Tanger CEO: ‘We’re in the market’ to acquire more full-price malls
Fresh off a strong fiscal year, Tanger is looking to add more full-price shopping centers to its portfolio as it branches out beyond outlets, President and CEO Stephen Yalof told Modern Retail.
Tanger, known for its outlet malls, is a longstanding player in the space, having opened its first outlet center in 1981 in North Carolina. Yet, a little over a year ago, it made its foray into a different market: full-price lifestyle centers. Tanger completed its first such acquisition — Bridge Street Town Centre in Huntsville, Alabama — in November 2023 for $193.5 million. In December, it acquired The Promenade at Chenal in Little Rock, Arkansas for $73 million. And earlier this month, it snapped up Pinecrest, a mixed-use center in Cleveland, Ohio, for $167 million.
Tanger has 38 outlet centers across the U.S. and Canada that span millions of square feet. Operating those is a tall task, but the company isn’t worried about making room for another business model. Full-price and outlet are “a shared service for a lot of these retail companies, so it’s an easy extension for us,” Yalof told Modern Retail. “It’s been quite natural and it’s been a great run.”
Tanger is moving ahead on this strategy as it enjoys continued growth. Last week, the company reported that its operating income for the fourth quarter totaled $26.3 million, up nearly 12% year over year. Its operating income for 2024 remained relatively flat compared to 2023, but its same-center operating income jumped 5.1% over a 12-month span. Tanger’s occupancy rate as of Dec. 31 was 98%, compared to 97.3% in December 2024 and 94.9% in June 2022.
Yalof spoke with Modern Retail about the company’s performance in 2024, its goals for 2025 and how the outlet business has changed since the pandemic. Below are excerpts from the interview, which have been edited for length and clarity.
What do you attribute your 2024 growth to?
Teamwork. We’re an operating company, so we don’t just buy shopping centers or hold shopping centers and third-party lease and manage. We operate the centers ourselves. I think the strength of the team really speaks volumes about the accomplishments that we’ve enjoyed over the past three or four years. We’ve reinvented a lot of our older legacy property. We’ve taken advantage of some of the better-positioned assets in our portfolio to understand the consumer base a little bit more and make sure that we’re leasing to the consumer, as opposed to just leasing the full space. And we’ve acquired a bunch of [properties] over the last two years.
What are your goals when it comes to acquisitions and building out that part of your portfolio?
We like open-air retail shopping centers. Some of them may have a big-box component to them, like Huntsville, Alabama. Some may be grocery-anchored, like the one that we just bought in Cleveland. [Some may be] movie-theater-anchored. It’s retail plus entertainment plus great experience plus really good amenities. That’s what we’re looking for.
Do you have plans to acquire any more centers in 2025?
We’re in the market and we’re looking. We haven’t announced any new acquisitions since Cleveland. It’s interesting that the aperture has gotten wider for us. It’s not like there’s a particular bullseye product that we’re looking for. We’re looking at a bunch of interesting things in the open-air retail space, places where we think we can leverage our team to add value.
But I think the most important part of that story is our balance sheet. We’ve got great access to capital. We’ve got very low leverage, so we have the ability to use our balance sheet in order to continue to acquire assets. Our stock is trading at a pretty high price. It gives us … a pretty big bank to pull from and execute some of these acquisitions.
How does running a full-price mall compare with running an outlet?
Outlet is definitely a specialty. There’s a certain type of retailer that wants to be in outlet. Not every retailer has an outlet business or strategy. For those who gravitate to outlet that are new to outlet, there are a lot of barriers to entry, such as, “Do I have enough inventory to sign a long-term lease so I can close out all of that excess?” That’s why we have a pop-up strategy that works really well for us and lets retailers actually try the outlet business before they dig in and sign long-term leases. A lot of the brands that have had great success in that portfolio have started that way.
For these open-air full-price centers, we’re typically speaking to a lot of the same retailers [as the outlets]. I spent 15 years on the real estate team at Ralph Lauren, and I was responsible for outlet, and I was responsible for full-price. It’s a shared service for a lot of these retail companies, so it’s an easy extension for us. It’s been quite natural and it’s been a great run.
You mentioned speaking to the same retailers. What about the customer base? I imagine that people going to your outlets have less discretionary income than those going to your full-price centers. Has that impacted how you’re catering to shoppers?
You know, I’m going to say that’s not necessarily true. I’m an outlet shopper and a full-price shopper. When you can buy the brand that you love at the best possible price … it’s not because you don’t have the money to spend full price, it’s just that you choose to go shop an experiential environment that gives you the opportunity to get great brands at value pricing. And with that brand comes a number of things. It’s the quality of the brand, it’s the style that you know, it’s the fit that you know. It’s interesting — people will wear a polo shirt and keep that shirt for 20 years. What’s the difference if you bought this year’s [polo] or last year’s [polo]? In 15 years, when you’re putting that shirt on again, you’re like, “This is still cool!”
How has your tenant mix changed since Covid?
Old-school outlets used to be shopped far more heavily on the weekends than they were during the week. Now, geography is shifting, and communities are developing around many of our centers. We’re finding that there’s seven-day traffic, and that supports an elevation of food and beverage options. … We have a local customer who’s going to come for the food and hopefully stay for the shopping. And then we have a tourist customer who’s going to come for the shopping, but then hopefully stay for the food.
Also, what we’re seeing now is health and beauty. Sephora and Ulta are both brand-new to the outlet business, and so we’ve enjoyed the opportunity to make deals with both of those brands. … They draw a much younger customer. We’re using a lot of our social media to try and speak to that younger customer, … but you need something for them to do when they get there. They really respond well to the health and beauty category, and we’re thrilled to be able to offer those amenities.