TANGER INC. 10-Q

Item 1 - Financial Statements of Tanger Properties Limited Partnership TANGER PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except unit data, unaudited) September 30, 2024 December 31, 2023 Assets Rental property: Land $ 303,605 $ 303,605 Buildings, improvements and fixtures 3,011,234 2,938,434 Construction in progress 9,421 29,201 3,324,260 3,271,240 Accumulated depreciation ( 1,401,334 ) ( 1,318,264 ) Total rental property, net 1,922,926 1,952,976 Cash and cash equivalents 10,830 12,572 Short-term investments — 9,187 Investments in unconsolidated joint ventures 70,245 71,900 Deferred lease costs and other intangibles, net 77,508 91,269 Operating lease right-of-use assets 76,431 77,400 Prepaids and other assets 116,714 108,157 Total assets $ 2,274,654 $ 2,323,461 Liabilities and Equity Liabilities Debt: Senior, unsecured notes, net $ 1,041,240 $ 1,039,840 Unsecured term loan, net 322,967 322,322 Mortgages payable, net 60,186 64,041 Unsecured lines of credit — 13,000 Total debt 1,424,393 1,439,203 Accounts payable and accrued expenses 86,124 117,847 Operating lease liabilities 85,079 86,076 Other liabilities 86,426 89,022 Total liabilities 1,682,022 1,732,148 Commitments and contingencies Equity Partners’ Equity: General partner, 1,150,000 units outstanding at September 30, 2024 and 1,150,000 units outstanding at December 31, 2023, respectively 5,599 5,776 Limited partners, 4,707,958 and 4,707,958 Class A common units, and 109,058,387 and 107,643,251 Class B common units outstanding at September 30, 2024 and December 31, 2023, respectively 615,884 610,330 Accumulated other comprehensive loss ( 28,851 ) ( 24,793 ) Total partners’ equity 592,632 591,313 Noncontrolling interests in consolidated partnerships — — Total equity 592,632 591,313 Total liabilities and equity $ 2,274,654 $ 2,323,461 The accompanying notes are an integral part of these consolidated financial statements. 12 TANGER PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per unit data, unaudited) Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Revenues: Rental revenues $ 125,221 $ 110,835 $ 365,349 $ 319,005 Management, leasing and other services 2,485 2,138 7,095 6,174 Other revenues 5,295 4,373 12,884 11,751 Total revenues 133,001 117,346 385,328 336,930 Expenses: Property operating 40,247 36,758 113,261 103,618 General and administrative 18,215 18,937 56,518 54,675 Depreciation and amortization 35,376 25,374 103,410 76,656 Total expenses 93,838 81,069 273,189 234,949 Other income (expense): Interest expense ( 15,493 ) ( 11,688 ) ( 45,546 ) ( 35,997 ) Other income (expense) ( 52 ) 1,899 755 7,023 Total other income (expense) ( 15,545 ) ( 9,789 ) ( 44,791 ) ( 28,974 ) Income before equity in earnings of unconsolidated joint ventures 23,618 26,488 67,348 73,007 Equity in earnings of unconsolidated joint ventures 2,312 2,389 7,803 6,030 Net income 25,930 28,877 75,151 79,037 Noncontrolling interests in consolidated partnerships — — 80 ( 248 ) Net income available to partners 25,930 28,877 75,231 78,789 Net income available to limited partners 25,671 28,588 74,477 78,001 Net income available to general partner $ 259 $ 289 $ 754 $ 788 Basic earnings per common unit: Net income $ 0.23 $ 0.26 $ 0.66 $ 0.71 Diluted earnings per common unit: Net income $ 0.22 $ 0.26 $ 0.65 $ 0.70 The accompanying notes are an integral part of these consolidated financial statements. 13 TANGER PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands, unaudited) Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Net income $ 25,930 $ 28,877 $ 75,151 $ 79,037 Other comprehensive income (loss): Foreign currency translation adjustments ( 139 ) ( 1,765 ) ( 1,051 ) ( 376 ) Changes in fair value of cash flow hedges ( 6,894 ) ( 1,845 ) ( 3,007 ) ( 5,644 ) Other comprehensive income (loss) ( 7,033 ) ( 3,610 ) ( 4,058 ) ( 6,020 ) Comprehensive income 18,897 25,267 71,093 73,017 Comprehensive income attributable to noncontrolling interests in consolidated partnerships — — 80 ( 248 ) Comprehensive income attributable to the Operating Partnership $ 18,897 $ 25,267 $ 71,173 $ 72,769 The accompanying notes are an integral part of these consolidated financial statements. 14 TANGER PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY (In thousands, except unit and per unit data, unaudited) General partner Limited partners Accumulated other comprehensive loss Total partners’ equity Noncontrolling interests in consolidated partnerships Total equity Balance, June 30, 2023 $ 4,503 $ 517,400 $ ( 14,160 ) $ 507,743 $ — $ 507,743 Net income 289 28,588 — 28,877 — 28,877 Other comprehensive loss — — ( 3,610 ) ( 3,610 ) — ( 3,610 ) Compensation under Incentive Award Plan — 3,459 — 3,459 — 3,459 Withholding of 5,505 common units for employee income taxes — ( 120 ) — ( 120 ) — ( 120 ) Issuance of 5,000 general partner units and 101,615 limited partner units 122 2,349 — 2,471 — 2,471 Issuance of 44,300 common units upon exercise of options — 610 — 610 — 610 Common distributions ($ 0.245 per unit) ( 270 ) ( 26,730 ) — ( 27,000 ) — ( 27,000 ) Balance, September 30, 2023 $ 4,644 $ 525,556 $ ( 17,770 ) $ 512,430 $ — $ 512,430 General partner Limited partners Accumulated other comprehensive loss Total partners’ equity Noncontrolling interests in consolidated partnerships Total equity Balance, December 31, 2022 $ 4,516 $ 521,168 $ ( 11,750 ) $ 513,934 $ — $ 513,934 Net income 788 78,001 — 78,789 248 79,037 Other comprehensive loss — — ( 6,020 ) ( 6,020 ) — ( 6,020 ) Compensation under Incentive Award Plan — 9,234 — 9,234 — 9,234 Issuance of 51,500 common units upon exercise of options — 653 — 653 — 653 Issuance of 5,000 general partner units and 101,615 limited partner units 122 2,349 — 2,471 — 2,471 Withholding of 367,776 common units for employee income taxes — ( 6,963 ) — ( 6,963 ) — ( 6,963 ) Common distributions ($ 0.7100 per unit) ( 782 ) ( 78,886 ) — ( 79,668 ) ( 248 ) ( 79,916 ) Balance, September 30, 2023 $ 4,644 $ 525,556 $ ( 17,770 ) $ 512,430 $ — $ 512,430 15 General partner Limited partners Accumulated other comprehensive loss Total partners’ equity Noncontrolling interests in consolidated partnerships Total equity Balance, June 30, 2024 $ 5,656 $ 593,742 $ ( 21,818 ) $ 577,580 $ — $ 577,580 Net income 259 25,671 — 25,930 — 25,930 Other comprehensive loss — — ( 7,033 ) ( 7,033 ) — ( 7,033 ) Compensation under Incentive Award Plan — 2,901 — 2,901 — 2,901 Issuance of 45,625 common units upon exercise of options — 633 — 633 — 633 Issuance of 818,943 limited partner units — 24,070 — 24,070 — 24,070 Forfeiture of 4,450 restricted common share awards — — — — — Withholding of 5,267 common units for employee income taxes — ( 141 ) — ( 141 ) — ( 141 ) Common distributions ($ 0.275 per unit) ( 316 ) ( 30,992 ) — ( 31,308 ) — ( 31,308 ) Balance, September 30, 2024 $ 5,599 $ 615,884 $ ( 28,851 ) $ 592,632 $ — $ 592,632 General partner Limited partners Accumulated other comprehensive loss Total partners’ equity Noncontrolling interests in consolidated partnerships Total equity Balance, December 31, 2023 $ 5,776 $ 610,330 $ ( 24,793 ) $ 591,313 $ — $ 591,313 Net income 754 74,477 — 75,231 ( 80 ) 75,151 Other comprehensive loss — — ( 4,058 ) ( 4,058 ) — ( 4,058 ) Compensation under Incentive Award Plan — 9,159 — 9,159 — 9,159 Issuance of 70,625 common units upon exercise of options — 1,166 — 1,166 — 1,166 Issuance of 818,943 limited partner units — 24,070 — 24,070 24,070 Grant of 770,265 restricted common share awards by the Company, net of forfeitures — — — — — — Issuance of 136,469 deferred units — — — — — — Withholding of 381,166 common units for employee income taxes — ( 10,665 ) — ( 10,665 ) — ( 10,665 ) Contributions from noncontrolling interests in consolidated partnerships — — — — 80 80 Common distributions ($ 0.81 per unit) ( 931 ) ( 92,653 ) — ( 93,584 ) ( 93,584 ) Balance, September 30, 2024 $ 5,599 $ 615,884 $ ( 28,851 ) $ 592,632 $ — $ 592,632 The accompanying notes are an integral part of these consolidated financial statements. 16 TANGER PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, unaudited) Nine months ended September 30, 2024 2023 OPERATING ACTIVITIES Net income $ 75,151 $ 79,037 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 103,410 76,656 Amortization of deferred financing costs 2,609 2,395 Equity in earnings of unconsolidated joint ventures ( 7,803 ) ( 6,030 ) Equity-based compensation expense 8,980 9,040 Amortization of debt (premiums) and discounts, net 548 537 Amortization (accretion) of market rent rate adjustments, net 393 545 Straight-line rent adjustments ( 361 ) 1,409 Distributions of cumulative earnings from unconsolidated joint ventures 5,551 6,153 Changes in other assets and liabilities: Other assets 1,079 ( 373 ) Accounts payable and accrued expenses ( 20,540 ) ( 17,499 ) Net cash provided by operating activities 169,017 151,870 INVESTING ACTIVITIES Additions to rental property ( 73,430 ) ( 120,070 ) Additions to investments in unconsolidated joint ventures — ( 2,612 ) Additions to short-term investments — ( 7,679 ) Proceeds from short-term investments 9,187 46,979 Additions to non-real estate assets ( 6,770 ) ( 7,126 ) Distributions in excess of cumulative earnings from unconsolidated joint ventures 2,837 4,102 Additions to deferred lease costs ( 2,561 ) ( 1,960 ) Payments for other investing activities ( 1,972 ) ( 2,199 ) Proceeds from other investing activities 5,357 3,426 Net cash used in investing activities ( 67,352 ) ( 87,139 ) FINANCING ACTIVITIES Cash distributions paid ( 93,584 ) ( 79,667 ) Proceeds from revolving credit facility 262,000 — Repayments of revolving credit facility ( 275,000 ) — Repayments of notes, mortgages and loans ( 3,813 ) ( 3,629 ) Issuance of units, including transaction costs 24,070 2,471 Employee income taxes paid related to shares withheld upon vesting of equity awards ( 10,665 ) ( 6,963 ) Additions to deferred financing costs ( 6,876 ) — Proceeds from exercise of options 1,166 653 Payment for other financing activities ( 861 ) ( 941 ) Contributions from noncontrolling interests in other consolidated partnerships 80 — Distributions to noncontrolling interests in other consolidated partnerships — ( 248 ) Net cash used in financing activities ( 103,483 ) ( 88,324 ) Effect of foreign currency on cash and cash equivalents 76 ( 315 ) Net decrease in cash and cash equivalents ( 1,742 ) ( 23,908 ) Cash and cash equivalents, beginning of period 12,572 212,011 Cash and cash equivalents, end of period $ 10,830 $ 188,103 The accompanying notes are an integral part of these consolidated financial statements. 17 TANGER INC. AND SUBSIDIARIES TANGER PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Business Tanger Inc. and its subsidiaries, which we refer to as the Company, is one of the leading owners and operators of outlet and open-air retail centers in the United States and Canada. We are a fully-integrated, self-administered and self-managed real estate investment trust, which, through our controlling interest in Tanger Properties Limited Partnership and its subsidiaries, which we refer to as the Operating Partnership, focuses on developing, acquiring, owning, operating and managing outlet and open-air shopping centers. As of September 30, 2024, we owned and operated 31 consolidated outlet centers and one open-air lifestyle center, with a total gross leasable area of approximately 12.7 million square feet, which were 97 % occupied and contained over 2,500 stores representing approximately 660 store brands. We also had partial ownership interests in 6 unconsolidated centers totaling approximately 2.1 million square feet, including 2 centers in Canada. The portfolio also includes two managed centers, totaling approximately 760,000 square feet. Each of our centers, except one joint venture center, features the Tanger brand name. All references to gross leasable area, square feet, occupancy, stores and store brands contained in the notes to the consolidated financial statements are unaudited. Our shopping centers and other assets are held by, and all of our operations are conducted by the Operating Partnership. Accordingly, the descriptions of our business, employees and assets are also descriptions of the business, employees and assets of the Operating Partnership. Unless the context indicates otherwise, the term “Company” refers to Tanger Inc. and subsidiaries and the term “Operating Partnership” refers to Tanger Properties Limited Partnership and subsidiaries. The terms “we”, “our” and “us” refer to the Company or the Company and the Operating Partnership together, as the text requires. On November 16, 2023, we changed our legal name from Tanger Factory Outlet Centers, Inc. to Tanger Inc. We refer to Tanger Inc.’s current legal name throughout this Quarterly Report on Form 10-Q. The Company, including its wholly-owned subsidiary, Tanger LP Trust, owns the majority of the units of partnership interest issued by the Operating Partnership. The Company controls the Operating Partnership as its sole general partner. Tanger LP Trust holds a limited partnership interest. As of September 30, 2024, the Company and its wholly-owned subsidiaries owned 110,208,387 units of the Operating Partnership and other limited partners (the “Non-Company LPs”) collectively owned 4,707,958 Class A common limited partnership units. Each Class A common limited partnership unit held by the Non-Company LPs is exchangeable for one of the Company’s common shares, subject to certain limitations to preserve the Company’s REIT status. Class B common limited partnership units of the Operating Partnership, which are held by Tanger LP Trust, are not exchangeable for common shares of the Company. 2. Summary of Significant Accounting Policies Basis of Presentation The unaudited consolidated financial statements included herein have been prepared pursuant to accounting principles generally accepted in the United States of America (“GAAP”) and should be read in conjunction with the consolidated financial statements and notes thereto of the Company’s and the Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, 2023. The December 31, 2023 balance sheet data in this Form 10-Q was derived from the Company’s audited financial statements. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”), although management believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the financial statements for the interim periods have been made. The results of interim periods are not necessarily indicative of the results for a full year. 18 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. We consolidate properties that are wholly-owned and properties where we own less than 100% but control such properties. Control is determined using an evaluation based on accounting standards related to the consolidation of voting interest entities and variable interest entities (“VIE”). For joint ventures that are determined to be a VIE, we consolidate the entity where we are deemed to be the primary beneficiary. Determination of the primary beneficiary is based on whether an entity has (1) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance, and (2) the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE. Our determination of the primary beneficiary considers all relationships between us and the VIE, including management agreements and other contractual arrangements. Investments in real estate joint ventures that we do not control, but may exercise significant influence on, are accounted for using the equity method of accounting. These investments are recorded initially at cost and subsequently adjusted for our equity in the joint venture’s net income or loss, cash contributions, distributions and other adjustments required under the equity method of accounting. For certain investments in real estate joint ventures, we record our equity in the venture’s net income or loss under the hypothetical liquidation at book value method of accounting due to the structures and the preferences we receive on the distributions from our joint ventures pursuant to the respective joint venture agreements for those joint ventures. Under this method, we recognize income and loss in each period based on the change in liquidation proceeds we would receive from a hypothetical liquidation of our investment based on depreciated book value. Therefore, income or loss may be allocated disproportionately as compared to the ownership percentages due to specified preferred return rate thresholds and may be more or less than actual cash distributions received and more or less than what we may receive in the event of an actual liquidation. 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 to provide further financial support to these joint ventures. The carrying amount of our investments in the Charlotte, Columbus, Galveston/Houston, and National Harbor joint ventures are less than zero because of financing or operating distributions that were greater than net income, as net income includes non-cash charges for depreciation and amortization. “Noncontrolling interests in the Operating Partnership” reflects the Non-Company LPs’ percentage ownership of the Operating Partnership’s units. “Noncontrolling interests in other consolidated partnerships” consist of outside equity interests in partnerships or joint ventures not wholly-owned by the Company or the Operating Partnership that are consolidated with the financial results of the Company and Operating Partnership because the Operating Partnership exercises control over the entities that own the properties. Noncontrolling interests are initially recorded in the consolidated balance sheets at fair value based upon purchase price allocations. Income is allocated to the noncontrolling interests based on the allocation provisions within the partnership or joint venture agreements. Accounts Receivable Individual leases are assessed for collectability and upon the determination that the collection of rents is not probable, accrued rent and accounts receivable are written-off as an adjustment to rental revenue. Revenue from leases where collection is deemed to be less than probable is recorded on a cash basis until collectability is determined to be probable. Further, we assess whether operating lease receivables, at a portfolio level, are appropriately valued based upon an analysis of balances outstanding, historical bad debt levels and current economic trends including discussions with tenants for potential lease amendments. Our estimate of the collectability of accrued rents and accounts receivable is based on the best information available to us at the time of preparing the financial statements. Straight-line rent adjustments recorded as a receivable in prepaids and other assets on the consolidated balance sheets was approximately $ 49.3 million and $ 48.9 million as of September 30, 2024 and December 31, 2023, respectively. 19 Impairment of Long-Lived Assets Rental property held and used by us is reviewed for impairment in the event that facts and circumstances indicate the carrying amount of an asset may not be recoverable. In such an event, we compare the estimated future undiscounted cash flows associated with the asset to the asset's carrying amount, and if less than such carrying amount, recognize an impairment loss in an amount by which the carrying amount exceeds its fair value. The cash flow estimates used both for determining recoverability and estimating fair value are inherently judgmental and reflect current and projected trends in rental, occupancy, capitalization, and discount rates, and estimated holding periods for the applicable assets. Impairment analyses are based on our current plans, intended holding periods and available market information at the time the analyses are prepared. If our estimates of the projected future cash flows change based on uncertain market conditions or holding periods, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements. Due to the financial impacts from the COVID-19 pandemic, we began performing the above described procedures on our Atlantic City, New Jersey center in 2020. While the center’s performance has improved since that time, we have continued to perform those procedures and concluded each quarter that the carrying amount of the asset was recoverable. We evaluate different holding period scenarios and apply probabilities to those scenarios to determine an average holding period of 9.75 years. Management has the intent, and we have the ability, to hold the property for at least this period, and we believe this period is reasonable based on the center’s performance and our history of being a long-term owner and operator of our centers. We believe the carrying value is recoverable because in our models the sum of the estimated future undiscounted cash flows, $ 59.6 million, and the estimated potential disposition proceeds of the sale of the center, $ 77.1 million (in aggregate totaling $ 136.7 million) exceeds the carrying value of $ 107.8 million by $ 28.9 million. The recorded carrying amount includes intangible lease costs from our 2011 acquisition of the center. 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. As these inputs are difficult to predict and are subject to future events that may alter our assumptions, the future cash flows estimated by management in its impairment analysis may not be achieved, and actual losses or impairment may be realized in the future. If in the future we reduce our estimate of cash flow projections, we may need to record an asset impairment. We have not materially changed the assumptions used in the analysis during the first nine months of 2024. However, we can provide no assurance that material impairment charges with respect to our properties will not occur in future periods. 20 3. Investments in Unconsolidated Real Estate Joint Ventures The equity method of accounting is used to account for each of the individual joint ventures. We have an ownership interest in the following unconsolidated real estate joint ventures: As of September 30, 2024 Joint Venture Center Location Ownership % Square Feet (in 000’s) Carrying Value of Investment (in millions) Total Joint Venture Debt, Net (in millions) (1) Investments included in investments in unconsolidated joint ventures: RioCan Canada Ontario, Canada 50.0 % 665 $ 70.2 — Investments included in other liabilities: Charlotte (2) Charlotte, NC 50.0 % 399 ( 21.5 ) 98.0 National Harbor (2) National Harbor, MD 50.0 % 341 ( 11.7 ) 92.2 Galveston/Houston (2) Texas City, TX 50.0 % 353 ( 13.5 ) 57.3 Columbus (2) Columbus, OH 50.0 % 355 ( 4.3 ) 70.4 50.0 % 1,448 $ ( 51.0 ) $ 317.9 As of December 31, 2023 Joint Venture Center Location Ownership % Square Feet (in 000’s) Carrying Value of Investment (in millions) Total Joint Venture Debt, Net (in millions) (1) Investments included in investments in unconsolidated joint ventures: RioCan Canada Ontario, Canada 50.0 % 665 71.9 — Investments included in other liabilities: Charlotte (2) Charlotte, NC 50.0 % 399 $ ( 20.8 ) $ 99.2 National Harbor (2) National Harbor, MD 50.0 % 341 ( 13.7 ) 93.3 Galveston/Houston (2) Texas City, TX 50.0 % 353 ( 13.0 ) 57.1 Columbus (2) Columbus, OH 50.0 % 355 ( 3.4 ) 70.4 50.0 % 1,448 $ ( 50.9 ) $ 320.0 (1) Net of debt origination costs of $ 1.8 million as of September 30, 2024 and $ 2.1 million as of December 31, 2023. (2) 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. The negative carrying value is due to the distributions of proceeds from mortgage loans and quarterly distributions of excess cash flow exceeding the original contributions from the partners and equity in earnings of the joint ventures. Fees we received for various services provided to our unconsolidated joint ventures were recognized in management, leasing and other services as follows (in thousands): Three months ended Nine months ended September 30, September 30, 2024 2023 2024 2023 Fee: Management and marketing $ 575 $ 553 $ 1,702 $ 1,662 Leasing and other fees 81 99 293 197 Expense reimbursements from unconsolidated joint ventures 1,369 1,197 3,677 3,382 Total Fees $ 2,025 $ 1,849 $ 5,672 $ 5,241 21 Our investments in real estate joint ventures are reduced by the percentage of the profits earned for leasing and development services associated with our ownership interest in each joint venture. Our carrying value of investments in unconsolidated joint ventures differs from our share of the assets reported in the “Condensed Combined Balance Sheets - Unconsolidated Joint Ventures” shown below due to adjustments to the book basis, including intercompany profits on sales of services that are capitalized by the unconsolidated joint ventures . The differences in basis (totaling $ 2.4 million and $ 2.8 million as of September 30, 2024 and December 31, 2023, respectively) are amortized over the various useful lives of the related assets. Condensed combined summary financial information of unconsolidated joint ventures accounted for using the equity method is as follows (in thousands): September 30, 2024 December 31, 2023 Assets Land $ 80,379 $ 82,962 Buildings, improvements and fixtures 467,265 466,496 Construction in progress 1,003 223 548,647 549,681 Accumulated depreciation ( 215,605 ) ( 203,395 ) Total rental property, net 333,042 346,286 Cash and cash equivalents 15,476 14,040 Deferred lease costs and other intangibles, net 2,459 2,637 Prepaids and other assets 11,491 11,616 Total assets $ 362,468 $ 374,579 Liabilities and Owners’ Equity Mortgages payable, net $ 317,868 $ 319,957 Accounts payable and other liabilities 13,177 16,013 Total liabilities 331,045 335,970 Owners’ equity 31,423 38,609 Total liabilities and owners’ equity $ 362,468 $ 374,579 Three months ended Nine months ended Condensed Combined Statements of Operations - Unconsolidated Joint Ventures September 30, September 30, 2024 2023 2024 2023 Revenues $ 23,774 $ 23,548 $ 69,476 $ 67,481 Expenses: Property operating 9,342 9,059 26,210 26,315 General and administrative 40 23 170 212 Depreciation and amortization 5,359 5,151 14,380 15,546 Total expenses 14,741 14,233 40,760 42,073 Other income (expense): Interest expense ( 4,587 ) ( 4,603 ) ( 13,675 ) ( 13,523 ) Other income 216 153 598 422 Total other expense ( 4,371 ) ( 4,450 ) ( 13,077 ) ( 13,101 ) Net income $ 4,662 $ 4,865 $ 15,639 $ 12,307 The Company and Operating Partnership’s share of: Net income $ 2,312 $ 2,389 $ 7,803 $ 6,030 Depreciation and amortization (real estate related) $ 2,850 $ 2,608 $ 7,450 $ 7,893 22 4. Debt Guaranteed by the Company All of the Company’s debt is held by the Operating Partnership and its consolidated subsidiaries. The Company guarantees the Operating Partnership’s obligations with respect to its unsecured lines of credit, which have a total borrowing capacity of $ 620.0 million as of September 30, 2024. The Company also guarantees the Operating Partnership’s unsecured term loan. The Operating Partnership had the following principal amounts outstanding on the debt guaranteed by the Company (in thousands): As of September 30, 2024 December 31, 2023 Unsecured lines of credit $ — $ 13,000 Unsecured term loan $ 325,000 $ 325,000 5. Debt of the Operating Partnership The debt of the Operating Partnership consisted of the following (in thousands): As of As of September 30, 2024 December 31, 2023 Stated Interest Rate(s) Maturity Date Maturity Date With Extension Option Principal Book Value (1) Principal Book Value (1) Senior, unsecured notes: Senior notes 3.125 % September 2026 $ 350,000 $ 348,900 $ 350,000 $ 348,467 Senior notes 3.875 % July 2027 300,000 298,853 300,000 298,546 Senior notes 2.750 % September 2031 400,000 393,487 400,000 392,827 Unsecured term loan (4) Adj SOFR + 0.94 % January 2027 January 2028 325,000 322,967 325,000 322,322 Mortgages payable: Atlantic City (2) (3) 6.44 % - 7.65 % December 2024- December 2026 8,523 8,685 12,336 12,613 Southaven Adj SOFR + 2.00 % October 2026 October 2027 51,700 51,501 51,700 51,428 Unsecured lines of credit Adj SOFR + 0.85 % April 2028 April 2029 — — 13,000 13,000 Total $ 1,435,223 $ 1,424,393 $ 1,452,036 $ 1,439,203 (1) Includes premiums, discounts and unamortized debt origination costs. These costs were $ 10.8 million and $ 12.8 million as of September 30, 2024 and December 31, 2023, respectively. This excludes $ 7.8 million and $ 2.1 million of unamortized debt origination costs related to the unsecured lines of credit for the periods ended September 30, 2024 and December 31, 2023, respectively, recorded in prepaids and other assets in the consolidated balance sheet. (2) The effective interest rate assigned during the purchase price allocation to the Atlantic City mortgages assumed during the acquisition in 2011 was 5.05 %. (3) Principal and interest due monthly with remaining principal due at maturity. (4) In June 2024, the interest rate spread improved by 1 basis point as the Company exceeded the sustainability metric threshold. 23 In April 2024, the Operating Partnership entered into amendments to its unsecured lines of credit, which, among other things, increased the borrowing capacity from $ 520 million to $ 620 million, with an accordion feature to increase total borrowing capacity to $ 1.2 billion, extended the maturity date from July 14, 2025 to April 12, 2028 (which may be extended by one additional year by exercising extension options), and reduced the applicable pricing margin from Adjusted SOFR plus 100 basis points to Adjusted SOFR plus 85 basis points based on the Company's current credit rating. Certain of our properties, which had a net book value of approximately $ 241.5 million at September 30, 2024, serve as collateral for mortgages payable. As of September 30, 2024, we maintained unsecured lines of credit that provided for borrowings of up to $ 620.0 million. The unsecured lines of credit as of September 30, 2024 included a $ 20.0 million liquidity line and a $ 600.0 million syndicated line. The syndicated line may be increased up to $ 1.2 billion through an accordion feature in certain circumstances. The unsecured lines of credit and senior unsecured notes include covenants that 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 agreements, for the prior fiscal year on an annual basis or 95 % of FFO on a cumulative basis. As of September 30, 2024, we believe we were in compliance with all of our debt covenants. Debt Maturities Maturities and principal amortization of the existing long-term debt as of September 30, 2024 for the next five years and thereafter are as follows (in thousands): Calendar Year Amount For the remainder of 2024 $ 1,317 2025 1,501 2026 407,405 2027 625,000 2028 — Thereafter 400,000 Subtotal 1,435,223 Net discount and debt origination costs ( 10,830 ) Total $ 1,424,393 We have considered our short-term (one-year or less from the date of filing these financial statements) liquidity needs and the adequacy of our estimated cash flows from operating activities and other financing sources to meet these needs. These other sources include but are not limited to: existing cash, ongoing relationships with certain financial institutions, our ability to sell debt or issue equity subject to market conditions and proceeds from the potential sale of non-core assets. We believe that we have access to the necessary financing to fund our short-term liquidity needs. 24 6. Derivative Financial Instruments The following table summarizes the terms and fair values of our derivative financial instruments, as well as their classifications within the consolidated balance sheets (notional amounts and fair values in thousands): Fair Value Effective Date Maturity Date Notional Amount Bank Pay Rate Company Fixed Pay Rate September 30, 2024 December 31, 2023 Assets (Liabilities) (1) : July 1, 2019 February 1, 2024 $ 25,000 Daily SOFR 1.7 % $ — $ 88 January 1, 2021 February 1, 2024 150,000 Daily SOFR 0.5 % — 692 January 1, 2021 February 1, 2024 100,000 Daily SOFR 0.2 % — 497 March 1, 2021 February 1, 2024 25,000 Daily SOFR 0.2 % — 124 Total $ 300,000 0.4 % $ — $ 1,401 February 1, 2024 February 1, 2026 75,000 Daily SOFR 3.5 % 175 670 February 1, 2024 August 1, 2026 75,000 Daily SOFR 3.7 % ( 362 ) 54 February 1, 2024 January 1, 2027 175,000 Daily SOFR 4.2 % ( 3,039 ) ( 2,435 ) Total $ 325,000 3.9 % $ ( 3,226 ) $ ( 1,711 ) (1) Asset balances are recorded in prepaids and other assets on the consolidated balance sheets and liabilities are recorded in other liabilities on the consolidated balance sheets. The derivative financial instruments are comprised of interest rate swaps, which are designated and qualify as cash flow hedges, with various counterparties. We do not use derivatives for trading or speculative purposes and currently do not have any derivatives that are not designated as hedges. Changes in the fair value of derivatives designated and qualifying as cash flow hedges is recorded in accumulated other comprehensive loss and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The following table represents the effect of the derivative financial instruments on the accompanying consolidated financial statements (in thousands): Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Interest Rate Swaps (Effective Portion): Amount of gain (loss) recognized in other comprehensive income (loss) $ ( 6,894 ) $ ( 1,845 ) $ ( 3,007 ) $ ( 5,644 ) 25 7. Fair Value Measurements Fair value guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers are defined as follows: Tier Description Level 1 Observable inputs such as quoted prices in active markets Level 2 Inputs other than quoted prices in active markets that are either directly or indirectly observable Level 3 Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions Fair Value Measurements on a Recurring Basis The following table sets forth our assets and liabilities that are measured at fair value within the fair value hierarchy (in thousands): Level 1 Level 2 Level 3 Quoted Prices in Active Markets for Identical Assets or Liabilities Significant Observable Inputs Significant Unobservable Inputs Total Fair value as of September 30, 2024: Assets: Interest rate swaps (prepaids and other assets) $ 497 — $ 497 $ — Total assets $ 497 $ — $ 497 $ — Liabilities: Interest rate swaps (other liabilities) $ ( 3,722 ) $ — $ ( 3,722 ) $ — Total liabilities $ ( 3,722 ) $ — $ ( 3,722 ) $ — Level 1 Level 2 Level 3 Quoted Prices in Active Markets for Identical Assets or Liabilities Significant Observable Inputs Significant Unobservable Inputs Total Fair value as of December 31, 2023: Asset: Interest rate swaps (prepaids and other assets) $ 2,708 $ — $ 2,708 $ — Total assets $ 2,708 $ — $ 2,708 $ — Liabilities: Interest rate swaps (other liabilities) $ ( 3,018 ) $ — $ ( 3,018 ) $ — Total liabilities $ ( 3,018 ) $ — $ ( 3,018 ) $ — Fair values of interest rate swaps are estimated using Level 2 inputs based on current market data received from financial sources that trade such instruments and are based on prevailing market data and derived from third party proprietary models based on well recognized financial principles including counterparty risks, credit spreads and interest rate projections, as well as reasonable estimates about relevant future market conditions. 26 Other Fair Value Disclosures The estimated fair value within the fair value hierarchy and recorded value of our debt consisting of senior unsecured notes, unsecured term loans, secured mortgages and unsecured lines of credit were as follows (in thousands): September 30, 2024 December 31, 2023 Level 1 Quoted Prices in Active Markets for Identical Assets or Liabilities $ — $ — Level 2 Significant Observable Inputs 978,398 918,091 Level 3 Significant Unobservable Inputs 384,801 401,609 Total fair value of debt $ 1,363,199 $ 1,319,700 Recorded value of debt $ 1,424,393 $ 1,439,203 Our senior unsecured notes are publicly-traded which provides quoted market rates. However, due to the limited trading volume of these notes, we have classified these instruments as Level 2 in the hierarchy. Our other debt is classified as Level 3 given the unobservable inputs utilized in the valuation. Our unsecured term loan, unsecured lines of credit and variable interest rate mortgages are all SOFR based instruments. When selecting the discount rates for purposes of estimating the fair value of these instruments, we evaluated the original credit spreads and do not believe that the use of them differs materially from current credit spreads for similar instruments and therefore the recorded values of these debt instruments is considered their fair value. The carrying values of cash and cash equivalents, short-term investments, receivables, accounts payable, accrued expenses and other assets and liabilities are reasonable estimates of their fair values because of the short maturities of these instruments. Short-term government securities and our certificates of deposit included in short-term investments are highly liquid investments, which are classified as Level 1 in the fair value hierarchy because they are valued using quoted market prices in an active market. 8. Shareholders’ Equity of the Company Dividend Declaration In July 2024, the Company's Board of Directors (the “Board”) declared a $ 0.275 cash dividend per common share payable on August 15, 2024 to each shareholder of record on July 31, 2024, and in its capacity as General Partner of the Operating Partnership, authorized a $ 0.275 cash distribution per Operating Partnership unit to the Operating Partnership's unitholders. At-the-Market Offering Under our at-the-market stock offering (“ATM Offering”) program, which commenced February 2021, and was replaced with a new program in December 2023, we may offer and sell our common shares, $ 0.01 par value per share, 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 the sale of common shares pursuant to the ATM Offering program for working capital and general corporate purposes. As of September 30, 2024, we had approximately $ 195.1 million of common shares remaining available for sale under the ATM Offering program. 27 The following table sets forth information regarding issuances under our ATM Offering program: Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Number of common shares settled during the period 818,943 106,615 818,943 106,615 Average price per share $ 30.53 $ 24.89 $ 30.53 $ 24.89 Aggregate gross proceeds (in thousands) $ 25,000 $ 2,654 $ 25,000 $ 2,654 Aggregate net proceeds after commissions and fees (in thousands) $ 24,687 $ 2,621 $ 24,687 $ 2,621 In October 2024, we issued an additional 484,741 common shares under our ATM program at an average price of $ 33.38 per share, totaling approximately $ 16.2 million of gross proceeds. Share Repurchase Program In May 2023, the Board authorized the repurchase of up to $ 100.0 million of the Company’s outstanding common shares through May 31, 2025, replacing the previously authorized plan to repurchase up to $ 80.0 million of the Company's outstanding common 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 common shares. The Company intends to structure open market purchases to occur within pricing and volume requirements of Rule 10b-18 of the Exchange Act. The Company may, from time to time, enter into Rule 10b5-1 plans to facilitate the repurchase of its common shares under this authorization. The Company did not repurchase any common shares in both the three and nine months ended September 30, 2024 and September 30, 2023. The remaining amount of common shares authorized to be repurchased under the program as of September 30, 2024 was approximately $ 100.0 million. 28 9. Partners’ Equity of the Operating Partnership All operating partnership units issued by the Operating Partnership have equal rights with respect to earnings, dividends and net assets. When the Company issues common shares upon the exercise of options, the grant of restricted common share awards, or the exchange of Class A common limited partnership units, the Operating Partnership issues a corresponding Class B common limited partnership unit to Tanger LP Trust, a wholly-owned subsidiary of the Company. Likewise, when the Company repurchases its outstanding common shares, the Operating Partnership repurchases a corresponding amount of Class B common limited partnership units held by Tanger LP Trust. The following table sets forth the changes in outstanding partnership units for the three and nine months ended September 30, 2024 and September 30, 2023: Limited Partnership Units General Partnership Units Class A Class B Total Balance June 30, 2023 1,100,000 4,737,982 104,085,781 108,823,763 Options exercised — — 44,300 44,300 Issuance of units 5,000 — 101,615 101,615 Forfeitures of restricted common share awards by the Company — — — — Units withheld for employee income taxes — — ( 5,505 ) ( 5,505 ) Balance September 30, 2023 1,105,000 4,737,982 104,226,191 108,964,173 Balance December 31, 2022 1,100,000 4,737,982 103,397,920 108,135,902 Options exercised — — 51,500 51,500 Issuance of units 5,000 — 101,615 101,615 Grant of restricted common share awards by the Company, net of forfeitures — — 1,042,932 1,042,932 Units withheld for employee income taxes — — ( 367,776 ) ( 367,776 ) Balance September 30, 2023 1,105,000 4,737,982 104,226,191 108,964,173 Balance June 30, 2024 1,150,000 4,707,958 108,203,536 112,911,494 Options exercised — — 45,625 45,625 Issuance of units — — 818,943 818,943 Forfeitures of restricted common share awards by the Company — — ( 4,450 ) ( 4,450 ) Units withheld for employee income taxes — — ( 5,267 ) ( 5,267 ) Balance September 30, 2024 1,150,000 4,707,958 109,058,387 113,766,345 Balance December 31, 2023 1,150,000 4,707,958 107,643,251 112,351,209 Options exercised — — 70,625 70,625 Issuance of units — — 818,943 818,943 Grant of restricted common share awards by the Company, net of forfeitures — — 770,265 770,265 Issuance of deferred share units — — 136,469 136,469 Units withheld for employee income taxes — — ( 381,166 ) ( 381,166 ) Balance September 30, 2024 1,150,000 4,707,958 109,058,387 113,766,345 29 10. Earnings Per Share of the Company The following table sets forth a reconciliation of the numerators and denominators in computing the Company’s earnings per share (in thousands, except per share amounts): Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Numerator: Net income attributable to Tanger Inc. $ 24,856 $ 27,624 $ 72,109 $ 75,367 Less allocation of earnings to participating securities ( 232 ) ( 414 ) ( 692 ) ( 854 ) Net income available to common shareholders of Tanger Inc. $ 24,624 $ 27,210 $ 71,417 $ 74,513 Denominator: Basic weighted average common shares 108,972 104,461 108,675 104,308 Effect of notional units 799 1,026 746 898 Effect of outstanding options 933 832 925 783 Diluted weighted average common shares 110,704 106,319 110,346 105,989 Basic earnings per common share: Net income $ 0.23 $ 0.26 $ 0.66 $ 0.71 Diluted earnings per common share: Net income $ 0.22 $ 0.26 $ 0.65 $ 0.70 We determine diluted earnings per share based on the weighted average number of common shares outstanding combined with the incremental weighted average shares that would have been outstanding assuming all potentially dilutive securities were converted into common shares at the earliest date possible. Notional units granted under our equity compensation plan are considered contingently issuable common shares and are included in earnings per share if the effect is dilutive using the treasury stock method and the common shares would be issuable if the end of the reporting period were the end of the contingency period. For the three and nine months ended September 30, 2024, approximately 120,000 notional units were excluded from the computation because these notional units either would not have been issuable if the end of the reporting period were the end of the contingency period or as they were anti-dilutive. For the three and nine months ended September 30, 2023, no notional units were excluded from the computation. With respect to outstanding options, the effect of dilutive common shares is determined using the treasury stock method, whereby outstanding options are assumed exercised at the beginning of the reporting period and the exercise proceeds from such options and the average measured but unrecognized compensation cost during the period are assumed to be used to repurchase our common shares at the average market price during the period. For the three and nine months ended September 30, 2024, no options were excluded from the computation and for the three and nine months ended September 30, 2023, approximately 333,300 and 475,200 options, respectively, were excluded from the computation as they were anti-dilutive. The assumed exchange of the partnership units held by the Non-Company LPs as of the beginning of the year, which would result in the elimination of earnings allocated to the noncontrolling interest in the Operating Partnership, would have no impact on earnings per share since the allocation of earnings to a common limited partnership unit, as if exchanged, is equivalent to earnings allocated to a common share. Certain of the Company’s unvested restricted common share awards contain non-forfeitable rights to dividends or dividend equivalents. The impact of these unvested restricted common share awards on earnings per share has been calculated using the two-class method whereby earnings are allocated to the unvested restricted common share awards based on dividends declared and the unvested restricted common shares’ participation rights in undistributed earnings. Unvested restricted common shares that do not contain non-forfeitable rights to dividends or dividend equivalents are included in the diluted earnings per share computation if the effect is dilutive, using the treasury stock method. 30 11. Earnings Per Unit of the Operating Partnership The following table sets forth a reconciliation of the numerators and denominators in computing earnings per unit (in thousands, except per unit amounts): Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Numerator: Net income attributable to partners of the Operating Partnership $ 25,930 $ 28,877 $ 75,231 $ 78,789 Less allocation of earnings to participating securities ( 232 ) ( 414 ) ( 692 ) ( 854 ) Net income available to common unitholders of the Operating Partnership $ 25,698 $ 28,463 $ 74,539 $ 77,935 Denominator: Basic weighted average common units 113,680 109,199 113,383 109,046 Effect of notional units 799 1,026 746 898 Effect of outstanding options 933 832 925 783 Diluted weighted average common units 115,412 111,057 115,054 110,727 Basic earnings per common unit: Net income $ 0.23 $ 0.26 $ 0.66 $ 0.71 Diluted earnings per common unit: Net income $ 0.22 $ 0.26 $ 0.65 $ 0.70 We determine diluted earnings per unit based on the weighted average number of common units outstanding combined with the incremental weighted average units that would have been outstanding assuming all potentially dilutive securities were converted into common units at the earliest date possible. Notional units granted under our equity compensation plan are considered contingently issuable common units and are included in earnings per unit if the effect is dilutive using the treasury stock method and the common units would be issuable if the end of the reporting period were the end of the contingency period. For the three and nine months ended September 30, 2024, approximately 120,000 notional units were excluded from the computation because these notional units either would not have been issuable if the end of the reporting period were the end of the contingency period or as they were anti-dilutive. For the three and nine months ended September 30, 2023, no notional units were excluded from the computation. With respect to outstanding options, the effect of dilutive common units is determined using the treasury stock method, whereby outstanding options are assumed exercised at the beginning of the reporting period and the exercise proceeds from such options and the average measured but unrecognized compensation cost during the period are assumed to be used to repurchase our common units at the average market price during the period. The market price of a common unit is considered to be equivalent to the market price of a Company common share. For the three and nine months ended September 30, 2024, no options were excluded from the computation and for the three and nine months ended September 30, 2023, approximately 333,300 and 475,200 options, respectively, were excluded from the computation, as they were anti-dilutive. Certain of the Company’s unvested restricted common share awards contain non-forfeitable rights to distributions or distribution equivalents. The impact of the corresponding unvested restricted unit awards on earnings per unit has been calculated using the two-class method whereby earnings are allocated to the unvested restricted unit awards based on distributions declared and the unvested restricted units’ participation rights in undistributed earnings. Unvested restricted common units that do not contain non-forfeitable rights to dividends or dividend equivalents are included in the diluted earnings per unit computation if the effect is dilutive, using the treasury stock method. 31 12. Equity-Based Compensation of the Company We have a shareholder approved equity-based compensation plan, the Incentive Award Plan of Tanger Inc. and Tanger Properties Limited Partnership, as amended (the “Plan”), which covers our non-employee directors, officers, employees and consultants. Per the Operating Partnership’s limited partnership agreement, when a common share is issued by the Company, the Operating Partnership issues one corresponding operating partnership unit to the Company’s wholly-owned subsidiary, the Tanger LP Trust. Therefore, when the Company grants an equity-based award, the Operating Partnership treats each award as having been granted by the Operating Partnership. In the discussion below, the term “we” refers to the Company and the Operating Partnership together and the term “shares” is meant to also include corresponding units of the Operating Partnership. We recorded equity-based compensation expense in general and administrative expenses in our consolidated statements of operations as follows (in thousands): Three months ended Nine months ended September 30, September 30, 2024 2023 2024 2023 Restricted common shares 1 $ 1,748 $ 1,912 $ 5,690 $ 5,649 Notional unit performance awards 1 1,038 1,393 3,030 3,039 Options 89 83 260 352 Total equity-based compensation $ 2,875 $ 3,388 $ 8,980 $ 9,040 (1) The nine months ended September 30, 2023 includes the reversal of compensation costs related to the voluntary resignation of an executive officer. Equity-based compensation expense capitalized as a part of rental property and deferred lease costs were as follows (in thousands): Three months ended Nine months ended September 30, September 30, 2024 2023 2024 2023 Equity-based compensation expense capitalized $ 26 $ 72 $ 179 $ 194 Restricted Common Share and Restricted Share Unit Awards During February 2024, the Company granted approximately 253,000 restricted common shares to the Company’s non-employee directors and the Company’s executive officers. The grant date fair value of the awards was $ 26.78 per share. The restricted common shares vest ratably over a three-year period on February 15th of each year for executive officers and over a one-year period on February 15th for non-employee directors. Compensation expense related to the amortization of the deferred compensation is being recognized in accordance with the vesting schedule of the restricted shares. For certain restricted shares that vest and restricted share units that are settled during the period, we withhold shares with value equivalent up to the employees’ maximum statutory obligation for the applicable income and other employment taxes, and remit cash to the appropriate taxing authorities. The total number of shares withheld upon vesting or settlement were approximately 381,000 and 368,000 for the nine months ended September 30, 2024 and 2023, respectively. The total number of shares withheld was based on the value of the common shares on the vesting or settlement date as determined by our closing share price on the prior day. Total amounts paid for the employees’ tax obligation to taxing authorities were $ 10.7 million and $ 7.0 million for the nine months ended September 30, 2024 and 2023, respectively. These amounts are reflected as financing activities within the consolidated statements of cash flows. 32 2024 Performance Share Plan During 2024, the Compensation Committee of the Company approved the general terms of the Tanger Inc. 2024 Performance Share Plan (the “2024 PSP”) covering the Company's executive officers whereby a maximum of approximately 367,000 restricted common shares may be earned if certain share price appreciation goals are achieved over a three-year measurement period. The 2024 PSP is a long-term incentive compensation plan. Recipients may earn units which may convert into restricted common shares of the Company based on the Company’s absolute share price appreciation (or absolute total shareholder return) and its share price appreciation relative to its peer group (or relative total shareholder return) over a three-year measurement period. Any shares earned at the end of the three-year measurement period are subject to a time-based vesting schedule, with 50 % of the shares vesting immediately following the measurement period, and the remaining 50 % vesting one-year thereafter, contingent upon continued employment with the Company through the vesting date (unless terminated prior thereto (a) by the Company without cause, (b) by participant for good reason or, (c) due to death or disability). The following table sets forth 2024 PSP performance targets and other relevant information about the 2024 PSP: Performance targets (1) Absolute portion of award: Percent of total award 33.3 % Absolute total shareholder return range 26 % - 40.5 % Percentage of units to be earned 20 % - 100 % Relative portion of award: Percent of total award 66.7 % Percentile rank of peer group range (2) 30 th - 80 th Percentage of units to be earned 20 % - 100 % Maximum number of restricted common shares that may be earned 367,000 February grant date fair value per share $ 16.36 (1) The number of restricted common shares received under the 2024 PSP will be determined on a pro-rata basis by linear interpolation between total shareholder return thresholds, both for absolute total shareholder return and for relative total shareholder return amongst the Company’s peer group. (2) The peer group is based on companies included in the FTSE Nareit Retail Index. The fair values of the 2024 PSP awards granted during the nine months ended were determined at the grant dates using a Monte Carlo simulation pricing model and the following assumptions: Risk free interest rate (1) 4.4 % Expected dividend yield (2) 4.3 % Expected volatility (3) 37 % (1) Represents the interest rate as of the grant date on U.S. treasury bonds having the same life as the estimated life of the restricted unit grants. (2) The dividend yield is calculated utilizing the average dividend yield over the previous three-year period and the current dividend yield as of the valuation date. (3) Based on a mix of historical and implied volatility for our common shares and the common shares of our peer index companies over the measurement period. 2021 Performance Share Plan In February 2024, the measurement period for the 2021 Performance Share Plan (the “2021 PSP") concluded. Based on the Company’s absolute share price appreciation and relative total shareholder return over the three-year measurement period, we issued 479,097 restricted common shares in February 2024, with 343,996 vesting immediately and the remaining 135,101 vesting in February 2025. The vesting of those 135,101 shares is contingent upon continued employment with the Company through the vesting date (unless terminated prior thereto 33 (a) by the Company without cause, (b) by participant for good reason or (c) due to death or disability, in which cases vesting will accelerate). 13. Accumulated Other Comprehensive Income (Loss) of the Company The following table presents changes in the balances of each component of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2024 and 2023 (in thousands): Tanger Inc. Accumulated Other Comprehensive Income (Loss) Noncontrolling Interest in Operating Partnership Accumulated Other Comprehensive Income (Loss) Foreign Currency Cash flow hedges Total Foreign Currency Cash flow hedges Total Balance June 30, 2024 $ ( 23,961 ) $ 3,294 $ ( 20,667 ) $ ( 1,331 ) $ 177 $ ( 1,154 ) Other comprehensive income before reclassifications ( 178 ) ( 178 ) 39 39 Reclassifications out of accumulated other comprehensive income (loss) into other income (expense) for foreign currency and interest expense for cash flow hedges ( 6,573 ) ( 6,573 ) ( 320 ) ( 320 ) Balance September 30, 2024 $ ( 24,139 ) $ ( 3,279 ) $ ( 27,418 ) $ ( 1,292 ) $ ( 143 ) $ ( 1,435 ) Tanger Inc. Accumulated Other Comprehensive Income (Loss) Noncontrolling Interest in Operating Partnership Accumulated Other Comprehensive Income (Loss) Foreign Currency Cash flow hedges Total Foreign Currency Cash flow hedges Total Balance December 31, 2023 $ ( 23,085 ) $ ( 434 ) $ ( 23,519 ) $ ( 1,293 ) $ 19 $ ( 1,274 ) Other comprehensive income before reclassifications ( 1,054 ) — ( 1,054 ) 1 — 1 Reclassification out of accumulated other comprehensive income (loss) into other income (expense) for foreign currency and interest expense for cash flow hedges — ( 2,845 ) ( 2,845 ) — ( 162 ) ( 162 ) Balance September 30, 2024 $ ( 24,139 ) $ ( 3,279 ) $ ( 27,418 ) $ ( 1,292 ) $ ( 143 ) $ ( 1,435 ) Tanger Inc. Accumulated Other Comprehensive Income (Loss) Noncontrolling Interest in Operating Partnership Accumulated Other Comprehensive Income (Loss) Foreign Currency Cash flow hedges Total Foreign Currency Cash flow hedges Total Balance June 30, 2023 $ ( 23,187 ) $ 9,845 $ ( 13,342 ) $ ( 1,291 ) $ 473 $ ( 818 ) Other comprehensive income before reclassifications ( 1,688 ) — ( 1,688 ) ( 77 ) — ( 77 ) Reclassification out of accumulated other comprehensive income (loss) into other income (expense) for foreign currency and interest expense for cash flow hedges — ( 1,765 ) ( 1,765 ) — ( 80 ) ( 80 ) Balance September 30, 2023 $ ( 24,875 ) $ 8,080 $ ( 16,795 ) $ ( 1,368 ) $ 393 $ ( 975 ) 34 Tanger Inc. Accumulated Other Comprehensive Income (Loss) Noncontrolling Interest in Operating Partnership Accumulated Other Comprehensive Income (Loss) Foreign Currency Cash flow hedges Total Foreign Currency Cash flow hedges Total Balance December 31, 2022 $ ( 24,516 ) $ 13,479 $ ( 11,037 ) $ ( 1,351 ) $ 638 $ ( 713 ) Other comprehensive income before reclassifications ( 359 ) — ( 359 ) ( 17 ) — ( 17 ) Reclassification out of accumulated other comprehensive income (loss) into other income (expense) for foreign currency and interest expense for cash flow hedges — ( 5,399 ) ( 5,399 ) — ( 245 ) ( 245 ) Balance September 30, 2023 $ ( 24,875 ) $ 8,080 $ ( 16,795 ) $ ( 1,368 ) $ 393 $ ( 975 ) We expect within the next twelve months to reclassify into earnings as a decrease to interest expense approximately $ 23,000 of the amounts recorded within accumulated other comprehensive income related to the interest rate swap agreements in effect as of September 30, 2024. 35 14. Accumulated Other Comprehensive Income (Loss) of the Operating Partnership The following table presents changes in the balances of each component of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2024 (in thousands): Foreign Currency Cash flow hedges Accumulated Other Comprehensive Income (Loss) Balance June 30, 2024 $ ( 25,289 ) $ 3,471 $ ( 21,818 ) Other comprehensive income (loss) before reclassifications ( 140 ) — ( 140 ) Reclassification out of accumulated other comprehensive income (loss) into other income (expense) for foreign currency and interest expense for cash flow hedges — ( 6,895 ) ( 6,895 ) Balance September 30, 2024 $ ( 25,429 ) $ ( 3,424 ) $ ( 28,853 ) Foreign Currency Cash flow hedges Accumulated Other Comprehensive Income (Loss) Balance December 31, 2023 $ ( 24,376 ) $ ( 417 ) $ ( 24,793 ) Other comprehensive income before reclassifications ( 1,053 ) — ( 1,053 ) Reclassification out of accumulated other comprehensive income (loss) into other income (expense) for foreign currency and interest expense for cash flow hedges — ( 3,007 ) ( 3,007 ) Balance September 30, 2024 $ ( 25,429 ) $ ( 3,424 ) $ ( 28,853 ) Foreign Currency Cash flow hedges Accumulated Other Comprehensive Income (Loss) Balance June 30, 2023 $ ( 24,478 ) $ 10,318 $ ( 14,160 ) Other comprehensive income (loss) before reclassifications ( 1,765 ) — ( 1,765 ) Reclassification out of accumulated other comprehensive income (loss) into other income (expense) for foreign currency and interest expense for cash flow hedges — ( 1,845 ) ( 1,845 ) Balance September 30, 2023 $ ( 26,243 ) $ 8,473 $ ( 17,770 ) Foreign Currency Cash flow hedges Accumulated Other Comprehensive Income (Loss) Balance December 31, 2022 $ ( 25,867 ) $ 14,117 $ ( 11,750 ) Other comprehensive loss before reclassifications ( 376 ) — ( 376 ) Reclassification out of accumulated other comprehensive income (loss) into other income (expense) for foreign currency and interest expense for cash flow hedges — ( 5,644 ) ( 5,644 ) Balance September 30, 2023 $ ( 26,243 ) $ 8,473 $ ( 17,770 ) We expect within the next twelve months to reclassify into earnings as a decrease to interest expense approximately $ 23,000 of the amounts recorded within accumulated other comprehensive income related to the interest rate swap agreements in effect as of September 30, 2024. 36 15. Lease Agreements As of September 30, 2024, we were the lessor to approximately 2,500 stores in our 32 consolidated centers, under operating leases with initial terms that expire from 2024 to 2039, with certain agreements containing extension options. Also, certain of our lease agreements require tenants to pay their portion of reimbursable expenses such as common area expenses, utilities, insurance and real estate taxes. The components of rental revenues are as follows (in thousands): Three months ended Nine months ended September 30, September 30, 2024 2023 2024 2023 Rental revenues - fixed $ 98,879 $ 87,315 $ 294,031 $ 252,017 Rental revenues - variable (1) 26,342 23,520 71,318 66,988 Rental revenues $ 125,221 $ 110,835 $ 365,349 $ 319,005 (1) Primarily includes rents based on a percentage of tenant sales volume and reimbursable expenses such as common area expenses, utilities, insurance and real estate taxes. 16. Supplemental Cash Flow Information We purchase capital equipment and incur costs relating to construction of facilities, including tenant finishing allowances. Expenditures included in accounts payable and accrued expenses were as follows (in thousands): As of As of September 30, 2024 September 30, 2023 Costs relating to construction included in accounts payable and accrued expenses $ 19,059 $ 29,919 Interest paid, net of interest capitalized was as follows (in thousands): Nine months ended September 30, 2024 2023 Interest paid $ 49,370 $ 39,421 37 17. New Accounting Pronouncements Recently issued accounting standards On August 22, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-05, an update to Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASU 2023-05”). ASU 2023-05 clarifies existing guidance by requiring a joint venture to recognize and initially measure assets contributed and liabilities assumed at fair value, upon its formation. These amendments are effective prospectively for all joint venture formations with a formation date on or after January 1, 2025, with early adoption permitted. We are evaluating the impact of ASU 2023-05 on our consolidated financial statements. We will apply the provisions of ASU 2023-05 to new joint ventures, as applicable, but do not believe the adoption of ASU 2023-05 will have a material impact on our consolidated financial statements. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 requires, among other updates, enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker. ASU 2023-07 also clarifies that entities with a single reportable segment are subject to both new and existing reporting requirements under Topic 280. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective adoption. Early adoption is permitted. We are evaluating the impact of this guidance on our consolidated financial statements and related disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 updates income tax disclosures related to the rate reconciliation and requires disclosure of income taxes paid by jurisdiction. ASU 2023-09 also makes several other changes to income tax disclosure requirements. The guidance is effective for fiscal years beginning after December 15, 2024. The guidance should be applied prospectively; however, retrospective application is permitted. Early adoption is permitted. We are evaluating the impact of this guidance on our consolidated financial statements and related disclosures. 18. Subsequent Events Dividend Declaration In October 2024, the Board declared a $ 0.275 cash dividend per common share payable on November 15, 2024 to each shareholder of record on October 31, 2024, and in its capacity as General Partner of the Operating Partnership, authorized a $ 0.275 cash distribution per Operating Partnership unit to the Operating Partnership's unitholders. 38