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Item 7. Management’s Discussion and Analysis

2024-02-21 compared with 2023-02-27 · 226 added, 281 removed, 421 unchanged (55% of the section changed)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statements

Certain statements made in Item 1 - Business and this Management's Discussion and Analysis of Financial Condition and Results of Operations below are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act.

We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Reform Act of 1995 and included this statement for purposes of complying with these safe harbor provisions.

Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies, beliefs and expectations, are generally identifiable by use of the words “anticipate,” “believe,” “can,” “continue,” “could,” “designed,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would,” or similar expressions.

Such forward-looking statements include, but are not limited to, statements regarding:

the expected impact of the novel coronavirus (“COVID-19”) pandemic, supply chain and labor issues and rising interest rates on our business, financial results and financial condition;

our ability to raise additional capital, including via future issuances of equity and debt, and the use of proceeds from such issuances;

our results of operations and financial condition;

capital expenditure and working capital needs and the funding thereof;

the repurchase of the Company's common shares, including the potential use of a 10b5-1 plan to facilitate repurchases;

future dividend payments;

the possibility of future asset impairments;

potential developments, expansions, renovations, acquisitions or dispositions of outlet centers, including our Nashville development;

compliance with debt covenants;

renewal and re-lease of leased space;

the outlook for the retail environment, potential bankruptcies, and other store closings;

consumer shopping trends and preferences;

the outcome of legal proceedings arising in the normal course of business;

and real estate joint ventures.

You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other important factors which are, in some cases, beyond our control and which could materially affect our actual results, performance or achievements.

Other important factors which may cause actual results to differ materially from current expectations include, but are not limited to:

our inability to develop new outlet centers or expand existing outlet centers successfully;

risks related to the economic performance and market value of our outlet centers, including due to changes in the national, regional and local economic climate, inflation and rising interest rates;

the relative illiquidity of real property investments;

impairment charges affecting our properties;

our dispositions of assets may not achieve anticipated results;

competition for the acquisition and development of outlet centers, and our inability to complete outlet centers we have identified;

environmental regulations affecting our business;

risk associated with a possible terrorist activity or other acts or threats of violence, public health crises and threats to public safety;

risks associated with supply chain disruptions and labor shortages;

our dependence on rental income from real property;

our dependence on the results of operations of our retailers;

the fact certain of our lease agreements include co-tenancy and/or sales-based provisions that may allow a tenant to pay reduced rent and/or terminate a lease prior to its natural expiration;

the fact that certain of our properties are subject to ownership interests held by third parties, whose interests may conflict with ours;

risks related to uninsured losses;

risks related to changes in consumer spending habits;

investor and regulatory focus on environmental, sustainability and social initiatives;

risks associated with our Canadian investments;

risks associated with attracting and retaining key personnel;

risks associated with debt financing;

risk associated with our guarantees of debt for, or other support we may provide to, joint venture properties;

the effectiveness of our interest rate hedging arrangements;

uncertainty relating to the phasing out of LIBOR;

risk associated with our interest rate hedging arrangements;

risk associated to uncertainty related to determination of LIBOR;

our potential failure to qualify as a REIT;

our legal obligation to make distributions to our shareholders;

legislative or regulatory actions that could adversely affect our shareholders;

our dependence on distributions from the Operating Partnership to meet our financial obligations, including dividends;

the risk of a cyber-attack or an act of cyber-terrorism;

as well as the other risks described in “Item 1A-Risk Factors” in Part I of this Annual Report on Form 10-K..

We qualify all of our forward-looking statements by these cautionary statements.

The forward-looking statements in this Annual Report on Form 10-K are only predictions.

We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events.

The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements.

Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

The following discussion should be read in conjunction with the consolidated financial statements appearing elsewhere in this report.

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General Overview

As of December 31, 2022, we had 29 consolidated outlet centers in 18 states totaling 11.4 million square feet, one managed center and one center under construction.

We also had 6 unconsolidated outlet centers totaling 2.1 million square feet, including 2 outlet centers in Canada.

The table below details our acquisitions, new developments, expansions and dispositions of consolidated and unconsolidated outlet centers that impacted our results of operations and liquidity from January 1, 2020 to December 31, 2022:

Consolidated Outlet Centers Unconsolidated Joint Venture Outlet Centers Managed Centers

Outlet Center Quarter Acquired/Open/Disposed/Demolished Square Feet (in thousands) Number of

Outlet Centers Square Feet (in thousands) Number of

Outlet Centers

As of December 31, 2019 12,048 32 2,212 7 — —

Dispositions:

Terrell, Texas Third Quarter (178) (1) — — — —

Other 3 — — — — —

As of December 31, 2023, we had 31 consolidated centers and one open-air lifestyle center in 18 states totaling 12.7 million square feet.

We also had 6 unconsolidated centers totaling 2.1 million square feet, including 2 outlet centers located in Canada.

Our portfolio also includes two managed centers totaling approximately 760,000 square feet.

The table below details our acquisitions, new developments, expansions and dispositions of consolidated and unconsolidated centers that impacted our results of operations and liquidity from January 1, 2021 to December 31, 2023:

Consolidated Centers

Unconsolidated Joint Venture Centers

Managed Centers

Quarter Acquired/Developed/Disposed Square Feet (in thousands) Number of Centers Square Feet (in thousands) Number of Centers

Square Feet (in thousands) Number of

As of December 31, 2020 11,873 31 2,212 7 — —

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As of December 31, 2022 11,353 29 2,113 6 457 1

Palm Beach, Florida

Third Quarter — — — — 301 1

Nashville, Tennessee Fourth Quarter

291 1 — — — —

Asheville, North Carolina Fourth Quarter 382 1 — — — —

Huntsville, Alabama Fourth Quarter 651 1 — — — —

Other — — — — — —

As of December 31, 2023

12,690 32 2,113 6 758 2

Leasing Activity

The following table provides information for our consolidated outlet centers related to leases for new stores that opened or renewals that were executed during the years ended December 31, 2022 and 2021, respectively:

The following table provides information for our consolidated centers related to leases for new stores that opened or renewals that were executed during the years ended December 31, 2023 and 2022, respectively:

Comparable Space for Executed Leases (1) (2) (3)

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2022 344 1,644 $ 31.96 $ 13.64 4.18

(4) Represents average initial cash rent (base rent and common area maintenance (“CAM”)).

(4) Represents average initial cash rent (base rent and CAM).

(5) Represents change in average initial and expiring cash rent (base rent and CAM).

(6) Tenant allowance includes other landlord costs.

COVID-19 Pandemic

Due to the COVID-19 pandemic, a number of our tenants requested rent deferrals, rent abatements or other types of rent relief during this pandemic in 2020.

As a response, in late March 2020, we offered all tenants in our 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.

Through December 31, 2022, the Company had collected 99% of the 2020 deferred rents.

The extent of future tenant requests for rent relief and the impact on our results of operations and cash flows is uncertain and cannot be predicted at this time.

If store closures were to occur again in our domestic markets, this could have a material adverse impact on our financial position and results of operations.

Results of Operations

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• increase in average portfolio occupancy rate from 95% to 97%,

• gain on sale of assets in the 2022 period of $3.2 million from the sale in December 2022 of our Blowing Rock, North Carolina outlet center,

• decrease in interest expense from the full year impact of the refinance of $400 million of unsecured debt during the third quarter of 2021 at a rate of 2.75%, along with the full year impact of debt reductions during 2021 using the proceeds from equity issuances during the first half of 2021.

• the prior year included a loss on the early extinguishment of debt of $47.9 million, and a $7.0 million impairment charge recognized on the outlet center in Mashantucket, Connecticut.

In the tables below, information set forth for properties disposed includes the Jeffersonville outlet center sold in January 2021 and the Blowing Rock outlet center sold in December 2022.

• higher property management and leasing responsibilities for two centers in Palm Beach, Florida,

• increase in other revenues from marketing partnership programs,

• higher investment income

• lower depreciation expense

These increases were partially offset by:

• lower termination fees,

• gain on sale of assets in the 2022 period of $3.2 million from the sale of our Blowing Rock, North Carolina center,

• higher general and administrative expenses in 2023

In the tables below, information set forth for properties disposed includes the Blowing Rock, NC center sold in December 2022.

New developments and acquired properties relates to the Nashville, TN;

Asheville, NC;

and Huntsville, AL centers all of which were opened or acquired in the fourth quarter of 2023.

Rental Revenues

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Rental revenues from existing properties $ 434,901 $ 419,139 $ 15,762

Rental revenues from new developments and acquired properties 5,950 — 5,950

Rental revenues from properties disposed — 2,144 (2,144)

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$ 438,889 $ 421,419 $ 17,470

Rental revenues increased primarily due to growth in occupancy and rental rates in 2022.

Rental revenues from existing properties increased primarily due to growth in occupancy and rental rates in 2023.

Our average occupancy increased from 95% to 97% from 2022 to 2023.

Additionally, rental revenues were also impacted by the net reversal of revenue reserves in the 2022 period of approximately $4.1 million, compared to $1.2 million of net reserves recorded in 2021.

Additionally, the 2022 period included the acceleration of amortization of an above market lease intangible for one tenant of approximately $1.0 million.

The 2022 period included significant termination rents from certain tenants.

The 2023 period did not have termination rents at that level.

Management, Leasing and Other Services

Management, leasing and other services increased $746,000 in the 2022 period compared to the 2021 period.

Management, leasing and other services increased $1.5 million in the 2023 period compared to the 2022 period.

The following table sets forth the changes in various components of management, leasing and other services (in thousands):

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Total Fees $ 8,660 $ 7,157 $ 1,503

Management, leasing and other service revenue increased in the 2022 period due to the addition of property management and leasing responsibilities for a center in Palm Beach, Florida.

Management, leasing and other service revenue increased in the 2023 period due to the addition of property management responsibilities for two centers in Palm Beach, Florida during 2022 and 2023.

Other Revenues

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Other revenues from existing properties $ 16,171 $ 13,861 $ 2,310

Other revenues from new developments and acquired properties 687 — 687

Other revenues from property disposed — 176 (176)

$ 16,858 $ 14,037 $ 2,821

Other revenues from existing properties increased in the 2022 period due an increase in other revenue streams, such as paid media, sponsorships and onsite signage, on a local and national level.

Other revenues from existing properties increased in the 2023 period due an increase in other revenue streams, such as EV charging, paid media, sponsorships and onsite signage, on a local and national level.

Property Operating Expenses

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Property operating expenses from existing properties $ 136,381 $ 137,428 $ (1,047)

Property operating expenses from new developments and acquired properties 3,593 — 3,593

Property operating expenses from property disposed — 962 (962)

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$ 145,547 $ 143,936 $ 1,611

Property operating expenses at existing properties increased in the 2022 period compared to the 2021 period primarily due to an increase in property insurance and property taxes.

Property operating expenses from properties disposed for the 2021 period includes $1.7 million in net proceeds received from the successful appeal of property taxes for certain tax years prior to disposition.

Property operating expenses at existing properties decreased in the 2023 period compared to the 2022 period primarily due to decreases in snow removal expense from a mild winter in 2023.

General and Administrative Expenses

General and administrative expenses increased $4.6 million in the 2023 period compared to the 2022 period.

The 2022 period includes higher compensation costs due to the addition of certain executives and other key employees during the second half of 2021 and during 2022 to drive operational and growth initiatives, which led to increased costs in 2022.

In addition, 2022 includes executive severance costs, totaling $2.4 million.

The 2021 period includes compensation cost related to employees that accepted a voluntary retirement plan with an effective retirement date of March 31, 2021, as well as other executive severance costs incurred during 2021, totaling $3.6 million.

Finally, travel costs have increased compared to 2021 with the decrease in restrictions from COVID-19 and other corporate employee benefit costs have increased as well.

Impairment Charges

During the fourth quarter of 2021, we determined that the estimated future undiscounted cash flows of our Foxwoods outlet center in Mashantucket, Connecticut did not exceed the property's carrying value due to a continuing decline in operating results.

Therefore, we recorded $7.0 million of non-cash impairment charges in our consolidated statement of operations for 2021, which equaled the excess of the property's carrying value over its estimated fair value.

There were no impairment charges in 2022.

The 2023 period includes higher compensation costs due to the addition of certain executives and other key employees during 2022 and 2023 to drive operational and growth initiatives.

In addition, the 2023 period includes increases in share-based compensation and other employee benefit costs.

Finally, 2023 and 2022 includes executive compensation adjustments, totaling ($806,000) and $2.4 million, respectively.

Depreciation and Amortization

Depreciation and amortization expense increased $1.9 million in the 2022 period compared to the 2021 period.

Depreciation and amortization expense decreased $3.0 million in the 2023 period compared to the 2022 period.

The following table sets forth the changes in various components of depreciation and amortization costs from the 2022 period to the 2023 period (in thousands):

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Depreciation and amortization expenses from existing properties $ 104,000 $ 111,017 $ (7,017)

Depreciation and amortization from property disposed 887 931 (44)

Depreciation and amortization from new developments and acquired properties 4,889 — 4,889

Depreciation and amortization from disposed property — 887 (887)

$ 108,889 $ 111,904 $ (3,015)

During 2022, we adjusted the useful lives of our solar assets from twenty years to ten years, resulting in an incremental $4.4 million of depreciation expense.

Excluding this change, our depreciation would have decreased

due primarily to tenant improvements becoming fully depreciated and a decrease in our redevelopment activity.

Depreciation and amortization expense from existing properties decreased as certain assets became fully depreciated during the 2022 and 2023 periods.

In addition, during the year ended 2022, we changed our useful depreciable lives of our solar assets to better reflect the estimated periods during which these assets will remain in service.

The estimated useful lives of these assets that previously averaged 20 years were decreased to an average of ten years.

The effect of this change in estimate was to increase 2022 depreciation expense by $4.4 million.

Interest Expense

Interest expense decreased $5.9 million in the 2022 period compared to the 2021 period primarily because during August and September 2021, we completed a public offering of $400.0 million of 2.750% 10 year senior notes and completed the early redemption of $100.0 million of 3.875% senior notes due in 2023 and $250.0 million of 3.75% senior notes due in 2024, redeemed $150.0 million of senior notes in April 2021 and repaid $50.0 million of our term loan, reducing our average interest rate.

In addition, proceeds from our 2021 equity offerings were used to reduce debt in 2021, also contributing to a reduction of interest expense in 2022.

Loss on Early Extinguishment of Debt

For the year ended December 31, 2021, we recorded make-whole premiums of $44.9 million and the write-off of approximately $3.0 million of debt discount and debt origination costs due to the early redemption of our notes originally due 2023 and 2024.

Interest expense increased $1.0 million in the 2023 period compared to the 2022 period primarily because starting in the second quarter of 2022, interest rates began to rise significantly which impacted our debt that is based on variable rates.

In October 2022, we amended and restated our unsecured term loan.

The outstanding balance was increased from $300.0 million to $325.0 million, and the maturity date was extended to January 2027 plus a one-year extension option.

Also, in October 2022, the Southaven, Mississippi consolidated joint venture amended and restated its variable interest rate secured term loan, increasing the outstanding balance to $51.7 million from

$40.1 million.

In May 2023, Fitch Ratings assigned a first-time ‘BBB’ long-term issuer default rating to the Company and the Operating Partnership, along with a Stable rating outlook.

Fitch also assigned a ‘BBB’ rating to Operating Partnership’s senior unsecured debt, which includes our lines of credit, a term loan and senior notes.

As a result, the applicable pricing margin on each of our unsecured lines of credit and our term loan was reduced by 25 basis points (including a 5 basis point reduction in the facility fee on the unsecured lines of credit).

Gain on Sale of Assets

In December 2022, we sold a non-core outlet center in Blowing Rock, North Carolina for net proceeds of $12.4 million, which resulted in a gain on sale of assets of $3.2 million.

We did not have a gain or loss on the sale of our Jeffersonville, Ohio asset in 2021.

In December 2022, we sold a non-core center in Blowing Rock, North Carolina for net proceeds of $12.4 million, which resulted in a gain on sale of assets of $3.2 million.

Other Income (Expense)

Other income (expense) increased approximately $7.6 million in the 2022 period compared to the 2021 period, primarily due to a $2.4 million gain on sale of a non-real estate asset and higher investment income on our cash and cash equivalents from opportunities available in the current rising interest rate environment.

Also, in March 2021, the RioCan joint venture closed on the sale of its outlet center in Saint-Sauveur, for net proceeds of approximately $9.4 million.

Our share of the proceeds was approximately $4.7 million.

As a result of this transaction, we recorded a foreign currency loss of approximately $3.6 million in other income (expense), which had been previously recorded in other comprehensive income.

Equity in Earnings (Losses) of Unconsolidated Joint Ventures

Other income (expense) increased approximately $3.7 million in the 2023 period compared to the 2022 period, primarily due to higher returns on our cash and cash equivalents and short-term investments from opportunities available in the rising interest rate environment.

This was partially offset by the 2022 period including a $2.4 million gain on sale of a non-real estate asset.

Equity in Earnings of Unconsolidated Joint Ventures

Equity in earnings (losses) of unconsolidated joint ventures decreased approximately $354,000 in the 2023 period compared to the 2022 period.

In the table below, information set forth for property disposed includes the Saint-Sauveur, Quebec outlet center in our Canadian joint venture, which was sold in March 2021.

2022 2021 Increase/(Decrease)

Equity in earnings from existing properties $ 8,594 $ 8,714 $ (120)

Equity in earnings (losses) from property disposed — 190 (190)

$ 8,594 $ 8,904 $ (310)

Equity in earnings (losses) of unconsolidated joint ventures from existing properties decreased primarily due to the increase in variable interest rates in 2022 that negatively impacted two of our joint ventures that had variable rate mortgages.

In addition, the variable interest mortgage for our Columbus, Ohio joint venture was refinanced in September 2022 and now has a fixed interest rate of 6.25% compared to LIBOR + 1.85%.

The decrease is primarily due to the increase in variable interest rates which began in 2022 and continued through 2023 and negatively impacted two of our joint ventures, from the refinancing of those two joint ventures mortgages.

In June 2023, the Galveston/Houston joint venture completed the refinance of its mortgage.

The new $58.0 million loan has a maturity date of June 2026 and an interest rate of Daily SOFR + 3.00%.

In conjunction with this refinance, the joint venture entered into a $29.0 million interest rate swap agreement that fixes Daily SOFR at 4.44% until December 2025.

In September 2022, the Columbus joint venture completed the refinance of its existing $71.0 million mortgage with an interest rate of LIBOR + 1.85% which had a maturity date of November 2022.

The refinanced mortgage remained $71.0 million but became a non-recourse loan with a maturity date in October 2032 and a fixed interest rate of 6.25%.

2022 Compared to 2021

For a discussion of our results of operations for the year ended December 31, 2020, including a year-to-year comparison between 2021 and 2020, refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report Form 10-K for the year ended December 31, 2021.

For a discussion of our results of operations for the year ended December 31, 2022, including a year-to-year comparison between 2022 and 2021, refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2022.

Liquidity and Capital Resources of the Company

In this “Liquidity and Capital Resources of the Company” section, the term, the "Company", refers only to Tanger Factory Outlet Centers, Inc.

In this “Liquidity and Capital Resources of the Company” section, the term, the "Company", refers only to Tanger Inc.

on an unconsolidated basis, excluding the Operating Partnership.

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The Company receives proceeds from equity issuances from time to time, but is required by the Operating Partnership's partnership agreement to contribute the proceeds from its equity issuances to the Operating Partnership in exchange for partnership units of the Operating Partnership.

We are a well-known seasoned issuer with a shelf registration which expires in February 2024 that allows the Company to register various unspecified classes of equity securities and the Operating Partnership to register various unspecified classes of debt securities.

We expect to file a new joint shelf registration statement on Form S-3 prior to the expiration of the current registration statement.

As circumstances warrant, the Company may issue equity from time to time on an opportunistic basis, dependent upon market conditions and available pricing.

We are a well-known seasoned issuer with a shelf registration that expires in December 2026, which allows us to register various unspecified classes of equity securities and the Operating Partnership to register various unspecified classes of debt securities.

As circumstances warrant, we may issue equity from time to time on an opportunistic basis, dependent upon market conditions and available pricing.

The Operating Partnership may use the proceeds to repay debt, including borrowings under its lines of credit, develop new or existing properties, make acquisitions of properties or portfolios of properties, invest in existing or newly created joint ventures, or for general corporate purposes.

The liquidity of the Company is dependent on the Operating Partnership's ability to make sufficient distributions to the Company.

The Operating Partnership is a party to loan agreements with various bank lenders that require the Operating Partnership to comply with various financial and other covenants before it may make distributions to the Company.

The Company also guarantees some of the Operating Partnership's debt.

If the Operating Partnership fails to fulfill its debt requirements, which trigger the Company's guarantee obligations, then the Company may be required to fulfill its cash payment commitments under such guarantees.

However, the Company's only material asset is its investment in the Operating Partnership.

The Company believes the Operating Partnership's sources of working capital, specifically its cash flow from operations, and borrowings available under its unsecured credit facilities, are adequate for it to make its distribution payments to the Company and, in turn, for the Company to make its dividend payments to its shareholders and to finance its continued operations, investment and growth strategy and additional expenses we expect to incur.

However, there can be no assurance that the Operating Partnership's sources of capital will continue to be available at all or in amounts sufficient to meet its needs, including its ability to make distribution payments to the Company.

The unavailability of capital could adversely affect the Operating Partnership's ability to pay its distributions to the Company, which will in turn, adversely affect the Company's ability to pay cash dividends to its shareholders.

We operate in a manner intended to enable us to qualify as a REIT under the Internal Revenue Code, or the Code.

For the Company to maintain its qualification as a REIT, it must pay dividends to its shareholders aggregating annually at least 90% of its taxable income.

While historically the Company has satisfied this distribution requirement by making cash distributions to its shareholders, it may choose to satisfy this requirement by making distributions of cash or other property, including, in limited circumstances, the Company's own shares.

Our liquidity is dependent on the Operating Partnership's ability to make sufficient distributions to us.

We also also guarantee some of the Operating Partnership's debt.

If the Operating Partnership fails to fulfill its debt requirements, which would trigger our guarantee obligations, then we may be required to fulfill our cash payment commitments under such guarantees.

However, our only material asset is our investment in the Operating Partnership.

We believe the Operating Partnership's sources of working capital, specifically its cash flow from operations, and borrowings available under its unsecured credit facilities, are adequate for it to make its distribution payments to us and, in turn, for us to make dividend payments to our shareholders and to finance our continued operations, investment and growth strategy and additional expenses we expect to incur.

The unavailability of capital could adversely affect the Operating Partnership's ability to pay its distributions to us, which will in turn, adversely affect our ability to pay cash dividends to our shareholders.

We operate in a manner intended to enable us to qualify as a REIT under the Internal Revenue Code.

In order for us to maintain our qualification as a REIT, we must pay dividends to our shareholders aggregating annually at least 90% of our taxable income.

While historically we have satisfied this distribution requirement by making cash distributions to our shareholders, it may choose to satisfy this requirement by making distributions of cash or other property, including, in limited circumstances, our own shares.

For tax reporting purposes, we distributed approximately $101.0 million during 2023.

If in any taxable year the Company were to fail to qualify as a REIT and certain statutory relief provisions were not applicable, we would not be allowed a deduction for distributions to shareholders in computing taxable income and would be subject to U.S.

If in any taxable year, we were to fail to qualify as a REIT and certain statutory relief provisions were not applicable, we would not be allowed a deduction for distributions to shareholders in computing taxable income and would be subject to U.S.

federal income tax (including any applicable alternative minimum tax for tax years prior to 2018) on our taxable income at the regular corporate rate.

As a result of this distribution requirement, the Operating Partnership cannot rely on retained earnings to fund its on-going operations to the same extent that other companies whose parent companies are not real estate investment trusts can.

The Company may need to continue to raise capital in the equity markets to fund the Operating Partnership's working capital needs, as well as potential developments of new or existing properties, acquisitions or investments in existing or newly created joint ventures.

The Company currently consolidates the Operating Partnership because it has (1) the power to direct the activities of the Operating Partnership that most significantly impact the Operating Partnership’s economic performance and (2) the obligation to absorb losses and the right to receive the residual returns of the Operating Partnership that could be potentially significant.

The Company does not have significant assets other than its investment in the Operating Partnership.

We may need to continue to raise capital in the equity markets to fund the Operating Partnership's working capital needs, as well as potential developments of new or existing properties, acquisitions or investments in existing or newly created joint ventures.

We currently consolidate the Operating Partnership because we have (1) the power to direct the activities of the Operating Partnership that most significantly impact the Operating Partnership’s economic performance and (2) the obligation to absorb losses and the right to receive the residual returns of the Operating Partnership that could be potentially significant.

We do not have significant assets other than its investment in the Operating Partnership.

Therefore, the assets and liabilities and the revenues and expenses of the Company and the Operating Partnership are the same on their respective financial statements, except for immaterial differences related to cash, other assets and accrued liabilities that arise from public company expenses paid by the Company.

However, all debt is held directly or indirectly at the Operating Partnership level, and the Company has guaranteed some of the Operating Partnership's unsecured debt as discussed below.

Because the Company consolidates the Operating Partnership, the section entitled "Liquidity and Capital Resources of the Operating Partnership" should be read in conjunction with this section to understand the liquidity and capital resources of the Company on a consolidated basis and how the Company is operated as a whole.

Under our at-the-market stock offering (“ATM Offering”) program, which commenced in February 2021, we may offer and sell our common shares, $0.01 par value per share (“Common Shares”), having an aggregate gross sales price of up to $250.0 million (the “Shares”).

We may sell the Shares in amounts and at times to be determined by us but we have no obligation to sell any of the Shares.

However, all debt is held directly or indirectly at the Operating Partnership level, and we have guaranteed some of the Operating Partnership's unsecured debt as discussed below.

Because we consolidate the Operating Partnership, the section entitled "Liquidity and Capital Resources of the Operating Partnership" should be read in conjunction with this section to understand the liquidity and capital resources of the Company on a consolidated basis and how the Company is operated as a whole.

Under our ATM Offering, which commenced in February 2021, and was reinstated with a new program in December 2023, we may offer and sell our common shares, $0.01 par value per share (“Common Shares”), having an aggregate gross sales price of up to $250.0 million.

We may sell the Common Shares in amounts and at times to be determined by us but we have no obligation to sell any of the Common Shares.

Actual sales, if any, will depend on a variety of factors to be determined by us from time to time, including, among other things, market conditions, the trading price of the Common Shares, capital needs and determinations by us of the appropriate sources of its funding.

We currently intend to use the net proceeds from any sale of shares pursuant to the ATM Offering for working capital and general corporate purposes.

We currently intend to use the net proceeds from any sale of Common Shares pursuant to the ATM Offering for working capital and general corporate purposes.

As of December 31, 2023, we had approximately $220.1 million remaining available for sale under our ATM Offering program.

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Aggregate net proceeds after commissions and fees (in thousands) $ 88,861 $ — $ 186,969

In May 2021, the Company’s Board of Directors authorized the repurchase of up to $80.0 million of the Company’s outstanding shares through May 31, 2023.

Repurchases may be made from time to time through open market, privately-negotiated, structured or derivative transactions (including accelerated share repurchase transactions), or other methods of acquiring shares.

The Company intends to structure open market purchases to occur within pricing and volume requirements of Rule 10b-18.

The Company may, from time to time, enter into Rule 10b5-1 plans to facilitate the repurchase of its shares under this authorization.

The Company did not repurchase any shares during the years ended December 31, 2022, 2021 and 2020.

The remaining amount authorized to be repurchased under the program as of December 31, 2022 was approximately $80.0 million.

In January 2023, the Company's Board of Directors declared a $0.22 cash dividend per common share payable on February 15, 2023 to each shareholder of record on January 31, 2023, and a $0.22 cash distribution per Operating Partnership unit to the Operating Partnership's unitholders.

In May 2023, the Board authorized the repurchase of up to $100.0 million of our outstanding Common Shares through May 31, 2025.

We intend to structure open market purchases to occur within pricing and volume requirements of Rule 10b-18 under the Exchange Act.

We may, from time to time, enter into Rule 10b5-1 plans to facilitate the repurchase of our Common Shares under this authorization.

We did not repurchase any Common Shares during the years ended December 31, 2023, 2022 and 2021.

The remaining amount of Common Shares authorized to be repurchased under the program as of December 31, 2023 was $100.0 million.

In January 2024, the Board declared a $0.26 cash dividend per Common Share payable on February 15, 2024 to each shareholder of record on January 31, 2024, and a $0.26 cash distribution per general and limited partnership unit to the Operating Partnership's unitholders.

Liquidity and Capital Resources of the Operating Partnership

In this “Liquidity and Capital Resources of the Operating Partnership” section, the terms “we”, “our” and “us” refer to the Operating Partnership or the Operating Partnership and the Company together, as the text requires.

Summary of Our Major Sources and Uses of Cash and Cash Equivalents

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Capital Expenditures

The following table details our capital expenditures for consolidated outlet centers for the years ended December 31, 2022 and 2021, respectively (in thousands):

The following table details our capital expenditures for consolidated centers for the years ended December 31, 2023 and 2022, respectively (in thousands):

2023 2022 Change

Capital expenditures analysis:

New outlet center developments and expansions (1)

New center developments and expansions (1)

$ 123,175 $ 39,967 $ 83,208

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Additions to rental property-cash basis $ 188,196 $ 77,310 $ 110,886

(1) New outlet center developments and expansions in the 2022 period primarily due to development costs at our site in Nashville, TN.

The 2021 period included a land acquisition at our Westgate outlet center.

(1) New center developments and expansions in both periods primarily due to development costs at our site in Nashville, TN.

(2) In the 2023 and 2022 periods, second generation tenant allowances are presented net of $1.1 million and $1.5 million tenant allowance reversals respectively, which were the result of a lease modifications.

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Other capital expenditures includes capital expenditures related to recurring and value-enhancing capital activities.

We expect total capital expenditures for 2023 to be approximately $210 million as compared to capital expenditures of $77.3 million in 2022 driven primarily by approximately $110 million of anticipated development costs to complete our site in Nashville, Tennessee.

We expect total capital expenditures for 2024 to be approximately $100.0 million as compared to capital expenditures of $188.2 million in 2023.

The higher 2023 amount was driven primarily by the expenditures for our Nashville, TN development, which opened in October 2023.

We expect to maintain sufficient liquidity to fund these capital expenditures.

In November 2023, we acquired a 382,000-square-foot, open-air outlet center in Asheville, North Carolina for $70 million in an all-cash transaction.

The established center is occupied by a diverse mix of brands that includes leading home furnishings providers as well as iconic apparel, footwear and accessories brands.

In addition, in November 2023, we acquired Bridge Street Town Centre, an 825,000-square-foot, open-air lifestyle center in Huntsville, Alabama for $193.5 million with cash.

proceeds from our ATM program and amounts available under our unsecured lines of credit.

The center comprises over 80 retail stores, restaurants, and entertainment venues and serves as the dominant shopping destination in the market.

Potential Future Developments, Acquisitions and Dispositions

As of the date of this filing, we are not in the pre-development period for any potential new developments.

As of the date of the filing of this Annual Report, we are not in the pre-development period for any potential new developments.

We may use joint venture arrangements to develop potential sites.

We expect to maintain sufficient liquidity to fund existing capital expenditures, including completion of our Nashville, Tennessee asset.

We expect to maintain sufficient liquidity to fund existing capital expenditures.

In the case of projects to be wholly-owned by us, we expect to fund these projects with cash on hand, borrowings under our unsecured lines of credit and cash flows from operations, but may also fund them with capital from additional public debt and equity offerings.

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Future retail real estate assets may be wholly-owned by us, owned through joint ventures or partnership arrangements, or through management agreements.

However, you should note that any developments or expansions that we, or a joint venture that we have an ownership interest in, have planned or anticipated may not be started or completed as scheduled, or may not result in accretive net income or funds from operations ("FFO").

See the section "Non-GAAP Supplemental Earnings Measures" - "Funds From Operations" below for further discussion of FFO.

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We may also enter into letters of intent for the purchase or sale of properties.

Any prospective acquisition or disposition that is being evaluated or which is subject to a letter of intent may not be consummated, or if consummated, may not result in an increase in earnings or liquidity.

Any prospective acquisition or disposition that is being evaluated or that is subject to a letter of intent may not be consummated, or if consummated, may not result in an increase in earnings or liquidity.

Unconsolidated Real Estate Joint Ventures

From time to time, we form joint venture arrangements to develop or acquire outlet centers.

As of December 31, 2022, we have partial ownership interests in six unconsolidated outlet centers totaling approximately 2.1 million square feet, including two outlet centers in Canada.

See Note 5 to the Consolidated Financial Statements for details of our individual joint ventures, including, but not limited to, carrying values of our investments, fees we receive for services provided to the joint ventures, recent development and financing transactions and condensed combined summary financial information.

We may elect to fund cash needs of a joint venture through equity contributions (generally on a basis proportionate to our ownership interests), advances or partner loans, although such funding is not typically required contractually or otherwise.

From time to time, we form joint venture arrangements to develop or acquire centers.

As of December 31, 2023, we have partial ownership interests in six unconsolidated centers totaling approximately 2.1 million square feet, including two centers located in Canada.

See Note 6 to the Consolidated Financial Statements for details of our individual joint ventures, including, but not limited to, the carrying values of our investments, fees we receive for services provided to the joint ventures, recent development and financing transactions and condensed combined summary financial information.

We may elect to fund cash needs of a joint venture through equity contributions (generally on a basis proportionate to our ownership interests in the joint venture), advances or partner loans, although such funding is not typically required contractually or otherwise.

We separately report investments in joint ventures for which accumulated distributions have exceeded investments in, and our share of net income or loss of, the joint ventures within other liabilities in the consolidated balance sheets because we are committed and intend to provide further financial support to these joint ventures.

We believe our joint ventures will be able to fund their operating and capital needs during 2023 based on their sources of working capital, specifically cash flow from operations, access to contributions from partners, and ability to refinance all or portion of their debt obligations, including the ability to exercise upcoming extensions of near term maturities.

We believe our joint ventures will be able to fund their operating and capital needs during the year ended 2024 based on their sources of working capital, specifically cash flow from operations, access to contributions from partners, and ability to refinance all or portion of their debt obligations, including the ability to exercise upcoming extensions of near-term maturities.

Our joint ventures are typically encumbered by a mortgage on the joint venture property.

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A default by a joint venture under its debt obligations may expose us to liability under the guaranty.

For construction and mortgage loans, we may include a guaranty of completion as well as a principal guaranty ranging from 5% to 15.5% of principal.

For construction and mortgage loans, we may include a guaranty of completion as well as a principal guaranty.

The principal guarantees include terms for release based upon satisfactory completion of construction and performance targets including occupancy thresholds and minimum debt service coverage tests.

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Future Debt Obligations

As described further in Note 8 of the notes to the consolidated financial statements, as of December 31, 2022, scheduled maturities and principal amortization of our existing debt for 2023, 2024, 2025, 2026 and 2027 are $4.8 million, $5.1 million, $1.5 million, $407.4 million and $625.0 million, respectively.

As described further in Note 9 to the Consolidated Financial Statements, as of December 31, 2023, scheduled maturities and principal amortization of our existing debt for 2024, 2025, 2026 and 2027 are $5.1 million, $14.5 million, $407.4 million and $625.0 million, respectively.

As of December 31, 2023, scheduled maturities after 2027 aggregate to $400.0 million.

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We are obligated to make periodic interest payments at fixed and variable rates, depending on the terms of the applicable debt agreements.

Based on applicable interest rates, forward curve estimates, and scheduled debt maturities as of December 31, 2022, these interest obligations total approximately $253.4 million and range from approximately $18.4 million to $53.2 million on an annual basis over the next five years.

Based on applicable interest rates and scheduled debt maturities as of December 31, 2023, these interest obligations total approximately $220.7 million and range from approximately $11.0 million to $55.2 million on an annual basis over the next five years.

Our variable rate debt agreements are based on Daily SOFR so the Daily SOFR rate at December 31, 2023 was used to calculate future interest expense.

Operating Lease Obligations

As described further in Note 20 of the notes to the consolidated financial statements, as of December 31, 2022, we had a total of $238.3 million of minimum operating lease obligations.

As described further in Note 21 to the Consolidated Financial Statements, as of December 31, 2023, we had a total of $232.6 million of minimum operating lease obligations.

These minimum lease payments range from approximately $4.9 million to $5.9 million on an annual basis over the next five years.

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Effect of foreign currency rate changes on cash and equivalents (115) (111) (4)

Net increase in cash and cash equivalents $ 50,859 $ 76,402 $ (25,543)

Net increase/(decrease) in cash and cash equivalents

$ (199,439) $ 50,859 $ (250,298)

Operating Activities

The decrease in net cash provided by operating activities was primarily due to changes in working capital, offset by an increase in rental revenues primarily due to an increase in occupancy rates and increase in rental rates,

The increase in net cash provided by operating activities was primarily due to the addition of three centers during the fourth quarter of 2023, changes in working capital and an increase in rental revenues at existing centers primarily driven by an increase in occupancy rates and increase in rental rates.

Investing Activities

The primary cause for the increase in net cash used in investing activities was due to the purchase of land at our new center in Nashville, Tennessee, paired with construction costs related to increased additions to rental properties during 2022 and increase in short-term investments.

The 2021 period included net proceeds of approximately $8.1 million received from the sale of our Jeffersonville outlet center, while the 2022 period included lower distributions in excess of cumulative earnings from unconsolidated joint ventures and net proceeds of approximately $12.4 million related to the sale of the property in Blowing Rock, North Carolina.

The increase in net cash used in investing activities was primarily driven by the acquisition in November 2023 of two centers in Asheville, NC and Huntsville, AL, for a net total of $259.7 million.

In addition, during 2023, we completed the development of our new center in Nashville, TN, which opened in October 2023.

Financing Activities

The primary cause for the decrease in net cash used in financing activities was the increase in the term loan borrowing capacity and the Southaven mortgage increased capacity, in addition to the early redemption in 2021 of $250.0 million of our 3.875% senior notes due December 2023 and $250.0 million of our 3.75% senior notes due 2024, including make whole premiums of $44.9 million.

In addition, in March 2021 and June 2021, we paid down a total of $50.0 million of borrowings under our unsecured term loan with cash on hand.

This was offset by higher dividend payments in 2022 compared to 2021.

The primary cause for the decrease in net cash used in financing activities was the issuance of approximately 3.5 million Common Shares under our ATM Offering Program during 2023, which generated approximately $88.4 million of net proceeds.

This increase was partially offset by higher dividends paid during 2023 compared to 2022 primarily driven by an increase in our dividend rate.

Financing Arrangements

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We intend to retain the ability to raise additional capital, including public debt or equity, to pursue attractive investment opportunities that may arise and to otherwise act in a manner that we believe to be in the best interests of our shareholders and unitholders.

The Company and Operating Partnership are well-known seasoned issuers with a joint shelf registration statement on Form S-3, expiring in February 2024, that allows us to register unspecified amounts of different classes of securities.

The Company and Operating Partnership are well-known seasoned issuers with a joint shelf registration statement on Form S-3, expiring in December 2026, that allows us to register unspecified amounts of different classes of securities.

To generate capital to reinvest into other attractive investment opportunities, we may also consider the use of additional operational and developmental joint ventures, property management opportunities, the sale or lease of outparcels on our existing properties and the sale of certain properties that do not meet our long-term investment criteria.

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We anticipate that adequate cash will be available to fund our operating and administrative expenses, regular debt service obligations, and the payment of dividends in accordance with REIT requirements in both the short and long-term.

Although we receive most of our rental payments on a monthly basis, distributions to shareholders and unitholders are typically made quarterly and interest payments on the senior, unsecured notes are made semi-annually.

Although we receive most of our rental payments on a monthly basis, dividends and distributions to shareholders and unitholders, respectively, are typically made quarterly and interest payments on the senior, unsecured notes are made semi-annually.

Amounts accumulated for such payments will be used in the interim to reduce the outstanding borrowings under our existing unsecured lines of credit or invested in short-term money market or other suitable instruments.

As of December 31, 2022, our total liquidity was approximately $784.6 million, including $264.6 million of cash and cash equivalents and short-term investments on our balance sheet and the full undrawn capacity under our $520 million unsecured lines of credit.

We believe our current balance sheet position is financially sound;

however, due to the economic uncertainty caused by the current macroeconomic environment, including rising interest rates and inflation, and the inherent uncertainty and unpredictability of the capital and credit markets, we can give no assurance that affordable access to capital will exist between now and when our next significant debt matures, which is our senior notes due September 2026.

Equity Offerings under the ATM Offering Program

In February 2021, the Company established the ATM Offering program whereby it may offer and sell the Company's common shares having an aggregate gross sales price of up to $250.0 million.

During 2021, under this program, the Company sold 10.0 million shares at a weighted average price of $18.97 per share, generating net proceeds of $187.1 million and leaving a remaining authorization of $60.1 million.

The proceeds were contributed to the Operating Partnership and then used primarily to reduce indebtedness as described in the sections immediately below.

During 2022, the Company did not sell any shares under the ATM Offering program.

During 2023, we sold 3.5 million shares under our at-the-market stock offering ("ATM Offering") program at a weighted average price of $25.75 per share, generating gross proceeds of $87.3 million.

As of December 31, 2023, we have a remaining authorization of $220.1 million under the ATM Offering Program.

Our ATM Offering Program also provides that we may sell Common Shares through forward sale contracts.

Actual sales under the ATM Offering Program will depend on a variety of factors including market conditions, the trading price of our Common Stock, our capital needs, and our determination of the appropriate sources of funding to meet such needs.

Throughout 2023, we entered into $325 million of forward starting Daily SOFR interest rate swaps at average fixed pay rate of 3.90%.

The swaps were effective February 1, 2024 and end at various dates from February 1, 2026 to January 1, 2027.

These swaps replace $300.0 million of existing swaps that expired on February 1, 2024 as part of our interest rate risk management strategy.

Redemption of the 2023 and 2024 Senior Notes and public offering of aggregate $400.0 Million Unsecured Senior Notes due 2031

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The aggregate net proceeds from the offering, after deducting the underwriting discount and offering expenses, were approximately $390.7 million.

We used the net proceeds from the sale of the notes to redeem all remaining 3.875% senior notes due 2023, $100.0 million in aggregate principal amount outstanding, and all 3.750% senior notes due 2024, $250.0 million in aggregate principal outstanding.

The redemptions occurred in September 2021 and included a make-whole premium of $31.9 million and the write-off of approximately $1.9 million of debt discount and debt origination costs.

The make-whole premium and the write-off of debt discount and debt origination costs was recorded as a loss on early extinguishment of debt within the consolidated statements of operations.

The remaining proceeds were used for general corporate purposes.

The remaining net proceeds were used for general corporate purposes.

Unsecured term loan

In March 2021 and June 2021, we paid down a total of $50.0 million of borrowings under our $350.0 million unsecured term loan with cash on hand, reducing the balance outstanding to $300.0 million as of December 31, 2021.

In March 2021 and June 2021, we paid down a total of $50.0 million of borrowings under our $350.0 million unsecured term loan with cash on hand, reducing the balance outstanding to $300.0 million.

In October 2022, we amended and restated our unsecured term loan.

The outstanding balance was increased from $300.0 million to $325.0 million and the maturity was extended to January 2027 plus a one-year extension option.

The outstanding balance was increased from $300.0 million to $325.0 million, and the maturity date was extended to January 2027 plus a one-year extension option.

The interest rate changed from LIBOR + 1.25% to Adjusted SOFR + 0.95% based on our current credit rating.

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Other Financing Activity

In October 2021, the joint venture that owns the Southaven, Mississippi outlet center exercised its option to extend the maturity of the Southaven, Mississippi mortgage to April 2023 and paid down the principal balance by $11.3 million to $40.1 million.

The outlet center is consolidated for financial reporting purposes and we funded the entire $11.3 million.

Additionally, in October 2022, the Southaven, Mississippi joint venture amended and restated its secured mortgage, increasing the outstanding balance to $51.7 million from $40.1 million, extending maturity to October 2026 plus a one year extension option, from April 2023, with an interest rate of Adjusted SOFR plus 200 basis points.

During 2021, we completed the principal payments of certain mortgage notes secured by the Atlantic City property with stated interest rates that ranged from 5.14% to 6.27% and which were scheduled to mature in 2021.

The effective interest rate for the remaining notes remains 5.05% as established upon acquisition.

The stated rates for the remaining secured notes ranged from 6.44% to 7.65% with maturity dates between December 2024 and December 2026.

The Operating Partnership’s debt agreements require the maintenance of certain ratios, including debt service coverage and leverage, and limit the payment of dividends such that dividends and distributions will not exceed funds from operations, as defined in the agreements, for the prior fiscal year on an annual basis or 95% on a cumulative basis.

In October 2022, the Southaven, Mississippi consolidated joint venture amended and restated its secured mortgage, increasing the outstanding balance to $51.7 million from $40.1 million, extending the maturity date to October 2026 plus a one-year extension option, from April 2023, with an interest rate of Adjusted SOFR plus 200 basis points.

The Operating Partnership’s debt agreements require the maintenance of certain ratios, including debt service coverage and leverage, and limit the payment of dividends such that dividends and distributions will not exceed FFO, as defined in the debt agreements, for the prior fiscal year on an annual basis or 95% on a cumulative basis.

Debt Covenants

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Failure to comply with these covenants would result in a default which, if we were unable to cure or obtain a waiver from the lenders, could accelerate the repayment obligations.

Further, in the event of default, the Company may be restricted from paying dividends to its shareholders in excess of dividends required to maintain its REIT qualification.

Further, in the event of default, we may be restricted from paying dividends to our shareholders in excess of dividends required to maintain our REIT qualification.

Accordingly, an event of default could have a material and adverse impact on us.

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We believe that we have access to the necessary financing to fund our short-term liquidity needs.

As of December 31, 2022, we were in compliance with all financial and non-financial covenants related to our debt obligations.

As of December 31, 2023, we were in compliance with all financial and non-financial covenants related to our debt obligations, as detailed below:

Senior unsecured notes financial covenants Required Actual

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Total Liabilities to Total Adjusted Asset Value <60% 38 %

Secured Indebtedness to Adjusted Unencumbered Asset Value < 35% 5 %

Secured Indebtedness to Total Adjusted Asset Value < 35% 5 %

EBITDA to Fixed Charges > 1.5 x 4.5

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Columbus 71.0 October 2032 6.25 % — % —

Galveston/Houston 64.5 July 2023 LIBOR + 1.85% 15.5 % 10.0

Galveston/Houston 58.0 June 2026

Daily SOFR + 3.00% 17.2 % 10.0

National Harbor 93.6 January 2030 4.63 % — % —

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$ 320.0 $ 10.0

In September 2022, the joint venture that owns the Columbus, Ohio outlet center completed the refinance of its existing $71.0 million mortgage, which had an interest rate of LIBOR + 1.85% and a maturity date of November 2022.

Houston/Galveston, Texas

In June 2023, the Galveston/Houston joint venture completed the refinance of its mortgage.

The new $58.0 million loan has a maturity date of June 2026 and an interest rate of Daily SOFR + 3.00%.

In conjunction with this refinancing, the joint venture entered into a $29.0 million interest rate swap that fixes Daily SOFR at 4.44% until December 2025.

Columbus, Ohio

In September 2022, the joint venture that owns the Columbus, Ohio center completed the refinance of its existing $71.0 million mortgage, which had an interest rate of LIBOR + 1.85% and a maturity date of November 2022.

The refinanced mortgage remained $71.0 million, but became a non-recourse loan with a maturity date in October 2032 and a fixed interest rate of 6.25%.

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Actual results may differ from these estimates, and such differences may be material.

Management believes the Company’s critical accounting estimates are those related to impairment of long-lived assets, impairment of investments, revenue recognition and collectibility of operating lease receivables.

Management considers these estimates critical because they are both important to the portrayal of the Company’s financial condition and operating results, and they require management to make judgments and estimates about inherently uncertain matters.

The Company’s senior management has reviewed these critical accounting estimates and related disclosures with the Audit Committee of the Company’s Board of Directors.

The Company’s senior management has reviewed these critical accounting estimates and related disclosures with the Audit Committee of the Board.

Evaluation of Impairment of long-lived assets

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We have not materially changed the assumptions used in the analysis during the year ended December 31, 2023, and no impairments were identified.

One of our outlet centers has an estimated fair value significantly less than its recorded carrying value of approximately $113.0 million.

However, based on our current plan with respect to that outlet center, we believe that its carrying amount is recoverable and therefore no impairment charge was recorded.

One of our centers has an estimated fair value less than its recorded carrying value of approximately $111.1 million.

However, based on our current plan with respect to that center, we believe that its carrying amount is recoverable and therefore no impairment charge was recorded.

Accordingly, we will continue to monitor circumstances and events in future periods that could affect inputs such as the expected holding period, operating cash flow forecasts and capitalization rates, utilized to determine whether an impairment charge is necessary.

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If in the future we reduce our estimate of cash flow projections, we may need to impair some of these assets.

We have not materially changed the assumptions used in the analysis during the year ended December 31, 2022, and we have not taken any impairments of our assets during 2022 .

We have not materially changed the assumptions used in the analysis during the year ended December 31, 2023, and we have not taken any impairments of our assets during the year ended December 31, 2023 .

Evaluation of Impairment of investments

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These above factors are considered in the estimation process and are subject to significant management judgment, difficult to predict and contingent on future events that may alter our assumptions and the values estimated by us in our impairment analysis may not be realized.

Acquisitions of Real Estate

In accordance with the guidance for business combinations, we determine whether the acquisition of a property qualifies as a business combination, which requires that the assets acquired and liabilities assumed constitute a business.

If the property acquired is not a business, we account for the transaction as an asset acquisition and therefore capitalize transaction costs.

We evaluate each real estate acquisition to determine whether the integrated set of acquired assets and activities meets the definition of a business.

We allocate the purchase price of asset acquisitions based on the fair value of land, building, tenant improvements, debt and deferred lease costs and other intangibles, such as the value of leases with above or below market rents, origination costs associated with the in-place leases, the value of in-place leases and tenant relationships, if any.

We depreciate the amount allocated to building, deferred lease costs and other intangible assets over their estimated useful lives, which range up to 33 years.

The values of the above and below market leases are amortized and recorded as either an increase (in the case of below market leases) or a decrease (in the case of above market leases) to rental income over the remaining term of the associated lease.

The values of below market leases that are considered to have renewal periods with below market rents are amortized over the remaining term of the associated lease plus the renewal periods when the renewal is deemed probable to occur.

The value associated with in-place leases is amortized over the remaining lease term and tenant relationships are amortized over the expected term, which includes an estimated probability of the lease renewal.

If a tenant terminates its lease prior to the contractual termination of the lease and no rental payments are being made on the lease, any unamortized balance of the related intangibles is written off.

The tenant improvements and origination costs are amortized as an expense over the remaining life of the lease (or charged against earnings if the lease is terminated prior to its contractual expiration date).

We assess fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information.

These cash flow projections may be derived from various observable and unobservable inputs and assumptions.

Also, we may utilize third-party valuation specialists.

As a part of acquisition accounting, the amount by which the fair value of our previously held equity method investment exceeds the carrying book value is recorded as a gain on previously held interest in acquired joint venture.

During the fourth quarter of 2023, we acquired two centers for a total purchase price of $265.1 million, including capitalized transaction costs, that were accounted for as asset acquisitions.

Using the above guidance, we allocated the purchase price of asset acquisitions based on the fair value of land, building, tenant improvements, debt and deferred lease costs and other intangibles, such as the value of leases with above or below market rents, origination costs associated with the in-place leases, the value of in-place leases and tenant relationships, if any.

Approximately $7.0 million and $6.4 million, respectively, were allocated to above and below market rents.

Revenue recognition and collectibility of operating lease receivables

We, as a lessor, retain substantially all of the risks and benefits of ownership of our outlet centers and account for our leases as operating leases.

We, as a lessor, retain substantially all of the risks and benefits of ownership of our centers and account for our leases as operating leases.

We accrue fixed lease income on a straight-line basis over the terms of the leases, when we believe substantially all lease income, including the related straight-line rent receivable, is probable of collection.

Our assessment of collectability requires the exercise of considerable judgment and incorporates available operational performance measures such as sales and the aging of billed amounts as well as other publicly available information with respect to our tenant’s financial condition, liquidity and capital resources, including declines in such conditions due to, or amplified by, the COVID-19 pandemic.

When a tenant seeks to reorganize its operations through bankruptcy proceedings, we assess the collectability of receivable balances including, among other things, the timing of a tenant’s bankruptcy filing and our expectations of the assumption by the tenant in bankruptcy proceeding of leases at the Company’s properties on substantially similar terms.

In the event that we determine accrued receivables are not probable of collection, lease income will be recorded on a cash basis, with the corresponding tenant receivable and straight-line rent receivable charged as a direct write-off against lease income in the period of the change in our collectability determination.

Our financial results for 2020 were materially adversely impacted by COVID-19.

During the year ended December 31, 2020, as a direct result of the pandemic, bankruptcies and restructurings, the Company's earnings were negatively impacted by approximately $47.3 million due to (1) write-offs related to bankruptcies and other uncollectible accounts due to financial weakness, (2) one-time concessions in exchange for landlord-favorable amendments to lease structure, (3) reserves for a portion of deferred and under negotiation billings that we expect to become uncollectible in future periods and (4) and write-offs of straight-line rents associated with the bankruptcies and uncollectible accounts.

During 2022, we had reversals of revenue reserves of approximately $4.1 million, compared to $1.2 million of net reserves recorded in 2021.

During 2021 and 2022, our business and financial results improved, and metrics such as average occupancy rates, traffic to our centers, sales reported by our tenants, and collections of rental revenues returned to near, at, or in some cases above, pre-pandemic levels.

The extent of future tenant requests for rent relief and the impact on our results of operations and cash flows is uncertain and cannot be predicted at this time.

If store closures were to occur again in our domestic markets, this could have a material adverse impact on our financial position and results of operations.

Recent Accounting Pronouncements

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Funds From Operations

Funds From Operations (“FFO”) is a widely used measure of the operating performance for real estate companies that supplements net income (loss) determined in accordance with GAAP.

FFO is a widely used measure of the operating performance for real estate companies that supplements net income (loss) determined in accordance with GAAP.

We determine FFO based on the definition set forth by the National Association of Real Estate Investment Trusts (“Nareit”), of which we are a member.

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FFO is also widely used by us and others in our industry to evaluate and price potential acquisition candidates.

We believe that FFO payout ratio, which represents regular distributions to common shareholders and unit holders of the Operating Partnership expressed as a percentage of FFO, is useful to investors because it facilitates the comparison of dividend coverage between REITs.

We believe that FFO payout ratio, which represents regular distributions to common shareholders and unitholders of the Operating Partnership expressed as a percentage of FFO, is useful to investors because it facilitates the comparison of dividend coverage between REITs.

Nareit has encouraged its member companies to report their FFO as a supplemental, industry-wide standard measure of REIT operating performance.

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Core Funds From Operations

We present Core FFO (formerly referred to as AFFO) as a supplemental measure of our performance.

We present Core FFO (formerly referred to as Adjusted Funds from Operations "AFFO") as a supplemental measure of our performance.

We define Core FFO as FFO further adjusted to eliminate the impact of certain items that we do not consider indicative of our ongoing operating performance.

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Depreciation and amortization of real estate assets - unconsolidated joint ventures 10,514 11,018

Impairment charges - consolidated (1)

Loss on sale of joint venture property, including foreign currency effect (2)

Gain on sale of assets — (3,156)

FFO 220,846 203,206

FFO attributable to noncontrolling interests in other consolidated partnerships (248) —

Allocation of earnings to participating securities (2,151) (1,683)

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As further adjusted for:

Compensation related to voluntary retirement plan and other executive officer severance and retirement (4)

Casualty gain — (969)

Compensation-related adjustments (2)

Gain on sale of non-real estate asset (3)

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Basic weighted average common shares

104,682 103,687

Effect of notional units 1,052 1,240

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111,266 110,395

(1) The 2021 amount includes $563,000 of impairment loss attributable to the right-of-use asset associated with the ground lease at the Mashantucket (Foxwoods), Connecticut outlet center.

(2) Includes a $3.6 million charge related to the foreign currency effect of the sale of the Saint-Sauveur, Quebec property by the RioCan joint venture in March 2021.

(3) Assumes the Class A common limited partnership units of the Operating Partnership held by the noncontrolling interests are exchanged for common shares of the Company.

Each Class A common limited partnership unit is exchangeable for one of the Company's common shares, subject to certain limitations to preserve the Company's REIT status.

(4) The 2021 amount includes compensation cost related to a voluntary retirement plan offer which required eligible participants to give notice of acceptance by December 1, 2020 for an effective retirement date of March 31, 2021.

The 2021 and 2022 amounts include executive officer severance costs incurred during those years.

(5) In April 2021, the Company completed a partial redemption of $150.0 million aggregate principal amount of its $250.0 million 3.875% senior notes due December 2023 for $163.0 million in cash.

In September 2021, the Company completed a redemption of the remaining senior notes due 2023, $100.0 million in aggregate principal amount outstanding, and all of its 3.750% senior notes due 2024, $250.0 million in aggregate principal outstanding, for $381.9 million in cash.

The loss on extinguishment of debt for 2021 includes make-whole premiums of $44.9 million for both of these redemptions.

In October 2022, the Company refinanced its Term Loan to add $25.0 million of borrowing capacity and extend the maturity to January 2027 plus a one-year extension option as well as change the interest rate from LIBOR + 1.25% to Adjusted SOFR + 1.20%.

(1) Assumes the Class A common limited partnership units of the Operating Partnership held by the noncontrolling interests are exchanged for Common Shares.

Each Class A common limited partnership unit is exchangeable for one Common Share, subject to certain limitations to preserve the Company's REIT status.

(2) For the 2023 period, represents the reversal of previously expensed compensation related to a voluntary executive departure.

For the 2022 period, represents executive severance costs.

(3) Represents gain on sale of the corporate aircraft.

(4) In October 2022, we refinanced our term loan to add $25.0 million of borrowing capacity and extend the maturity to January 2027 plus a one-year extension option.

The interest rate changed from LIBOR + a spread of 0.75% to 1.65% to Adjusted SOFR + a spread of 0.70% to 1.60% based on our current credit rating.

The amendment also incorporates a sustainability metric, reducing the applicable grid-based interest rate spread by one basis point annually, subject to meeting certain thresholds.

Portfolio Net Operating Income and Same Center NOI

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Other (income) expense (9,729) (6,029)

Impairment charges — 6,989

Depreciation and amortization 108,889 111,904

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$ 317,249 $ 298,080

(1) In April 2021, the Company completed a partial redemption of $150.0 million aggregate principal amount of its $250.0 million 3.875% senior notes due December 2023 for $163.0 million in cash.

The loss on extinguishment of debt for 2021 includes make-whole premiums of $44.9 million for both of these redemptions.

(1) In October 2022, we refinanced our term loan to add $25.0 million of borrowing capacity and extend the maturity to January 2027 plus a one-year extension option.

The interest rate changed from LIBOR + a spread of 0.75% to 1.65% to Adjusted SOFR + a spread of 0.70% to 1.60% based on our current credit rating.

The amendment also incorporates a sustainability metric, reducing the applicable grid-based interest rate spread by one basis point annually, subject to meeting certain thresholds.

(2) Non-cash items include straight-line rent, above and below market rent amortization, straight-line rent expense on land leases and gains or losses on outparcel sales, as applicable.

(3) Sold outlet centers excluded from Same Center NOI Cash Basis:

Outlet centers sold:

Jeffersonville January 2021

Blowing Rock December 2022

(3) Centers excluded from Same Center NOI Cash Basis:

Center Date Event

Nashville, TN October 2023 New Development

Asheville, NC November 2023 Acquired

Huntsville, AL November 2023 Acquired

Blowing Rock, NC December 2022 Sold

Adjusted EBITDA, EBITDAre and Adjusted EBITDAre

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Each of these measures is defined as follows:

We define Adjusted EBITDA as net income (loss) computed in accordance with GAAP before net interest expense, income taxes (if applicable), depreciation and amortization, gains and losses on sale of operating properties, joint venture properties, outparcels and other assets, impairment write-downs of depreciated property and of investment in unconsolidated joint ventures caused by a decrease in value of depreciated property in the affiliate, compensation related to voluntary retirement plan and other executive officer severance, casualty gains and losses, gains and losses on early extinguishment of debt, net and other items that we do not consider indicative of the Company's ongoing operating performance.

We determine EBITDAre based on the definition set forth by Nareit, which is defined as net income (loss) computed in accordance with GAAP before net interest expense, income taxes (if applicable), depreciation and amortization, gains and losses on sale of operating properties, gains and losses on change of control and impairment write-downs of depreciated property and of investment in unconsolidated joint ventures caused by a decrease in value of depreciated property in the affiliate and after adjustments to reflect our share of the EBITDAre of unconsolidated joint ventures.

Adjusted EBITDAre is defined as EBITDAre excluding gains and losses on early extinguishment of debt, net, casualty gains and losses, compensation related to voluntary retirement plan and other executive officer severance, casualty gains and losses, gains and losses on sale of outparcels, and other items that that we do not consider indicative of the Company's ongoing operating performance.

We define Adjusted EBITDA as net income computed in accordance with GAAP before net interest expense, income taxes (if applicable), depreciation and amortization, gains and losses on sale of operating properties, joint venture properties, outparcels and other assets, impairment write-downs of depreciated property and of investment in unconsolidated joint ventures caused by a decrease in value of depreciated property in the affiliate, compensation related adjustments, casualty gains and losses, gains and losses on early extinguishment of debt, net and other items that we do not consider indicative of the Company's ongoing operating performance.

We determine EBITDAre based on the definition set forth by Nareit, which is defined as net income computed in accordance with GAAP before net interest expense, income taxes (if applicable), depreciation and amortization, gains and losses on sale of operating properties, gains and losses on change of control and impairment write-downs of depreciated property and of investment in unconsolidated joint ventures caused by a decrease in value of depreciated property in the affiliate and after adjustments to reflect our share of the EBITDAre of unconsolidated joint ventures.

Adjusted EBITDAre is defined as EBITDAre excluding gains and losses on early extinguishment of debt, net, casualty gains and losses, compensation related adjustments, gains and losses on sale of outparcels, and other items that that we do not consider indicative of the Company's ongoing operating performance.

We present Adjusted EBITDA, EBITDAre and Adjusted EBITDAre as we believe they are useful for investors, creditors and rating agencies as they provide additional performance measures that are independent of a Company’s existing capital structure to facilitate the evaluation and comparison of the Company’s operating performance to other REITs and provide a more consistent metric for comparing the operating performance of the Company’s real estate between periods.

Adjusted EBITDA, EBITDAre and Adjusted EBITDAre have significant limitations as analytical tools, including:

• They do not reflect our interest expense;

• They do not reflect our net interest expense;

• They do not reflect gains or losses on sales of operating properties or impairment write-downs of depreciated property and of investment in unconsolidated joint ventures caused by a decrease in value of depreciated property in the affiliate;

7 unchanged sentences

Interest expense, net 38,149 43,372

43,372 52,426

Income tax expense (7)

Income tax expense (benefit)

Depreciation and amortization 108,889 111,904

Impairment charges - consolidated (1)

Loss on sale of joint venture property, including foreign currency effect (2)

Gain on sale of assets — (3,156)

Compensation related to voluntary retirement plan and other executive severance (3)

Compensation-related adjustments (1)

Gain on sale of non-real estate asset (2)

Casualty gain — (969)

Loss on early extinguishment of debt (3)

4 unchanged sentences

Interest expense, net 38,149 43,372

43,372 52,426

Income tax expense (7)

Income tax expense (benefit)

Depreciation and amortization 108,889 111,904

Impairment charges - consolidated (1)

Loss on sale of joint venture property, including foreign currency effect (2)

Gain on sale of assets — (3,156)

Pro-rata share of interest expense - unconsolidated joint ventures 7,087 5,858

Pro-rata share of interest expense, net - unconsolidated joint ventures

Pro-rata share of depreciation and amortization - unconsolidated joint ventures 10,514 11,018

EBITDAre $ 269,805 $ 256,079

Compensation related to voluntary retirement plan and other executive severance (3)

Casualty gain — (969)

Compensation-related adjustments (1)

Gain on sale of non-real estate asset (2)

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Adjusted EBITDAre $ 268,999 $ 256,330

(1) The 2021 amount includes $563,000 of impairment loss attributable to the right-of-use asset associated with the ground lease at the Mashantucket (Foxwoods), Connecticut outlet center.

(2) Includes a $3.6 million charge related to the foreign currency effect of the sale of the Saint-Sauveur, Quebec property by the RioCan joint venture in March 2021.

(3) The 2021 amount includes compensation costs related to a voluntary retirement plan offer which required eligible participants to give notice of acceptance by December 1, 2020 for an effective retirement date of March 31, 2021.

The 2021 and 2022 amounts include executive officer severance costs incurred during those years

(4) In October 2022, the Company refinanced its Term Loan to add $25.0 million of borrowing capacity and extended the maturity to January 2027 plus a one-year extension option as well as changed the interest rate from LIBOR + 1.25% to Adjusted SOFR + 1.20%.

In April 2021, the Company completed a partial redemption of $150.0 million aggregate principal amount of its $250.0 million 3.875% senior notes due December 2023 for $163.0 million in cash.

The loss on extinguishment of debt for 2021 includes make-whole premiums of $44.9 million for both of these redemptions.

(1) For the 2023 period, represents the reversal of previously expensed compensation related to a voluntary executive departure.

For the 2022 period, represents executive severance costs.

(2) Represents gain on sale of the corporate aircraft.

(6) Includes interest expense less interest income, which is included in other income on our statement of operations.

In 2022, we revised our presentation of interest expense to show this net of interest income.

Prior period results have been revised to conform with the current period presentation.

(7) In 2022, income tax expense was added back in a separate line to arrive at EBITDA and EBITDAre.

Prior period results have been revised to conform with the current period presentation.

(3) In October 2022, we refinanced our term loan to add $25.0 million of borrowing capacity and extend the maturity to January 2027 plus a one-year extension option.

The interest rate changed from LIBOR + a spread of 0.75% to 1.65% to Adjusted SOFR + a spread of 0.70% to 1.60% based on our current credit rating.

The amendment also incorporates a sustainability metric, reducing the applicable grid-based interest rate spread by one basis point annually, subject to meeting certain thresholds.

Economic Conditions and Outlook

We are closely monitoring the impact of supply chain and labor issues, inflationary pressures, rising interest rates and the overall macroeconomic environment on all aspects of our business and geographies, including how it will impact our tenants and business partners.

We are closely monitoring the impact of supply chain and labor issues, inflationary and deflationary pressures, changes in interest rates and the overall macroeconomic environment on all aspects of our business and geographies, including how it will impact our tenants and business partners.

The majority of our leases contain provisions designed to mitigate the impact of inflation.

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In addition, certain of our lease agreements include co-tenancy and/or sales-based provisions that may allow a tenant to pay reduced rent and/or terminate a lease prior to its natural expiration if we fail to maintain certain occupancy levels or retain specified named tenants, or if the tenant does not achieve certain specified sales targets.

If our occupancy declines, certain outlet centers may fall below the minimum co-tenancy thresholds and could trigger many tenants' contractual ability to pay reduced rents, which in turn may negatively impact our results of operations.

Our occupancy at our consolidated centers improved from 95% at the end of 2021 to 97% at the end of 2022.

Our outlet centers typically include well-known, national, branded companies.

If our occupancy declines, certain centers may fall below the minimum co-tenancy thresholds and could trigger many tenants' contractual ability to pay reduced rents, which in turn may negatively impact our results of operations.

Our occupancy at our consolidated centers was 97% at the end of the years ended December 31, 2023 and 2022, respectively.

Our centers typically include well-known, national, branded companies.

By maintaining a broad base of well-known tenants and a geographically diverse portfolio of properties located across the United States, we believe we reduce our operating and leasing risks.

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As of January 31, 2024, we had lease renewals executed or in process for approximately 93.0% of the space that came up for renewal in 2023.

The current challenging retail environment has impacted our business as our operations are subject to the operating results and operating decisions of our retail tenants.

We continue to be encouraged by the stability of our sales trends which remain elevated above pre-pandemic levels.

However, many retailers across the country are currently facing, or expect to face, potential impact of logistics and staffing issues, although there has been improvement in these areas in 2022.

While we believe many of these retailers are proactively navigating this situation, the ultimate impact of inflation, labor and supply chain issues and overall macroeconomic environment is unknown.

We believe retail real estate will continue to be a profitable and fundamental distribution channel for many brands and retailers.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis