range, depending on if we have a higher tenant renewal and therefore more downtime, but higher rents, which translates into '25, or maybe a little bit higher of a renewal rate, and therefore less downtime, but not as high on the rent side. So there's a lot of puts and takes, and there's not necessarily a number that's within the range of downtime, but it is a headwind. They're definitely coming in at 95% this year. We talked on the last conference call about our intent of this strategy, both from a CapEx perspective, but also some of the downtime that would be associated with that. And we're going to try to mitigate as much of that downtime with some temp tenants, but there is certainly a modest drag in our numbers from it.

Okay. So higher re-tenanting activity would result in more drag, higher re-tenanting lease spreads, which would maybe have positive implications as we think ahead to '25 and vice versa. The higher renewals end up resulting at higher same-store this year with lower combined leasing spreads?

You know, we don't guide to leasing spreads. What we do guide to is SSNOI growth. And we've built a plan that took into consideration renewal rate that's probably more in line with previous years of 80% to 85% renewals where last year was an outsized year at 95%. So our mission is to replace a lot of the lesser productive with more productive. Michael mentioned there'll be a drag. There'll be some downtime. We're pretty good at keeping those spaces filled and occupied and minimizing downtime as much as we can. We've got a great TI team that's on the front lines whose sole purpose is to make sure that we facilitate a very quick transition from retailer to retailer. But I think the best indicator of our ability to plan this is in that SSNOI guidance that we shared with you.

Okay. And then my other question was around investments. You were sitting on a lot of cash previously, over $200 million last quarter, which helped the companies blended cost of funding for the acquisitions completed in the fourth quarter. With that cash deployed now for Asheville and Bridge Street, how does that change how you think about future investments and required returns just given your cost of equity and debt today without having that cash on the balance sheet to deploy.

Sure. What's interesting, Todd, is with the reduction in credit spreads and the decline in interest rates, the cost of debt from when we did those transactions has come in meaningfully. You think about where REIT bonds and we're trading last year, we've come in pretty substantially. So we're conscious of our cost of debt as well as our cost of equity both have improved over time. We are going to be prudent and disciplined in everything that we look at. We want to make sure that any asset we bring onto this portfolio is both strategic in nature and ultimately provides financial accretion. And those are two disciplines that we want to be very mindful of. And the other part of this is where our balance sheet stands today, pro forma for the acquisitions were 5.2 to 5.3 times, and that's where we are today. But we've provided same center guidance of 2% to 3% -- 2% to 4%. You know, EBITDA growth a little bit ahead of that, given where our G&A load is. And then from a free cash flow perspective, you know, you look at back in 2023, this company generated $80 million of free cash flow. And so the combination of continuing to have a low pay-out ratio, we're increasing FFO 3% to 7% this year, that's going to drop to the bottom line and provide us free cash flow and EBITDA growth, which would provide us the capacity to go out and make acquisitions on a solid basis. And so we really take pride in where the balance sheet stands to be able to have the opportunity to execute and be mindful of those opportunities.

Okay, thank you.

Our next question is from the line of Craig Mailman with Citi. Please proceed with your question.

Hey, good morning. Just a follow-up on the investment question. Steve, I appreciate you don't want to give guidance here, but maybe some color on the mix of what you're underwriting, whether it's more outlet versus additional lifestyle centers? And then also, have you guys identified any outparcel or redevelopment within the portfolio and have sort of an earmarked spend for that? I noticed you took another $30 million on the ATM, it looked like in December. So maybe just talk about what that cash is used for, if that's going to be sort of near term or whether that's just opportunistic?

Thanks for the question, Craig. Look, I'll take the front half and then I'll turn it over to Michael to talk to you about the ATM activity. But and I appreciate you understanding why we're not going to sort of divulge the things that we're looking at. There's a competitive marketplace out there. And we think we might see value where others don't, which might give us a little bit of advantage in certain markets that we're looking at. Obviously, we're an outlet company. We feel that open-air lifestyle is immediately adjacent to outlet for a number of the reasons I shared in my prior answer just talking about a lot of the synergies of retailers in food and beverage and entertainment and the things that we've been doing in our centers now for the last three years. That said, we do think that there's a tremendous amount of opportunity for us in our outparcel. We have a lot of excess unmonetized land that we own outright. And we've got a team that's focused 100% on just monetizing that. We brought a couple of things to light last year, Dave & Buster's in Savannah and a couple of other outparcels that we were able to open up new facilities on. This year, we've just did a little bit of possession in Arizona to Texas Roadhouse, they're under construction currently. And again, adding food and beverage to a very, very highly productive shopping center we'll only get more customers to come, stay longer. And as we like to say, spend more when they're there. So it definitely feeds into the narrative of what we're doing across our portfolio. We do have a lot of other land to monetize. Those deals are actually very good deals for us, require very little capital on our end. We are debt leasers, we are not sellers, so we like to enjoy the rent that comes with that opportunity and fully monetized, we think there's a lot of headroom for us out there. As far as ATM, I'll ask Michael to sort of take that piece.

Thanks, Steve, and thanks, Craig, for the question. The ATM activity, we announced $57.5 million when we announced Huntsville, we did about $30 million post that, which was really just to position our balance sheet effectively back to where it was at the start of last year at 5.2 to 5.3 times. We feel that, that leverage level is towards the low end of our range even before EBITDA growth and free cash flow to allow us the optionality to be able to fund our internal and external growth activity and that equity was raised at a commensurate yield to where we invested in assets. And so we thought it was an appropriate amount, it was prudent, and it allowed us to come to this year with full availability now on our line of credit, which we feel provides us access to capital.

Great. And then just a second question, more guidance related. I know you guys put in other income kind of expense of $0 million to $2 million, which seems like the drop would just be less interest income given that you've exhausted the cash balances. But just wondering if you have any color on kind of management leasing and other services and other revenues, which contributed about almost $26 million in '23 what you expect from a run rate perspective there in '24 to be meaningfully different? Or any color you could give on that would be great.

Sure, Craig. This is Doug. That number, we continue to grow through the activities that we're providing. We talked about last quarter, taking on additional management of the strip center adjacent to our Palm Beach outlets. But otherwise, there shouldn't be any substantial growth in the line item. It can be lumpy at times due to leasing fees. But the Tanger Place next door to Tanger Palm Beach was the only midyear addition last year that would be full year run rate impact in '24. Otherwise, we'll continue to earn a variety of fees through the assets owned in joint ventures and then the Palm Beach property.

Okay. So it should be ascribed slightly higher.

Sorry, what was that, Craig?

I was going to say the amount should be kind of flattish year-over-year to slightly higher. So you have $26 million, $27 million range. Is there a fair way to think about it?

Yes. So you're talking about all of the ancillary revenues, including the sustainability initiatives, EV charging, the marketing partnerships, all of those pieces. I thought the question was on the management and leasing fees. But you're right, the rest of that business, we see Continued opportunities. The $0 million to $2 million on the interest and other income, that line item is primarily interest income, along with some of the TRS activity and some small miscellaneous piece. But the other revenue line item, we will continue to see progress on our marketing partnerships initiative. The team there is doing a great job. Our sustainability initiatives continue to drive revenue. Some of that came online last year. So you'll see some full year impact from that in '24. We think that's a line item that is high priority strategically for us, and we'll continue to see growth in those various revenue line items.

Okay. All right. So net-net, those are kind of going higher a little bit. Okay. Perfect. Thank you.

Thanks, Craig.

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

Hi, everyone. Congrats on the strong year. Maybe starting with occupancy. Could you guys just confirm whether the tenants remain at 10% now, but then more importantly, permanent tenancy increased during '23. So what's your outlook for increases in permanent occupancy in '24? And maybe what are some of the pieces to consider why it may or may not increase in the near to medium term?

Thanks, Caitlin. So temp continues to be about 10% of our portfolio. Occupancy in aggregate was 97.3%, which includes the acquisitions of Huntsville and Asheville, which were below average occupancy to our portfolio. On a same-center basis, it was relatively flat at 98%, which was up about 100 basis points over last year, and all of that growth came from increasing permanent occupancy. So a lot of things that we've been talking about on the calls has been we're going to continue to drive our overall occupancy to a point where then we can start to reduce the amount of temp. And I love when Steve always says, as long as there's one vacant square foot, we're going to try to get a tenant in that space overall. As we think about what's going to happen in 2024, we've talked a lot about this remerchandising and re-tenanting, which is swapping out perm for perm. So our expectation over the course of the year embedded within our guidance is some range where we'll continue to increase our permanent overall, but the most important thing is the replacement of lower productive users and replacing them with higher productive users, which we will drive our sales growth, drive our rents and ultimately drive NOI.

Got it. Okay. And then maybe just a follow-up to a question from earlier on the uncollectible rents. You mentioned how when something is in the news, that's normally not news to you, which is good. But I'm guessing that maybe something that could come up in August or November '24, say, maybe it's been quite fully appreciated now in February. So to what extent is the roughly say 50 basis points of rent reserve bad debt assumption include maybe like a buffer for unknown events coming up?

So within our range, every one of these items has got a high and a low and an average. And so there's a lot of different variables. We feel that over time, we've been able to handle difficulty in the retailer environment. And we're in a unique spot where we do get monthly sales from our tenants. And so we're always understanding and we're in constant communication with our tenants to try to work out if they have some problems to get them to the other side. It's been fortunate that we haven't had companies go completely away in Chapter 7. And so that's -- we're mindful of the environment and we feel that embedded in our current 2% to 4% is a reasonable amount of protection around that.

Okay. Thank you.

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

Hello. This is Viktor Fediv on with Greg McGinniss. As a quick follow-up on these temp tenants. When you look to backfill one of those month-to-month leases, how quickly you can get a new tenant in the space and paying rent?

It really depends on the center. It depends on who the user is. Look, it's -- that temp tenant really encompasses a lot of different types of leasing throughout our portfolio. Sometimes we use and we call it really short-term tenancy because we try a lot of new retail. First of all, there's a lot of barriers to entry to be in the outlet center business. It's a lot of the retailers that want to be in the business don't necessarily have 10 years' worth of excess inventory and product to sell. Therefore, they want to try it before they make a long-term commitment. So we use a pop-up strategy, which is still embedded in that temp handle that we've created to give folks an opportunity to give it a try. One such tenant was a hook, which is a resource that you'll see in a lot of the department stores that sell fishing gear and sporting goods stores. Hook decided that they wanted to -- they had excess -- they had excess product. They wanted to get it to try. They did a pop up in one of our shopping centers in Rehoboth Beach turned out to be a success. And now they've got permanent stores across our portfolio, and that's a great story. That's part of how we use temp or short-term leasing. Other local retailers that may fill a space just to keep the space warm while we're searching for a long-term tenant or perhaps we have it leased but the retailer isn't ready to take delivery of possession yet. We've just executed five leases with a major brand. We haven't announced who they are yet. There are short-term tenants in all of those spaces, where those retailers are ready to take delivery and possession, each one of those short-term leases comes with a 30-day right of termination on behalf of the landlord, we send them their notice, but we also offer them a different opportunity within the shopping center if such an opportunity exists. So it's a very fluid business, it's one that keeps lights on. It's one that keeps spaces cash flowing and maintains great retail vibrancy. I hate to use this old adage, we've been using it for years. But we feel like our customers don't know the difference between a short-term retailer and a full-time retailer, but everybody knows the difference between a closed store and an open store. So as far as we're concerned, if we can keep lights on, that short-term strategy is a great one for us.

Yes, makes sense. Thank you. Then probably there's a quick update on how does lease-up look like in Huntsville open-air lifestyle center? And probably, it is broadly trying to understand whether there is an overlap in learning for your leasing team in terms of leasing shopping centers versus outlets? Or did you need any new people to hire? Just want to understand that as well.

How you doing? This is Justin Stein. So we are really excited about the opportunity at Huntsville. And you have to remember, we are account based in this organization, which means people on the leasing team lease to a certain account, whether it's Nike or Lululemon. And so we have relationships, deep relationships with all of these retailers. And a lot of the times, the real estate directors, the head of real estate for these companies are the same people that we've been dealing with on the outlet channel. We also have a leasing team that has come from the tenant side of the business. So we are well equipped from a leasing, from a marketing and an operations side to handle what's ahead of us in Huntsville. We're really excited about it.

Got it. Thank you.

Our next question is from the line of Mike Mueller with JPMorgan. Please proceed with your question.

Yeah, hi. I understand about being opportunistic on the investment side. But I'm just curious when it comes to development, are you actively pursuing different developments or just looking at the higher yields that you achieved on acquisitions in the fourth quarter, the near-term focus is kind of more on that sort of deployment?

Yes. I think acquisitions. Yes, I mean, just take a look at the going in yields on the two acquisitions that we've made. And if you also look at the replacement cost, I mean, we purchased those assets for about 40% of which you could probably build them for today. So it looks like a pretty sound strategy. I wouldn't consider our team to be turnaround specialists, but we're opportunistic. And if we see there's outsized growth opportunity in some of these shopping centers, those are the ones that we're going to target and those are the ones that we're going to go after.

Got it. Okay. Thank you.

Thanks, Michael.

Thank you. Our next question is a follow-up from the line of Floris van Dijkum with Compass Point. Please proceed with your question.

Hey, guys. Just a couple of follow-ups here. I note that SPG is actually your second largest tenant or not SPG directly, but Spark at 3.9%. They lease 4.3%, so they negotiate it pretty, apparently, pretty well in terms of paying less than what they're leasing. But if I look at your soft luxury brands, Capri and Tapestry combines, they account for about 3% of the space and pay 5% of the rents. You don't have any LVMH and caring the higher-end luxury brands. Steve, again, we've been saying this for a while, but maybe you can talk about what needs to happen to -- for you to be able to attract some of those -- and by the way, those two control multiple brands of operators. But what does it take to get those into your centers? And presumably, you're working on that. What are the things that need to happen, in your view, in order for you to get some of those other luxury retailers to tenant your properties?

Well, first of all, we've seen outsized growth in the portfolio that we have. And a lot of our shopping centers, you don't -- you merchandise a shopping center for the community and for the customer base. So we know who our customer is, we know what their price point is, and you don't want to make the mistake of bringing a customer to a shopping center regardless of price point that isn't going to have a large audience to shop it and not be successful. So there's a handful of shopping centers that we think have great opportunity to be elevated, that is a road that we need to travel. It's going to require us building foundation and increasing some of those bridge to better then better could help us support more of a luxury elevation. You mentioned, as we've said in past calls, we are in constant communication with all of those brands. We know what we need to do. We know where we need to do it. We've got a strategy to execute to it. And we don't think it's that far away, but it's something that we think about every day because there's a population of retailers that aren't yet in our centers were -- it is our responsibility to make sure that we're going after them and speaking to them regularly. In the meantime, there's also a population of retailers that speak directly to the sweet spot of customer that comes to our shopping center. And we've done a really good job of bringing new and diverse brands, Nashville is a great example of a shopping center, 25% of that center are tenants that are brand new to Tanger are brand new to the outlet channel. And that's really where our core focus is. I think we'll ultimately get to that North Star of luxury. But in the meantime, we're going to continue to deliver revenue growth, positive rent spreads and continue to grow our business with the retailers that our customer base wants to shop.

Thanks. And I guess the follow-up to my follow-up is temp tenancy is still at 10%. When could we expect that percentage, I think, more normalized prior to COVID or prior to the retail armageddon, I think that number was around 5%. When do you see that number stabilizing or reducing going forward and over what time period?

Look, again, when we -- post COVID, when we rebuilt the team here at Tanger, one of our focuses was to put short-term leasing in the hands of the general managers in each one of our shopping centers. So we added 35 new tenant reps to our leasing team, one for each of the centers. Now we're up to 39 centers. So of course, our short-term leasing pace is going to be a lot greater than it had been in the past because we have so many more people focusing on it. All of that said and what I shared earlier, we look at short-term leasing as a strategy. One that keeps lights on, one that keeps space cash flowing, one that gives an opportunity to new retailers coming into the business to try before they buy. And it's been a very successful strategy for us. Michael just said, there's one square foot of vacancy or we see that as opportunity. We're going to constantly keep those spaces leased as best we can. Also, if I have a short-term tenant sitting at center court in one of my shopping centers and I can re-lease that space. I'm not going to kick the short-term tenant out of the shopping center if they want to stay, we're just going to find them a less desirable space to slide into. And as we continue to -- and what that does is ultimately maintain that level of temp. So we're going to continue to use it as a strategy. I think it's been very good for us. It served a lot of purposes. Obviously, rent revenue is a critical one. And we've been very successful as we've been replacing temp, getting great mark-to-market on the space. And a lot of that rent growth for us is embedded in that conversion. We're anxious to get there, we see this great opportunity, a great source of organic growth. We also see the renewals. A lot of those retailers that we're not going to renew and replace with new tenants, we see that as a great source of organic growth. And we're going to asset manage our centers to the best of our ability to make sure we go after every opportunity to grow revenues across our portfolio.

But just to be clear, your guidance does not assume any reduction in temp tenancy in your portfolio over the next 12 months?

I think the temp tenancy will reduce on its own as we continue to grow that permanent tenancy. So again, that's - the goal is to -- we're in the -- we're in the permanent leasing business. We're in the long-term rent collecting business. That is our core business. We're going to use whatever strategy we can to generate revenue while we get to that North Star of full-term, long-term high-paying secured leases. In the meantime, we'll use whatever strategies we can to make sure that we're keeping the right time to do and keeping cash flow in our centers.

Thanks.

Thanks, Floris.

Thank you. Our last question is from the line of Caitlin Burrows with Goldman Sachs. Please proceed with your question.

Hi, again, everyone. Maybe just a couple of quick ones before we get to the hour mark. So a follow-up on the leasing spread topic. Realize that leasing spreads do end up being somewhat a function of new versus renewal leases. But looking at the '22 10-K, it looked like the '24 expirations are expected to have higher ABR. So I'm wondering if you could just talk about the population of lease expirations in '24 and whether those do have tough comps or maybe they're higher quality spaces, so that's not really an issue.

So a lot of that is just the population of leases in terms of the mix of our centers. You look in the supplemental, there's a wide range. Some of those centers that are on a 10-year anniversary, you just have a little bit of higher rent. So it's much more about what is expiring and who's in that pool rather than something in aggregate around our portfolio. And you are correct. Our net leasing spread is going to be impacted by the amount of re-tenanting or renewal we're going to do. We continue to believe we're going to have positive spreads overall, as we have demonstrated for the last eight quarters overall, and that is really driving our OCR is driven by the rent increases that we've been able to attain.

Got it. So when you say that like it's the higher expirations in '24, they are based on like mix of centers and some anniversarying perhaps when they were built. Again, I'm just wondering if they kind of deserve to be higher, so there is not really tough comps? Or if, in reality, they are tough comps because if they were only built 10 years ago, then they were established well or something and now maybe the upside is less. Is there anything to add on that or it's kind of a wash?

Caitlin, the other piece of it is that that's just the base rent component. We've talked for the last couple of quarters about adding in more of the recoveries, ensuring the tenants are covering their share of CAM and taxes and our advertising fees. So the total rent is our focus, growing total rent leads to growing NOI. The base rents by themselves, it can be a little skewed comparing year-to-year because you're not sure which in that pool are just more of a gross rent or which ones are going to be layered in with some of the recovery components. But our strategy, as Steve and Michael talked about, growing total rents, continuing to focus on where we can improve the rent paying in each individual space throughout all of our centers. And that is going to continue to be a focus. And as Michael mentioned, it's more of a pool issue and not necessarily a tougher comps issue.

Okay. And then maybe just following up on Floris' recent question, not necessarily on luxury, but could you guys talk about the types of tenants that are active today maybe those that are more legacy tenants looking to expand and who you're seeing that were perhaps new in 4Q and could be new in '24. I think Steve earlier, you mentioned doing more like home, wellness, health and beauty, but any more details you can give on like who's driving this activity that you guys see?

Caitlin, it's Justin. We are very proud of our execution to our diversification strategy. As Steve mentioned earlier, we've done a bunch of deals in the home and beauty category, food and beverage opportunities throughout the portfolio, whether it's in our peripheral land opportunity or within the four walls of our center, we've done business with bookstores and entertainment concepts. So we are very proud of what we've done. We brought a ton of new brands in the portfolio in '24 and we feel that, that will continue into '25, bringing new brands that are finding the outlet channel as a profitable distribution point for them, and we're excited about '24 and beyond.

Okay. Thank you.

Thanks, Caitlin.