STAG Industrial(STAG)2025-02-12 21:12Portfolio 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 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 6.10 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 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].