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Good morning. This is Cyndi Holt, Senior Vice President of Investor Relations, and I would like to welcome you to the Tanger Factory Outlet Centers Fourth Quarter and Year End 2020 Conference Call. Yesterday evening, we issued our earnings release as well as our supplemental information package and investor presentation. This information is available on our Investor Relations website, investors.tangeroutlet.com.
Please note that during this conference call, some of management's comments will be forward-looking statements that are subject to numerous risks and uncertainties, and actual results could differ materially from those projected. We direct you to our filings with the Securities and Exchange Commission for a detailed discussion of these risks and uncertainties. During the call, we will also discuss non-GAAP financial measures as defined by SEC Regulation G, including funds from operations, or FFO; core FFO; and same-center net operating income.
Reconciliations of these non-GAAP measures to the most directly comparable GAAP financial measures are included in our earnings release and in our supplemental information. This call is being recorded for rebroadcast for a period of time in the future. As such, it is important to note that management's comments include time-sensitive information that may only be accurate as of today's date, February 18, 2021.
At this time, all participants are in listen-only mode. Following management's prepared comments, the call will be open for your questions. We request that everyone asks only one question and one follow-up to allow as many of you as possible to ask questions. If time permits, we are happy for you to re-queue for additional questions.
On the call today will be Steven Tanger, our Executive Chair; Stephen Yalof, Chief Executive Officer; and Jim Williams, Executive Vice President and Chief Financial Officer.
I will now turn the call over to Steven Tanger. Please go ahead, Steve.
Good morning and thank you for joining us today. Clearly, 2020 was a year like no other, and I want to express my deep appreciation for the entire Tanger team, who have worked so diligently to navigate the challenges brought on by the global pandemic. Virtually, all of our tenants have been facing mandates, directing them to close their stores, operate at reduced capacity and comply with additional health and safety measures. In 2020, there were several retail bankruptcies and restructurings, resulting in space recapture and a higher vacancy at historic levels that also providing us with opportunities to further diversify and upgrade our tenant mix.
This past year also highlighted the positive characteristics of the Tanger Outlet platform as evidenced by the resilience our portfolio has demonstrated since governmental mandates were lifted starting in the second quarter of 2020. Our open-air centers provided an excellent value proposition for both retailers and shoppers that cannot be duplicated by e-commerce or other brick-and-mortar formats. These desirable characteristics are demonstrated in our recent results, including the rapid pace that stores reopened after mandates were lifted and the positive trends in our traffic and rent collection metrics.
Our balance sheet further differentiates Tanger. Our financial strategy has always been conservative with a great emphasis on maintaining sufficient liquidity to provide optimal flexibility. In January, given the meaningful improvement of our cash flows since the onset of the pandemic, we reinstated our dividend, which is an important part of our total return for shareholders. As previously announced on January 1, I assumed the role of Executive Chair after 12 years as CEO. And the more than 35 years that I've been with the company, I am extremely proud of what we have accomplished as a leader in the outlet industry. We created a brand synonymous with quality outlet centers, became the go-to channel for countless world-class brands and retailers, created thousands of jobs and prioritized our role as a community leader, contributor and partner.
I am pleased to officially welcome Steve Yalof as our CEO, a role he assumed last month. I have complete confidence in Steve's ability to lead the company during this transformative time and look forward to advising Steve through this transition. We are encouraged by the opportunities we have identified to position the company to return to sustain growth over time. Finally, I want to extend our best wishes to those who are in the path of the current winter storms and are being so impacted by the extreme weather and power outages.
Now I'd like to turn the call over to Steve, to discuss these initiatives and provide a review of our fourth quarter and full year performance.
Thanks, Steve. I'm grateful and excited for the opportunity to lead Tanger through this important transition in partnership with Steve, our Board of Directors and the entire Tanger team. While the last 11 months have been challenging for our company, the positive traffic, rent collections and liquidity trends that Steve mentioned are all indicators that our business is stabilizing and our shoppers are quickly returning to our open-air outlet shopping centers.
During 2020, while navigating the pandemic, we accomplished many things that established the groundwork for positioning our company for growth. Our team turned challenges into opportunities and focused on enhancing the key components of our core business, leasing operations, and marketing. I could not be more proud of this team and I'm thankful for their professionalism, drive and commitment to Tanger.
Our year-end consolidated portfolio occupancy was 91.9%, despite having recaptured almost 8% of the square footage in our portfolio during the year due to bankruptcies and brand wide retailer restructurings. Leasing has taken on an increased intensity and a broader focus across the entire company. Our leasing and business development professionals are focused on growing our existing tenant base from store expansions and new deals across our portfolio, identify new retailers and uses in order to diversify our center offerings and augment our merchandising with best in market food, entertainment and experiential retailers aimed at driving new shopper visits, increasing their frequency, extending their stay and driving sales growth. This strategy has already begun to pay off as we've added best-in-class brands, such as Tory Burch, Lululemon, Victoria’s Secret and Hugo Boss to several new locations. And in early 2021, we'll add new categories.
For example, in the F&B category, the iconic gourmet grocery, Nantucket Meat & Fish, took space in Hilton Head, South Carolina. In the sporting goods category, Dick’s will open their first outlet warehouse concept with us later this month. And in shipping and distribution through our partnership with Fillogic, the last-mile distribution in logistics platform, we are opening our first on-center facility in Deer Park, which we anticipate will be a model for other locations going forward.
Leasing momentum had started to build in Q4 across our portfolio and continues to do so now. We're well-staffed to take advantage of this increased activity. In addition to our team of leasing professionals, we have entered into strategic partnerships in key markets with top retail brokers to tap their local market expertise and drive best-in-class local and iconic businesses in these select markets.
Lastly, as I discussed last quarter, we brought on an EVP of property operations to help create a field-led strategy. Through this initiative, we've reorganized our field management teams and have empowered them to take a proactive role in supporting our local leasing initiatives. Given the level of vacancy going into 2021, it's going to take time to rebuild our occupancy and we anticipate that. In certain cases, rent spreads will continue to be pressured. However, we're encouraged by an increase in deal activity, as we see more retailers strategizing growth.
While our strong brand stabilize traffic and an attractive value proposition, Tanger Outlets offers retail brands a compelling solution to manage their product, placement and pricing that is unique to any other retail distribution channel. We also believe there's an opportunity to drive NOI by monetizing additional elements of our center, such as media and amenity, sponsorships.
At the onset of the pandemic, we proactively offered all of our retail partners the opportunity to defer April and May rents until January and February of this year in order to provide them the flexibility to reopen quickly when the mandates were lifted, this strategy proved effective. The percentage of occupied stores that are open rapidly accelerated post-mandate and currently stands at 99%.
Our strong rent collections at 95% of fourth quarter billed rents and better than expected deferred rent collections to date, demonstrate that the strategy was successful, where we permitted concessions, we negotiated landlord-friendly amendments that resulted in a value for value exchange that strengthened our portfolio. We also took a close look at expenses and were able to quickly devise a plan that resulted in almost $18 million in cost reductions over the last nine months of 2020. I'm pleased to note the meaningful rebound in traffic to our centers.
In the fourth quarter, shopper traffic rebounded to approximately 90% of prior year levels, rising to more than 95% during the month of January. Excluding our Canadian centers, the stores were closed under government mandate, January traffic rebounded to prior year levels. This performance reflects our favorable characteristics open air, outdoor centers that offer an inviting way for shoppers to find their favorite brands at everyday value pricing.
During 2020, we started the journey of our digital transformation. During the second quarter, we rolled out our Tanger three ways to shop in-store, curbside pickup and our proprietary Tanger virtual shopper service. Each allowing the customer to shop the way they feel most comfortable. Tanger virtual shopper is a service that meets our customer where they are and allows them to virtually shop any brand in the Tanger portfolio regardless of geography using FaceTime to chat with the Tanger stylist. Orders can be picked up via curbside or shipped to home. To date our Tanger virtual shopper engagements continue to build.
Throughout the pandemic, our centers have been hubs for civic engagement, including blood drives, food drives, and voter registration sites. During 2020, Tanger team members created and organized a DENI leadership council with the mission of championing diversity, equity and inclusion across the organization, empowering us to reach our full potential, fueling innovation and connection with our employees, customers and the communities we serve.
My confidence in our business is steadfast and I'm energized by our opportunity. While there are still headwinds as we entered 2021, I'm confident in our team, our strategy and our ability to execute to our initiatives. We remain focused on our core business, accelerating leasing, reshaping our operations and advancing our marketing strategy to meet shoppers where they want to shop, each of these initiatives are establishing the necessary infrastructure to return, to sustain growth and profitability over time, which is our top priority.
I would now like to turn the call over to Jim Williams to take you through our financial results, our balance sheet and liquidity recap and our outlook for 2021. Jim?
Thank you, Steve. Fourth quarter results showed continued improvement from our second and third quarter performance, but reflect the ongoing impact of the pandemic, recent bankruptcies and brand-wide restructurings.
Fourth quarter core FFO available to common shareholders was $0.54 per share compared to $0.59 per share in the fourth quarter of 2019. Same Center NOI for the consolidated portfolio, decreased $7.8 million for the quarter, primarily reflecting the rent modifications and store closings from the recent bankruptcies and brand-wide restructurings, including an additional 317,000 square feet recaptured during the quarter. Included in Same Center NOI for the quarter are write-offs of approximately $3.1 million related to fourth quarter billed rent.
The write-offs were offset by the reversal of approximately $3.5 million in reserves related to rent previously deferred or under negotiation as a result of better than expected collections, leaving a net benefit of approximately $400,000. In addition, we recognized a $1.1 million charge to core FFO related to the write-off of straight line rents which are not included in Same Center NOI.
Through the end of January, we had collected 95% of fourth quarter rents billed. We also continue to collect rents billed for prior periods, including amounts related to 2020 we allowed our tenants to defer to 2021. As of January 31, our second quarter improved to 63% of billed rents from 43%, third quarter improved to 91% from 89%. And 57% of deferred rents had been collected, nearly half of which represented prepayments. We collected 90% of the deferred rents that were due in January. We have reflected these collections in the period the rents were billed in the rent collections table that is presented in both our earnings release and in our supplement.
As of January 31, 2021, collections of January rent billed were similar to collection rates for the fourth quarter. Core FFO for the quarter was positively impacted by the recognition of lease termination fees totaling $4.1 million, which was significantly elevated over the prior amount of approximately $100,000. As previously discussed, we have always prioritized maintaining a strong financial position and particularly through the pandemic this discipline has proven to be critical.
With the improvements in rent collections, the ongoing focus on cost controls and a prudent approach to capital allocation we had over $680 million of available liquidity, including over $80 million of cash and $600 million of unused capacity on our lines of credit as of the end of January.
We have no significant debt maturities until December, 2023. Given the improved rent collections and our ample liquidity position, our board declared a dividend of $0.1775 per share, which was paid last week to holders of record on January 29. We will continue our disciplined and conservative approach to capital allocation. In addition to dividend distributions, sufficient to maintain REIT status, our priority uses of capital, include investing in our portfolio to grow NOI, reducing leverage to pre-COVID levels over time and evaluating selective growth opportunities over the longer-term.
While we are encouraged by the pace of leasing and progress of the initiatives that Steve Yalof discussed, we anticipate that there will be variability in our performance as the ongoing impact of the pandemic remains uncertain. We continue to anticipate pressure from current vacancies, additional potential store closers and rent modifications. In light of this backdrop, we expect core FFO per share for 2021 to be between $1.47 and $1.57 per share. This guidance assumes there are no further government mandated shutdowns and assumes lease termination fees decrease by $9 million to $10 million or $0.09 to $0.10 per share from the elevated level we recognized in 2020.
Currently we expect to recapture approximately 200,000 square feet due to the bankruptcies and brand-wide restructuring store in 2021. Most of which we expect will occur during the first half of the year. We are not providing any further detailed operational performance assumptions at this time. However, we do anticipate there will be some variability in quarterly operational performance on a year-over-year comparison basis. In 2020, we did not see any meaningful impact from COVID in the first quarter. And in the first quarter of 2021, there have been widespread winter storms across much of our portfolio. We expect a combined annual recurring capital expenditures and second generation tenant allowances of approximately $40 million – $45 million for 2021.
Finally, we believe our balance sheet is well-positioned from a liquidity perspective. We are continuing to take the appropriate steps to navigate the current environment and maximize our financial flexibility. I'd now like to open it up for questions. Operator, can we take our first question?
We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Craig Schmidt of Bank of America. Please go ahead.
Well, thank you. Good morning. How many Christopher & Banks stores are in the Tanger portfolio?
Good morning, Craig. I am pulling that number up. Unless Cyndi, if you're on the phone, if you want to jump in with the actual number of C&Bs.
Steve, it’s Jim. I’ve got it. We have – Craig, we have 11 stores with Christopher & Banks with about 44,000 square feet of space.
Okay. And then last quarter you said you thought you might have 40,000 square feet closing between fourth quarter and second quarter of 2021. Do you still feel like that's a good range?
Craig, are you speaking of Christopher & Banks in general or the total square feet?
No, no, just the overall. I mean, you said you had, I believe 317,000 in fourth quarter.
Well, yes. Last time, we didn't testify it around 400,000 square feet of space, 317,000 did come through in fourth quarter. What we're saying now, I think what we have – what we see is we believe that we'll probably see another 200,000 square feet of space come back. That's a little more than what we were guiding to before, but since then, Christopher & Banks and Francesca's has declared bankruptcy. So 200,000 square feet of space in 2021, the bulk of that should happen in the first half of the year.
Great. Thank you.
The next question comes from Todd Thomas of KeyBanc Capital. Please go ahead.
Hey, good morning. This is Ravi Vaidya on the line for Todd Thomas. Hope everyone's doing well. I was just wondering in terms of occupancy, can you give any comments during the cadence of occupancy? When and where do you see it bottoming out and then rebounding? Given the comments, is it fair to say that, well, the bottom be at the end of the second quarter and then come back up after that?
Good morning, Ravi. This is Steve. Well, look, obviously, coming out of 2020, unprecedented returns of space coming back our way through a corporate-wide restructuring and bankruptcies. And obviously, the biggest challenge that we have going forward is leasing. Our leasing team is completely assembled. We've empowered our entire field team to work on leasing. And although the headwinds, at least for the first half of the year are pretty strong, we're pretty confident that towards the back end of the year we'll be filling a lot of that unoccupied space.
Thanks. Just one more here, regarding occupancy, the 91.9%, what percent of this is pop-up? And have you seen conversions from pop-up and temporary tenants to permanent leases? And if so, at what spreads?
Right now, about 7% where our typical temporary leasing has been historically between 4.5% and 5.5% is temporary of that 92%. I mentioned earlier, number of deals that we've done for 2021 that are executed, a number of those deals actually started out as pop-up or short-term leases, and we've extended the terms of those leases. So that seems to be a trend. Our center occupancy, our retailers, as we mentioned earlier, have returned almost 99%. Our traffic levels are way up, and I think retailers have confidence in the outlet channel as a great distribution channel for their products. We're seeing a lot of leasing activity going into fourth quarter and that momentum is being carried forward into the beginning of 2021. So we're encouraged.
Thanks so much. Appreciate it.
The next question comes from Greg McGinniss of Scotiabank. Please go ahead.
Hey, good morning. Just wanted to touch on foot traffic. And Steve, could you provide kind of some context on the cadence of the foot traffic per month? Trying to understand if there was a pullback and out with the rising case count. And then on the January numbers, are those based on gross visits or is it adjusted for the extra weekend in the month?
Well, we count our traffic on a regular rolling month basis. So let's start with Q4. During the course of Q4, the blend of traffic was about – was over 90%. I think November was probably the weaker of the three months, but traffic rebounded strongly in December. And then the numbers that we're reporting in January were extremely strong. Our Star Canadian centers, we've got three shopping centers in Canada, all three of them were closed during the month of January. So if we pull those out of the traffic count numbers, our numbers rebounded to where they were last year at this time.
Okay. But that's including an extra weekend in January versus last year, right? So I imagine that had some kind of positive benefit there. Not taking away from the 90%, which I think is impressive in this environment, just trying to understand the context around the January numbers.
Sure. Well, yes, I appreciate that. We look at the numbers week-over-week, so we compare them to the prior week. We'll probably – we'll have to get back to you with the actual math, but I'm sharing with you sort of a rolled up average of how we completed the month of January.
Okay. That's fair. And then just for the second question, Jim, could you provide maybe some of the steps on how we get from the $0.54 of FFO this quarter to kind of the $0.38 average run rate in 2021? I mean, you've got the term fees and the revenue reversal accounts are about half that difference, but any context around the other piece would be appreciated.
Greg, as we said in the prepared remarks, as far as giving additional operational information for the guidance for 2021, we're just going to limit that to overall core FFO, which we've said is going from $1.47 to $1.57. As you pointed out, the term fees were elevated in 2020. And I just want to point out, if you take out – if you adjust 2020 to take out the elevated portion, which we estimate around $9 million to $10 million, you're showing pretty much at the low end of the range and FFO growth rate of zero at the low end of the range, and around $6 million, $6.5 million at the top of the range. So showing some growth, we have pointed out that we do expect first quarter to be a tough comp. We expect 200,000 square feet of space to come back in the first half of the year. First quarter is going to be competing against the quarter last year that didn't have – that was pre-COVID versus this year that shows the impact of the bankruptcy suite we saw come through in 2020 and the winter storms we mentioned.
Second quarter will be kind of the opposite because that's when COVID hit. And we took the huge charges around $35 million. So that'll be the other – that'll be the opposite way. And for the rest of the year, we'll just have to see, but just given where we are in the uncertainty, we're just going to try to keep it just at the FFO level right now and not provide any other operational guidance.
All right. Thanks, Jim.
The next question comes from Caitlin Burrows of Goldman Sachs. Please go ahead.
Hi, good morning. Tanger collected 90% of rent deferrals in January 2021. So I was just wondering if deferrals continue to be repaid at that rate, what impact would that have on rent reserves recognized during 2020? Do you think you would need to reverse more if that rate continued?
Hi, Caitlin, it’s Jim. Yes, I mean, we have been very pleased with the rate of the collections and the cadence of the collections and we have received 90%. When we set the reserves earlier, we've never in a history have offered a tower portfolio a deferred plan like that. So we were very pleased to see that come in very strong. At the end of the year, what was left in the deferred was around $10 million. And if you add that, if you had the piece, that's still under negotiations, it's a little over $13 million and we've reserved about 39% of that, which is about $5.3 million. So there's a combination of both deferred and under negotiation. If we do continue to get a 90% collection rate yet, obviously some of that will come in. And if I had to quantify that, I would say probably between the $2.5 million and $3 million.
$2.5 million to $3 million of possible reversal if the same rate continued?
Yes.
Okay. Okay. And then switching to maybe the balance sheet side of things, Tanger's line of credit matures in October 2021, but can be extended for an additional year. So I was just wondering if you could go through the plan to address this, how far in advance would you have historically started to addressing it, and how do you think this year situation could be different or not?
Well, it's certainly different this year. In the past, we usually work on extending a line of credit within a couple of years of the maturity, but obviously COVID had put the brakes on the plan like that. We're certainly looking at that, watching the credit markets. I think we're certainly seeing, feels like we're seeing a little more return to normal. And we're waiting – I think we're waiting for the right time when the credit terms and that will return closer to pre-COVID levels. And I think we're optimistic that if we continue to see our traffic trends continued positive momentum and what we're hearing from our retailers and trying to get back to doing deals again, I think we'll revisit that later this year, but that’s all the color that we have right now. We do have the option to extend to 2022, if we need to.
Okay. Thanks.
The next question comes from Katy McConnell of Citi. Please go ahead.
Hi, good morning, everyone. Can you update on somewhat temp tenant role that represent as a percentage of total 2021 lease expiration? And how much upside do you think you could see in that because they’re ultimately converted to longer-term deals?
Katy, I'm sorry. I think I missed part of your question. You want to talk about the number of temp tenant deals? I'm sorry, can you please restate?
Yes, sure. I was just asking if you could try to quantify how much temp tenant role could represent as a percentage of 2021 lease expiration.
Well, first of all, the temp tenant activity this year is probably greater than it's been in other years. I mentioned earlier that about 7% of our 92% current occupancy is temp tenant occupancy. A lot of that has to do with the fact the vacancy that we received in 2020 and some of the deals that we work with some of the tenants that we're restructuring. We took those leases down to short-term leases as we negotiated rent concessions and favoring occupancy over rent collection in 2020 to try and get our sales keeping – maintain a high and competitive level of occupancy on a going forward basis.
As I mentioned earlier, a lot of the retailers that started out as short-term or temp, we've been able to successfully convert them into permanent tenants on a going forward basis. And as we bridge a lot of that occupancy, we're leaning very heavily on our field teams to do a lot of that leasing for us. So we will see a lot more local and temp leasing probably in the first half of the year, but we're very proactive with our long-term leasing to replace that tendency and to grow our permanent leasing base.
Okay, thanks. And then can you provide the sales and pricing on the Jeffersonville assets you had in this quarter? And are you currently marketing shop closure at any other centers for sale at this point?
The Jefferson sale was an immaterial transaction, so we're not going to provide any other details in that other than the sales price was around $8 million, $8.5 million. We have a robust asset management plan that we are reviewing every property in our portfolio to decide which properties we want to retain and which ones we want to divest of. And we'll continue that process, we don't do any comment on properties to be disposed of until we have an agreement or they close.
Okay. Thank you.
The next question comes from Mike Mueller of JPMorgan. Please go ahead.
Yes, hi. Steve, I think you talked about $18 million of cost savings that you achieved over the past nine months. Can you walk through some of the categories those came in? And is there a portion of that you think is permanent or should it all essentially go away as occupancy builds again?
Well, additionally for last year, I mean we did operate at 40% of operating hours in the field, sorry, we reduced our operating hours by 40% when our shopping centers reopened. And some of the savings were embedded in that less operating hours for some of our shopping centers. We're currently operating at about 20% fewer hours than we had historically. A lot of that savings is also in G&A. And although the savings that we experienced in G&A in 2000, we'll maintain those savings but we will in fact add some expense in that category going forward.
But as far as expense mitigation is concerned, we've got a robust strategy with our field management teams to work very closely to mitigate expenses. As I mentioned in my opening remarks that through our EVP of Operations and the field management strategy that we've just put in place. We've made the General Managers of each of our shopping centers far more responsible for expense and property management in their shopping centers where they're managing on a daily basis their property-wide expenses. And we think a lot of that expense savings will pass right through.
Got it. And I think the release mentioned you were about 47% through 2021 expirations thus far. Are you seeing any geographical differences in terms of tenant demand, whether it's middle of the country versus coastal or Southern geographies versus Northern?
Well, I think our, our properties are pretty much drive to American tourist locations. And a lot of those locations are second home locations, locations where a lot of people during COVID have repositioned themselves in their families and we've seen. That lends itself to a lot of reasons why we're seeing a lot of traffic increases in some of these shopping centers. So I think that the increase in leasing activity is pretty much across the board, but favoring a lot of these drive to American tourist locations.
Got it. Okay. Thank you.
[Operator Instructions] The next question comes from Floris van Dijkum of Compass Point. Please go ahead.
Good morning. Thanks guys for taking my question. Encouraging news on the collections obviously and the traffic numbers as well. Just wanted to ask you a little bit about the balance sheet particularly as your leasing costs rose by about 50%, it appears. And obviously the line hasn't been renewed yet. What about equity? Your stock has been pretty volatile but it's making a – it's one of the better performers so far this year. You spiked at one point. What are your thoughts around raising equity when you're trading at a premium to NAV?
Hi, Floris again, good morning. Yes. Certainly that's an option I think right now. From a liquidity perspective, we've got $80 million of cash on the books. We have no near-term maturities until 2023. So we're in good shape from a liquidity perspective. I’d say some folks have heard a lot of questions about ATM programs, we have not had an ATM program in the past for those reasons, but given where we're seeing the market go and I think that's something that we will evaluate.
It adds some flexibility to the balance sheet. I think it's another tool in the toolkit, so that's something that we will evaluate putting in place, in case somewhere down the road. We think it's the right time to raise equity. Right now from an equity perspective, I think we're in good shape.
Thanks, Jim. And then in terms of obviously the dividend has been reinstated now, you sold one of your lower tier assets. Maybe if you can give a little comment on how you see leasing spreads trending over the next 12 months. Obviously it's not an ideal leasing environment today with heightened vacancy levels and still a little bit reduced demands or certainly number of tenants out there. But do you – when do you think that you're going to start to see an inflection point in your leasing spreads in your portfolio? And maybe Steve, if you want to comment on that and where should people think about what the potential longer-term upside is?
Well Floris, what I can share with you is that, obviously leasing spreads came under real pressure in 2020 as we favored occupancy and made deals to keep our tenants particularly those in corporate restructuring and those filed for bankruptcy to keep those tenants in possession. And I think that strategy was a sound strategy.
I’ve mentioned that our leasing activity has definitely picked up through Q4 and as we take a look at some of the leases are – if we take a look at the new leases and the renewal leases for stores that will open in 2021, those leasing spreads are starting to improve. And we're hopeful that's a trend going forward, I really can't guide because we know that 2021 certainly is going to be fraught with headwinds, but we're very encouraged by what we're seeing, particularly with new leasing and renewal leasing going into this year.
Thanks, Steve. That's it for me.
And we have a follow-up from Caitlin Burrows of Goldman Sachs. Please go ahead.
Hi. Again, I was just wondering if maybe we could talk about the watch list the 900,000 square feet that was recaptured in 2020. How much of that space corresponded to tenants that you had recognized pre-COVID were a concern versus how much was maybe a surprise for acceleration given the conditions that ended up, coming up and what's the status of the company's watch list today?
Well, today's watch list is significantly less than last year’s watch list was. And I definitely agree with you that COVID accelerated retailer bankruptcies, but fortunately a lot of the bankruptcies were restructures, not liquidations. And in that connection, we were able to save a lot of retailers in our portfolio.
I’ve mentioned earlier that we favored occupancy in 2020, we wanted to make sure that our retailers stayed in our shopping centers, that we could weather the COVID pandemic together and we feel optimistic that when the vaccine rolls out, that people return to normal life and normal shopping cadence, it's best to have these stores in open and operating, than not.
Okay. So I guess it sounds like with the acceleration of or like pull-forward, possibly a bankruptcy activity in 2020 we're at a smaller watch list today. I guess one thing you guys maybe had pointed out in the past, and you just mentioned now, was how there were a lot of restructures versus liquidations. Do you expect that the retailers who have restructured they are kind of done or do you think there's some risks that there could be, I guess bankruptcy part two or how do you think those retailers are doing now?
Well, first of all, I think that they might be out of the channel. I think that we're a low cost of occupancy, low-cost of entry, and we're seeing a lot of the retailers that may have had other results in other brick and mortar formats, stick with us in the outlet channel. I think that's a great place for them to do business. They can control their pricing, they can control their product, they can control their placements and our traffic numbers have definitely supported the fact that they're seeing customers through that channel.
So I would venture to say that no material surprises based on what we shared with you relative to what we believe we're going to be getting back. And our expectation is we will probably work out with a lot of those retailers to keep them in occupancy. A lot of those workouts will be short-term in nature, so that when the market returns, when sales return, we'll be able to reprice our real estate accordingly.
Okay. And then maybe just one last one back to the balance sheet side again, given the Tanger’s current credit ratings having a negative outlook. Would you think the risk is of a downgrade and in a theoretical case of one, what would the impact be? Or is that not something that you're concerned about right now?
Caitlin, Jim, look we're in constant communication with our rating agencies, keeping them up to date on our progress that we're making and the trends. I don't want to speculate on what they're likely to do and that's not in our control other than keeping them up to date as I mentioned.
Certainly, our debt metrics aren't as strong as they were a year ago. As we said, net debt to EBITDA is now at 7.1[ph] or 7.2[ph], so we're mindful where that is. If there are downgrades, the costs –there is an implied cost, but it's not a significant cost in the spreads of our – that's embedded in our term loan and line of credit, but it's not significant.
Okay. That's all. Thanks.
This concludes our question-and-answer session. I would like to turn the conference back over to Steven Tanger for any closing remarks.
I want to once again thank everybody for joining our call today. We wish you and your families well. Please be safe and we'll talk to you again in 90 days. Good bye.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.