Tanger - Q4 2025
February 25, 2026
Transcript
Ashley Curtis (AVP for Investor Relations)
Good morning. I'm Ashley Curtis, Assistant Vice President of Investor Relations. I would like to welcome you to Tanger Inc.'s Fourth Quarter and Full Year 2025 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. 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 measurements 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 25th, 2026. At this time, all participants are in listen-only mode. Following management's prepared remarks, the call will be open for your questions. We request that everyone ask only one question and one follow-up question. If time permits, we are happy for you to re-queue for additional questions. 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 Yalof. Please go ahead.
Stephen Yalof (President, CEO, and Director)
Thank you, Ashley. Good morning. I'm pleased to report that Tanger delivered another strong quarter, capping off a productive year and positioning us for continued growth. These results demonstrate how our differentiated platform is powering our ability to drive sustained growth across our portfolio, supported by limited new retail development, consolidating department store business, and favorable demographic and economic trends in the markets and communities we serve. Fourth quarter Core FFO was $0.63 per share, growing 17% over the prior year period, 9% for the full year and ahead of our guidance. We attribute this strong performance to our focused execution across all facets of our business, including record-breaking leasing production, the accretive integration of our recent acquisitions, and disciplined expense management across our enterprise, which contributed to a robust Core FFO and Same-Center NOI growth.
Turning to leasing, we achieved leasing volume over 3 million sq ft, our highest annual production on record. Occupancy at year-end was 98.1%, a 70 basis point sequential increase, we delivered another quarter of positive rent spreads and extended lease terms for both renewals and new deals. Tenant sales productivity remained high at $473 per sq ft, up 7% from the prior year, OCR remains at 9.7%, providing additional runway for growth. We have proactively addressed our 2026 lease roll, as of the end of January, we've addressed over 40% of the space scheduled to expire this year, providing an opportunity to focus on re-tenanting opportunities and center merchandising initiatives. These metrics demonstrate the sustained retailer demand for our open-air outlet and lifestyle centers.
We remain laser-focused on our core strategy of adding new uses and categories and replacing poor-performing tenants, allowing for continuous refreshment of our merchandising and offer. This strategy has served to deliver improved retailer sales performance and has been a significant driver of traffic growth, increased customer visit frequency at our centers, and NOI growth. Favorable market conditions, supported by both a lack of new retail center development and a consolidation in the department store business, has contributed to strong leasing demand across our portfolio, which we expect will continue. Growing local populations, robust retailer open to buys, and our focus on diversifying our tenant mix to meet our growing customer base create a flywheel for sustained long-term growth across our portfolio. During the holiday season, we saw positive traffic performance as we leveraged print and digital channels to communicate retailer messaging, compelling value and offers, and community events.
We anniversaried our successful proactive holiday selling season marketing campaigns, highlighted by our Every Day is Black Friday promotion, starting the first week of November. Our holiday social media marketing initiatives furthered our engagement with younger shoppers, keeping everyday value pricing at their favorite brands across our platform. Additionally, this important cohort are increasingly discovering and engaging with our growing TangerClub and loyalty platform to enjoy even better deals during their shopping visits. Our ability to grow NOI through multiple avenues is key to Tanger's sustained success. 2025 was a notable year for intensifying and upgrading our real estate through Peripheral Land Activation, center renovations, and the strategic addition of Food, Beverage, and Entertainment uses. These initiatives contribute to the elevated dining and entertainment experience that our customers enjoy when they visit our centers.
Dinner on-center experiences have proven to support our ability to attract more elevated brands that today's consumers demand. Across our portfolio, we are experiencing substantial population growth as families and businesses relocate to our growing markets. This is fundamentally changing the customer base, which creates sustained demand and drives traffic throughout the week across all seasons. Will continue to be a positive tailwind for our business. The strong population and domestic tourism growth in many of our markets has been widely recognized as major attractions and economic drivers plant flags in our communities.
Recent examples include the announced Sphere development adjacent to our National Harbor Center in the Washington, D.C., MSA, the Kansas City Chiefs stadium relocation to the Village West Entertainment District, home of our newly acquired Tanger Kansas City at Legends, and the announced relocation and development of Space Force on the Redstone Arsenal campus in Huntsville, Alabama, at the interchange shared by our Bridge Street Town Center. These announcements only reinforce our center's positioning as the center of the thriving, dynamic communities and offer long-term opportunities to invest additional capital, grow NOI, and increase value for stakeholders. We are making significant advancements in our tech initiatives, leveraging AI across our enterprise, enhancing operational efficiency, communicating with our shoppers and TangerClub members, and supporting our customer service programs. For example, our multilingual AI chatbot successfully handled more than half of our customer service interactions last year.
Tanger's enhanced technology platform positions us to unlock even greater opportunities for innovation, transformation, and actionable insights for the future. We've strengthened our balance sheet by completing several post-year-end transactions which addressed upcoming bond maturities, strengthened our liquidity position, and mitigated refinancing costs. Our well-positioned balance sheet provides us the flexibility to reinvest in retenanting our existing portfolio and align our assets with the growing opportunities in our markets, while pursuing selected external growth opportunities. As the retail landscape continues to evolve, Tanger's value proposition remains highly relevant, combining desirable shopping and valued brands and experiences in thriving communities. We're creating the shopping destinations that resonate with the consumers of the future while delivering consistent value to our retailers, shoppers, and shareholders.
I'm very proud that Tanger was recently named by Newsweek as One of America's Greatest Workplaces for Culture, Belonging, and Community in 2026, as well as one of America's Greatest Workplaces for Women, which recognize companies that have made an inclusive workplace environment the foundation of their organizational success. I want to thank our dedicated Tanger team members, retail partners, loyal shoppers, and shareholders for your continued support as we build on this momentum in 2026. I'll now turn the call over to Michael to discuss our financial results, recent capital markets activity, and 2026 guidance in more detail.
Michael Bilerman (EVP, CFO, and Chief Investment Officer)
Thank you, Steve. We delivered Core FFO of $0.63 per share in the fourth quarter, representing a 16.7% increase compared to the $0.54 per share in the prior year period, and we ended 2025 delivering Core FFO of $2.33 per share, up 9.4% from the $2.13 we produced in 2024. This growth was driven by solid Same-Center NOI growth of 4.3% for the year, which reflects the success of our leasing, operating, and marketing strategies, along with contributions from our accretive external growth activity. Our full year results came in just above the high end of our recent guidance on modestly higher Same-Center NOI growth and better performance from our acquisitions.
Leasing activity across our portfolio continues to be positive, allowing us to capture total rent growth through a combination of improved base rents and increased tenant reimbursements. We also continue to grow the contribution from other revenues while remaining disciplined with cost management. Our tenant watch list remains at manageable levels, and we weren't surprised by the recently announced tenant bankruptcies, which we believe provide attractive opportunities for remerchandising over time. Turning to our balance sheet. We completed a number of significant capital markets transactions in early January, raising and refinancing $800 million of debt, which improved an already strong balance sheet by enhancing our liquidity, increasing our flexibility, extending our debt duration, lowering our pricing, expanding our bank group, and importantly, reducing risk. We thank our lenders and investors for their support.
Let me just spend a couple of minutes detailing these transactions and how they fit into our overall capital structure and forward liquidity. At the end of 2025, we had $1.8 billion of prorated debt, with $350 million of unsecured debt coming due this September at 3.125%. We also had $44 million drawn on our $620 million lines of credit, and we had an overall debt duration of under three years. Pro forma for the upsized term loans and the exchangeable that we completed in January, the company now has over $1 billion of immediate liquidity, which includes $270 million of cash.
another $150 million available to us under delayed draws on the new term loans and the full availability on our $620 million lines of credit. This capacity provides us a significant financial flexibility to invest in our portfolio, explore external growth opportunities, and have the capital to repay the unsecured notes that mature in September. Through these transactions, and assuming we pay off the September bonds and the Kansas City mortgage in 2027, we will have extended our debt duration by two years, locked in forward rates for the next five to seven years, and lowered our weighted average interest rate by approximately 10 basis points.
In terms of the deals, we first closed on $550 million of unsecured term loans due in 2030 and 2033, which increased our total term loan capacity by $225 million, with $150 million of that increased capacity on delayed draw features over the next four to seven months. Blended, these new term loans are priced at just over 100 basis points over SOFR at our current ratings grid, and we have swaps in place to fix this debt attractively. We were also able to remove the 10 basis point credit spread adjustment on the term loans and our lines of credit. At the closing in early January, we borrowed $400 million of the $550 million, which increased our term loan borrowings by $75 million from year-end.
We issued $250 million of five-year exchangeable senior notes, which carry a coupon of 2.375%. While the conversion price was set at $41.55 per share, which was up 22.5% from the close on January 7th, the company entered into capped call transactions, which raised the effective conversion price to $47.49 per share, or up 40% from the January 7th close. If we amortize the cost of the capped call and the transaction expenses into the coupon, the effective yield on the notes rises to the mid three percent range over the next five years. The $250 million of par value notes are to be settled in cash, with the premium above par paid in shares or cash at our option.
Overall, these refinancing moves underscore our long-term focus, positioning the balance sheet with conservative leverage metrics that provide the company with significant financial flexibility to support both our operational needs and our strategic growth initiatives to drive value for stakeholders. Our leverage remains below peers and our targets, providing additional capacity with net debt to Adjusted EBITDA at pro rata share of only 4.7x at year-end, which is benefiting from our continued strong EBITDA growth and the retention of free cash flow after dividends, with our growing dividend only representing 61% of our Funds Available for Distribution.
Pro forma for the financing transactions, 100% of our debt is at fixed rates, inclusive of our swaps, and our pro forma weighted average interest rate stands at about 4%, with a weighted average term to maturity of four years, rising to five years, assuming the payoff of the September bonds in Kansas City Mortgage. Note that we've added a pro forma debt chart to our supplemental on page 18 and one in our Investor Presentation on page 15 to provide additional details. Now turning to our Inaugural Guidance for 2026. We expect Core FFO per share in the range of $2.41-$2.49 a share, which is up over 5% at the midpoint, reflecting the continued organic growth and the contribution of our external growth activity.
We expect strong Same-Center NOI growth in the range of 2.25%-4.25%, with only Pinecrest and Kansas City remaining in the non-Same-Center pool. In addition, as we've discussed, our quarterly Same-Center NOI can vary given the timing of our operating expenses throughout the year against fixed CAM recoveries, which are more evenly distributed throughout the year. Also, following usual seasonal patterns, our occupancy peaks at year-end and then rebuilds throughout the year. We expect recurring CapEx in the range of $65 million-$75 million, which reflects the growing size of our portfolio, our focus on retenanting and reinvestment, with CapEx overall remaining in the mid-teens as a percentage of NOI. For additional details on our key assumptions, please see our release issued last night. One housekeeping note.
We do plan to file our 10-K tomorrow after the close, which will also be filed by the filing of an Updated Shelf, which reaches its three-year term in 2026, the Resale Agreement for our Convert, we'll also be refiling our ATM, where no issuances have occurred since late 2024. We are greatly looking forward to seeing many of you at upcoming events over the next few months. Please reach out to the respective firms if you'd like to join and meet with us. With that, operator, I'd now like to open the call up for questions.
Operator (participant)
Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question today comes from Samir Khanal of Bank of America. Please proceed with your question.
Samir Khanal (Stock Analyst)
Good morning. Thanks for taking my questions. First, you've previously highlighted success in recapturing underpaying space to bring in better use tenants, and it sounds like Saks would be no different this year. With Saks potentially rejecting leases this year, how should we think about the 2026 CapEx implications, just in terms of timing and magnitude, and is a range of Saks outcomes fully contemplated in the CapEx guide?
Stephen Yalof (President, CEO, and Director)
Good morning, Samir. I'll speak first to, you know, Saks' plan and strategy with those stores. They haven't rejected any of the leases, and we certainly don't anticipate them doing so. I mean, if they do, obviously, we've spoken about the fact that there's great upside for us long term. With regard to how we plan the capital, Michael, you want to?
Michael Bilerman (EVP, CFO, and Chief Investment Officer)
I would say, you know, at this juncture, you know, any spend, depending on if and when we get those stores back, we would underwrite. There wouldn't be much CapEx this year, so that's not embedded in the $65-$75 CapEx that we've given.
Samir Khanal (Stock Analyst)
Okay, thanks. Just, you know, follow up, just be curious to hear the latest from your conversations with retailers. First, if there's, you know, been anything on tariffs, just given some very recent headlines. Second, how retailers might be thinking about sales and the promotional environment this year versus last? Thanks.
Stephen Yalof (President, CEO, and Director)
I think first of all, the last year ended very promotionally. I think, you know, when tariffs were announced in April of last year, I think a lot of retailers were strategic, and the ones that were most nimble and able to move their distribution and their manufacturing around, saw great success of getting product into the stores. So much so that even in the fourth quarter, we saw an excess of inventory, particularly in our outlet channel. You know, we speak to our retailers frequently. You know, when we do our plan for 2026, a lot of that is informed by the growth strategies that the retailers have. They're open to buys, which don't seem to be decelerating by any stretch of the imagination.
We also speak to them with regard to what their sales expectations are going to be for that year, so that we can work in concert with them, because, as you know, overtrend is an important part of our business, too.
Operator (participant)
The next question is from Juan Sanabria of BMO Capital Markets. Please proceed with your question.
Juan Sanabria (Managing Director for U.S. Real Estate Equity Research)
Hi, good morning. Thanks for the time. just hoping you guys could talk a little bit about the Leasing trends. The spreads, if I look at the comparable numbers, came down in 2025, 2024, but the CapEx spend for those leasing was pretty good, and that, like, the term you're getting, the length of the leases has increased. I'm curious if the longer term is something you guys are proactively looking for or something the retailers want, given the limited amount of space available to markets with little supply coming?
Stephen Yalof (President, CEO, and Director)
Yeah, well, look, Juan, I would say that retenanting is clearly a far more profitable program for us than renewing leases. You know, if you take a look at our trend over the last five years, where we were renewing tenants at a rate of 95%, and this year, we'll renew tenants at a rate of about 80%, because that gives us a lot more opportunity to go after that renewal, which obviously brings more growth to our portfolio. You know, I have to remind us that, you know, we're operators, and every decision that we make is in service of long-term growth.
I think that's important to note as we think about the tenants that we choose to renew versus the tenants that we go to replace as we add, you know, new brands, entertainment, restaurants, to diversify the mix of our properties, which just increases the utility over time.
Juan Sanabria (Managing Director for U.S. Real Estate Equity Research)
Thanks for that. Then just to follow up, do you have any statistics, you've talked about it historically, on trying to increase the length of stay of customer visits and adding the food and beverage and entertainment component? Just wondering if there's any statistics you can share with regards to those metrics.
Stephen Yalof (President, CEO, and Director)
Yeah, you know, we'd mentioned in previous quarters that we're in the early innings. I think 12 times is what you're talking about. That's a pretty important metric for us. We're starting to measure dwell time now. When I say early innings, you know, we have to create a baseline before we can figure out how to build upon that baseline. Anecdotally, you know, we've got management teams on all of our shopping centers, so we know when our parking lots are full. We know when customers are there for a long period of time. You know, we, you know, we live and breathe on those centers.
Anecdotally, I can tell you that restaurants definitely add not only to the dwell time of the individual, the customers coming to visit us, but we see a lot of later business, too. We're increasing traffic at key times during the shopping day, where we're seeing a lot more customers at night. Ultimately, the longer people stay in our centers, you know, the more they'll spend, and that'll help us continue to drive sales through our platform.
Juan Sanabria (Managing Director for U.S. Real Estate Equity Research)
Thank you.
Operator (participant)
The next question is from Craig Mailman of Citi. Please proceed with your question.
Sydney McInty (Equity Research Associate)
Hi, guys, it's Sydney McInty in for Craig. Just curious, on the acquisition side, private capital continues to provide competition for available assets. Just what's been the volume of deals you guys have seen so far in 2026? Are the transactions you're looking at mainly marketed or off-market deals? Thanks.
Michael Bilerman (EVP, CFO, and Chief Investment Officer)
Thanks, Sidney. You know, our pipeline remains active. We're going to really lean in to assets where we can create value. I think we're pleased with the assets that we've bought, and we have case studies now of how we can use our platform to create value. There are competition in the market. I think that is against a backdrop of very little retail new development and very positive retail fundamentals, which is a good thing overall for the marketplace. For us, it's really where we can find value in the two channels, whether it's outlet or open-air lifestyle centers, which we believe gives us a competitive advantage, and in the synergistic nature of these two verticals together, which, you know, through the acquisitions that we've done, have really proven out the growth potential of our platform.
Sydney McInty (Equity Research Associate)
Great. Thank you. Then maybe one more for me. Just with the ongoing remerchandising efforts, I'm curious if you've continued to see, like, any shifts in the customer demographic at some of your outlets, and then maybe just an update on consumer health overall today. Thanks.
Michael Bilerman (EVP, CFO, and Chief Investment Officer)
Sure. I would say definitely. I think a lot of things are contributing to seeing a shift in consumer demographic. I think number one is, you know, our shopping centers, with the population shifts and a lot more people moving into the markets where we have centers, we're seeing more families come and shop with us, and we're seeing a much, a younger consumer, too. If you take a look at the brands and the categories that were really successful at the end of last year, Family Apparel, the Health and Beauty category, and a lot of those younger-driven consumer brands. You know, we've enhanced our digital marketing and our local marketing initiatives in such a way to really speak to that local customer.
You know, the digital initiatives, whether it's a TikTok and the Instagram that we're using right now to get in front of our customers, is really resonating with that much younger customer. That younger customer also likes our Loyalty Program. You know, we have a Loyalty Program that incents the customers to come back and shop with us more frequently, and they're rewarded for doing so with additional discounts to their favorite brands. That's increasing traffic. We see a lot of younger consumers taking advantage of that as well.
Sydney McInty (Equity Research Associate)
Thank you, guys.
Operator (participant)
The next question is from Rich Hightower of Barclays. Please proceed with your question.
Rich Hightower (Managing Director for U.S. REIT Research)
Yeah. Hey, good morning, guys. Michael, I think in the prepared comments, you gave us the, sort of the sequential occupancy, you know, cadence for 2026. Just to help us understand any other sort of variations seasonally that, you know, that we should think about in terms of the modeling, to get to the full year number. You know, the perennial question, you know, what set of circumstances gets you to the high end versus the low end, if you don't mind? Thank you.
Michael Bilerman (EVP, CFO, and Chief Investment Officer)
Thanks, Rich. You know, I'd say from an occupancy perspective, you know, what we try to highlight is not every point of occupancy is worth the same. You can't just assume we get to a certain occupancy or we drop a certain occupancy, that it has a direct correlation, one for one, relative to NOI, as evidenced last year, during our numbers. There is a cadence, just given the seasonal nature, where we do peak at the end of the year for the holidays, typically in the first quarter, where we do have most of our role. You know, you look back at our long-term history, it's averaged about 150 basis points, you know, coming off of that fourth quarter.
You know, we talked about in the release, we're ahead of our 2026 role in renewals. We continue to see very strong demand, and we're at record leasing volumes. In terms of the second part of your question, the Same-Center NOI range of two and a quarter to four and a quarter. you know, as part of NOI, there are variables related to sales, our RCD, our rent commencement dates, tenant credit, the downtime, our operating efficiency. So when you roll spreads and timing all into the mix, you know, each one of those variables could have a positive or a negative impact.
You know, we weight all of these variables to provide a range, of about 200 basis points in the same center that we feel very comfortable with at this juncture, knowing all of the things today that we that we know.
Rich Hightower (Managing Director for U.S. REIT Research)
Okay, that's very helpful. I guess maybe a bigger picture question, you know, sort of a follow-up to a prior question as well. You know, as you think about potential future M&A, on top of what you guys have already done the last couple of years, you know, I guess we've heard anecdotes from certain peers, you know, in retail, that they're having active conversations with retailers about specific centers that the retailer might want to expand to under different ownership. I'm wondering if you have any sort of color on those sorts of conversations from Tanger's end.
Michael Bilerman (EVP, CFO, and Chief Investment Officer)
Yeah, look, I mentioned earlier that we are. We're in conversations with our retailers all the time. you know, I think our retailers have really gotten behind-
what we've done as an organization to grow our business, grow dwell time, how we market to the consumer. Because of that, when we pick up the phone and call a retailer and say, "Hey, this is a prospective shopping center that we're looking at, something that you're in or something that you're not in, what are your thoughts?" We usually get positive feedback. I think our brands are definitely rooting for us. They like the fact that we've gotten into that second vertical of lifestyle shopping centers. They believe, and we've proven, that we add value, when we take ownership of those centers. We've got a very clear strategy. We work well with our retailer partners. I think they're supporting our growth.
You know, when we mention a particular market that we're interested in, whether it's an acquisition or even if there's a Greenfields Development opportunity across the country, we work closely with them to make sure that they're on board, so we're making really smart decisions from the very beginning of any transaction.
Rich Hightower (Managing Director for U.S. REIT Research)
Okay, thanks so much.
Operator (participant)
The next question is from Hong Zhang of JPMorgan. Please proceed with your question.
Hong Zhang (VP for North America Equity Research (REITs))
Yeah. Hi, Michael, I think you talked about CapEx being in the mid-teens this year. Is that something we should expect as kind of a run rate going forward, or is there any room for your CapEx TILC spend to fall, given customer retention?
Michael Bilerman (EVP, CFO, and Chief Investment Officer)
Thanks, Hong. We expect it to continue in this mid-teens range, which is, you know, for our channel, much lower relative to others, right? You know, you look at your models, you know, upwards of 20%-30% CapEx relative to NOI. We feel really good at our levels to be able to generate positive return on invested capital, and given a payout ratio of only 60%, be able to have that free cash flow to reinvest in our business.
Hong Zhang (VP for North America Equity Research (REITs))
Got it. Thank you.
Operator (participant)
The next question is from Greg McGinniss of Scotiabank. Please proceed with your question.
Nick Joseph (Director for Equity Research)
Hello, this is Nick Joseph for Greg McGinniss. Thank you for thanking, taking my question. Coming out of the holiday season and your kind of Black Friday Every Day campaign, what is your current read on the health of your consumer and overall profitability of your retail partners and potential expansion of them within your centers?
Stephen Yalof (President, CEO, and Director)
Thanks for the question. As far as the health of the retailers, there's been no deceleration with regard to retailers at open to buy. We see the retailers are looking to expand, there's not a lot of new retail space being built across the country, there's been a consolidation of Department Store Business. We're seeing it, you know, most notably, Saks OFF 5TH. Brands need to expand. They're looking for places to expand, a lot of our markets really support a lot of that growth and that planned growth. You know, we're definitely, you know, optimistic about open to buy and about the upside and opportunity that we have with the retailers. Regarding to the customer, you know, look, particularly in our outlet space, we provide value every day.
I think in, you know, whether it's uncertainty caused by, you know, tariff noise in the marketplace, or interest rates, or inflation, or pricing, I think that the customer is always going to think, "Where can I get the brands I want at the best possible price?" That's what we offer every day in the 38 outlet shopping centers across our portfolio. We see that customer. You know, that's why our traffic numbers were up as much as they were this year, particularly in the fourth quarter. We'll continue to drive traffic into our shopping centers, through our marketing initiatives, through our social media campaigns. I think that the customer, when they have the chance to vote, they vote with the cash register, and they're looking for their favorite brands and value pricing.
Again, if you want that, you shop Tanger.
Operator (participant)
The next question is coming from Floris van Dijkum of Ladenburg. Please proceed with your question.
Floris Van Dijkum (Managing Director for Equity Research)
Hey, guys. Thanks. Maybe if you guys could you update your temp tenancy? I know that historically, it's, you know, prior to, I guess, the retail arm again, it was around 5%. It's been around 10% more recently. Has there been any movements, and where do you expect that's gonna how that's gonna trend? Obviously, that also has an impact on your... I think Michael talked about the profitability per occupancy. It's permanent occupancy is twice as profitable as temp occupancy. If you can give us some comments on the trajectory of your temps, that'd be great.
Stephen Yalof (President, CEO, and Director)
Sure. Floris, first of all, I think we continue to grow NOI, and we continue to grow our business, and you see it in our ability, you know, when we bring in new retailers, as we continue to re-renew our existing tenants. You know, we get space back. You know, we talked about Saks. We'll use it as an example.
You know, should some of those Saks spaces be rejected, we feel that our temp strategy in place, we can go ahead and fill those Saks boxes almost immediately and retain that cash flow while we think about a long-term strategy to replace that tenancy, whether it's to divide some of those up in order to add multiple tenants, or if there's a big box retailer that we think we'd like to see in our shopping centers, that's gonna add to the variety, the mix, and the overall long-term growth of that property. To us, short-term leasing is a really important strategy, that 10-ish% that you're talking about.
You know, I don't, I don't think that that's ever going to be. It doesn't necessarily have to de-decrease in such a manner, because there's always going to be flexible vacancy, strategic vacancy across our entire portfolio, that when a, when a retailer goes out, we're gonna make sure that we've got a tenant that's gonna come in and backfill it until that next retailer with the long-term lease comes in and backfills behind it. You know, I think we've been really successful using that as a strategy. Just one last point to make. You know, when we started here about five years ago, you know, there were one or two people working in short-term leasing, so there wasn't that much of a focus.
Now that we've, you know, sort of given the keys to the, you know, the... We've made our general managers of our shopping centers responsible for their P&Ls. They're making sure, going out into their local markets, and they're doing a lot of that short-term leasing for us. A lot of those brands become future brands that we take across our portfolio. Gives us an opportunity to try new uses, gives us an opportunity to pop up retailers and give them an opportunity to be successful in our properties. By doing that, we've added 41 new leasing representatives in the short-term game alone, and that's always gonna add to velocity, maintain our occupancies, and keep them high.
You know, we say all the time, we love this, but, you know, I think our customers that shop our centers, you know, certainly know the difference between a closed store and an open store. Some of these short-term tenants really provide a lot of utility to our centers, a lot of value to the customer, and we're gonna continue to use that as a strategy. Thank you for that question, Floris.
Floris Van Dijkum (Managing Director for Equity Research)
No, no worries. Maybe my follow-up. I just, you know, having walked the property last year in Kansas City, and obviously, there was rumors at the time that the Kansas City Chiefs might be moving there. What kind of investments do you foresee happening potentially at that center? Obviously, I think it's still a couple of years out before the Stadium gets built, but what kind of opportunity do you see for Tanger in redoing your Legends assets and repositioning that?
Stephen Yalof (President, CEO, and Director)
You know, when we purchased that shopping center, we did so with the mindset that we also had a capital plan, that we're going to continue to invest in that center, and that investment's already started. You know, I think now that, you know, that the Kansas City Chiefs move and all of that infrastructure and all of that capacity that's gonna move to the Kansas side of Kansas City, you know, I think it only has. Our phones are ringing with retailers that are more anxious to come here that might not have been here before. We think that there's opportunity for our peripheral land for us to continue to develop and grow on that. There is some development opportunity in that shopping center that we're going to take advantage of. I think it's very top of mind.
That's why we talked about it in our opening remarks, very top of mind for this company. You know, we think there's a number of our centers that have an outlet profile, have also attracted non-traditional outlet retailers that see value in being where the consumer is and where the customer is going. I think that the customer is only gonna continue to grow and build in this market, and we're gonna make sure that we bring that customer not only the value that they want, but the retailers they want, the experiences they want, the food and beverage that they want across that portfolio. We see Legends as being not only a great buy that we made, but one of the great growth vehicles for this company going into the future.
Floris Van Dijkum (Managing Director for Equity Research)
Thanks, Stephen.
Operator (participant)
The next question is from Caitlin Burrows of Goldman Sachs. Please proceed with your question.
Harrison Slater (Equity Research Associate)
Hi, good morning. This is Harrison Slater on for Caitlin. Thanks for taking my question. What does guidance assume for bad debt in 2026? To what extent does that incorporate sort of known versus the unknown headwinds at this point? Thanks.
Michael Bilerman (EVP, CFO, and Chief Investment Officer)
Thanks, Harrison. As I mentioned before, our guidance range contemplates a range of credit scenarios. It does take into account what we know today. Within that range, we've taken into account the announced and different projections of how those will manifest themselves, as well as, you know, a normal credit reserve. You know, I would say our watch list remains at very manageable levels. None of the recent bankruptcies were a surprise to us, and importantly, it creates long-term opportunities to grow NOI.
As Steve talked about our temp strategy, you know, in many cases, we're able to mitigate some of that exposure because we're able to backfill on a short-term basis, number 1, and then number two is the ability to grow over time by bringing in a new permanent tenant or working with the existing tenant to bring them along.
Harrison Slater (Equity Research Associate)
Got it. Thank you. That's helpful. Just a quick follow-up. Leasing spreads were lower in 2025 than 2024, but in part due to tougher comps on the lease expirations. To what extent do you think tougher comps will continue to limit sort of reported leasing spreads and ultimately Same-Center NOI growth?
Michael Bilerman (EVP, CFO, and Chief Investment Officer)
Thanks, Harrison. You know, I think when you look at our leasing spreads, and when you look at page 12 in the supplemental, you know, a greater percentage of our growth is coming from re-merchandising, whether that's re-tenanting space, and you can see how we almost tripled the amount of square footage that we leased at almost 30% spreads with lower tenant allowances. What we're leasing on a non-comp basis, where we're either replacing vacancy or a temp, and that added another 300,000 sq ft, which has significant impact on NOI growth. You know, sometimes metrics will contradict each other. We don't take metrics to the bank. What we take to the bank is cash flow and Same-Center NOI growth, and all of that is supportive of where we stand.
You know, we look to being able to drive these spreads, work with our retail partners, to continue to grow the enterprise, keeping our renewals short and keeping the new deals attractive on a return on invested capital basis.
Harrison Slater (Equity Research Associate)
Thank you.
Operator (participant)
The next question is from Naishal Shah of Green Street. Please proceed with your question.
Naishal Shah (Senior Associate for Equity Research)
Hi, good morning. This is Naishal on for Vince today. It feels like we've recently seen an uptick in retailer bankruptcies and store closures thus far in 2026. Eddie Bauer is another name that's been struggling, and it sounds like they may also close some locations. I was curious if you could provide their share of total portfolio GLA and their annualized base rent.
Michael Bilerman (EVP, CFO, and Chief Investment Officer)
Thanks. You know, none of the tenants that have announced are in our top 25, so, you know, each of them there are small. I mean, obviously, all of our centers are open, so you can go to those centers and, you know, we have, I think, 14 Eddie Bauer stores in the portfolio. As we just, you know, we've been talking about on the call, you know, none of these are a surprise to us. This is typically the season, post-holiday, where you see it. Our watch list remains at, you know, very manageable and low levels. You know, while we focus on these things, it's the opposite that we're really excited about, which is all the demand.
When we have record leasing activity, increasing occupancy, the demand side of the equation is so much stronger than the bankruptcies. That's, you know, that's part of retail. It's the best thing that you constantly reinvent. We can't control people's capital structures or their margins, but we can drive traffic to our centers and do as much as we can do to help their performance.
Naishal Shah (Senior Associate for Equity Research)
Thank you. That's, that's helpful. Maybe just a quick follow-up. Every quarter over the last year, the number of new lease deals signed has increased in the Tanger portfolio, and I was curious, is there a certain category of tenant from which you're seeing an increasing level of demand?
Justin Stein (EVP and CRO)
Yeah, this is Justin. you know, it's not one specific category, but like Steve mentioned earlier, the family category, like, all the Gap brands are doing extremely well. The Athleisure brands are starting to do more deals throughout our portfolio, and obviously, we love Health and Wellness. We also spoke a lot about our focus on Food, Beverage, and Entertainment and activating and monetizing our peripheral land. I think you're gonna start to see a lot more of that throughout our portfolio.
I mean, for those of you that went to Nareit in December in Dallas, and you saw our peripheral strategy in action, you know, and, you know, if when you walked that asset, you saw a Portillo's, you saw the Crate & Barrel, excuse me, the Cracker Barrel, the 151 Coffee, and the Wagbar under construction. You know, that's just one center where we're focusing on Food, Beverage, and Entertainment, and I think you're gonna start to see that category expand throughout our portfolio in multiple centers around the country.
Naishal Shah (Senior Associate for Equity Research)
Awesome. Thanks so much.
Operator (participant)
Our next question is from Omotayo Okusanya of Deutsche Bank. Please proceed with your question.
Omotayo Okusanya (Director for Real Estate Equity Research)
Yes, good morning, everyone. Wanted to talk a little bit about the changes you've kind of been making over time, so the Loyalty Programs. Trying to understand a little bit more around, again, how that's kind of widening your customer base, kind of getting younger customers, exactly how you're measuring that, and how you see that kind of translating to better sales productivity at percentage?
Stephen Yalof (President, CEO, and Director)
Well, thanks for the question. First of all, the Loyalty Program is an opt-in program, and we reward our loyal customers with, you know, digital discounts and initiatives to come into the center, all of which have attribution. When we send a digital coupon to a particular customer in our Loyalty Program, that customer then, once they come back to the shopping center and make that purchase in the store, we know via the attribution that they came back. It gives us an opportunity to not only know who our customer is, speak to a customer in a way that they are interested in getting or consuming their shopping center information, rewarding them for their loyalty.
Our rewards, you know, we don't have a product, but in the Outlet channel, we're able to give additional discounts in partnership with the retailers, so that we can reward our customers with additional discounts. Stackable discounts on top of the best deal that they can get in any particular store, our rewards give them an opportunity to even do better. There are different levels in our Loyalty Program. There's the entry level, and then there's a level where if you've achieved a certain amount of sales in any particular year, then you're entitled to a number of different services as well as additional discounts. I just think the gamification of loyalty is really important, particularly to a younger consumer, because they're not only looking for their favorite brands, but they're looking for the best possible price.
When you go to one of our shopping centers and you see a number of young consumers walking around with a bunch of bags from their favorite stores, you know, what's as important to them as, "Look what I just bought at this store," is, "Look how much I got for the, for the money that I spent." I think that that's a really important part of the conversation, particularly in our outlet channel.
Omotayo Okusanya (Director for Real Estate Equity Research)
Is there any data out there just about how membership in general is growing, and whether it's like the 18 to 25 age group that's growing fastest? Just anything you can give us about how that's performing.
Stephen Yalof (President, CEO, and Director)
Nothing I'm prepared to share on the call right now, but we certainly have the data. We track the data, we communicate with these customers. I mean, look, it's a data-driven program. You know, perhaps in the coming quarters, we'll get some more information on loyalty. It's a great question, but, you know, I'm unfortunately not prepared to, you know, share anything that I have in front of me right now.
Omotayo Okusanya (Director for Real Estate Equity Research)
Fair enough. Great quarter.
Operator (participant)
The next question is from Todd Thomas of KeyBanc Capital Markets. Please proceed with your question.
Todd Thomas (Managing Director and Senior Equity Research Analyst)
All right, thanks. I wanted to go back to the operating results in the quarter, sorry if I missed this, what specifically drove the beat in the quarter versus guidance, which drove full year results above the high end of the range? I know there's a lot of seasonality in the business in general the fourth quarter in particular, just curious if you could sort of highlight, you know, exactly where the beat versus your budget was?
Stephen Yalof (President, CEO, and Director)
Thanks, Todd. You know, coming out of the third quarter, we had updated guidance of FFO of $2.28-$2.32, and Same-Center NOI of 3.5%-4.5%. We ended at $2.33, with Same-Center NOI of 4.3%. The NOI came in basically at the high end, just a tick higher, and a lot of that had to do with, you know, the performance in the fourth quarter from a revenue perspective as sales, you know, drove our percentage rents and the leasing activity, driving our base rents as well as our recoveries. The other upside that we got relative to our expectations was just the performance of the acquisitions that were in the non-Same Center pools.
We got a little bit more FFO out of that bucket, Kansas City, Pinecrest, and Little Rock, which all contributed to that end-of-year performance.
Todd Thomas (Managing Director and Senior Equity Research Analyst)
Okay. I wanted to ask about, you know, the sort of the bankruptcies or, you know, some of the tenants that have been discussed on the call. You know, we've seen the results of bankruptcy-related lease auctions over time, in the last few years, we've seen a lot of tenants stepping up at these auctions. Demand's been, you know, fairly strong in some instances. Whether Saks or otherwise, you know, how would that process work and the approval process work in your portfolio? Is it any different than it would be in a traditional portfolio, would Tanger be active or aggressive in lease auctions to retain control, just given, you know, sort of a below-market rents in some cases?
Stephen Yalof (President, CEO, and Director)
I think the answer is yes. I mean, look, we want to control our real estate. We want to make the leasing decisions. We want to make the merchandising decisions. I think, you know, as operators of shopping centers, I think we've proven that we're probably vested when we're in control of the property that we have. You know, I think a lot of the leases, particularly those Saks leases that you're talking about, sure, there's value in those leases, you know, the leases were written in such a way that, you know, definitely give the Saks creditors some control. At the end of the day, you know, if those leases get rejected, we still see that as a great opportunity for us.
If they don't get rejected, and they get bought at auction by retailers, then we'll be looking forward to working with these new retailers and, you know, bringing inventory to our property. Todd, the, you know, the other part, just thinking about bankruptcy relative to our portfolio. You know, we have a small tenant portfolio. We got over 3,000 stores, 16 million sq ft. Our average tenant size is 5,000. Outside, we don't have a lot of big boxes. You've shopped our centers, you know, the Saks situation is unique in that regard, where most of the other bankruptcies, as you've seen over the last number of years, you know, we're able to manage through that.
Those leases generally don't have a lot of term with them, those don't really happen, and we're able to re-lease the space either on a temp basis or then a perm basis and continue to drive NOI. You know, these bankruptcies are not, you know, creating a headwind. It creates more headlines than actual impact.
Todd Thomas (Managing Director and Senior Equity Research Analyst)
Are there certain restrictions around, you know, the auctions process and tenants stepping up? You know, I would assume, you know, in an outlet center, you know, or value-oriented center, there are certain restrictions. I mean, how does that work in your portfolio?
Stephen Yalof (President, CEO, and Director)
Yeah.
Todd Thomas (Managing Director and Senior Equity Research Analyst)
you know, can you just kind of run through that process a little bit and how it might differ?
Stephen Yalof (President, CEO, and Director)
Todd, it boils down to lease quality, you know, and really, it's the acquiring retailer will stand in the shoes of the exiting retailer and will have to live with the terms of those leases with regard to the term, the rent, and, you know, the use clause. You know, if there's consistency in the use clause, you know, that's one thing. If there's inconsistency between what the user wants to do with that space and the use clause, then that creates some of that conflict you're talking about.
Todd Thomas (Managing Director and Senior Equity Research Analyst)
Okay. All right. Thank you.
Operator (participant)
There are currently no additional questions. Thank you for your participation. You may disconnect your lines, and have a wonderful day.