Harrison Slater

Harrison Slater asked about the guidance assumption for bad debt in 2026, and to what extent it incorporates known versus unknown headwinds. He also inquired about the impact of tougher comps on reported leasing spreads and ultimately Same-Center NOI growth, given lower spreads in 2025 compared to 2024.

Answer

Michael Bilerman, EVP, CFO, and Chief Investment Officer, Tanger, stated that the guidance range contemplates various credit scenarios, including known bankruptcies and a normal credit reserve, with the watch list remaining manageable. He emphasized that a greater percentage of growth comes from re-merchandising (re-tenanting space) with higher spreads (almost 30%) and lower tenant allowances, which significantly impacts NOI growth, prioritizing cash flow and Same-Center NOI over just spread metrics.

Harrison Slater asked about the bad debt assumptions included in Tanger's 2026 guidance, specifically the extent to which known versus unknown headwinds are incorporated. He also inquired about the impact of tougher comps on reported leasing spreads and ultimately Same Center NOI growth, given that 2025 spreads were lower than 2024.

Answer

Michael Bilerman (EVP, CFO, and Chief Investment Officer, Tanger) stated that the guidance range contemplates various credit scenarios, including known bankruptcies and a normal credit reserve, noting that the watch list remains manageable and bankruptcies create long-term NOI opportunities, often mitigated by the temporary leasing strategy. He explained that while reported leasing spreads might fluctuate, a greater percentage of growth comes from re-merchandising and re-tenanting, which drives significant NOI growth, as evidenced by almost tripled square footage leased at 30% spreads with lower tenant allowances.