Good morning. This is Cyndi Holt, Vice President of Investor Relations, and I would like to welcome you to the Tanger Factory Outlet Centers Third Quarter 2020 Conference Call. Yesterday evening, we issued our earnings release as well as our supplemental information package and our 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; and adjusted EBITDA. 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, November 6, 2020. [Operator Instructions] On the call today will be Steven Tanger, Chief Executive Officer; Stephen Yalof, President and Chief Operating Officer; and Jim Williams, Executive Vice President and Chief Financial Officer. I will now turn the call over to Steven Tanger. Please go ahead, Steve.

Good morning, and thank you for joining us. I will provide a review of our third quarter performance and an update on each of our key priorities. Steve Yalof will provide additional details on our strategic initiatives, and Jim Williams, will discuss our financial results and balance sheet. During the third quarter, we made meaningful improvements across each of our areas of focus, including liquidity, rent collections, driving traffic to our centers, leasing and shopper engagement. Our centers offer a compelling option for retailers with an attractive, relatively low-cost of occupancy. For shoppers, our open-air outdoor centers offer an inviting way to find the brands and value they seek as evidenced by the rebound in traffic that we experienced as the third quarter progressed. We believe we are well positioned to capture pent-up demand going into this holiday shopping season and beyond. In the third quarter of 2020, same-center NOI was $66.6 million, a decline of $10.9 million compared to the prior year, driven in large part, by the impact of COVID-19 on rent collections. We are pleased that the year-over-year change is significantly better than it was in the second quarter. Furthermore, since the start of the third quarter, we have generated positive cash flow each month, resulting in $640 million of available liquidity at the end of October. We have made significant progress in terms of rent collections, which were markedly improved compared to the second quarter. For the third quarter, we expect to collect approximately 92% of rents billed, including 89% that we have already collected. We only have approximately 3% of third quarter billed rent that are being deferred or still under negotiation and 5%, which we do not anticipate collecting due to onetime concessions or bankruptcies or because we otherwise deemed them uncollectible because of…

Thank you. We've made significant progress in terms of stores reopening and rent collection since last quarter's call. These continue to be priorities for our entire team, and we're highly focused on returning to long-term sustained growth. Our immediate emphasis is on leasing available space, driving traffic to our open-air outlet centers and building shopper engagement through the important holiday shopping period. We are effectively executing on our initiatives aimed at operating more efficiently to optimize costs, maximizing revenue and driving NOI growth. In terms of leasing, we continue to get in front of our great brands and generate Tanger interest. Many of which are already Tanger customers that are looking to expand their footprint with us such as Calvin Klein, West Elm, Pottery Barn and Aerie. These brands have opened new locations during the pandemic, including marquee stores in center core locations. We are also strategically and successfully utilizing pop-up stores. Pop-ups allow us to fill vacancies and to introduce new brands and new categories to Tanger, such as in the home category, popular food and beverage concepts, well-known local brands and digitally native brands. While the rent per square foot on these pop-up leases is lower than the portfolio average, they fill a number of objectives, including keeping the space occupied with desirable retailers and setting us up for additional future growth with many of these tenants. Two such examples are Tory Burch and Vineyard Vines, both of which initiated their relationship with us as pop-ups and have since expanded to have multiple long-term leases. While leasing velocity remains moderate in this environment, we believe the open-air outlet distribution channel continues to be critically important for many retailers providing a low relative cost of occupancy, making it a compelling option for retailers new to the channel, particularly strong…

Thank you, Steve. Third quarter results, showed a strong improvement from our second quarter performance but reflect the ongoing impact of uncollected rent and reserves related to the pandemic and tenant bankruptcies. Please refer to the earnings release we issued last night for additional detail provided to quantify the impact on rental revenues. For the third quarter, net income available to common shareholders was $0.14 per share compared to net income of $0.25 per share in the prior year. Third quarter core FFO available to common shareholders was $0.44 per share compared to $0.58 per share in the third quarter of 2019. Same-center NOI for the consolidated portfolio decreased $10.9 million for the quarter, including a $6.6 million charge to write-off uncollectible revenues or reserve for rents that were deferred or under negotiation at quarter end and may not be collectible. In addition, we recognized a write-off of approximately $2.4 million in straight-line rents associated with the bankruptcies and uncollectible accounts. The outcome of the bankruptcy is still not fully known at this time. And the rents and uncollectible are largely pre-petition rents. Tenants who are currently on a cash basis of accounting comprise less than 3% of our monthly rents. We also continue to collect rents billed for prior periods, and as of October 31, our second quarter collections improved to 43% of rents billed as expected payments were received, rents previously under negotiation or resolved and a portion of rents written off in the second quarter were paid. With regard to rent deferrals, we recognized revenue from these leases in our net income, FFO and same-center NOI and recorded a lease receivable on our balance sheet. In the third quarter, approximately $2.2 million of rental income billed represented deferred rents or those that are under negotiation. This is…

[Operator Instructions] And our first question today comes from Katy McConnell from Citi.

So can you provide a little more color on what the pipeline of backfill leasing demand looks like today? And based on the progress you made addressing 2020 expirations, can you talk about how spreads are trending for those leases you're actually signing today as opposed to the prior 12 months?

This is Steve Yalof. I'm going to let Jim talk about the spreads. But as far as leasing is concerned, the first thing I want to share is that everybody in our company is a leasing representative. Steve's leasing, I'm leasing, our center managers are leasing. And our retailers, although they're taking a cautious approach, we're talking about future open to buy. Our leasing strategy is a sound one, and we're talking to a lot of the national retailers that are currently in our footprint about expanding. Some of the recent bankruptcies have created opportunity where we have space available in some shopping centers, they are typically high occupancy and have given us the opportunity to get in front of a number of new retailers and creating opportunities that hadn't been there in the past. We're also employing our pop-up strategy, as I said in my remarks. And we think pop-up as a strategy is a great opportunity to turn some of that vacant space into net income. And obviously, short-term leases give us the opportunity to reprice our real estate ultimately as we come to the end of this pandemic. I'll turn it over to Jim to sort of share with you a little bit more about the leasing spreads.

Katy, this is Jim. We're not going to be able to give you much guidance into 2021. We do -- and as we've said, we expect to see a little bit continued pressure on the spread as we're working with our tenants through this environment and the challenges that that faces to maintain high occupancy.

Okay. And then seeing as you made great progress on the rent collection this quarter, I'm curious when you'd expect to get back to a more normalized level of collection? And based on that progress since 2Q, can you touch on any top or bottom categories that contributed the most improvement? Or that are still lagging?

So Katy, I think we're delighted to see that our collection rates get to 89%. And really, if you look at what we expect to get, we think that will get up to 92%. And there's a piece that's still was deferred or under negotiation, which was 3%, which is pretty small, and I think pretty incredible when you think that we pretty much had to work with almost every tenant in the portfolio. And we're down to that pretty small percentage. So we're working through that. And I think we'll continue to make progress there. We've also seen the rents for second quarter and third quarter to be impacted by the bankruptcies and a lot of that -- of the write-off coming from the bankruptcies or pre-petition rents. And so now we're in the post-petition periods. So we don't expect to see -- unless there's further bankruptcy filings, we don't expect to see 2% of the rents written off for the bankruptcies. We do though see -- looking ahead, to see some more store closures and some rent lags coming in as we work through the bankruptcy tenants.

Our next question comes from Greg McGinniss from Scotiabank.

Just building on Katy's question a little bit. So based on that pretty impressive 89% collections number, and you've clearly been hard at work receiving past rents owed. Could you just provide the final collections number by month in Q3? And then kind of where you expect collections to trend by year-end? Is that 92% number, the bogey here?

Well, Greg, I mean, again, we're going to be a reluctant to give you guidance for the fourth quarter. But yes, I mean the collection rates for the month is very similar to, particularly the latter March, to where our average had turned out -- turned out to be 89%. And so far, what we're seeing in October is very similar to that rate.

Sorry. And then the July, August collections numbers, if you don't mind?

Obviously, July was lower. But as we don't -- we prefer not to give the monthly breakdown, I think the important piece, I think, is that where we're trending is toward the end of the quarter and looking into fourth quarter, is more like the rates what we're seeing in the table.

Okay. I guess then, Jim, as noted in the earnings release, there were some rents written off in Q2 that were repaid in Q3. Would you mind just outlining the impact of adjustments built into Q3 results that really actually apply to kind of last quarter's reserves and write offs?

Yes. There's quite a bit of movement, Greg, in the various buckets. I mean part of this analysis -- and there's a big chunk of rent that's been deferred that won't be paid until 2021. So as we move through the year, we will have to continue to go through what's still on the books, what's still unpaid and do a collectability assessment. In some cases, we've increased the reserves, what we had. In some cases, we've had some positive results where folks either paid where we didn't think they were going to pay or we got some termination fees what were previously written off. But net-net, I think the impact of truing up those items in the second quarter that rolled in the third quarter was pretty much a wash.

Okay. I guess just 1 more for me on the Terrell outlet sale. Just curious what the drivers were behind the disposition, whether we should expect to see further noncore sales in the future? And then the -- what the NOI contribution was from that asset? Obviously, it's smaller.

Yes. Yes, Terrell was a very small, poorly productive noncore asset. And it's consistent with our long standing policy of an aggressive and active asset management program. I'm not going to get too much into the details because it was an insignificant transaction, but it is consistent with our long-term plan.

Our next question comes from Todd Thomas from KeyBanc.

This is Ravi Vaidya on the line for Todd Thomas. I wanted to ask you guys about what concepts your team is seeing incremental demand from? We're hearing about retailers cutting their enclosed mall footprints. Gap was an example. Any sense how those types of tenants are thinking about the outlets?

So first of all, as it relates to Gap, we had a very favorable resolution with Gap. In fact, looking at new concepts with Gap as we speak. But I think as we reduce our dependency on apparel and footwear going forward, home furnishings, sporting goods, hard goods and entertainment concepts are things that we're focused on right now.

Okay. Great. It sounds like traffic -- and traffic has recovered, especially in September there, close to prior year levels. Can you offer any commentary on how that's translating into sales? Any updates on sales metrics or performance of the TangerClub membership, average basket size, anything like that?

Well, our centers are all open-air, where basically, consumers feel more comfortable in today's environment shopping. Last year, I just want to point out, we were compared to a period of time with Hurricane Dorian in September, where 7 of our coastal centers were closed. So without that impact, we still would have been about 96% of prior levels. But in all transparency, we wanted to point that out. We do believe that we have compelling offerings to consumers and we are prepared to satisfy what our research shows is tremendous pent-up demand for people to go shopping.

Okay. Just one more for me here. Given the additional space you expect to recapture the 400,000 square feet. Just wondering if you have a sense of where occupancy bottoms out and when. And just to clarify, is that 400,000 feet only for tenants in bankruptcy? Or are there other closures and nonrenewals in that total space you're going to recapture?

So that number is both bankruptcy and also restructuring. And obviously, it's a fluid situation with COVID right now. It's hard to make a determination as to where occupancy will land. But again, I reiterate that leasing is one of the main objectives for the entire organization. And we see that some of these spaces that we're getting back, particularly in some of our better assets, creating great opportunities for us to get in front of new retailers, particularly those that haven't been in our platform before. And we think that's going to be a great opportunity for us to build upon as we continue to maintain our strong leasing relationships with live retailers.

Our next question comes from Craig Schmidt from Bank of America.

I'm wondering, do the pop-ups impact leasing spreads? The pop-up leases.

No, they don't, Craig.

Okay. And then regarding like home and hard good categories, the new retailers that are renting your properties, what kind of ABR do they take comparable to the overall portfolio?

We don't really break down the rents by category. But from a contribution point of view, I mean you look at -- we look at great halo retailers like some of the deals we just did in Lancaster. We added West Elm, we added Pottery Barn. And those were retailers that were positioned in other centers in that community, but they wanted to position themselves where the traffic is, and they came to our shopping centers. And with great brand followings that they have, we see that those retailers, in addition to the rents that they pay and hopefully some overage rent that we'll get as their sales perform, we also get a whole new category of shopper shopping in our shopping center. And I think that's great. Obviously, all ships rise.

Okay our next question comes from Caitlin Burrows from Goldman Sachs.

I guess maybe on same-store NOI for that revenues were down in the quarter, but so were expenses. So NOI, I would say, was kind of even with them. I was wondering, going forward, you did talk about expense savings, but is it possible to continue these expense savings, while revenues are lower, so that kind of evens out the same-store NOI declines? Or do you think that the expense savings may not be able to keep up with the revenue?

Caitlin, this is Steve again. With regard to expense savings, so I think a lot of the Q3 expense savings had to do with the fact that we had cut our hours by 30%. And actually starting today, we're going to add back 2 hours a day for holiday shopping season. So implicit with longer hours come increased expenses. As I mentioned in my opening remarks, we just brought a very seasoned veteran of operating shopping centers to our team. And one of the legacy field operations of Tanger being a little bit more marketing driven, we're now pivoting to more of an operational model. And we think embedded in that pivot to more operations will come more expense savings on the field line.

Okay. Got it. And then just on the lease termination fees, they were high this quarter, but I know that you guys had mentioned last quarter that you were expecting them to be high. So I was just wondering if that expectation is now, of this elevated level, is over? Or do you think that what you had been talking about last quarter as that it would be coming, if there's still more, to that or if we should return to a more normalized level?

Caitlin, this is Jim. I'll take that question. We have been getting a few termination fees, but the primary reason for the termination fee that we recognized is a pretty significant termination fee we received from a single tenant, and we recognized about half of that in the third quarter and the other half will be recognized in fourth quarter.

Our next question comes from Vince Tibone from Green Street Advisors.

What percentage of your square footage is currently leased to pop-up or temporary tenants? And how does that compare to where it was a year ago?

It's Steve. Historically, temporary tenant's about 4% of our portfolio. But right now, that's expanded to about 5.5%. And again, short-term leases and pop-ups to us, obviously, occupancy is critical, and it's our goal right now to maintain occupancy. Occupancy means cash flow. But then a lot of those short-term leases where we have short lease expiration periods, obviously, give us the opportunity to reprice our real estate when we get to the other side of this current pandemic.

Got it. And just a follow-up on Craig's question. I just want to clarify. So all the pop-up leasing is not included in any of the leasing metrics. Like, I see you break it out 2 different sections, all lease terms and then terms of more than 12 months. So none of the pop-up leasing shows up even in the all lease terms section, is that correct?

So Vince, this is Jim. Let me just clarify. If you look at the footnote in our supplement, we tell you that what's not in spread are some of the temporary tenant leasing income, which is where pop-ups would be. What's in short-term leases are those that's beyond a year or more. And those are what's shown in the spreads.

Okay. Is there any -- like, so how much lower is the typical rent on the pop-ups? Because I think that's maybe a gap in NOI between -- it's hard to see how much that impacts, but because it's not showing up in spreads then I don't know where else it would flow through in the financials besides revenue ultimately. But, like, can you help us think about like, okay, if your tenants are going to increase, what is the rent level that they generally pay relative to the portfolio average?

This is Jim. I'll start off, and Steve Yalof, if you want to jump in. But as Steve said, I mean the pop-ups just due to their short-term nature are not going to pay the full rents. And we don't really get into what to -- what those rents are and how those compares. It's a case-by-case basis. It's a tenant-by-tenant basis. It depends on who we're talking to and who's coming in. Obviously, the goal there is to bring in some exciting new and fresh tenants to upgrade our tenant mix, and we think that's where we need to go and take the portfolio. But we're -- I think we're having a lot of success in talking to these tenants and getting them interested in coming in and opening space in our centers, certainly on a pop-up basis.

[Operator Instructions] Our next question comes from Mike Mueller from JPMorgan.

So looking at the reserve components, the $2.3 million tied to bankruptcy, primarily pre-petition, and then at risk due to financial weakness, that's about $3.6 million together. If we're thinking about the 400,000 square feet of space that you expect to lose over the next few quarters, what portion of that $3.6 million is tied to that 400,000 square feet? And then what portion is tied to, I guess, other tenant situations outside of the 400,000 square feet that you know you're going to lose?

So Mike, I don't have that kind of breakdown in front of me that I can share with you. There's certainly a component that's in the bankruptcy section, but I just don't have that information, I'm sorry.

And our next question is a follow-up from Vince Tibone from Green Street Advisors.

Just what's sort of the impairment charge at Foxwoods? And then does that mean the property is being marketed for sale?

Vince, this is Jim. The impairment related to Foxwoods is primarily the result of just that property being tied to the casino industry. So it has some challenges with rents and occupancy, certainly seeing that market take -- have -- the casino industry having its own challenges. I think one of the casino is still not open today. So we do a quarterly analysis each quarter. And based on our analysis and based on the facts and circumstances at that time, we determined that an impairment charge was necessary for Foxwoods. That doesn't necessarily mean that it's being marketed for sale. But we've always -- it doesn't mean that's marketed for sale.

Okay. And just one last one for me. Can you share some color on how much variability there is among traffic trends across your portfolio and any notable trends by region? And specifically, how are your 2 important Long Island centers performing compared to the rest of the portfolio?

Vince, I'll take that. The portfolio we have is not dependent upon visitors and tourists from other parts of the world, which obviously have been impacted by this terrible virus. Our properties are a drive to American resorts, where people tend to go year after year together. We don't really have -- we're not a proxy for retail so if I told you the southern properties were doing better than the northern properties, I don't know if I would give you a true picture. Each has different variables impacting traffic. Some of which are weather and other issues that present themselves today that might be extraordinary nonrecurring issues. So I don't think we would give you much data on geographic distribution of the sales and traffic that would be helpful to you.

And ladies and gentlemen, with that, we'll conclude today's question-and-answer session. I'd like to turn the conference call back over to Steve Tanger for any closing remarks.

I want to thank everybody for participating in our call today. We hope to see virtually a lot of you at NAREIT in a couple of weeks and eventually be able to visit with you face-to-face, as we always have. Please be safe and go shop at our opening outlet centers. Have a great holiday, if we don't see you or speak to you before. Goodbye.

Ladies and gentlemen, with that, we'll conclude today's conference call. We thank you for attending today's presentation. You may now disconnect your lines.