TANGER INC. (SKT) stock intrinsic value fair value estimate & owner earnings analysis

Tanger owns and runs outlet and open-air shopping centers. At December 31, 2025 its consolidated portfolio was 31 outlet centers and three open-air lifestyle centers, about 14.0 million square feet, 98% occupied, with over 2,600 stores from over 700 brands. It also holds partial stakes in six centers (about 2.1 million square feet), two of them in Canada. No tenant accounted for more than 6% of rental revenue in 2025. Leases are short: about 18% of the portfolio, 2.7 million square feet, comes up for renewal in 2026. Recent additions include a new center in Nashville, Tennessee (opened October 2023, 100% occupied at the end of 2025), Asheville, North Carolina and Bridge Street Town Centre in Huntsville, Alabama (both 2023), The Promenade at Chenal in Little Rock, Arkansas (2024), and Pinecrest in Cleveland, Ohio ($167 million) and Tanger Outlets Kansas City ($130 million), both in 2025. How we measure earnings. We start from operating cash flow, remove working-capital swings and stock compensation, and subtract the capital spending needed to keep existing centers leased: renovations, second-generation tenant allowances, other recurring capital work, leasing costs and non-real-estate assets. Tanger itself splits its capital spending between new-center development and everything else, and we use that split directly: spending on new centers (most of all Nashville in 2022-2023) and the cost of acquiring centers are treated as growth investment, not upkeep. Because Tanger's operating cash flow includes the share belonging to partnership units that can be exchanged one-for-one into common shares, we divide by a share count that includes those units (about 119.4 million for 2025, about 120.4 million at mid-2026). On that basis owner earnings per share were $1.57 (2016), $1.62 (2017), $1.77 (2018), $1.69 (2019), $1.29 (2020), $1.26 (2021), $1.33 (2022), $1.22 (2023), $1.42 (2024) and $1.71 (2025). Depreciation and the amortization of lease intangibles from acquisitions are added back; for real estate the ongoing cost of keeping a center competitive is already charged through the recurring capital spending above, so no further deduction is made. Because the company carries meaningful debt, we value the business before its lenders and then subtract what it owes. Adding back cash interest gives business cash flow per share of $2.07, $2.19, $2.38, $2.27, $1.88, $1.68, $1.70, $1.64, $1.90 and $2.21 for 2016 through 2025. We use the median of 2016-2019 and 2022-2025, about $1.98, as normal earning power. That window includes the 2018-2019 retail store-closure period and the post-pandemic rebuild when occupancy had fallen to 92% (end of 2020); 2020 and 2021 are left out as shutdown-distorted. Owner earnings per share grew about 20% in 2025; our base case assumes 0.7% for the first year, well below that, because the 2025 jump came largely from acquisitions funded partly with new shares and borrowing rather than from the existing centers alone. What the company owes. At June 30, 2026 total debt was about $1,861 million against about $197 million of cash and short-term investments. Much of it is fixed well below current rates: $400 million of 2.75% notes due September 2031, $250 million of 2.375% exchangeable notes issued in January 2026 and due 2031 (exchangeable at about $41.55 a share; we treat them as debt), and $300 million of 3.875% notes due July 2027, plus term loans near 4.9% after swaps. We credit about $103 million for the value of that cheap financing, giving net debt of about $1,562 million, or about $12.97 a share. The $350 million of 3.125% notes due September 2026 were pre-funded through new term loans and the exchangeable notes. Base case. Occupancy stays near today's 98%, existing leases keep their contractual base-rent escalations, and business cash flow grows about 0.7% a year from $1.98, continuing at that pace after year ten because the escalation clauses and the steady re-leasing of space are a structural feature of these leases. We give no credit for future acquisitions or developments: Tanger has funded its recent purchases partly by issuing shares and borrowing, so the growth they add is not secured, and the business has not shown a long, self-funded, through-the-cycle record of acquisitions. The business is worth about $4,529 million; less $1,562 million of net debt leaves about $2,968 million, or $24.65 a share. Bear case. A retail downturn of the kind Tanger has already lived through: in 2020-2023 business cash flow per share ran 21% to 31% below the 2018 level, and occupancy fell to 92%. We model business cash flow falling to $1.55 a share (about 22% below normal) for four years, recovering only to $1.85, never fully regaining the normal level, and staying flat after year ten. We also assume the $650 million of notes and loans maturing in 2027-2028 refinance at roughly 7.5% for five years, which adds about $41 million to what the company effectively owes. Even at the trough, business cash flow of about $187 million is well above annual interest of roughly $52 million to $79 million disclosed for the next five years. The business is worth about $3,596 million; less about $1,603 million of debt this leaves about $1,994 million, or $16.56 a share. Bull case. Business cash flow starts from the $2.21 a share actually earned in 2025, with the recent acquisitions in place, and grows 3% a year for ten years and 1.5% after that, supported by occupancy holding at 98% and same-center operating income that rose about 4% in 2025 ($376.1 million versus $361.2 million). The business is worth about $6,784 million; less $1,562 million of net debt leaves about $5,222 million, or $43.38 a share. In every case a large part of the value, about 58% to 66%, comes from the years after the first decade. That reflects our view that well-located outlet and open-air centers keep re-leasing their space indefinitely as long as the upkeep spending in our earnings figure continues; if that view is wrong, every case is too high. Margin-of-safety price. We are fairly confident in the earnings level: eight years of normal operations sit in a band of $1.64 to $2.38 of business cash flow per share, and recent occupancy has been stable at 98%. The most likely errors are, first, that the 2025 level depends on recently acquired centers whose returns are not yet proven over a cycle; second, that tenant bankruptcies or co-tenancy clauses (which let tenants pay less if occupancy falls) push income down further than in 2020; and third, that refinancing the 2027-2028 maturities costs more than we assume. The structure is reasonably sturdy: no tenant above 6% of rent, hundreds of brands, real property, and debt that is mostly fixed and spread from 2027 to 2031. Leverage is the main weakness, since debt is close to half of the business value in the bear case. Tanger declared $0.3125 a share for the second quarter of 2026, or about $1.25 a year, which is paid while waiting. We set the margin-of-safety price at $13.00. It assumes a five-year holding period with no growth in value: from $13.00 the base case, with dividends near today's rate, implies roughly 21% a year, and the bear case implies roughly 12% a year. At $14 the base case would imply about 19%, short of the target. Change from the previous analysis. The previous figures were prepared on a different basis and are not comparable.