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Steven Yelloff, the president and CEO of Tanker, a leading operator of open s shopping centers across twenty US states in Canada, joins US now to discuss this sector and your business. Sir Stephen good To, can't chat with you. Thank you, John, Thanks for them. Let's get into this. Traditionally we talk about a Macy's and the Bloomingdale's being that anchor retailer in them all. How has that changed and how are things developed for you?
You know, the footprints of our shopping centers are considerably smaller than the larger regional malls, So for US, anchor retailers are in the twenty five thousand to thirty five thousand square foot range, so far less reliant on any one tenant in any of our shopping centers. But there's still great draws. So Bloomydale still has an outlet business Sacks off Fifth too, both of which they facilitate brands that you wouldn't get in typical lifestyle stores that you have in our our.
Shopping So much has been written at about this sector of this industry in the last ten years. Usually it got something like this, most dreadful dying.
It's the end.
It's not for you. You see things quite differently.
Well, first of all, you know, ever since COVID, the open air shopping center has really been sort of the highlight in our sector. People like the place where they can gather, where it becomes a community space. So the outlet centers of ten fifteen years ago really power shopping experiences. But now they're evolving. We're changing the uses. We're filling some of that vacant see those created by COVID with
different types of uses, not necessarily outlet uses. Bigger draws draw retailers where people want to come and shop every week as opposed to once a quarter.
How much are you seeing that bifurcation that we were talking about in Macy's with respect to some of the lower income shoppers. Are people who are more looking for discounts and those who are willing to go to the upper end types of products.
Well, you know, look, we see Macy's as a competitor for us because Macy's branded value and that's pretty much what we're selling all day. So for us, if we can create more theater, if we can create more excitement, if we can create more of an entertaining environment for
people to shop. And I think they find that when they come into one of our centers where Ralph Laurence store is end to end just Ralph Laurence, so you can shop the entire lifestyle, the brand, the depth, the breath of the product in one environment where the service And that's a huge part of the business too, is you know, it's interesting, you know all the different places
where one can shop online or large department stores. I think there's nothing more satisfying to a customer that when a service representative says, you know, you look pretty good in that thing, and that helps sometimes helps close the deal. So, you know, we want to make sure that we provide service where a lot of those other venues don't.
I need someone to tell me that I look good before I buy something. Look, there's a real question here, and I guess I'm going to the question of the consumer and the retailer and the ability to spend Right now, there's so many sort of roader economic questions tied to your business. To understand how many people are will to shell out one hundred dollars two hundred dollars a day for the experience for the walking up and down the
mall and buying some food in the process. Are you seeing greater foot traffic increasing or do you see a real kind of pushback restraint by consumers that have gotten stretched?
You know, so our traffic numbers seem to be pretty consistent with where they were even in the peak, you know, prior to twenty nineteen. We're seeing more cars now in our center that we did then, and I think a lot of that is because we're closer into where the public is shopping now. You know, the old narrative on outlet centers, we are so far out that it required
a special trip and a special drive. And now what we're finding is people are moving to a lot of the geographies where our centers are and we become the center of the energy. And because of that, in order for us to compete in those marketplaces, we need more variety.
And variety comes not only with better outlet retailers, but it also comes with better food and beverage, restaurants, sit down entertainment, things for people to do, and that's why we're seeing the cars come, and they're coming more frequently.
When I grew up going to Tanger was a highlight, you know, twice a year. Now it sounds like what you're saying is you're making this habitual. How do you do that? How do you see returning customers so that it's not just I'm going to go to the outlets once a year.
Well, let's take Deer Park, which is out in Long Island, which might be a shopping center that you visited. So you take a look at a center. Well, you take a look at a center like that, So you know, it's up to us in order to make sure that we continue to drive customers into the center far more frequently than they had in the past. It's just the variety of uses that we bring and the brands that
people like. You know, the customers evolving, they're getting younger, and you know, it's really a lot of competition to get people off the couch and into a shopping center. So you can't just use great creative marketing to get a younger customer to come to your centers. They you have to have the brands that they like. So a lot of these new cool direct to consumer brands, brands you only saw online, but now you're seeing these brands
in a bricks and mortar format. We're getting them into our centers and they're serving as a big part of that draw.
You said that rent and open air outlet is less expensive than in a mall. Why is that?
Well, you know, open air, first of all, the common area maintenance piece is a considerable charge to a lot of retail. They get passed through the retailers quite frankly, and in our centers, you know, when you're open air, there's far less of that expense to divide amongst the retailers. You know, especially in our shopping centers. We're primarily Southern based, so you know, snow removal is a huge part of
the narrative too, especially now. Actually, we just bought a shopping center in Alabama and within the first month that we had that center at snowed in Alabama. Wow, believe it or not. So there's an expense piece of that that, you know, we at least see some savings.
Can we talk about crime and retail as well. If we had some politicians here, depending on their party, they tell you it was really bad, Well there was nothing to see here. What's the reality in your business? And is it regional? Is it state by state?
You know, I think it is state by state, and look, it's a problem everywhere and it's something that we are absolutely rigorous that when we dive in, and technology has really played a great role in helping us think through that. How do you thwart off potential organized crime? You know, we have great connectivity back to the FBI and of the great government agencies that give us alerts when there
are some things that are planned. And you know, we have great surveillance on site, digital surveillance, drone surveillance, so that if an incident does occur, you know, we've got great opportunity to.
Do you find the pressure, though the burden is landed on you to spend more on security, has this been passed to you?
Well, you know, we look, we're partners with the retailers in our centers and a lot of those retailers contribute to you know, we talked about CAM earlier and they can contribute that CAM cost. But you know, look, when something happens at a Tanger center, it's Tanger that's on that on that masthead. And sure it's a it's a
big part of our responsibility. You know, we'd like to say that we provide a fun entertaining and safe environment for our shoppers to come every day, and we'd love to be able to, you know, sort of that be our hallmark as we go forward.
And let's talk about multidecade highs. Can you wok us through how this is shaped you a business in any way Shapeful Foam.
Well, well for us, you know, being on sale every day, and I think that that's a big part of the narrative for us. You know, it's like the consumer we were talking about trading down the consumer that rather than spending their dollars on luxury products, you're really looking for branded value. There's been articles written recently about even the highest end consumer shopping in stores where they were able to get the same products that they're looking for, but
get them at the best possible price. And I think that's that's what we do every day. So we're seeing a lot of customers that we hadn't seen in the past coming and at least investigating and looking at at our product, and I think we're converting a lot of customers that way.
It raises a question also just about your real estate portfolio, because ultimately you do manage a whole host of different properties and you own them, And I'm wondering whether it's a time to be buying if you have all cash and you can buy, because people who do want to get out might have a more limited slew of potential buyers. Or is this sort of a place where you need to sort of manage a little bit more carefully.
Yeah. Well, last quarter we brought three new properties to market. So, for example, we built a brand new center in Nashville, Tennessee, opened in October, and then we purchased two properties, one in Ashville, North Carolina, and then one in Huntsville, Alabama, Huntsville, Alabama being a lifestyle center, not an outlet center, so it's the first in our portfolio that is not outlet or off price focused, and we think that makes a tremendous amount of sense because of the team that we
built in the platform that we built focused on leasing, operations and marketing. We think that team can execute to outlets specific and then adjacent to outlet, which we think is what lifestyle feels.
Do you think it's a particularly good time to expand and be buying properties because of the discounts due to where rates are.
Yeah, well, for us, look, we have great access to capital, we've untapped lines of credit, We've got a relatively low debt deeper ratio, so our balance sheet is very solid and we are definitely in growth and acquisition rode right.
Now, more acquisitions? Why would you make them? And what would they look like?
You know, we like the South. You know, we've been very successful in the South, open air shopping centers or you know, the hours of operation and the months of operation or definitely.
Send us a that's a weather's right for you?
Well, you know what works for us for sure. You know, Look, we're a Southern based company. We're based in Greensboro, North Carolina, so we've we've grown up in that marketplace, so we know it pretty well. And like I said, our last two acquisitions were well, we built in Nashville, but we acquired in North Carolina and Alabama.
We hear from certain industries it's easy to do business in certain states than others. Would you say the same thing?
Definitely, you know, and it's I think it's more the community than the state. You know, when we build a new shopping center or when we come into a new marketplace, it's really that community. It's the local government that needs to be pro business or not pro business, and when they are pro business, it really works out great. You know, first of all, if you think about it, any one of our shopping centers employs a thousand people, and where do they come from. They come from that local communit.
So we're added it from a job network and job creation point of view, but also we're a big tax generator for a lot of them.
It's refreshing to hear you say it's about the weather. When I first moved over here, I thought old people went to Florida because the weather was nice. I didn't realize it was about the taxes. Took me a while to catch here. It took me a while. We look at Jeff Bezoss to Florida without a doubt that's about the taxes.
Yeah, but open air shopping centers is about.
This about the weather of course today.
I mean honestly, in New York City, can you imagine, it's like a complete snowstorm is raining direntially. That's sound, I'm sure.
Of, Stephen, Thank you, Stevin out if appreciate. It's a CEO of tanger. This is bad human today, really