Tanger Reports Second Quarter Results & Provides COVID-19 Update

As previously announced, the Company has taken several steps to increase liquidity, preserve financial flexibility and meet its obligations for a sustained period of time until there is more clarity regarding the impact and duration of the pandemic and subsequent tenant bankruptcy announcements. These steps are discussed further in the COVID-19 Update section below.

As of July 31, 2020, the Company's total liquidity was approximately $564 million, including cash and cash equivalents on the Company's balance sheet and unused capacity under its lines of credit. During the second quarter of 2020, Tanger repaid $200 million of the outstanding balance under its $600 million unsecured lines of credit, and in July, repaid an additional $320 million.

Other than its unsecured lines of credit, which mature in October of 2021 and may be extended for one additional year, Tanger has no significant debt maturities until December 2023.

On June 11, 2020, Tanger completed amendments to the debt agreements for its lines of credit and bank term loan, primarily to improve future covenant flexibility. Refer to the Form 8-K filed with the Securities and Exchange Commission on June 16, 2020 for further details, including the amendments in their entirety.

As of June 30, 2020:

• The Company remained in compliance with all of its debt covenants
• Weighted average interest rate was 3.1% and weighted average term to maturity of outstanding consolidated debt, including extension options, was approximately 4.4 years
• Approximately 94% of the Company's consolidated square footage was unencumbered by mortgages
• Interest coverage ratio (calculated as Adjusted EBITDA divided by interest expense) was 2.7 times for the first half of 2020 and 3.6 times for the trailing twelve months ended June 30, 2020
• Total outstanding floating rate debt was approximately $411 million, representing approximately 21% of total consolidated debt outstanding or 15% of total enterprise value; reflecting the July line of credit repayments, floating rate debt represented 6% of total debt outstanding and 4% of total enterprise value
• FAD payout ratio was 140% for the first half of 2020, which does not reflect the Board's decision to temporarily suspend normal distributions following the payment of the May dividend

Tanger did not repurchase any common shares during the first half of 2020. As previously announced, the recent amendments to debt agreements prohibit share repurchases during the twelve-month surge leverage period beginning July 1, 2020.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") and Funds Available for Distribution ("FAD") are supplemental non-GAAP financial measures of operating performance. Definitions of Adjusted EBITDA and FAD and reconciliations to the nearest comparable GAAP measures are included in this release.

Operating Metrics

The Company's key portfolio results were as follows:

• Consolidated portfolio occupancy rate was 93.8% on June 30, 2020, compared to 94.3% on March 31, 2020 and 96.0% on June 30, 2019
• Blended average rental rates decreased 1.1% on a straight-line basis and 6.5% on a cash basis for all renewals and re-tenanted leases that commenced during the trailing twelve months ended June 30, 2020
• Lease termination fees totaled $1.7 million for the first half of 2020, including $1.5 million for the second quarter, compared to $1.4 million for the first half of 2019, including $0.3 million for the second quarter
• Same center net operating income ("Same Center NOI") for the consolidated portfolio decreased $39.0 million for the quarter and $41.7 million year to date, largely due to the impact of the COVID-19 pandemic during the quarter, including the write-off of rental revenues of $33.9 million (excluding straight-line rents), partially offset by a reduction in property operating expense of $10.0 million

Same Center NOI is a supplemental non-GAAP financial measure of operating performance. A complete definition of Same Center NOI and a reconciliation to the nearest comparable GAAP measure is included in this release.

Leasing Activity

Total commenced leases for the trailing twelve months ended June 30, 2020 that were renewed or re-leased for all terms included 296 leases, totaling over 1.4 million square feet.

As of June 30, 2020, Tanger had lease renewals executed or in process for 67.5% of the space in the consolidated portfolio scheduled to expire during 2020 compared to 72.6% of the space scheduled to expire during 2019 that was executed or in process as of June 30, 2019.

Tanger recaptured approximately 380,000 square feet within its consolidated portfolio during the first half of 2020 related to bankruptcies and brand-wide restructurings by retailers, including 48,000 square feet in the second quarter. During the first half of 2019, approximately 187,000 square feet were recaptured, including 105,000 square feet during the second quarter. The Company anticipates additional store closures and lease adjustments related to recent tenant bankruptcy filings and restructuring announcements.

Tanger Virtual Shopper™

During the quarter, Tanger launched the Tanger Virtual Shopper™ program, which serves to drive in-store sales for brands and retailers, functioning as a digital, service-minded extension of the brick-and-mortar shopping experience. Guests can shop remotely for their favorite brands, styles and outlet value deals across multiple retailers via on-site shopping specialists and stylists and can access any brand in the Tanger portfolio. Orders can be picked up curbside or shipped to home. The program is often generating incremental on-site visits.

COVID-19 Update

• Guidance - Due to limited visibility regarding the duration and magnitude of the pandemic and subsequent tenant bankruptcy filings, Tanger previously withdrew its guidance and is not providing updated guidance at this time.
• Cost Reductions - During the second quarter, the Company reduced cash outflows by approximately $11 million, including $1 million of general and administrative and $10 million of property operating expense. In addition, Tanger deferred its Nashville pre-development-stage project and certain other planned capital expenditures.
• Store Reopenings - As of July 31, 2020, 95% of total occupied stores in the Company's consolidated portfolio had reopened, representing 95% of leased square footage and 95% of annualized base rent. By June 15, 2020, in-store shopping for non-essential retail was allowed in every Tanger market. Reopened stores as a percentage of total occupied stores improved over time as more mandates were lifted, from 1% on April 6, 2020 to 56% on June 3, 2020 to 72% on June 14, 2020.
  Tanger Centers have not closed throughout the pandemic, but have been operating under reduced hours since late April when the first stores began to reopen. Tanger's centers may experience additional short-term store closures in the near term as retailers implement additional safety protocols at specific locations impacted by exposure to COVID-19.
• Rent Collections - Collections were markedly better for July than for second quarter rents. During the month of July, the Company collected total rent receipts of approximately $44.8 million, which exceeds its estimated average monthly cash outflows of approximately $24 million. As of July 31, 2020, Tanger had collected 72% of July rents billed, and 79% of net July rents recognized before reserves and straight-line rent adjustments.
  In late March, Tanger offered all tenants in its consolidated portfolio the option to defer 100% of April and May rents interest free, payable in equal installments due in January and February of 2021 as part of a strategy to proactively address COVID-19 related store closures by working with its tenant partners to reach a financial resolution to position both parties for long-term growth. The Company currently expects to collect approximately 43% of rents billed for the second quarter, to defer 26% and continues to negotiate 6%. The Company reserves all rights under its lease agreements and will pursue legal remedies to collect rent as appropriate.
  During the quarter, Tanger wrote off 25% of second quarter rents, including 9% related to tenant bankruptcies, 2% related to other uncollectible accounts due to financial weakness and 14% related to one-time concessions in exchange for landlord-favorable amendments to lease structure. In addition, Tanger recorded a $9.7 million reserve for a portion of deferred and under negotiation billings that are expected to potentially become uncollectible in future periods. Further, the Company recognized a write-off of approximately $3.7 million in straight-line rents associated with bankruptcies and uncollectible accounts.
  The tables below summarize the Company's current collection status for second quarter rents, as well as the impact to rental revenues recognized during the three months ended June 30, 2020 (in thousands). 
                                                                                                                                                                                                    

	2Q Rents Billed (1)			% of Billed			% of Net Rents Recognized Before Reserves & Straight-line Adjustments
Collection Status (as of July 31, 2020)
Paid	$	32,580		33		%	45		%
Expected	9,788			10		%	13		%
Payment received or expected	$	42,368		43		%	58		%
Deferred	25,558			26		%	35		%
Under negotiation	5,389			6		%	7		%
Deferred or under negotiation	$	30,947		32		%	42		%
Net rents recognized before reserves & straight-line adjustments	$	73,315		75		%	100		%
One-time rent concessions in exchange for landlord-favorable amendments to lease structure	13,852			14		%
Bankruptcy related, primarily pre-petition rents	8,894			9		%
At risk due to tenant financial weakness	1,447			2		%
Do not expect to collect (written off in 2Q)	$	24,193		25		%
Total rents billed	$	97,508		100		%
(1) Excludes variable revenue which is derived from tenant sales and lease termination fees.
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