Good morning. I'm Ashley Curtis, Assistant Vice President of Investor Relations and I would like to welcome you to Tanger Inc.'s First Quarter 2024 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 that this call may contain 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. Reconciliations of these non-GAAP measures to the most directly comparable GAAP financial measures are included in our earnings release and in our supplemental information. This call is being recorded for rebroadcast for a period of time in the future. As such, it is important to note that management's comments include time-sensitive information that may only be accurate as of today's date, May 1, 2024. [Operator Instructions] On the call today will be Stephen Yalof, President and Chief Executive Officer; and Michael Bilerman, Executive Vice President, 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.

Thank you and good morning. I'm pleased to announce another quarter of solid performance. Last year's positive momentum carried into our first quarter and we continue to successfully execute on our strategic initiatives of unlocking the embedded value in our portfolio to our leasing, operating, and marketing efforts, and selectively pursuing external growth. In the first quarter Same Center NOI grew by 5.2% and core FFO per share by 13%, driven by the execution of our internal and external growth initiatives. Leasing volume and rent spreads are key indicators of our ability to reprice our space. And over the trailing 12 months, we leased more than 2.3 million square feet of GLA, representing nearly 20% of our portfolio, and an average increase of 13% on a comparable basis as reflected in our rent spreads. Rent spreads for the quarter were 36% for re-tenanted space and 11% for renewals. We are pleased with the demand for space in our portfolio as we maintain a robust pipeline of deals in progress with existing best-in-class brands, and new to Tanger retailer's categories, and users seeking to grow their business with us. As of March 31, our portfolio occupancy was 96.5%, flat to the prior year period for the total portfolio with our same center portfolio up 60 basis points. As we discussed last quarter, we continue to grow occupancy and create demand for space in our centers. To that end, we're focused on portfolio enhancement. Where appropriate, our leasing professionals are prioritizing re-tenanting and rightsizing over renewing selected stores in order to enhance the overall merchandising mix, utility and shopper experience. Over the past few years, we have seen renewal rates greater than historical averages. Today, we see our increased pricing power as a catalyst to driving higher re-tenanting activity, which may result…

Thank you, Steve. Today, I'm going to discuss our first quarter financial results, our balance sheet activity and our increased guidance for the year. Overall, we continue to deliver strong financial results driven by both internal and external growth, backed by a solid balance sheet, which was further enhanced by the recent upsizing, extension, and reduced pricing on our unsecured lines of credit. In the first quarter, we delivered core FFO of $0.52 a share compared to $0.46 a share in the first quarter of the prior year as we saw continued solid operating growth, along with the contributions from the 3 new centers added in the fourth quarter. This growth was partially offset by increased interest expense from the new interest rate swaps, which became effective during the first quarter. Same Center NOI increased 5.2% in the first quarter driven by the robust leasing and positive rent spreads that Steve talked about, which has led to higher rental revenues from increased base rent and higher expense recoveries. In addition, in the first quarter, we recognized certain expense refunds related to expenses from prior year periods, which were approximately $0.01 higher than we anticipated. This was partially offset by additional snow removal expenses compared to the milder winter in the prior year. Our balance sheet remains well positioned to support our internal and external growth initiatives with low leverage, a largely fixed rate balance sheet, minimal debt maturities into late 2026 and ample free cash flow after dividends. At quarter end, we had an equity market capitalization of $3.4 billion and had $1.6 billion of pro rata net debt. Including the $325 million of interest rate swaps that went into effect in February of this year, approximately 93% of our total debt outstanding is at fixed rates. While our net…

[Operator Instructions] And our first question will come from the line of Jeff Spector with Bank of America.

Congrats on the quarter. My first question, just thinking about enhancing the merchandising mix. I know we've discussed this, but if you can maybe talk a little bit more about that. Are these tenants that are in outlets already? Are these tenants that are in, let's just say, other outlets and not yours or maybe some are at Deer Park, but you're hoping to expand or maybe a combination?

Yes, it's a combination of all. We're doing a really good job of something with the new brands and retailers that haven't been in the Tanger platform or haven't been in outlets before. And we're quite proud when we're able to bring a new retailer into the outlet space. We've announced a number of those. We talked about Nashville, where 20% of the tenant mix in Nashville were either new to Tanger or new brands to the outlet space. We're also going after diversified uses, better restaurants, sit-down restaurants, moving away from food courts and moving more into a sit-down experience. We're also going after different brands for our peripheral land where we have a lot of traction, signed a number of deals that we're looking forward to announcing shortly. But again, adding brand-new brands, uses, amenities to the portfolio to create a far more diverse experience because as we go after both that tourist customer and the local customer, we're looking for things for all of our shoppers to do when they come and visit.

And then as you've been achieving this, let's -- you've been working on this the past year. I know it's a bigger part in '24, but are you bringing in a different or new customer at some of the centers where you have work, let's say, brought in some of these new categories and tenants?

Absolutely. Go back to Hilton Head, South Carolina, where we added Nantucket's Meat and Fish. It's a great example of a grocery store opening up in one of our shopping centers, that's anchored by H&M and Nike. And we see a whole new set of people coming in, shopping more frequently, and staying for the brand's shopping as well. We're seeing our catchment area expanded as we add these new uses, and we're seeing our frequency of visit expand as well. So I think the strategy for us is to improve the complement of uses when you come to one of our shopping centers, I think the customer is demanding a far wider range experience when they come to us, not just that traditional power shop that you get at the outlet centers of a generation ago. I think our customers are looking for far more wide-ranging uses, amenities, services and product categories, and that's what we're going after. And our customers are responding. And you can see it in the traffic numbers that they continue to build this quarter, you can see it in our sales numbers as they continue to build this quarter. So a lot of that strength is coming through based on a lot of the work that our leasing team has done.

Our next questions come from the line of Craig Mailman with Citi.

Steve, I just want to go back to the commentary about, clearly, retention could be up and down this year as you guys are more purposeful about re-tenanting and remerchandising. It seemed like you emphasized that. Should we be expecting anything in the next quarter or 2 so that we're not surprised here if retention drops or occupancy kind of dips in the near term?

No, I don't think there'll be any surprises. But we guided to 2% to 4% Same Center NOI growth. We've grown that guidance to 2.5% to 4.5% Same Center NOI growth. So I think that those numbers are all contemplated in our guidance. Sorry, I said 2.5, I mean 2.25% to 4.25%, Craig. But as far as we're concerned, I think strategically, what we're looking to do is it's been retain 95% of our customer base on a renewal basis for the last 2 years. This year, we anticipate less renewal because we see some of that renewal base as opportunity to re-tenant. We're getting over 30% spreads on our re-tenanting. We're getting close to 10% to 12% on our renewal, and it's a great trade for us if we can take some older retailers that we've been renewing over the past 10, 15, 20 years, rightsized them in better locations inside our portfolio, and then replace some of that more visible space with far better retailers that are far more productive. And that's been the trend. That's what we've been doing. There's a number of retailers that are going to be brand new to our portfolio that we'll be announcing shortly that are great examples of that strategy.

And kind of bigger picture, I know these -- some of these initiatives are newer, but you guys have done a lot on the digital side with the new app and that initiative there. I mean are there any early takeaways from how customers are using it? Or I don't know if you guys are actually tracking kind of how they're moving about through the centers. But anything on that front that's helping you kind of reprice space within your centers? Or having kind of a different take on maybe what's the more valuable space? Or how people are kind of approaching their shopping patterns?

We haven't been using our internal digital footprint in order to speak to how to value our real estate. I think that our centers -- the footprints of our centers are manageable enough that supply and demand should dictates that pricing. We are using our digital footprint, however, to communicate better with our shoppers and our customers. And being in the discount space, we're able to communicate everyday value and everyday discount in partnership with our retailers to get out in front of that. So as an example, a lot of full-price retail, a lot of brands that don't typically go on sale can't offer as a catalyst to drive customers into your shopping center and additional discount. In our space, we can. And because of our great relationships with our retailer partners, we're able to use the speed that digital offers to get new offers out in front of our customers and drive shoppers into our centers.

That's helpful. Then maybe just one last one. Michael, on Express, I know you guys lost one tenant there, and you've been pretty clear in your responses at conferences and last quarter's earnings. But from the range of outcomes that could happen there, kind of it is a potential 7, which I know is not even being discussed really. But is that captured in the low end of the range? Do you think -- could you just kind of talk about the range of outcomes for that particular tenant as you guys build up guidance?

Craig, as you noted, we were ahead of this. We talked about it on last quarter call. We contemplated a range of outcomes in our guidance, sort of, what we know today. We continue to believe we'll be in that range. And it's a fluid process. Look, I think if you step back from it, overall, the outlet business overall, when you go through different processes, these are usually the last stores to close. And they also benefit from having generally low OCRs and pretty high productivity. And so I think the outlet channel during this process has demonstrated a lot of the talking points that we've been communicating and certainly over the 40-year history of this company.

What do you think the OCRs are for that target, roughly?

We're not going to talk about specific tenant OCRs. Our OCR for the entire portfolio is at 9.3%. As you've seen, we've been able to lift that OCR as we've been driving our rents. So that gives you an indication overall in our portfolio that we continue to believe that our rents are below market, and we get the extra tailwind as tenant sales continue to move forward.

Our next questions come from the line of Todd Thomas with KeyBanc Capital Markets.

Steve, I just wanted to go back to your comments around tenant retention and some of the potential re-tenanting activity that you anticipate being a headwind to Same-Store growth this year. What was the renewal rate in the first quarter? And any sense on how 2Q is trending? I would imagine that you have a better line of sight 4 or 5 months into the year, particularly after the holiday season. With regard to some of that tenant churn that you're talking about and the potential headwind that it might have on Same-Store growth this year. I'm just curious if you can provide a little more detail.

Well, I don't think it's a headwind. I mean, again, it's a strategy. So it's easy to renew existing tenants. It's a great strategy. You maintain your occupancy, the tenants continue to pay rent, and we've been consistently getting nice growth. However, for our portfolio, if you have a 10,000 square foot tenant whose sales performance on a per square foot basis continues to slowly deteriorate, it's incumbent on us as merchandisers of shopping centers to make sure that we put a more productive retailer in that particular location. And even more importantly, have that retailer who -- the incumbent retailer, repositioned inside our center in a rightsized box that also drives additional rent growth for us, but also more productivity for that retailer. So the narrative is merchandiser centers for the future, make sure we're putting in the most productive retailers that we can, making sure that the customer who comes to shop with us has a complement of a product to buy that they want so they keep coming back. Make sure that we're constantly reinventing the footprint of our mall, but more importantly, reinventing the footprint of the store and forcing those retailers to really reinvent and upgrade their store build-outs as well. I think we've been satisfying with our strategy of renewing for the past few years as we've exited COVID. I think our rent spreads, particularly on the re-tenanting side, it's given us the courage in our conviction that we can command far more money for our space than we have. We've grown our OCRs now over the last year by 100 basis points. We still think there is room to grow. And we're a leasing company, that's what we do, and we're going to continue to do so. And the retailers are responding. We're adding those new tenants that we're talking about, new uses that we're talking about. A couple of examples of which Huntsville, Alabama, we're thrilled to welcome Warby Parker to the center. That's our first deal that we've done with Warby Parker, thanks to our partnership with Centennial who's done the leasing at that project for some time. Great partnership. But again, these are new brands that we're bringing into our portfolio and looking forward to expanding those brands throughout the portfolio. And that's what I think our customer wants. That's what they're shopping for. That's what's going to keep them coming back.

What -- has the renewal rate started to normalize a little bit from 95% or so down towards kind of the mid- to low 80s where it has been historically?

That's how we're thinking about it, and that's how we planned it.

And then I just wanted to follow up on, I guess, Express and maybe the range of outcomes for certain events here during the year. Just I think last quarter, you indicated that you had about 50 basis points of bad debt reserves embedded in the 2% to 4% Same-Store range, which I realized was lifted this quarter, 25 basis points, it sounds like due to expense refunds. But is there anything else on top of that for unexpected move-outs or bankruptcies? Because Michael, you mentioned sometimes these restructurings are fluid, they can take a sudden turn. And I'm just curious whether you can provide a little bit more detail around what's budgeted and what degree of confidence you have that they will emerge from bankruptcy just given they're a top tenant 170 basis points of ABR?

Sure, Todd. When we talked on the 4Q call and provided that 2% to 4% range, we did reference where our bad debt had been historically. You can see in the numbers from last year, was around 35 basis points. But the range in bad debt, when you have a 2% to 4% range, it contemplates different levels. What we've been trying to communicate is effectively our 2 to 4 original guidance, which we have increased by 25 basis points due to the expense refunds that we could get in the quarter, is still -- we still feel comfortable with that range as we sit here today and contemplate the variety of outcomes that could come about. We don't want to get into different alternatives, Chapter 7, Chapter 11, how a Chapter 11 process will go. What we know today, what's been public is Express came out with the store closure list, on that store closure list there was 1 Tanger store out of the 30 stores that we have. And overall, there was only 3 outlet stores, open-air outlet stores on that list, which demonstrates to us the value of the outlet channel, the outlet platform for brands and retailers.

Our next questions come from the line of Caitlin Burrows with Goldman Sachs.

Steve, I think earlier, you commented on the volume of leasing you did in the last year. I think it was 2.3 million square feet, which is pretty impressive. So as you guys consider your pipeline today, the activity, the conversations, do you think that volume of leasing activity can be sustained? And I guess, why or why not?

I have my EVP of Leasing sitting next to me shaking his head, yes. We do because we think that there's a lot of other brands that are discovering the outlet channel. We also think, as we've started to allow brands that are not necessarily traditional outlet brands into our platform, they're finding that our locations and our position within the communities that we serve to be the place the customer wants to shop. So as we create these diverse mix of retailers in our footprints, in these tourist-driven, local population-driven marketplaces that were traditionally reserved for outlet only. We've opened up the floodgates to a whole new set of uses, and that's why we're having such great velocity of retailers and other uses that want to join the mix.

And then just on the leasing spreads, you mentioned how they are pretty impressive on the new leases, but at least this quarter, the TIs were pretty high, too. So I was wondering if you or someone else could talk about the TI trends, what type of tenants are asking for what and how you're deciding which to actually agree upon?

So Caitlin, when you look at the supplemental, the tenant allowance is relatively flat sequentially, so pretty consistent with the types of retailers that are coming into the space. And if you think about the gross rent that we're getting $47, the 68% of TA on 8.5 years of duration is a pretty appropriate payback period. And obviously, as a company, we think about that investment that we're making into the real estate for the productivity. And in almost all cases, the tenant is putting substantial dollars ahead of our capital that we're providing as they build out the stores. Caitlin, I know you've been out to a number of our centers, and you can see the build-outs of the re-tenanted spaces that are really strong.

Our next questions come from the line of Floris Van Dijkum with Compass Point.

A question on capital allocation. I was particularly interested in the Huntsville transaction you guys executed last year. And I think you indicated you've looked at over $7 billion of assets that you underwrote. As we look forward, maybe talk about the pipeline of stuff that you're looking at and how many more of those lifestyle centers could be contemplated to be added to the portfolio over the next 18 months or so?

Sure, Floris. So we step back from it, just thinking about our size, right? We're a $5 billion company. We don't need a tremendous amount of transactions. We want to make sure that the transactions that we do are value enhancing, where we can bring our operating, leasing and marketing platform to bear. We're not a buy and hold company. If we're going to acquire something, we wanted to ensure that it fits with our strategy and where our platform can create value. We think as part of that strategy is incumbent upon us to look at everything. Which is why we've looked on a lot of transactions so that when a Huntsville or an Ashville comes about, we can act quick, and being able to act quick is why the balance sheet is so well positioned to be able to go after those opportunities. So being able to have the liquidity, getting our line recast, getting additional availability, having the free cash flow and operating at a lower-leverage levels allows us to be opportunistic when transactions are in the market, or when there's disarray in the marketplace for us to be able to act. Our balance sheet is really clean. So we have the ability to take over assets with secured debt. We have an ability to do joint ventures. We have the ability to do partnerships. There are so many different alternatives, but the most important thing that we want to keep in our minds as we want to be disciplined, we want to be prudent, and we want to ensure that we can create value so that when we announce transactions, we'll be able to articulate the growth that we can see as all that is coming to the market into our portfolio.

And so we should presume that you're constantly evaluating stuff, and you will make announcements as and when things get agreed. Is that the right interpretation?

We are an active organization looking at a lot of opportunities, but they're going to have to be the right ones. And there's nothing embedded in our guidance. We have no -- we don't want to set a transaction amount. That's not the way we operate because if we find a deal, we have to look at that deal, finance it appropriate at that time relative to the return that we see going in and over the long term. And we'll keep everyone apprised as deals come through. And we're optimistic that we feel that this platform that's been built has the ability to overlook and manage additional open-air retail centers that have effective a lifestyle and outlet component.

Great. And if I can follow up, perhaps, and I know this is a question I've asked you guys in the past, but maybe if you can give us a little bit of an update on your thoughts on getting more luxury-type tenants in your portfolio? Have you made any progress? Which centers are, in your view, are the most likely to be the ones that receive some of that demand? And maybe think about what the potential impact of having more of these types of tenants in your portfolio, what would that do to your sales productivity and to your rental levels?

Floris, this is Justin. Yes, we continue to evaluate all the tenants throughout our portfolio, asset by asset. And we can share, we recently opened Lafayatte 148 in our National Harbor asset. We recently brought in Bash, a luxury tenant into Riverhead. Kate Spade recently opened in Charleston. So we continue to penetrate that elevated market case-by-case, center-by-center, and we're going to continue to chip away at that going forward.

Our next questions come from the line of Greg McGinniss with Scotiabank.

On the dividend yields, along with the payout ratio, they're one of the lowest amongst retail REITs. How are you thinking about additional dividend increases over the next few years?

Greg well, look, dividend yield is a factor of stock price, right? And so we think about our dividend level, which is obviously a board-level decision. We've been able, for the last number of years coming out of COVID, to raise that dividend yield as our cash flow has been growing, right? We've seen considerable FFO growth, and we're sharing in that growth with our shareholders. And still maintaining as low of a payout ratio as [indiscernible], that allow us to, because free cash flow is free. And so that free cash flow really helps to fund all of our internal and external growth initiatives on an effective basis in a high capital cost environment. So we recently, as we noted in the release in a couple of weeks ago, raised the quarterly dividend to an annualized level of $1.10 a share. The payout ratio in the first quarter was 54%. That payout ratio should trend a little bit higher just based on the timing of CapEx relative to the first quarter. And then we'll continue to evaluate how we can share in that cash flow growth over time and provide the returns to our shareholders.

But the expectation is to kind of maintain as much free cash flow as you can, understood. Could you probably provide a more --

We're balancing REIT regulations and free cash flow, right? Those are the 2 variables that we think about.

Could you provide a bit more color on what you saw regarding the increasing strength from consumers through quarter end? Has that trend continued into April? And is this a situation where trailing 12-month tenant sales may see greater sequential growth in Q2?

We're optimistic about the sales growth, a lot of the strategies that we're employing that we talked about, replacing some older brands with sales that are deteriorating with what we think are newer concepts that have great productivity ahead of them, I think, is going to contribute to our sales growth. We're also doing a wonderful job from a marketing point of view. We've balanced our marketing approach to both touristic as well as localized marketing. And we're going to continue to invest in local marketing in a lot of the centers, that paradigm has shifted. We talk about the suburbanization of America, where a lot of folks are moving to new geographies where our centers currently exist. And because of that, we're going after a whole new catchment. We're also merchandising our shopping centers to attract that catchment as well. So that's why we're optimistic about sales going forward. As far as the April run rate versus the March run rate, the Easter was in March this year, typically, what retailers and developers do is we blend our March and April sales to make those 2 comps [ a fairer fight ].

And I guess with regards to some of those new concepts, are you seeing higher average tenant sales from those new offerings? And is there any categories in particular that are doing well?

Yes. Health and Beauty is really doing great. We're really very pleasantly surprised with apparel, mostly family apparel, American Eagle and those brands just doing exceptionally well. I also think discipline on our part to make sure that these stores are rightsized. The old [indiscernible] outlets where we give the retailers as much space as they wanted. But as we're learning now with more efficient -- with faster delivery, with more efficient floor sets, a lot of our retailers can be far more productive on a per square foot basis in a far smaller footprint, and that works out great for everybody. It gives us an opportunity to have far more productive stores in a shopping center and provides a lot more variety to shopper.

At the risk of being chastised for asking too many questions. I do have one more. Given the strength of the balance sheet, the level of retailer demand with most assets in the high 90s occupancy, are there opportunities to add square footage to any of the centers? And is there any other redevelopment being considered at this time?

There are. Well, there's a couple of ways that we're adding square footage to our shopping centers. I mean there's -- there are Phase 2 locations in a number of our centers. In others, we've got peripheral land, and our peripheral land strategy has been one that we've really uncovered a couple of years ago. It takes us a bit to ultimately see those spaces cash flow. But we signed a number of deals. Arizona is a good example. We've got a Texas Roadhouse that should be opening shortly. That's not a piece of peripheral land, it's immediately adjacent to the shopping center. So we're finding demand for peripheral land close to our centers has heightened by virtue of the fact that, again, we are the regional draw in the markets that we serve. And brands, if they can't be in line, want to be adjacent to where the car -- where most of the cars in that geography are being parked, and that's in our Tanger centers.

Our next questions come from the line of Samir Khanal with Evercore ISI.

Michael, just -- most of my questions have been answered, but on the -- just on the modeling side here, the other revenues in the income statement, I think that's ancillary income sponsorships that you've done. I know that you've tried to sort of touch many of the assets, and that line has actually grown over time. And I think in the quarter, it was maybe down year-over-year. I'm just trying to understand how much there is more to do on that from ancillary income sponsorships, et cetera?

Sure. So step back just in the first quarter. First quarter last year, our center in Westgate and Phoenix, Bundall is right beside where the Super Bowl was played, and we did a significant amount of marketing last year in the first quarter. So that's what's affecting the year-over-year comp. Now if we step back and go to the full year, driving other incremental revenues at our centers continues to be a top priority. And we think we'll continue to have higher growth than the overall core portfolio, and that's what you'll see trend through the year as we continue to activate, drive our marketing partnerships and a lot of the other income sources that we're able to do at our centers. Just driving off of what Steve was talking about, the cars being regional draws, there's a fair amount of tenants that want to get in front of those consumers each and every day.

So it seems like you can still grow that line. I think last year, you're up like 12%. So that's sort of the double-digit growth, is it still the right sort of number to think about?

Absolutely. This is Leslie Swanson, Chief Operating Officer. We see a lot of potential. As we've outlined over the last several years, we're very, very keenly focused on incremental revenue, which not only means marketing partnerships from a sponsorship and media perspective that we're very committed to operational ancillary revenue streams as well, and we see a lot of that ROI come from our solar, from our EV charging. So what you're looking at in that line item is a culmination of all of those strategic efforts made by our teams across the country.

And then last one for me, Michael, is the expense recovery ratio. I know that moves around a lot, and I think it was much higher this quarter. What's kind of the right number to think about for the long term for the business?

So we think about this year in totality probably be in the mid-80s, maybe up a little bit from that level. The first quarter did benefit from the expense refunds that I talked about, which reduced our OpEx. So that -- the recovery rate is going to show higher because the operating expense number was down a little bit. The other factor is, it is heavily seasonal because we've moved largely to a fixed CAM structure, our recoveries are generally flat-ish during the year, absent our spreads, but the operating expenses are highly variable, both from controllable as well as uncontrollable expenses. As we talked about the last few quarters, just from a cadence during the year, you should expect the recovery rate to be higher in the first half of the year and lower in the second half of the year, as there typically is additional spend in the third and fourth quarters relative to the flat reimbursement level. We are trying to drive as part of our strategy, which has been the last number of years, drive total rent, which is increasing both base rent and net base rent line and higher reimbursements from the tenants, which shows up in the reimbursement line. And that's why we continue to talk about total rent growth, which all drops to NOI. Is that helpful?

Yes. Yes, it is.

Our next questions come from the line of Vince Tibone with Green Street.

Renewal spreads turned positive during '22, while the average lease term was about 3 years. But sales are currently down versus '22. I'm just trying to get a sense as these leases start rolling in '24, excuse me, '25 and '26. It feels like renewal spreads could be a little pressured and much lower than current levels unless sales really pick up. Am I thinking about this the right way? Or is there any color you can share on how we should think about renewal spreads after this year, once you begin anniversary-ing the first renewal the current team signed with the tenant?

Sure, Vince, this is Doug. When we look at 9.3% portfolio average, and you're right, there's different vintage and market discrepancies, but we still feel that there is room throughout our portfolio for additional rental increases. And when you are going to continue to pursue those and in situations where we feel that there aren't as many rent growth opportunities if the tenant is somewhat maxing out of its productivity level. Those are some of the opportunities that we are looking for the remerchandising opportunities, bringing in the new tenants, creating that sense of vibrancy, additional traffic drivers, all those elements that Steve has discussed for the last few quarters.

Okay. That's fair. But just to maybe follow up. I'm just trying to think about kind of some of the basic OCR math. So let's say, sales are up 5% over 3 years, contractual bumps are probably more than that, cumulatively. So I guess, like, do you think you'll be able to push OCRs further on a lot of these tenants. Because I imagine when the new team came in place, you already accomplished that or I'm just trying to figure out the lever, do you think you can continue to push OCRs to get better spread or can kind of keep spreads positive and attractive? Or is it -- I guess I'm struggling to put the pieces together on how renewal spreads, at least, could keep stay at the current levels. Because I totally get on the new leases, there's a great remerchandising opportunity. But on the renewal side is where I'm -- yes, I'm trying to figure out what the lever you guys could pull to keep those robust at the current levels for the next few years?

Well look, we've now shown our retailers that those tenants that have expiring leases, they need to be productive in order to stay in the center. So if a store is not productive, we're either going to ask them to reposition, downsize, rightsized or we're going to replace them. So if you're -- the key lever for growing rents for tenants that are renewing is the competition from the new productive retailers that are coming into the shopping center.

That's fair. Makes sense. And then maybe one last one for me. Just how do you -- how much do you think retailer inventory strategies impact demand for the outlet space? Like it seems like everyone is maybe a little tighter on inventory strategies today, but it obviously could change, we could loosen up. Like -- does that matter at all for trends in new store opening? Or yes, just curious to get your kind of comments and thoughts there.

Yes. Look, I think a lot of brands are using outlet as a strategy to do a number of different things. It's from clear excess inventory. And look, if you have an immediate excess inventory issue, you're not going to do a 10-year lease in an outlet center to clear what might be a year's worth of excess. Hence, we have a pop-up strategy to allow a lot of our retailers to come in and sell through that inventory. And that gives them an opportunity to have a taste of what the outlet center business is. We've done that with a number of brands, direct-to-consumer brands, but it becomes some of the fastest growing brands within our portfolio. We also have other retailers that are always going to look at outlet because there's an aspirational customer that shops at our platform that may not shop those particular brands in any other channel. So it's the first point of entry for a retailer to engage a new consumer and then ultimately trade them up through their ecosystem. So again, we could talk chapter and verse about that, dozens of different reasons why brands use outlet as a strategy, but those are sort of 2 strategies at either end of that spectrum.

Our next questions come from the line of Mike Mueller with JPMorgan.

Just a quick follow-up on the peripheral land strategy. For clarification, is this land that you already own and are developing, or is it unused land next to a center that you don't own that you're trying to acquire, and ultimately put something on? And if it's land that you already own, how many centers do you have that ability at today?

Mike, it's Justin. Primarily, it's land that we have already owned. We've been doing a good job of activating and monetizing that peripheral land over the last 24 to 36 months. Steve mentioned some of the brands that we brought in at Texas Roadhouse and West Gate. We also recently executed a Planet Fitness at Savannah, 7 Brew Coffee shop in our Myrtle Beach asset. We believe very heavily in our peripheral land. We believe that there's a tremendous amount of opportunity. We recently brought somebody, additional ones, to the team this week. That's how much we believe in what we can do with our SS land. And as far as how many assets, we feel that there's probably opportunity on peripheral land in a little bit over half of our assets.

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