Good morning. This is Cyndi Holt, Vice President of Investor Relations, and I would like to welcome you to the Tanger Factory Outlet Centers' Second Quarter 2019 Conference Call. Yesterday, we issued our earnings release as well as our supplemental information package and investor presentation. This information is available on our Investor Relations Web site, investors.tangeroutlets.com. Please note that during this 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, adjusted funds from operations, or AFFO, same-center net operating income and portfolio net operating income. 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, August 1st, 2019. At this time, all participants are in listen-only mode. Following managements prepared comments; the call will be open for your direct questions. We ask you to limit your questions to two so that all callers will have the opportunity to ask questions. On the call today will be Steven Tanger, Chief Executive Officer; and Jim Williams, Executive Vice President and Chief Financial Officer. I will now turn the call over to Steven. Please go ahead, Steve.

Thank you for joining us this morning. Today, I will provide you with our second quarter results and operational and strategic highlights. Jim will then review our financials and outlook for the year. We are delighted that we delivered second quarter results that exceeded our plan, with positive performance across a number of metrics, including occupancy, tenant sales, customer traffic, and loyalty program growth. Based upon stronger-than-expected year-to-date results, we are raising our annual guidance for Same Center NOI, occupancy, and AFFO. For the second quarter, Same Center NOI declined by 10 basis points compared to the second quarter of last year, which represents a 40 basis point sequential improvement from our performance in the first quarter. Year-to-date Same Center NOI declined by 30 basis points due to the impact of prior bankruptcies, lease modifications, and store closures. Our better-than-anticipated second quarter results were driven primarily by stronger than expected variable rental contributions and higher occupancy, including pop-up and temporary stores to test new exciting brands in our centers which fill vacant space until long-term tenants fill occupancy. We ended the second quarter with 96% occupancy in our consolidated portfolio, which represents an increase of 60 basis points from the end of the last quarter, and 40 basis points from this time last year. We maintain an unwavering emphasis on leasing as we understand that filling the vacant space produces instant revenue and elevated customer experience and Same Center NOI improvement. Our blended average rental rates increased 3.5% on a straight-line basis, and were all 60 basis points on a cash basis for all leases that commenced during the trailing 12 months, ended July 30, 2019. These included 338 leases totaling approximately 1.6 million square feet. We had lease renewals executed or in process for 72.6% of the space in…

Thank you, Steve. Second quarter AFFO available to common shareholders was $0.57 per share compared to $0.60 per share in the second quarter of 2018. Same-center NOI increased 10 basis points compared to the prior year quarter driven primarily by the impact of prior bankruptcies, lease modifications and store closures partially offset by contributions from pop-up and seasonal store occupancy. Maintaining a strong balance sheet remains a strategic priority for us. As of June 30, approximately 94% of the square footage in our consolidated portfolio was not encumbered by mortgages. As of quarter end, only $90 million was outstanding on our unsecured lines of credit, leaving 97% unused capacity or approximately $581 million. We maintained a substantial interest coverage ratio for the first-half of the year of 4.2 times. And net consolidated debt EBITDA was approximately 5.8 times for the trailing 12 months. Our floating rate exposure represented only 3% of total debt or less than 2% of total enterprise value as of June 30th. Weighted average interest rate for our outstanding consolidate debt as of quarter end was 3.6%, and the average time to maturity was 5.9 years with no significant debt maturities until December 2023. Year-to-date, we have reduced our outstanding consolidated debt by $126.6 million. The strength of our balance sheet provides us with stability. And the significant free cash flow after payment of our dividend will allow us to take advantage of selective external opportunities that may arise. In the first-half of 2019, we repurchased approximately 558,000 common shares for approximately $10 million. At quarter end, we had $90 million remaining under the current repurchase authorization through May 2021. In terms of our outlook for 2019, we are pleased to raise our guidance for the full-year. We are increasing our same center NOI guidance for the…

At this time, your first question comes from Greg McGinniss with Deutsche Bank.

Hey, good morning. Steve, could you talk about the occupancy guidance a little bit more, it seems to imply an uncharacteristic 200 basis point drop in occupancy for the back-half of the year. Just wondering if that's related to specific tenants or negotiations. Any details would be helpful.

Good morning, Greg. We have a lot of unknown potential bankruptcy in the second-half of the year that we're just being appropriately cautious in our guidance. We've been very successful so far this year in filling space with exciting new pop-up tenants that add vibrancy to the center. That strategy will continue in the second-half of the year, but we don't want to get ahead of ourselves. We've had a great first-half, great second quarter. We've got some momentum going, but we're still being, I think, appropriately -- I think our guidance is appropriate for the second-half until some of the unknowns become known.

Okay, thank. And then I guess might as well head into a pop-up question. I'm just curious, how much space does pop-up in tenant currently taking, how does this compare to the historical average? And then if you could address your success on converting these tenants into permanent ones that'll be appreciated. And then if you could just remind us on the difference in rent between temp and permanent tenants too, please. Thank you.

Currently our pop-up strategy is a way to test new concepts, and it's consistent with what we've always done in the past. We maintain pop-up stores -- we have pop-up stores to maintain an appealing presentation to our consumers so that they have a better experience on our properties. These pop-up stores and temporary tenants are a combination of national brands and local brands that we test. Right now it's about, give or take, 5% of our portfolio, which is slightly higher than previously, but still a very important part of our tenant mix. We have had really pretty good success converting these pop-up test stores into longer-term permanent stores such as Vineyard Vines, which started as a pop-up test. With regard to the rent, the rent is fantastic because it's compared to zero. And we use these temporary tenants to fill space and create revenue and NOI until we can curate the center and find an appropriate longer-term tenant. It's been a very successful strategy for the 38 years we've been in business. And it's a successful strategy, I believe, used by every successful retail company -- retail…

Thank you, Steve. Appreciate it.

Your next question comes from Christy McElroy with Citi.

Hi, good morning everyone. Thanks. Just wanted to follow-up on Greg's question with regards to occupancy and the guidance, I just want to reconcile that a bit better. And it seems like obviously you're projecting, right now, guidance is projecting a steeper decline in the Same Store NOI growth rate. It's obviously projecting a steeper decline in occupancy, but it doesn't reconcile with the 225,000 square feet of closures that are in your guidance, it says up to 225,000 square feet. Given that 187,000 square feet looks like it's already in the occupancy number. So I just wanted to reconcile that. Does that mean that if worse case scenario kind of plays out in the second half that the closures will be meaningfully higher than the 225,000 square feet? And then, Jim, you also mentioned something about variable rent potentially being a factor. Maybe you can just sort of give us a little bit more clarity there.

Yes, sure. Christy, there are several things that go into average occupancy. One piece of that is the known or likely store closings that you are talking about, which we have guided up to 225,000 square feet. Another piece of that is just is the natural lease rollover. But we've provided that approximately -- the renewal rate will be approximately 75% this year. So you've got some of that coming in to your occupancy. And the other piece is for unknown closures, which given in this retail environment it's prudent to maintain and incorporate some of that into our guidance.

Okay, so I think that's the piece that we're missing there, is kind of what's embedded in there for unknown closures which would be higher than the 225,000 square feet.

That's exactly right.

Okay. And then just on Ascena, it looks like the store count came down by 13 stores and the AVR exposure declined by 50 basis points quarter-over-quarter. What was the driver of that? And then just on with regard to Dressbarn, what is the date that you're expecting for those closures? I know you expect them to be in there through year-end, but I'm assuming that you don't have any in sort of that first August round that they're closing?

Christy, Ascena has sold their Maurices nameplate earlier in the year, so the Maurices stores are out of the Ascena account.

Got it.

Second, we have a settlement agreement with Dressbarn that the stores will remain open until December 31st. They will be included in 2019 occupancy. I just wanted to mention that they have been cooperative and professional in the process. We have had probably six-seven months of advance notice, and are in the process of filling some of the vacant space with much more productive tenants going forward. As I mentioned in my prepared remarks, their sales productivity is only about 50% of our average. So we are cautiously optimistic that this situation will lead to a higher sales productivity and a better presentation to our visitors by new replacing tenants for the Dressbarn concept.

Thank you.

Your next question comes from Todd Thomas with KeyBanc Capital Markets.

Hi, thanks. Good morning. Just following up on that a little bit with Dressbarn, so you mentioned the 177,000 square feet that'll hit, I guess, at the very beginning of 2020. And then separately, I think you commented that there are known closures heading into 2020. Are there additional closures in addition to Dressbarn that you're aware of at this time, and would you expect the space recaptured in 2020 to be higher than in 2019.

Good morning, Todd. If we knew then we'd be happy to tell you, but right now we don't. We will give more guidance on 2020 certainly later in the year or early in 2020. So there's nothing more to tell you. I don't want to speculate. We're in a business where new tenants come in to fill space and tenants that are overleveraged, poorly merchandized and don't reinvest in their stores tend to leave. It's just the retail real estate business we've been in for a long time. And I wish I could give you more guidance, we just -- that's why we call them unknown because we just don't know.

Okay. And then you mentioned that you're brining in some TJX, HomeGoods, Marshalls retail and things like that. Are these traditional stores for the TJX banners, or is this a different formant? And how does that work with the brands that they're clearing merchandize for that also have locations within the centers? It seems like a little bit of competition. And I know you have some TJX banners in some centers already, so maybe you can just talk about that dynamic and how that works a little bit.

The folks a TJ Maxx and their various nameplates are extremely professional. We tested the idea in Foley, Alabama five or six years ago, where we have virtually every one of our major tenants represented. And a lot of the tenants represented in the T.J. Maxx store. We wanted to test it to be sure that they would be compatible and our consumers would find them exciting. They are two different shopping experiences, although they might be next to each other. T.J. Marshalls HomeGoods has perfected the thrill of the hunt. They have lots of different brands. We have stores owned by the companies whose brand is displayed. We may have 10,000 square feet in the environment of the brand with full colors assortment and a full-size range. T.J. may have the brand and limited sizes and limited colors, but many more brands. They are just two different shopping experiences that coexist beautifully. The T.J. store in Foley is doing well. And our tenants are doing well. And we are hopeful that we will continue to expand our relationship with a great company.

Okay, all right. Thank you.

Your next question comes from Craig Schmidt with Bank of America.

Good morning. I was wondering in your active approach to releasing does that include a number of shorter-term leases?

Yes, Craig it does. We use and I've always used popup and temporary stores to fill vacant space until we can find the appropriate longer-term tenants and part of our business strategy since we started 38 years ago.

Great. And then, I noticed the average size dress barn stores about a little over 8,000 square feet. Do you think you may lease that space to a single user or would you be breaking it up?

It's very site specific. Keep in mind that most if not all of the dress barn stores are 100 feet deep and single level on grade. It's very easy and inexpensive to split it into two or three stores. Obviously, we'd like to replace an 8,000 foot tenant with an 8,000-foot tenant going out. That's our first goal. But the flexibility to subdivided space is relatively easy and inexpensive. And keep in mind a perspective. This is an 8,000-foot box versus some of the other mid-to-large department store boxes, which are 10, 20 times larger.

Okay. Thank you.

Your next question comes from Samir Khanal with Evercore ISI.

Hey, good morning, Steve. Again, I guess just kind of at a high level, can you just generally talk about? I mean, you touched on a little bit about leasing discussions but how are leasing discussions going on with potential tenants. I mean, I know there's dress barn, you've had that other vacancies, just, I mean, you mentioned possible further fallout this year. So obviously, those potential tenants are also looking, are aware of that information. So, just trying to get some color from a high level of how these leasing discussions are gone?

Good morning, Samir. Look, we've always had tenant turnover every year. It's a fact of life and 10 years from now, we still will be talking about tenant turnover. The names of our major tenants are totally different today than they were 10 years ago. Fact of the matter is we're still 96% occupied. We are -- the conversations with our tenants are very constructive. Our tenants tell us that the outlet distribution channel is amongst their most profitable divisions with their lowest cost of occupancy and they plan to continue to invest in the outlets. Candidly, with 96% occupancy, having tenant turnover provides us with space to attract new higher volume, exciting tenants. But we look at it as an opportunity. I think our tenants look at it as opportunity, and we are looking forward to enhancing our tenant mix.

Okay, thanks for that. And I guess my second question is around traffic. You did mention in the release that traffic was up, I think it was 1.5%. I'm just trying to gauge as to how you're actually measuring that?

We measure it consistently every year the same way. We have no map pneumatic counters at every one of our properties and the location is consistent. So it's an increase in store count - I'm sorry, car count, going into our centers, measured the same way year after year.

Okay, thanks for that.

Your next question comes from Caitlin Burrows with Goldman Sachs.

Hi, good morning. I think earlier in the comments, maybe it was Jim; you mentioned that you're expecting a renewal rate of - it's either 70% or 75% later this year. I'm just wondering if you could tell us what that's historically been?

Go ahead, Jim.

Yes, sure. It's historically been in the range of around 80% to 85%, so little bit lower this year.

Got it. And then sorry if I missed this, I dropped off a little in the beginning, but on the occupancy in the second quarter, it does seem like it was stronger than you had laid out previously just to do 1Q late closures that you knew of and April closures. So I'm just wondering if you could give some more detail on what was different versus your own expectation. Did some move outs not happened, was timing just different back so more quickly or anything else like that?

I think it's a combination of the various things you mentioned. We were able to keep some tenants that we had anticipated losing. Their sales improved and they decided to say in occupancy longer. We have a very robust pop up in temporary tenant program, where we continue to fill spaces and we will continue to do that. So we are pleased, we are 96% at the end of Q2 and we're working very hard to keep the space filled and our centers vibrant and exciting experience for tenants when they - for our customers when they come visit Tanger centers.

Got it. And then, just looking at the lease expiration schedule, it does seem like the portion that's set to expire in 2020 and 2021 has increased over the past couple of years. So I was wondering do you think that's due to increased usage of popup and some tenants or is it potentially something else?

I don't think that our lease rollover schedule has increased dramatically. It usually ranges between 15% to 18% a year. I don't think that the pop ups we have been through potential vacant stage. And if they are, we'll continue to fill.

Okay, thanks.

I would just - I would say - like 13% to 15% that the annual lease rollover would be and that's really what, if you look on it in our supplement what we're showing and expecting for next year.

That's why Jim is the CFO and I'm not.

I guess I was just looking at when you look at it as a percent of rents as of year end 2017. I think it was 10% and 12%. Now it's about 14%, which is close to his 13%. But it sounds like from what you're saying that's natural.

Yes.

Okay, thanks.

Your next question comes from Michael Mueller with J.P. Morgan.

Hi, this is Hong [ph] on for Mike. I was wondering if you could provide an update on your national site, if there's any changes to plans or retailer sentiment on the potential development?

Good morning. National is a vibrant market. We are excited about the potential of delivering an outlet center in the southern part of national. We are continuing, the master developers continuing the masquerading of the site and the interchange, the new interchange that will feed our development site is under construction. We are in the process of scheduling and visiting the site with our key tenants. Initial reaction has been stronger than we had anticipated. And we will continue to update you every quarter as we progress. But right now, it's moving as planned.

Thank you.

Your next question comes from Caitlin Burrows with Goldman Sachs.

Hi again, I just have two quick follow-ups. I know just in terms of the closures you're expecting could happen in 2020 and the proactive activity that you're doing ahead of that. I guess I'm just wondering could you give some comment on what you're seeing in terms of interest in pricing for that space at this point.

We really don't talk about pricing on individual spaces. We have 30 to 100 different spaces, and I don't want to speculate, Caitlin, as we fill the space they will be incorporated into our metrics that we'll report as appropriate and timely.

Okay. And then, just on the increased traffic and sales that you guys reported, I know when you look you have a lot of tenants but when you look at some of the public ones and what they're telling the market in terms of traffic and sales at their outlet centers, you are doing better than what they're reporting. So I was just wondering if you have any view on how that could be different. Is it that you don't own every outlet center in the country or something else that could be an explanation for how the retailers are reporting something different than what you're seeing?

First of all, I would encourage you to speak to the individual retailers you're talking about, their CEOs have had conference calls and we've read their scripts and we've talked to them, some of their announced closures are international. We don't have any international stores. Second, some of them have announced closures for lower producing outlets in their chain. Thankfully, we've not been advised any of those are ours. So I think the CEOs of our retail partners are making global strategic comments on a public conference call. They're not talking about specific spending to any individual developer.

Got it. Okay, thank you.

There are no further questions at this time.

Thank you, Operator, and thank everybody for their interest in our company. We look forward to seeing you soon. Have a great day. Good-bye.