Good morning. This is Doug McDonald, Senior Vice President of Finance and Capital Markets, and I would like to welcome you all to the Tanger Factory Outlet Centers First Quarter 2022 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 Investor Relations website, investors.tangeroutlets.com. Please note that during this conference call, some of management's comments will be 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 including funds from operations or FFO, core FFO, same-center net operating income, adjusted EBITDAre and net debt.

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, May 6, 2022. . On the call today will be Steve Tanger, our Executive Chair; Stephen Yalof, Chief Executive Officer; and Jim Williams, Executive Vice President and Chief Financial Officer.

I will now turn the call over to Steve Tanger. Please go ahead, Steve..

Good morning, and thank you for joining us for our first quarter 2022 earnings call. The results reflect our company's ongoing positive momentum as evidenced by our strong operating performance, including sustained high occupancy, raised guidance for the year and a recent dividend increase.

I want to thank our team for their unwavering commitment to executing on our strategy to increase cash flow and to grow the value of our real estate. I will now turn the call over to Steve Yalof to provide additional details..

Thanks, Steve. Our first quarter results reflect our strong operating fundamentals, positive leasing momentum, occupancy improvement and a return to positive leasing spreads are translating into earnings growth. This strength along with a constructive outlook, led our Board of Directors to approve a 9.6% increase in the annual dividend.

Our first quarter operating and financial metrics were ahead of our expectations. And with our leasing results to date supporting a positive outlook, we are raising our full year's earnings guidance.

In particular, traffic in the first quarter was up about 1% compared to the prior year first quarter, which I will remind you when we saw traffic rebounds and approach pre-pandemic levels. Traffic was later in March on a year-over-year comparable basis due to the timing of Easter and our related Tanger style marketing program.

Yet, April traffic has returned even as consumers face higher gas prices and an inflationary environment. Tenant sales remained strong at $464 per square foot for the trailing 12-month period, an almost 20% increase from the pre-pandemic comparable period in 2019.

We ended the first quarter with 94.3% total portfolio occupancy of 230 basis points from the year ago period. Leasing spreads turned positive with blended average rental rates up 1.3% for all comparable renewed and re-tenanted leases executed during the 12 months ended March 31, 2022.

This is a significant milestone and one which underscores the importance of our shopping destinations to our retailers and tenants. Taken together, these metrics helped generate robust growth. Same-center NOI was up 9.9% compared to the prior year driven by growth in occupancy, variable rents and other revenues in 2022.

The current quarter benefited from a reversal of revenue reserves as we collected previously doubtful or disputed rents. As we've been discussing over the past several quarters, we are laser focused on 3 strategic priorities, all aimed at sustaining growth over time.

We continue to make meaningful progress on accelerating leasing, commercializing marketing and reshaping operations, which are evident in our results, and we are laying the foundation for growth in the quarters and years to come.

Our goal is to accelerate leasing are simple; to increase occupancy, grow rent over time; and elevate and diversify and attract new brands.

We continue to achieve this with our best-in-class centers and a best-in-class leasing team all supported by enhanced analytics that allow us to make the right decisions to optimize the merchandising of our properties.

What's increasingly clear is that the retailers are committed to our open-air shopping destinations as part of their growth strategies, evidenced by our leasing momentum and tenant's desire to expand their footprint within timer centers. We have also welcomed a number of new brands to the portfolio, such as Wolford, St.

John, Ulta and Regatta and new F&B businesses Junction 35 to our flagship severe build destination and Brooklyn Monster at Tanger Outlet Spotswood. Our focus on non-apparel and footwear tenants also continues as we sign leases with new F&B, furniture and home and digitally native brands.

These new additions deliver high-quality shopper visits by attracting a higher income shopper and a younger demographic.

Over the trailing 12-month period ended March 31, we executed 1.8 million square feet of leases across 375 transactions, representing a 39% increase in space and a 42% increase in transactions from the comparable prior period, driven in large part by the strong renewal activity, approximately 45% of this GLA was executed in the first quarter of this year.

Growing customer traffic, coupled with increased sales productivity at Tanger Centers has led to the absorption of vacancy as evidenced by our 230 basis point pickup in occupancy over the last 12 months.

This dynamic is translating into our ability to execute far more landlord favorable lease terms and enabling us to convert variable rent to fixed rent while commanding greater overage rent pay rates and tighter breakpoints.

We also saw the lengthening of the average initial lease term by 6 months on renewal and 4 years on re-tenanted comparable leases executed in the trailing 12 months ended March 31, 2022, versus the prior year period. Our leasing momentum fuels our optimism and our continued ability to achieve our leasing objectives.

Furthermore, we feel confident in our tenant base with a watch-list that is meaningfully smaller than it has been for many years and only 1% of our portfolio is on a cash basis, down from 3% at year's end. Our core strategy of commercializing marketing revolves around our ongoing digital transformation.

We are focused on performing marketing that is targeted, measurable and drives higher conversions. We have shifted some of our marketing spend from broader brand awareness to targeted programs designed to achieve specific goals, including driving cars into our parking lots and growing the average spend per shopper.

Our retailers are the direct recipients of these targeted initiatives and as they continue to drive value, their partnership and participation continues to grow, thus resulting in higher shopper spends and bigger basket sizes.

We have also improved our TangerClub paid membership program by enhancing the value proposition, exclusive offerings and shopper perks aimed at growing our active membership. Year-to-date, new enrollments were up 20% compared to the prior year, and we continue to see this group as the most productive of our customers.

We are focused on reshaping operations by maximizing operational efficiency and growing ancillary revenues through marketing partnerships and media.

On-center activations and partnerships with national brands such as Coca-Cola and the National Football League, are growing across our entire portfolio as these brands seek to leverage the traffic and customers we drive to Tanger shopping destinations.

These other revenues increased by almost 50% in the first quarter from the prior year, and there is additional opportunity in these non-rental revenues in the quarters and years to come. We are continuing to invest and execute on our sustainability initiatives that provide a return to our shareholders and our communities.

Efforts include doubling our renewable energy footprint with solar infrastructure that will also produce expense savings over time, growing our EV charging station program by adding 200 new units across 17 centers delivering free charging options to our shoppers and bringing our very popular eco-friendly rooftop B initiative to more Tanger Centers.

Finally, we're encouraged by our tenants' desire to expand their footprint with Tanger and for new tenants to begin and grow their relationship with us. We are pleased with the progress of our national project and continue to be on track to break ground later this quarter, with grand openings scheduled for fall 2023.

Our peripheral land team is aggressively pursuing opportunities to monetize and develop our outparcel portfolio. We are unlocking new opportunities to enhance our offering at exciting shopper amenities and generate new revenue streams, all creating long-term portfolio value.

In summary, we're encouraged by our continued progress and our ability to execute on our strategic priorities. The value proposition of our open air centers is being validated by shoppers, tenants and the communities we serve.

I would now like to turn the call over to Jim Williams to take you through our financial results, balance sheet and increased guidance for 2022..

Thank you, Steve. I am pleased to report that we delivered solid results for the first quarter of 2022 with core FFO of $0.45 per share, up 12.5% compared to the last year period. Our outperformance was due to better-than-expected leasing performance and other revenues as well as the reserve reversals.

including our share of unconsolidated joint ventures, we recognized approximately $3.1 million in the reversal of certain revenue reserves compared to approximately $1.7 million in the first quarter of the prior year.

These factors helped drive a year-over-year increase in same-center NOI for the total portfolio of 9.9% for the quarter to $78.2 million.

Also contributing to the outperformance was the recognition of approximately $2.6 million in termination fees, including our share of unconsolidated joint ventures in the current quarter compared to $0.8 million in the prior year. Due to the well-timed capital markets activity executed over the past year, our balance sheet is well positioned.

We have no significant debt maturities until April 2024 and as of March 31, our net debt to adjusted EBITDAre improved to 5.4x for the trailing 12 months compared to 6.8x a year ago. As of quarter end, our weighted average interest rate was 3.1% and 93% of our outstanding debt was fixed.

We have always prioritized maintaining a strong financial position and a disciplined and prudent approach to capital allocation. Our dividend was well covered with an FAD payout ratio of 38% for the first quarter. Last month, the Board of Directors approved a 9.6% increase in the dividend on an annualized basis.

We are increasing our guidance for 2022 and now expect core FFO to be in the range of $1.71 and $1.79 per share. This is $0.03 higher than our original guidance. approximately half driven by better-than-anticipated first quarter results and half due to stronger-than-expected leasing performance year-to-date.

We expect same-center NOI growth at a range of 2.5% to 4.5%, up 100 basis points. For additional details on our key assumptions, please see our release issued last night. I'd now like to open it up for questions.

Operator, can we take our first question?.

. Our first question today is coming from Todd Thomas from KeyBanc..

First question, I just wanted to ask about the sequential decrease in occupancy. It sounds like leasing activity is strong.

Curious some of that occupancy loss was the result of temp and seasonal tenants vacating after the holidays, if you could sort of quantify or speak to that? And then if you could also address whether or not you'd expect to see occupancy climb higher from here? Or could there continue to be a little bit of occupancy loss in the second quarter from your temp per seasonal tenants or otherwise that are still potentially moving out?.

Thanks for the question. With regard to the sequential decrease in occupancy, some of that was seasonal, but other bit was frictional. Currently, we're performing a lot of what we call shuffles around our portfolio.

If you read the release recently, we opened up and expanded Under Armour store in Tilton in order to expand some of these stores, other stores have to close and make room through the expansion of existing tenants or make room for new tenants.

That same strategy is playing out in places like Lancaster with Victoria's Secret, Atlantic City with a large retailer that we're putting in there that we'll hopefully be able to share that in next quarter or even in with Ulta. So there's a number of things that play with regard to what's causing some of that sequential decrease.

We're actually pretty excited about the 230 basis point increase year-over-year. We've got a very robust pipeline.

We don't talk about deals that are unexecuted, but we've got a very, very robust pipeline of new retailers to Tanger as well as expanding some of our best-performing retailers in the portfolio and also adding across the rest of our portfolio, some of our best brands that have gone into some of our shopping center yet.

So we're pretty optimistic about our leasing activity going into the next quarter..

Okay. And can you provide an update after the holidays here as to where the portfolio stands in terms of occupancy that's related to temporary and seasonal tenants today? And then I know you've been working to convert a lot of tenants to permanent. I wanted to ask for an update there.

And also, maybe, Jim, I was just curious if you could let us know if that leasing when you do convert temp tenants to permanent, is that leasing included in the trailing 12-month leasing stats that are disclosed?.

So here, I'll take -- I guess I'll take the front half of that. The big focus of ours is converting our tenants to permanent tenancy.

But I understand, when we take a permanent tenant, and they occupy a temp space, there's still occupancy or space available in that shopping center, we're going to take that Tanger tenant, and we're going to move that Tanger tenant into another available space in our portfolio. So there's always going to be movement with our temp tenants.

We think leasing is a great strategy. But obviously, we're far more focused on long-term leasing because the payback of the long-term leasing is far better than the short-term tenants. I'll let Jim give you a little bit more color on how we look at it from a financial point of view..

So, Todd, to answer your question on the spreads, temporary tenants are not in the spreads. Our spreads compare a permanent tenant to the most recent for prior permanent tenant..

Okay.

And how much of the occupancy today is related to temp tenants?.

A little bit over 10%..

The next question is coming from Mike Bilerman from Citi..

So Stephen, maybe just going on occupancy for a moment. It's obviously been an impressive increase off of the lows. When you look at the portfolio, there's about 5 assets that are in that high 70s sort of low 80s type occupancy.

And when you look at those 5 assets, it actually is 200 basis points of your vacancy, right? So that if you're at 94.3% and you take out Atlantic City and Foxwoods and we had 2 assets in Grand Rapids and Howell and you mentioned Tilton, you're talking about almost half of that vacancy and without it, you'd be at 96.5%.

So maybe you can dive in a little bit on the strategy for those assets and where you think occupancy can go because it feels as though there's probably not as much occupancy upside, maybe another 50 to 100 basis points of the other assets.

And then all of those other initiatives, which I want to spend some time on will continue to drive NOI growth, but maybe you can talk a little bit about the specific assets and how much effort you can do to narrow that gap on those? Or maybe you want to sell them.

And that's the way you're going to get rid of the vacancy?.

Thanks for the question. So first of all, the good news is all the assets that you called out are still cash flowing positive. So that's important.

But in 2 of the assets, the Foxwoods asset and the Atlantic City asset, we had said in prior quarters, we'll probably hit the hardest through the pandemic because those markets were relying on tourism, relying on hotel space, entertainment and gaming. And what we're seeing right now is those categories come back. So....

Very strong. yes, that's why would the gaming markets have been so strong over time through the pandemic. I guess I'm surprised that you haven't been able to make a further progress in that vacancy for those 2 assets..

And again, a lot of that opportunity, at least once we identify a tenant is going to take a space that gestation period of a permanent lease can take anywhere between 9 and 12 months. So you'll see a lot of the fruits of labor of these markets coming back.

But I mentioned the Atlantic City, when Todd asked the question about some of the frictional vacancy that we see, although we don't comment on leases that aren't executed yet, we've got a very large tenant that we anticipate executing in the next few months in Atlantic City that will fill a big chunk of space that we've been for lack of a better expression holding for that particular tenant.

But I think this tenant coming to this location definitely underscores the fact that Atlantic City as a market is coming back and sales and traffic are coming back there as well. Foxwoods had been historically a little bit slower to come back, but they just recently announced their partnership with Great Wolf Lodge.

So that will become under that will be under construction shortly. And they're lined up for their summer events and their summer entertainment calendar is far more robust than it's been in years past, which just underscores the fact that Foxwoods themselves are investing a lot of money into traffic generation.

And obviously, we'll ultimately reap the benefits. We have done 1 or 2 recent deals in Foxwoods, but we will -- and we'll continue to lean very heavily into them.

As far as the other 2 centers, the Michigan centers that you mentioned, both of those centers rely a little bit more on people getting in their car and traveling to those shopping centers, and we see that dynamic changing, particularly over this summer, where a lot of our customers are shifting from maybe they were sitting home and buying products.

Now they're hitting the road a little bit more, and we anticipate a lot of more tourist traffic to our centers. And I think how a Grand Rapids will definitely be great recipients of that..

Is there a way to think about the occupancy target towards the end of the year. So effectively, if you think about it today, Stephen, you're sitting out about 700,000 square feet of vacancy across the portfolio, those 5 assets I just mentioned are a little over $300,000 and $400,000 in the rest of the portfolio.

Where should net absorption be by the end of the year, right? How much of this $300,000 of vacancy of these assets are you going to be able to chew into because I would think that, that has the most meaningful impact on that bottom line occupancy number and then all of those other initiatives that you're focused on in terms of maximizing and reshaping the operations, getting all those new leasing streams, commercializing the marketing are going to add on top of that occupancy gains that you're going to get?.

Our primary objective is we're focused on cash flow. And for us, some of the vacancy and some of our better performing assets will return far better than some of the vacancy and some of our lower-performing assets.

That said, we're going to focus on in some particular centers where we've got 100% occupancy, where we've got underperforming retailers, we're going to be just as aggressive going after more productive retailers and higher rent payers in some of that space and creating some of that frictional vacancy when we pull out an underperforming and replace them with a much better performer or a larger expanding retailer.

As far as these other assets, I guess, I mentioned we've got a pipeline of executed leases that are signed, but have not yet taken delivery of possession. We're always looking at least 18 and 24 months out. So as leases are rolling, we're thinking about replacing those tenants, and that's across the entire portfolio.

And with regard to leases out for signature, that pipeline is extremely robust right now. And as I mentioned, being fed by a lot of the retailers that have had success in our portfolio for years and years going into some of the markets that they hadn't yet joined us in.

So for us, cash flow generation is far more important than occupancy, although occupancy is a great flashing light. We're very excited to say we're up 230 basis points. But again, we're focused on the most productive tenants, the best leases and the highest cash flow, and that's where our leasing team is focusing their energy..

Our next question today is coming from Floris Gerbrand Van Dijkum from Compass Point..

Just following up on the leasing. I mean, obviously, your shares are valued like you have no growth. And what you're showing here is you've got growth both in occupancy and for the first time in probably over 5 years, positive leasing spreads.

And just maybe if you can talk through, Stephen, the -- you talked a little bit about your improved or longer lease terms. Obviously, rents are going higher.

But maybe you can talk about some of the other soft elements of your leasing? Are you negotiating higher fixed bumps? Or are you actively trying to do that? And maybe also talk about the occupancy costs? And how much ability because the occupancy cost is, call it, 8.3% appears pretty low.

How much ability do you think you have as the overall occupancy increases, how much more ability will you have to push rents higher?.

Floris, thanks so much for the question.

I think the -- the most material change to leasing right now over the last 2 years is that where we were very focused 2 years ago on maintaining occupancy, reducing base rents, replacing base rents with higher percentage rents in order to get some downside protection to some retailers during the height of the pandemic.

What we're seeing now, evidenced by our lease spreads increasing as well as our lease terms increasing is that we're going back to fundamental lease and deal making. 10-year terms, higher base rents.

We're now pushing for and getting better percentage rents going forward, the retailers have gotten used to stepping up to higher percentage rents over the last couple of years.

We're doing a very effective job of taking a lot of that variable rent that was a huge driver of our growth over the last few quarters and sweeping that into the base rent numbers so that we are protecting a lot of the rent that we've achieved over the past quarters.

And I think, especially now in this current market environment, that's a really good leasing strategy for us. I know you asked a number of other questions. If you want to risk a couple of those, I'm trying to pick them off in order here..

Yes. No, no. I -- one of the other things is in terms of other softer elements in terms of getting higher fixed bumps in your lease terms, et cetera.

How is that progressing? And do you have like a target in your mind in terms of what -- where you would like the portfolio to go?.

Well, as far as the fixed bumps, I think the milestone here is that we're actually going back to the old -- or to how we have traditionally cast leases. So fixed CAM with our bumps, the retailers' paying there for rental share of the real estate taxes and other pass-throughs and other marketing fees.

And I think the marketing fees, and I think if you're talking about the sort of the softer numbers, I think marketing fees are becoming more and more important to our retailers as they see the progress that we've made from a marketing point of view. We've gone from more static marketing to performance-based marketing.

We're using technology in order to influence more cars into the parking lots.

There's a number of initiatives that we've stood up over the last, I'd say, 2 quarters that have really enhanced our ability to drive traffic into our centers, but also give us great data and information about the tenants about the shoppers that are coming into our parking lots. And through that data, we're able to better communicate with them.

We're able to convert them into a TangerClub membership, which for us is a great source of revenue. And also kept them to come back and shop with us far more frequently. So I think that, that marketing spend, the retailers rely very heavily on the outlet developer to drive traffic.

I think a lot of our big retailer partners, their advertising spend is to drive customers into their full-price venues. So it's unique in our channel that we do a lot of that advertising on the retailers' behalf to drive customers into the shopping centers. And we've got a real successful strategy that we are executing to in order to do that..

If I have one more question, maybe you talked a little bit about your lease pipeline.

Do you have like a number in terms of your signs not open or your -- in the dollar amount of revenues that you expect to come online over the next 12 months or maybe 24 months?.

Floris, this is Jim. The spread -- lease spread versus occupied spread right now is around 40 basis points..

Your next question today is coming from Caitlin Burrows from Goldman Sachs..

Maybe just following up a little on that discussion you were having with Floris on the pricing. So with leasing spreads having turned positive, it sounds like you guys are more confident, which is good on the pricing side going forward.

I'm wondering given that the quoted number is trailing 12 months, could you give more color on maybe the real time or the outlook do you expect rents and leasing spreads could stay in that kind of flattish range or even increase?.

Caitlin, this is Jim. Yes, we're certainly pleased with the momentum that we're seeing and the performance that we've seen year-to-date. And obviously, that sort of played into the -- us feeling comfortable raising our guidance. We don't really give color.

We don't give -- we're not going to guide to the spreads, but we can just say we are very pleased with the performance we've seen year-to-date and our outlook for the rest of the year..

Okay. And then also that trailing 12-month leasing spread only includes the space that was vacant for less than 12 months.

So I was wondering if you could comment on what it would be if the longer vacant spaces were included, would you get a sense of the more complete portfolio?.

Again, Caitlin, that's not a number we're going to provide. We think the -- we think the better comparison to be a true comparable to the space is to do it the way we're doing on a comparable basis. And I think that's pretty consistent with how our peers do it as well..

Maybe just one then on external growth. I think in -- I know in recent quarters, you guys had talked about their possibly being effective acquisition opportunities.

So just wondering if you could give an update on what you're seeing on this front, if any, have kind of come and you passed or may not actually go through? Or just anything you're seeing on the transaction side..

We're still very heavily working on a number of different opportunities for us from an acquisition point of view. We've got of the 36 properties that we manage, 6 of them are JVs. We think the JV structure is a great one for us.

It's been very successful for us, whether it's with our partnerships in Canada, our partnerships with Simon, or other partners that we have across the portfolio. And that's a strategy that we're pursuing right now. We're hopeful in maybe in the next quarter or 2 to talk about one specific JV that we've been working on.

But unfortunately, until we have that 1 fully completed, we're not going to be able to share it..

Next question is coming from Emily Arft from Green Street..

Just a quick one.

Would you say that the low end of your updated same-store NOI guidance still assumes roughly flat tenant sales or has your outlook on sales for the year ahead changed?.

This is Jim. When we gave our year-end guidance, we said that the bottom of the range really take into consideration a modest decline in sales at the upper end of our range would imply a modest increase in sales. I think what we've seen so far this year through the first quarter as sales are pretty much where we had planned them to be.

So that's still the parameters that we put into our guidance..

Okay. And maybe one follow-up. You reported strong leasing activity, and there seems to be significant enthusiasm on the tenant side.

What are you hearing from retailers? And is there any sort of change in tone? Are they concerned at all about the higher inflation, the higher interest rate environment and the potential drop in consumer spending, are they talking about potential recession..

Well, first of all, I guess, what we're hearing from our retailers and what we're seeing as far as sales performance is concerned, is that there's been a big shift from casual product to fashion product and a lot of our fashion brands in our portfolio have really been the overachievers in the last quarter.

And we -- so we've -- and we're seeing now with the ability for a lot of our other retailers to pivot, and I guess you probably read the same things we read and meet with our retailers regularly. We know that there are a lot of retailers are now thinking about that pivot from more casual to more dressed for work product.

And that is a great driver of traffic to our shopping centers and also a great driver of sales.

With regard to any recessionary pressure that may be ahead of us, again, from a company point of view, anticipating some financial headwinds that would occur this year, we did a number of things in our balance sheet last year in order to recast our credit lines recast our debt stack at an all-time low coupon for us.

So we think we're in pretty good shape from a balance sheet point of view. And also from a leasing strategic point of view, moving a lot of that variable rent that we saw last year into base rent was a great move for us because it guarantees a lot more rent for us going into a possible recessionary time.

I also think that a lot of the retailers in our stack are extremely professional. They are some of the best international, global and national brands. And they've dealt with the cycles they've been around for quite some time. They've dealt with these cycles many times in the past.

And we're very confident that our retailers will be able to weather and perform well through these times. And I think the last point is we're value-priced. And when people want to go shopping, your dollar goes a lot further in a value-priced environment, especially when you're looking for your best brands and the best logos..

Your next question today is coming from Mike Mueller from JPMorgan..

I guess in terms of the 10% temp tenants, given the strong sales and traffic trends that you've been seeing, is it getting any easier to convert those tenants to longer-term leases?.

Well, temp tenants is coming a bunch of different adjacent sizes. I mean I'll give you a great example because we just signed a temp tenant, there's a digitally native brand called Summersalt that just took a lease from us in Myrtle Beach.

This will be Summersalt -- this will be their first store, let alone their first outlet store, and they're popping up in our Myrtle Beach. We call a pop-up a short term or short-term tenant.

So we see that as a strategy to get a brand-new brand in front of our customers, give this brand an opportunity to generate new customers and we think there'll be -- as the was and as Tory Burch was converting their pop-up stores into long-term permanent leases, we think we'll see some growth from those -- from this retailer over time.

Then there's our short-term leases, which to us, are tenants where we control the real estate.

And I think that's really critical because in an environment where there's still occupancy opportunities in some of our shopping centers to have a short-term tenant where we're able to control whether we can terminate those leases on a 30-day notice, 99% of these leases had that clause, it's a landlord favorable clause.

That will be the lowest rent payers perhaps, but gives us the most optionality and the most flexibility to do what we need to do with our real estate. So whether that tenant is sitting next to an Under Armour as they did in Tilton, which we need to let that short-term tenant.

Those so we can expand the Under Armour store, we'll do our best to take that short-term tenants and replace them someplace else in our portfolio or someplace else in that shopping center where there's another vacancy.

So that although we're replacing a lot of that temp tenancy with either an expanding existing or some new tenancy, as long as there is vacancy in our shopping centers, we're going to want to move that short-term tenant into the next vacant space. They may not get that space that was vacated by a Wilson or a Bass or a Dressbarn over the last 2 years.

and they may be moving to a different part of that shopping center. But once again, it's economical for them to want to be in the shopping center, it's low-cost base, and we're going to -- we're just going to continue to pop them up throughout our portfolio as that opportunity provides itself..

Got it. And then I think you made a comment about Nashville breaking ground this quarter and then opening in the fall.

Can you remind me, is that a normal timeframe from break ground to open? Or is it a little drawn out just because of the macro environment?.

It's actually turn out because the entire property is built on rock. So the typical groundbreaking or shoveling dirt, we're going to be jackhammering rock. So unfortunately, the preparing the mega pad for development is going to take far longer than a standard development. I've built a lot of shopping centers over the years.

They're usually in the 12 to 14 months period. This one at 16 months has to do with the condition of the property as we break ground..

. Our next question is coming from Greg McGinniss from Scotiabank..

Jim, I just wanted to touch on guidance increase. You mentioned about $0.015 of the raise was driven by prior period rent collections and these termination fees, which was around $0.05 in Q1.

Could you help us understand what's baked in for the balance of the year?.

Greg, yes, I mean, just to give you a little color, we had a handful of tenants, a small group of tenants that were on cash basis or still kind of disputing rents back to the COVID days. We're able to settle those and collect those rents in the first quarter and reverse those reserves.

Most of that was actually baked into our guidance, particularly if you think about how we get to the top of the range. Looking forward, we really have about -- we've got about 1 other tenant that we were convert from a cash basis to accrual basis in the second quarter. And that will have about $0.015, $0.02 a share impact in the second quarter.

The majority of that is really restoring straight-line rents. And looking after that, I mean, we'll have less than 1% of our portfolio that's on a cash basis. So I think that really kind of gets through most of the significant reserves from prior year rents. So we don't see much of that going forward for the balance of the year..

Okay. And then maybe just a couple of follow-ups on Nashville. How do you plan on funding that development? Can you talk about maybe investment yields that you're targeting? I mean how are you controlling for increasing construction costs and supply chain headwind, especially given the extended build-out time..

Well, I'll give you -- I'll take the back half of the question. Jim can talk about how we're funding the development, but you're right about supply chain, and that original construction cost has definitely had some movement. The good news is Nashville being such a hot market. Our rents have also grown.

So we're very confident at the -- that sort of range we provided in quarters past with regard to yield is still intact.

As far as funding, Jim, can you take that?.

Yes, sure. Greg, we have $153 million of cash on the books. We have completely undrawn credit facility around $520 million. And also, if you look at our -- we know where our payout ratio is, it was around 38% for the first quarter, but I think looking ahead, we anticipate a payout ratio in the near the low 50s.

And that's generating about $50 million to $70 million of excess cash flow. So we can really find Nashville, particularly since it's got a 16-month development time line with our internally generated cash..

Great. Your next question today is coming from Craig Schmidt from Bank of America..

Thinking again about Nashville. How would you characterize the tenancy at Nashville versus your other Tanger centers? And what is the mix of local versus national tenants? And have you hit that 60% hurdle yet..

So I would say that we're trying to -- I would say that the natural tenancy, unfortunately, we're not sharing our tenant names right now. But I can -- I'll talk about it a little bit. But -- and with regards to the hurdle, let me start with that. We are -- we're at our threshold that we've committed to.

So we are, in fact, ready to break ground on that shopping center. With regard to tenancy, I think local food and beverage is going to be very exciting and very needed in that shopping center. So I think that that's where a lot of that local tenancy is going to come from.

And as far as will it look like another one of our shopping centers, I think it will be a lot of the better performing tenants in our stack, our tenants that have already joined us in the shopping center. And I'll give a little bit more color in the quarters to come with regard to who that full tenant base is going to be.

As far as the look at the center, it will look a lot different than most of the shopping centers that we have in our portfolio, where we are going away from what was formerly a racetrack design, to more of a village design that we think will be much better and much more welcoming to the community and allow us to be a gathering place for a lot of the local population that continues to be building quite rapidly in that market..

And will the tenant reflect your current thinking on nonfashion tenant fleet..

I'm sorry, you broke up a little bit.

Will they reflect what?.

You're currently pumping down the fashion tenancy mix of your portfolio.

I'm just wondering are you going to bake that into your opening at Nashville?.

Yes..

Okay. Great. And then one other question. I mean you're very active in terms of rewards programs and building a good customers.

What do you do on acquiring new customers to the Tanger outline?.

We have a couple of great strategies for acquiring new customers. I'll share a recent one with you because I think it's a great example of what we do best.

Through every year on Easter time, we host TangerStyle, and TangerStyle is basically the retailers offering an additional 25% off to each one of the customers that shop in the shopping center if they participate in the TangerStyle program. And that's usually 2 weeks before Easter, and it concludes 2 weeks following the Easter holiday.

This year, we did things a little bit differently. We offered 15% to all of our shoppers. We offered an additional 10% or 25% off to TangerClub members. And the goal was not only to build up our TangerClub base, which we think is a very important set of customers, they shop more frequently, they spend more money each time they come and visit with us.

But it gave us an opportunity to acquire a new customer and get some data on a new customer.

And we think that, that's the most important part of our TangerClub on a going-forward basis is the personalization of how we communicate to these new customers and the value proposition that they get for being part of this TangerClub -- this TangerClub group, better value, exclusive offerings such as early shopping hours and in some instances, upfront parking.

But all of the things that these customers are looking for when they shop with us in exchange for our getting more data so we can communicate to them in a more meaningful way..

You reached the end of our question-and-answer session. I'd like to turn the floor back over to Mr. Tanger for any further or closing comments..

I want to take this opportunity to thank each of you for your interest in our company and your time this morning. We are very proud of our positive results and continued momentum. We look forward to providing ongoing updates on our various initiatives in the next coming months.

Our team is always available for follow-up discussions and we will be speaking with many of you at the upcoming NAREIT conference. Take care and be safe. Goodbye..

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today..