Core Viewpoint - STAG Industrial, Inc. has signed a new lease for 102,060 square feet of warehouse and distribution space, indicating strong demand for its industrial properties [1][2]. Group 1: Lease Details - The new 30-month lease is with a wholesale apparel and promotional product distributor, starting on April 1, 2025, and includes annual rent escalations of 3.5% [2]. - The asset at 452 Casual Drive in Wellford, SC, is now 69% leased, contributing to an overall lease-up rate of 51% for the company's completed development portfolio [2]. Group 2: Company Overview - STAG Industrial, Inc. is a real estate investment trust focused on acquiring, owning, and operating industrial properties across the United States [3]. - As of December 31, 2024, the company's portfolio includes 591 buildings in 41 states, totaling approximately 116.6 million rentable square feet [3]. Group 3: Management Commentary - The Executive Vice President of Real Estate Operations highlighted the transaction as a demonstration of the strength of STAG's development platform and operational capabilities, emphasizing a mutually beneficial outcome for both the company and the tenant [3].

Core Viewpoint - STAG Industrial, Inc. has not provided significant benefits to shareholders from its acquisition strategy, leading to a hold recommendation in September 2024 [1]. Company Analysis - The company has a focus on sustainable profitability and value-oriented criteria for investments, indicating a conservative long-term investment approach [1]. - The analyst emphasizes a fundamental, bottom-up research methodology, including detailed analysis of financial statements and earnings calls to assess the company's competitive position [1]. Investment Position - The analyst holds a beneficial long position in STAG shares, indicating confidence in the company's potential despite the previous hold recommendation [2].

Financial Data and Key Metrics Changes - Core FFO per share for Q4 was $0.61, representing a 4.8% increase compared to 2023 [21] - Cash available for distribution totaled $370 million in 2024, with approximately $95 million of free cash flow retained after dividends [21] - Same-store cash NOI grew 4.4% for the quarter and achieved record same-store cash NOI growth of 5.8% for the year [22] Business Line Data and Key Metrics Changes - Leasing activity has reaccelerated, with 23 leases totaling 2.4 million square feet commenced during the quarter, generating cash and straight-line leasing spreads of 19.4% and 34.9%, respectively [22] - The company has already leased 70% of the operating portfolio square feet expected for 2025, achieving cash leasing spreads of 23.8% [11][22] Market Data and Key Metrics Changes - The national industrial leasing demand in 2024 was muted compared to recent years, but many markets remain healthy with increased tenant demand [8][9] - The strongest market rent growth was observed in non-coastal and manufacturing markets [10] Company Strategy and Development Direction - The company anticipates the acquisition market will gain momentum as the year progresses, with acquisition volume guidance ranging from $350 million to $650 million [26] - A joint venture development partnership was entered to construct approximately 400,000 square feet across two buildings in the Charlotte market, with an expected stabilized yield of 7% [19] Management's Comments on Operating Environment and Future Outlook - Management noted that the supply pipeline continues to contract, with deliveries down over 30%, and this trend is expected to continue in 2025 [8] - There is uncertainty regarding tariffs, with tenants expressing that it is too early to determine the impact on their operations [47][48] Other Important Information - The company sold two buildings for aggregate proceeds of $29 million during the quarter, with one building sold in January for $67 million [16][17] - Approximately 2.5 million square feet of development activity is ongoing across 11 buildings in the U.S., with 50% of the space under construction already leased [18] Q&A Session Summary Question: Leasing and spreads for Q4 were lower, what is the outlook for 2025? - Management indicated that Q4 leasing spreads were affected by fixed-rate renewal options, and excluding those, spreads would have been 34%. They expect 2025 spreads to be around 24-25% [32][33] Question: Can you discuss the yields in the development portfolio? - Management expects mid-sixes for stabilization on the Tampa assets and noted that leasing activity in Spartanburg is increasing [36][38] Question: What are the trends in the private transaction market? - Management observed a pause in the private market but expects an uptick in transaction activity as the year progresses [52][55] Question: How is the company planning for development starts in 2025? - Management is optimistic about development starts and is looking for additional opportunities in strong markets [76][77] Question: How does the 70% of renewals completed compare historically? - Management stated that the 70% completion rate is consistent with previous years, indicating no significant change in strategy [80][81]

STAG Industrial (STAG) Q4 2024 Earnings Call February 13, 2025 10:00 AM ET Company Participants Steve Xiarhos - Vice President - Capital Markets & Investor RelationsWilliam Crooker - CEO, President & DirectorMatts Pinard - CFOVince Tibone - Managing Director and Head of US Industrial & Mall ResearchMichael Chase - Executive VP & Chief Investment OfficerJohn Kim - Managing Director - US Real EstateBrendan Lynch - Director Conference Call Participants Craig Mailman - Managing Director & Equity Research Analys ...

Group 1 - Stag Industrial (STAG) reported quarterly funds from operations (FFO) of $0.61 per share, exceeding the Zacks Consensus Estimate of $0.60 per share, and up from $0.58 per share a year ago, representing an FFO surprise of 1.67% [1] - The company achieved revenues of $199.33 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 3.46%, compared to year-ago revenues of $183.31 million [2] - Stag has consistently outperformed consensus FFO and revenue estimates over the last four quarters [2] Group 2 - The stock has gained approximately 4.1% since the beginning of the year, outperforming the S&P 500's gain of 3.2% [3] - The future performance of Stag's stock will largely depend on management's commentary during the earnings call and the outlook for FFO [4][6] - Current consensus FFO estimate for the upcoming quarter is $0.60 on revenues of $196.33 million, and for the current fiscal year, it is $2.47 on revenues of $806.1 million [7] Group 3 - The Zacks Industry Rank indicates that the REIT and Equity Trust - Other sector is currently in the bottom 33% of over 250 Zacks industries, which may negatively impact stock performance [8] - The estimate revisions trend for Stag is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, suggesting expected underperformance in the near future [6]

Core Insights - Stag Industrial reported strong Q4 2024 results, exceeding earnings and revenue estimates, with a Core FFO per share of $0.61 and revenue of $199.3 million, reflecting an 8.7% year-over-year growth [2][3][6] Financial Performance - Core FFO per share increased by 5.2% from $0.58 in Q4 2023 to $0.61 in Q4 2024 [3][6] - Revenue rose to $199.3 million, surpassing the expected $193 million, and up from $183.3 million in the previous year [2][3][7] - Net income attributable to common stockholders was $50.9 million, a 22.1% increase from $41.7 million in Q4 2023 [3] - Cash NOI for the quarter was reported at $155.5 million, up 8.6% from $143.1 million year-over-year [3] Business Strategy - Stag Industrial focuses on acquiring and managing single-tenant industrial properties across the U.S., aiming for a diversified portfolio to mitigate risks [4] - The company has been expanding its portfolio through acquisitions, enhancing quality and managing risks related to environmental compliance and regulations [5][8] Operational Highlights - The occupancy rate remained high at 96.5%, supported by lease commencements totaling 2.4 million square feet [7] - The company added 15 buildings covering approximately 2.4 million square feet for a total of $293.7 million in acquisitions [8] Liquidity and Financial Management - Stag Industrial reported net proceeds of $167.7 million from its At-The-Market program, concluding the year with $623.1 million in available liquidity [9] - The net debt to annualized run rate adjusted EBITDA was reported at 5.2x, indicating prudent leverage and capital management [9] Future Outlook - Management projects continued growth in Core FFO, supported by strategic acquisitions and a steady leasing environment, with 70.2% of 2025 leasing already addressed [10] - The company anticipates a promising Cash Rent Change of 23.8% [10]

Portfolio and Occupancy - As of December 31, 2024, the company owned 591 buildings across 41 states, totaling approximately 116.6 million rentable square feet, with an occupancy rate of approximately 96.5%[27]. - The Operating Portfolio was approximately 97.3% leased, with a Straight-line Rent Change of approximately 41.8% for new and renewal leases in 2024, compared to 44.0% in 2023[28]. - The company has 11 development projects as of December 31, 2024, which are not included in the building count[27]. - The company has acquired 194 buildings totaling approximately 35.4 million rentable square feet in the past five years[66]. - The company operates a total of 591 buildings with a total rentable square footage of 116,627,125 square feet[148]. - The top 20 markets account for 58.4% of total annualized base rental revenue, with Chicago, IL being the largest at 7.8%[152]. - The largest market in terms of rentable square footage is El Paso, TX, with 2,417,131 square feet across 12 buildings[147]. - The company has a significant presence in Florida, owning 5 buildings in Jacksonville with a total rentable square footage of 1,256,750[142]. - The company has properties in California, including 8 buildings in Sacramento totaling 976,557 square feet[142]. - The company has a diverse portfolio with significant exposure to various industries, including Containers & Packaging and Automobile Components[153]. Financial Performance and Revenue - Cash Rent Change for new and renewal leases grew approximately 28.3% in 2024, down from 31.0% in 2023[28]. - 22.7% of total annualized base rental revenue leases are set to expire before December 31, 2026[70]. - The total annualized base rental revenue from the top 20 tenant industries is 82.2%[153]. - The weighted average lease term was approximately 4.3 years as of December 31, 2024, with a total of 767 leases expiring over the next decade[157][158]. - Annualized base rental revenue from American Tire Distributors, Inc. is approximately $6.1 million, representing about 1% of total annualized base rental revenue[182]. - For the year ended December 31, 2024, new leases totaled 2,861,955 square feet with a cash rent per square foot of $5.63, reflecting a 22.6% increase[187]. - Renewal leases amounted to 10,675,681 square feet with a cash rent per square foot of $6.23, showing a 29.8% increase[187]. - The total weighted average rent for all leases was $6.10 per square foot, with an overall rent change of 28.3%[187]. - Approximately 5.8% of total annualized base rental revenue is expected to expire between January 1, 2025, and December 31, 2025, with anticipated rental rates for new leases expected to exceed existing rates[191]. Risk Factors - Inflation and rising interest rates may adversely affect financing costs and general expenses, impacting cash flows[60]. - The company faces significant competition for tenants, which may negatively impact occupancy and rental rates[71]. - Economic downturns in the industrial real estate sector could adversely affect the company's investments[64]. - Tenant defaults could significantly impact rental revenue, with potential complete cash flow reduction from single-tenant properties[72]. - Bankruptcy of tenants may lead to diminished income, with claims for unpaid rent likely being substantially less than owed[73]. - Future public health crises could adversely affect business operations, financial condition, and cash flows[74]. - Economic challenges such as inflation and labor shortages may hinder tenants' ability to make timely rent payments[75]. - The company may face risks from uninsured losses, including those from floods and acts of terrorism, which could significantly impact asset value[99]. - The company is exposed to climate change-related risks, which could increase operational costs and affect property demand[104]. - The company may face challenges in selling properties due to uncertain market conditions, affecting potential cash distributions[107]. Corporate Governance and Responsibility - The company maintains a corporate responsibility program that incorporates environmental, social, and governance (ESG) initiatives into its overall business strategy[46]. - The company is committed to competitive employee compensation and benefits, including fully paid health and wellness benefits[50]. - The company actively engages in community development through partnerships with local charitable organizations[50]. - The company is structured as an umbrella partnership REIT (UPREIT), allowing for tax-deferred property acquisitions[52]. Debt and Financing - As of December 31, 2024, the company had total outstanding debt of approximately $3.0 billion, including $409.0 million of variable interest rate debt[112]. - The company faces risks associated with rising interest rates, which could increase debt payments and adversely affect cash flows and distributions to stockholders[112]. - Existing mortgage notes and unsecured loan agreements impose financial covenants that could limit the company's flexibility and ability to make distributions[113]. - The company's ability to pay dividends and meet debt obligations relies heavily on distributions from its Operating Partnership, which are subject to various loan terms[114]. - If debt is unavailable at reasonable rates, the company may struggle to finance acquisitions or refinance existing debt, potentially leading to unfavorable financial outcomes[115]. - Adverse changes in credit ratings could increase borrowing costs and hinder access to additional financing, impacting future growth and acquisition activities[118]. - The company may face significant tax liabilities if it fails to maintain its REIT status, which could reduce net earnings available for distribution[119]. - Compliance with REIT distribution requirements may hinder the company's ability to reinvest cash in its business, potentially affecting long-term growth[122]. Cybersecurity - The company is exposed to risks associated with cyber-attacks and IT system failures, which could disrupt operations and lead to financial misstatements[126]. - The company has implemented a comprehensive cybersecurity risk management program focusing on identifying, evaluating, and managing cybersecurity risks[132]. - The board of directors receives regular reports on cybersecurity risks and exposures, ensuring oversight of the risk management program[135]. - The company employs technical safeguards such as firewalls and intrusion detection systems, which are regularly evaluated and improved[140]. - Mandatory cybersecurity training is provided to employees to enhance awareness and prevention of potential threats[140]. - The company carries comprehensive cyber liability insurance to cover certain first-party and third-party losses[140]. - As of the report date, there are no known cybersecurity threats that have materially affected the company's business strategy or financial condition[133]. Economic Outlook - The company reported a 3.1% growth in U.S. GDP for the third quarter of 2024, despite concerns about a slowing global economy[177]. - The company anticipates continued growth in e-commerce, which is expected to drive demand for well-located distribution space[179]. - The company anticipates increased domestic warehouse demand due to higher inventory-to-sales ratios and supply chain resilience efforts[188]. - The company has experienced a slowdown in acquisition activity since 2022 due to macroeconomic uncertainties[177].

Financial Performance - Reported net income attributable to common stockholders for Q4 2024 was $50.9 million, a 22.1% increase from $41.7 million in Q4 2023[5] - Achieved Core FFO per diluted share of $0.61 for Q4 2024, up 5.2% from $0.58 in Q4 2023, and $2.40 for the full year 2024, a 4.8% increase from $2.29 in 2023[5] - Produced Cash NOI of $155.5 million for Q4 2024, an 8.6% increase compared to $143.1 million in Q4 2023, and $597.8 million for the full year 2024, an 8.5% increase from $550.9 million in 2023[5] - In Q4 2024, the Company reported total revenue of $199.3 million, an increase of 8.3% from $183.3 million in Q4 2023[30] - Rental income for Q4 2024 was $198.7 million, up 8.8% from $182.6 million in Q4 2023[30] - Net income for Q4 2024 was $52,008,000, an increase of 22% compared to $42,628,000 in Q4 2023[33] - Cash net operating income (NOI) for Q4 2024 reached $155,470,000, up from $143,131,000 in Q4 2023, representing an increase of 8.5%[33] - Funds from operations (FFO) for the year ended December 31, 2024, totaled $458,741,000, a 8.9% increase from $421,317,000 in 2023[36] - Core funds from operations for Q4 2024 were $113,515,000, compared to $108,538,000 in Q4 2023, reflecting a growth of 4.5%[36] - Adjusted EBITDAre for the year ended December 31, 2024, was $557,350,000, an increase of 8.8% from $511,893,000 in 2023[36] - Same Store Cash NOI for the year ended December 31, 2024, was $550,246,000, up from $520,315,000 in 2023, indicating a growth of 5.8%[33] - Total NOI for Q4 2024 was $159,061,000, compared to $146,696,000 in Q4 2023, marking an increase of 8.4%[33] - Cash available for distribution for the year ended December 31, 2024, was $369,814,000, compared to $361,278,000 in 2023, showing a slight increase of 2.0%[36] Asset and Liability Management - As of December 31, 2024, total assets increased to $6.83 billion from $6.28 billion as of December 31, 2023, reflecting a growth of 8.8%[28] - Total liabilities rose to $3.30 billion as of December 31, 2024, compared to $2.84 billion a year earlier, marking an increase of 16.2%[28] - The Company's net debt to annualized run rate adjusted EBITDAre was 5.2x as of December 31, 2024[23] - The Company had liquidity of $623.1 million as of December 31, 2024[23] Leasing and Occupancy - Achieved an occupancy rate of 96.5% across the total portfolio as of December 31, 2024[2] - Commenced Operating Portfolio leases of 2.4 million square feet in Q4 2024, resulting in a Cash Rent Change of 19.4%[16] - Addressed 70.2% of expected 2025 new and renewal leasing, consisting of 9.7 million square feet, achieving a Cash Rent Change of 23.8%[20] - Produced Same Store Cash NOI of $139.2 million for Q4 2024, a 4.4% increase from $133.4 million in Q4 2023[5] Acquisitions and Dispositions - Acquired 15 buildings totaling 2.4 million square feet for $293.7 million in Q4 2024, with a Cash Capitalization Rate of 6.2%[7] - Sold two buildings in Q4 2024 for $29.4 million, totaling 366,599 square feet[15] Financial Reporting and Future Outlook - The Company plans to host a conference call on February 13, 2025, to discuss the quarter's results[24] - A supplemental information package with additional financial details is available on the Company's website[25] - The company reported a loss on impairment of $4,967,000 for the year ended December 31, 2024[33] - Forward-looking statements indicate that actual results may differ due to various risks and uncertainties, emphasizing the importance of cautious interpretation of future projections[68] Definitions and Metrics - The company defines Funds from Operations (FFO) in accordance with NAREIT standards, which excludes gains or losses from sales of depreciable operating property and impairment write-downs[48] - Core FFO excludes amortization of above and below market leases, debt extinguishment expenses, and non-recurring other expenses, providing a clearer view of operational performance[49] - Net operating income (NOI) is defined as rental income minus property expenses, excluding depreciation and amortization, which helps assess the core operations of the properties[53] - Cash NOI is calculated by adjusting NOI for straight-line rent adjustments and amortization of above and below market leases, providing a more accurate measure of cash flow[54] - Run Rate Cash NOI includes adjustments for a full period of acquisitions and dispositions, but does not predict future results, highlighting the variability in performance[55] - The company emphasizes that occupancy rate is a key metric, defined as the percentage of total leasable square footage for which revenue recognition has commenced[57] - The Operating Portfolio includes all stabilized buildings, excluding non-core properties and those held for sale, which is crucial for understanding the company's asset base[58] - The Pipeline includes transactions under consideration that have passed initial screening, indicating potential future growth opportunities[59] - Renewal Leases are defined as leases signed by existing tenants to extend terms for 12 months or more, reflecting tenant retention strategies[60]

Core Insights - The company reported strong financial and operational results for Q4 and the full year 2024, highlighting increased acquisition activity and operational efficiency [2][4][7] Financial Performance - Net income attributable to common stockholders for Q4 2024 was $50.9 million, a 22.1% increase from $41.7 million in Q4 2023 [4][7] - Basic and diluted net income per share for Q4 2024 was $0.28, up 21.7% from $0.23 in Q4 2023 [4][7] - Cash NOI for Q4 2024 was $155.5 million, an 8.6% increase from $143.1 million in Q4 2023 [4][7] - Same Store Cash NOI for Q4 2024 was $139.2 million, a 4.4% increase from $133.4 million in Q4 2023 [4][7] - Adjusted EBITDAre for Q4 2024 was $145.2 million, a 9.0% increase from $133.2 million in Q4 2023 [4][7] - Core FFO for Q4 2024 was $113.5 million, a 4.6% increase from $108.5 million in Q4 2023 [4][7] Acquisition and Disposition Activity - The company acquired 15 buildings for $293.7 million in Q4 2024, with a total square footage of 2.4 million and an occupancy rate of 100% upon acquisition [6][9] - The total acquisition activity for 2024 amounted to 32 buildings and 5.95 million square feet for $682.4 million [9] - The company sold two buildings in Q4 2024 for $29.4 million, totaling 366,599 square feet [10] Leasing Activity - The company commenced leases totaling 2.4 million square feet in Q4 2024, with a Cash Rent Change of 19.4% and a Straight-Line Rent Change of 34.9% [11][12] - For the full year 2024, new leases totaled 2.86 million square feet, with a Cash Rent Change of 22.6% [12] Capital Markets Activity - The company paid off a $50 million fixed-rate senior unsecured note at maturity on October 1, 2024 [14][15] - As of December 31, 2024, the company's Net Debt to Annualized Run Rate Adjusted EBITDAre was 5.2x, with liquidity of $623.1 million [15] Balance Sheet Highlights - Total assets as of December 31, 2024, were $6.83 billion, compared to $6.28 billion as of December 31, 2023 [18] - Total liabilities increased to $3.30 billion from $2.84 billion year-over-year [18]

Core Viewpoint - The article emphasizes the importance of distinguishing valuable information from noise in investment analysis [1]. Group 1 - The phrase "separating the wheat from the chaff" is highlighted as a crucial skill in life and investment [1].