STAG Industrial(STAG) - 2025 Q1 - Quarterly Report

PART I. Financial Information Item 1. Financial Statements (unaudited) This section presents the unaudited consolidated financial statements for STAG Industrial, Inc. for the quarter ended March 31, 2025, including balance sheets, statements of operations, comprehensive income, equity, and cash flows, along with detailed notes explaining the company's organization, accounting policies, rental property, debt, derivatives, equity, noncontrolling interests, equity incentive plan, leases, earnings per share, commitments, and subsequent events Consolidated Balance Sheets | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Total Assets | $6,847,859 | $6,833,335 | | Total Liabilities | $3,304,207 | $3,304,227 | | Total Equity | $3,543,652 | $3,529,108 | - Total assets increased by approximately $14.5 million from December 31, 2024, to March 31, 2025, primarily driven by an increase in rental property, net, and restricted cash[10] Consolidated Statements of Operations | Metric | Three months ended March 31, 2025 (in thousands) | Three months ended March 31, 2024 (in thousands) | Change (YoY) | | :----------------------------------- | :----------------------------------- | :----------------------------------- | :----------- | | Total Revenue | $205,574 | $187,543 | +9.6% | | Total Expenses | $131,456 | $124,013 | +6.0% | | Net Income | $93,362 | $37,453 | +149.3% | | Net Income Attributable to Common Stockholders | $91,340 | $36,580 | +149.7% | | Net Income Per Share — Basic and Diluted | $0.49 | $0.20 | +145.0% | - Net income significantly increased by 149.3% year-over-year, primarily driven by a substantial gain on the sale of rental property and an increase in rental income[12][180] Consolidated Statements of Comprehensive Income | Metric | Three months ended March 31, 2025 (in thousands) | Three months ended March 31, 2024 (in thousands) | | :------------------------------------------ | :----------------------------------- | :----------------------------------- | | Net Income | $93,362 | $37,453 | | Other Comprehensive Income (Loss) | $(10,981) | $7,076 | | Comprehensive Income | $82,381 | $44,529 | | Comprehensive Income Attributable to STAG Industrial, Inc. | $80,648 | $43,547 | - Comprehensive income attributable to STAG Industrial, Inc. increased by 85.2% year-over-year, despite a negative impact from interest rate swaps in 2025 compared to a positive impact in 2024[14] Consolidated Statements of Equity | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------------- | :----------------------------- | :----------------------------- | | Total Stockholders' Equity | $3,466,951 | $3,457,651 | | Noncontrolling Interest in Operating Partnership | $74,302 | $69,932 | | Noncontrolling Interest in Joint Ventures | $2,399 | $1,525 | | Total Equity | $3,543,652 | $3,529,108 | - Total equity increased by approximately $14.5 million from December 31, 2024, to March 31, 2025, primarily due to net income partially offset by dividends and other comprehensive loss[17] Consolidated Statements of Cash Flows | Metric | Three months ended March 31, 2025 (in thousands) | Three months ended March 31, 2024 (in thousands) | Change (YoY) | | :----------------------------------- | :----------------------------------- | :----------------------------------- | :----------- | | Net Cash Provided by Operating Activities | $103,540 | $105,162 | -1.5% | | Net Cash Used in Investing Activities | $(24,926) | $(76,260) | +67.3% (decrease in cash used) | | Net Cash Used in Financing Activities | $(67,954) | $(37,680) | -80.3% (increase in cash used) | | Cash and Cash Equivalents and Restricted Cash—End of Period | $48,053 | $13,090 | +267.1% | - Net cash used in investing activities significantly decreased by $51.3 million year-over-year, primarily due to increased proceeds from the sale of rental property in 2025[20][193] - Net cash used in financing activities increased by $30.3 million, mainly due to the redemption of $100.0 million in unsecured notes in February 2025[20][194] Notes to Consolidated Financial Statements This section provides detailed notes to the unaudited consolidated financial statements, covering the company's business organization, significant accounting policies, specifics on rental property, debt structure, derivative financial instruments, equity, noncontrolling interests, equity incentive plans, lease arrangements, earnings per share calculations, commitments and contingencies, and subsequent events 1. Organization and Description of Business - STAG Industrial, Inc. is an industrial real estate operating company focused on acquisition, development, and operation of industrial properties across the U.S., structured as an UPREIT[22] - As of March 31, 2025, the Company owned 597 industrial buildings in 41 states, totaling approximately 117.6 million rentable square feet[23] - The Company owned 97.9% of the common units in its Operating Partnership as of March 31, 2025[22] 2. Summary of Significant Accounting Policies - Interim financial statements are prepared in conformity with GAAP and Form 10-Q instructions, including normal recurring adjustments, and are not necessarily indicative of full-year results[24] - The Company's consolidated financial statements include the accounts of STAG Industrial, Inc., the Operating Partnership, and their consolidated subsidiaries, eliminating all significant intercompany balances and transactions[25] - The Company manages its operations as a single segment for performance assessment, deriving revenue from rental income, and assesses performance based on net income, FFO, and NOI[29][30][31] 3. Rental Property | Rental Property Component | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------ | :----------------------------- | :----------------------------- | | Land | $776,387 | $771,794 | | Buildings, net | $4,639,358 | $4,634,634 | | Construction in progress | $140,595 | $218,616 | | Total rental property, net | $6,500,605 | $6,495,779 | - During Q1 2025, the Company acquired 3 industrial buildings totaling 393,564 square feet for a purchase price of $43.285 million in Minneapolis, MN, and Chicago, IL[36] - The Company disposed of one building (0.3 million square feet) for net proceeds of $63.834 million, recognizing a net gain of $49.913 million in Q1 2025[40] - A gain on involuntary conversion of approximately $1.9 million was recognized in Q1 2025 due to tornado damage from December 2023[42] 4. Debt | Debt Type | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Weighted Average Interest Rate (March 31, 2025) | | :-------------------------- | :----------------------------- | :----------------------------- | :------------------------------------ | | Unsecured Credit Facility | $512,000 | $409,000 | Term SOFR + 0.875% | | Unsecured Term Loans, net | $1,022,185 | $1,021,848 | 1.80% - 4.83% (fixed via swaps) | | Unsecured Notes, net | $1,494,303 | $1,594,092 | 2.80% - 6.30% | | Mortgage Note, net | $4,142 | $4,195 | 3.71% | | Total Carrying Value | $3,032,630 | $3,029,135 | 4.13% | - The Company redeemed $100.0 million of Series D Unsecured Notes at maturity on February 20, 2025[53] - The Company was in compliance with all financial covenants for its debt arrangements as of March 31, 2025[54] 5. Derivative Financial Instruments - The Company uses interest rate swaps to manage interest rate risk on existing and future liabilities, not for speculative purposes, converting variable rates to effectively fixed rates[58][59] | Derivative Type | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------- | :----------------------------- | :----------------------------- | | Interest rate swaps-gross asset | $26,261 | $36,466 | | Interest rate swaps-gross liability | $(783) | $0 | - Approximately $17.3 million is estimated to be reclassified from accumulated other comprehensive income as a decrease to interest expense over the next 12 months due to cash flow hedges[62] 6. Equity - The Company has 300,000,000 shares of common stock authorized, with 186,612,226 shares issued and outstanding as of March 31, 2025[10][73] - A new $750 million At-The-Market (ATM) common stock offering program was established on February 13, 2025, with $749.821 million available as of March 31, 2025[74] - During Q1 2025, 52,352 restricted shares of common stock were granted, and 51,100 vested, with an unrecognized compensation expense of approximately $3.4 million remaining[78][79] 7. Noncontrolling Interest | Noncontrolling Interest Type | December 31, 2024 | March 31, 2025 | | :-------------------------------- | :---------------- | :--------------- | | LTIP Units | 2,307,662 | 2,534,636 | | Other Common Units | 1,464,718 | 1,464,718 | | Total Noncontrolling Common Units | 3,772,380 | 3,999,354 | | Percentage of Operating Partnership | 2.0% | 2.1% | - The Company granted 280,334 LTIP units in Q1 2025 to non-employee directors and certain executive officers/senior employees, with an unrecognized compensation expense of approximately $8.1 million[84][88] - As of March 31, 2025, the Company held 90.0% and 95.3% interests in joint ventures in Concord, NC, and Reno, NV, respectively, with third-party equity totaling approximately $2.4 million[89] 8. Equity Incentive Plan - Performance units were granted on January 7, 2025, under the 2011 Plan to executive officers and key employees, with a measuring period from January 1, 2025, to December 31, 2027[90] - The fair value of performance units granted in Q1 2025 was $6.858 million, determined by a lattice-binomial option-pricing model based on a Monte Carlo simulation[91][92] - Unrecognized compensation expense for performance units was approximately $11.4 million as of March 31, 2025, to be recognized over approximately 2.2 years[94] | Non-Cash Compensation Expense (in thousands) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Restricted shares of common stock | $394 | $475 | | LTIP units | $1,108 | $899 | | Performance units | $1,482 | $1,357 | | Director compensation | $198 | $177 | | Total non-cash compensation expense | $3,182 | $2,908 | 9. Leases | Rental Income Component (in thousands) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :------------------------------------- | :-------------------------------- | :-------------------------------- | | Fixed lease payments | $156,782 | $142,111 | | Variable lease payments | $43,759 | $42,189 | | Straight-line rental income | $4,243 | $2,805 | | Net increase to rental income related to above and below market lease amortization | $578 | $297 | | Total rental income | $205,362 | $187,402 | - The weighted average remaining lease term for operating leases (lessee) is 35.1 years as of March 31, 2025, with a weighted average discount rate of 6.9%[103] | Operating Lease Cost (in thousands) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :---------------------------------- | :-------------------------------- | :-------------------------------- | | Operating lease cost (property expense) | $697 | $616 | | Operating lease cost (G&A expense) | $430 | $430 | | Total operating lease cost | $1,127 | $1,046 | 10. Earnings Per Share | Metric (in thousands, except per share data) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net income attributable to common stockholders | $91,340 | $36,580 | | Weighted average common shares outstanding — basic | 186,468 | 181,708 | | Weighted average common shares outstanding — diluted | 186,758 | 181,991 | | Net income per share — basic and diluted | $0.49 | $0.20 | - Basic and diluted EPS increased by $0.29 (145%) year-over-year, reflecting higher net income attributable to common stockholders[109] 11. Commitments and Contingencies - The Company is involved in various legal proceedings in the ordinary course of business, but management believes their ultimate settlement will not materially adversely affect financial position, results of operations, or cash flows[110] - As of March 31, 2025, the Company had approximately $4.2 million in letters of credit related to construction projects and other agreements[111] 12. Subsequent Events - On April 15, 2025, the Company entered into a note purchase agreement for a future private placement of $550.0 million in senior unsecured notes, expected to be issued around June 25, 2025[113] | Note Series | Principal Amount (in millions) | Maturity Date | Fixed Annual Interest Rate | | :---------- | :----------------------------- | :------------ | :------------------------- | | Series O | $350.0 | June 25, 2030 | 5.50% | | Series P | $100.0 | June 25, 2033 | 5.82% | | Series Q | $100.0 | June 25, 2035 | 5.99% | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations for the three months ended March 31, 2025, compared to the same period in 2024. It covers forward-looking statements, key definitions, an overview of the business, factors influencing future results, market outlook, rental income, property expenses, lease expirations, portfolio activity (acquisitions/dispositions), market and tenant concentrations, critical accounting policies, detailed results of operations (including same-store NOI), non-GAAP financial measures (FFO and NOI), cash flows, and liquidity and capital resources Forward-Looking Statements - The report contains forward-looking statements regarding future financial condition, operations, acquisition strategy, occupancy, leasing rates, and liquidity, which are subject to various risks and uncertainties[117] - Key risks include global/national recessions, economic conditions, ability to raise equity, competitive environment, real estate value fluctuations, interest rates, tenant defaults, acquisition timing, technological developments, natural disasters, geopolitical events, changes in laws/regulations, and financing risks[117] Certain Definitions - Key definitions include 'Cash Rent Change' (percentage change in base rent of new/renewal leases vs. comparable leases), 'Occupancy rate' (percentage of total leasable square footage with commenced revenue recognition or lease term), and 'Operating Portfolio' (stabilized buildings, excluding non-core flex/office, Value Add, and held for sale)[119][122] - 'Straight-line Rent Change' measures the percentage change in average monthly base rent over the lease term compared to the Comparable Lease[124] - 'Value Add Portfolio' refers to properties that are less than 75% occupied, undergoing significant renovation, or under development[128] Overview - STAG Industrial, Inc. is a REIT focused on acquiring, owning, developing, and operating industrial properties across the U.S., publicly traded on the NYSE under 'STAG'[130] - The company's platform identifies properties offering relative value, provides growth through sophisticated industrial operations, and capitalizes its business appropriately[130] - The company operates to maintain its REIT qualification, generally avoiding federal income tax by distributing income to stockholders[130] Factors That May Influence Future Results of Operations - Future revenue and cash flow growth depend on external growth (acquisition activity) and internal growth (occupancy and rental rates)[131] Outlook - The industrial real estate business is influenced by macro-economic trends like interest rates, inflation, trade policies, and geopolitical tensions, leading to financial market volatility and concerns about a slowing global economy[132] - Despite volatility, the company expects to benefit from its diversified portfolio, competitive rental rates, strong occupancy, minimal floating rate debt exposure (hedged), strong banking relationships, and access to capital[133] - Long-term demand for U.S. industrial real estate is expected to accelerate due to e-commerce growth, increasing attractiveness of the U.S. as a manufacturing/distribution location, and improved transportation infrastructure[134][143] Conditions in Our Markets - The portfolio maintains strong occupancy and geographic diversity, though industrial market demand is moderating, and vacancy rates are rising but remain near historical standards[135] - American Tire Distributors, Inc. (ATD), a tenant accounting for ~1% of total annualized base rental revenue, filed for Chapter 11 reorganization but is current on rent; the company does not expect a material adverse effect[136] Rental Income - Rental income is primarily driven by occupancy and rental rates, which are influenced by the overall economy, supply/demand dynamics, property quality, and tenant's ability to meet obligations[138][139] | Operating Portfolio Leases Commenced (Q1 2025) | Square Feet | Cash Rent Change | SL Rent Change | Weighted Average Lease Term (years) | | :--------------------------------------------- | :---------- | :--------------- | :------------- | :---------------------------------- | | New Leases | 279,055 | 34.0% | 47.0% | 4.3 | | Renewal Leases | 4,683,573 | 27.0% | 41.9% | 4.5 | | Total/Weighted Average | 4,962,628 | 27.3% | 42.1% | 4.5 | Property Operating Expenses - Property operating expenses include utilities, real estate taxes, management fees, insurance, and maintenance. For most tenants, these are controlled by triple net lease provisions, where tenants are responsible for most costs[145] - The company's overall performance is affected by its ability to pass through property operating expenses to tenants, as some modified gross and gross leases, or leases with expense caps, may require the company to absorb certain expenses[145] Scheduled Lease Expirations - Approximately 9.4% of total annualized base rental revenue is subject to leases expiring between April 1, 2025, and March 31, 2026 (excluding month-to-month leases)[146] - The company expects rental rates on new leases for expiring space to be higher than existing rates, leading to increased revenue[146] | Lease Expiration Year | Total Rentable Square Feet | Percentage of Total Occupied Square Feet | Total Annualized Base Rental Revenue (in thousands) | | :-------------------- | :------------------------- | :--------------------------------------- | :------------------------------------------------ | | Remainder of 2025 | 4,615,168 | 4.1% | $26,162 | | 2026 | 18,976,908 | 16.8% | $107,431 | | 2027 | 18,118,549 | 16.1% | $101,202 | | Thereafter | 48,860,750 | 43.3% | $267,832 | | Total | 117,625,561 | 100.0% | $645,170 | Portfolio Acquisitions | Market | Date Acquired | Square Feet | Number of Buildings | Purchase Price (in thousands) | | :------------- | :------------ | :---------- | :------------------ | :---------------------------- | | Minneapolis, MN | Jan 9, 2025 | 161,600 | 1 | $16,537 | | Chicago, IL | Feb 27, 2025 | 231,964 | 2 | $26,748 | | Total (Q1 2025) | | 393,564 | 3 | $43,285 | Portfolio Disposition - During Q1 2025, the company sold one building (0.3 million rentable square feet) for net proceeds of approximately $63.8 million, recognizing a gain of $49.9 million[151] Top Markets | Top 20 Markets | % of Total Annualized Base Rental Revenue | | :--------------- | :---------------------------------------- | | Chicago, IL | 8.1% | | Greenville, SC | 5.2% | | Minneapolis, MN | 4.3% | | Pittsburgh, PA | 4.0% | | Columbus, OH | 3.8% | | Detroit, MI | 3.6% | | Philadelphia, PA | 3.1% | | South Central, PA | 3.1% | | Boston, MA | 2.5% | | El Paso, TX | 2.4% | | Milwaukee, WI | 2.3% | | Kansas City, MO | 2.1% | | Charlotte, NC | 2.1% | | Houston, TX | 2.0% | | Sacramento, CA | 2.0% | | Indianapolis, IN | 1.9% | | Cincinnati, OH | 1.8% | | Cleveland, OH | 1.7% | | Columbia, SC | 1.4% | | Grand Rapids, MI | 1.4% | | Total | 58.8% | Top Industries | Top 20 Tenant Industries | % of Total Annualized Base Rental Revenue | | :------------------------------------ | :---------------------------------------- | | Air Freight & Logistics | 11.0% | | Containers & Packaging | 7.6% | | Machinery | 6.4% | | Automobile Components | 6.2% | | Commercial Services & Supplies | 5.6% | | Trading Companies & Distribution (Industrial Goods) | 5.4% | | Distributors (Consumer Goods) | 4.6% | | Building Products | 4.5% | | Broadline Retail | 3.7% | | Consumer Staples Distribution | 3.7% | | Household Durables | 3.3% | | Specialty Retail | 3.0% | | Media | 2.9% | | Beverages | 2.4% | | Food Products | 2.4% | | Electrical Equipment | 2.1% | | Electronic Equip, Instruments | 2.0% | | Chemicals | 1.9% | | Ground Transportation | 1.9% | | Automobiles | 1.5% | | Total | 82.1% | Top Tenants | Top 20 Tenants | Number of Leases | % of Total Annualized Base Rental Revenue | | :-------------------------------- | :--------------- | :---------------------------------------- | | Amazon | 7 | 2.9% | | American Tire Distributors, Inc. | 7 | 1.0% | | Schneider Electric USA, Inc. | 3 | 0.9% | | Soho Studio, LLC | 1 | 0.9% | | International Paper Company | 4 | 0.9% | | CHEP USA | 6 | 0.7% | | Tempur Sealy International, Inc. | 2 | 0.7% | | The Coca-Cola Company | 3 | 0.7% | | Iron Mountain Information Management | 6 | 0.7% | | Hachette Book Group, Inc. | 1 | 0.7% | | Kenco Logistic Services, LLC | 3 | 0.7% | | Penguin Random House, LLC | 1 | 0.7% | | FedEx Corporation | 4 | 0.7% | | Penske Truck Leasing Co. LP | 3 | 0.6% | | WestRock Company | 6 | 0.6% | | Lippert Component Manufacturing | 4 | 0.6% | | DHL Supply Chain | 4 | 0.6% | | GXO Logistics, Inc. | 2 | 0.6% | | Carolina Beverage Group | 3 | 0.6% | | AFL Telecommunications LLC | 2 | 0.6% | | Total | 72 | 16.4% | Critical Accounting Policies - The company refers to its Annual Report on Form 10-K for the year ended December 31, 2024, for a discussion of its critical accounting policies and estimates[158] Results of Operations - Net income for the total portfolio increased by $55.9 million (149.3%) to $93.4 million for Q1 2025 compared to Q1 2024[165] - Same store total operating revenue increased by $6.3 million (3.5%) to $187.0 million, driven by a $5.7 million increase in lease income due to new leases and renewals[167][168] - Same store operating expenses increased by $1.8 million (4.9%) to $39.5 million, primarily due to increases in real estate tax, other expenses, and snow removal[172] - Total other income (expense) increased by $45.3 million (173.8%) to $19.2 million in Q1 2025, mainly due to a $49.9 million gain on property sales and a $1.9 million gain on involuntary conversion[180] Non-GAAP Financial Measures - Funds From Operations (FFO) and Net Operating Income (NOI) are non-GAAP financial measures used by management and investors to understand core operations and compare performance among REITs[181][184][188] | Metric (in thousands) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | FFO attributable to common stockholders and unit holders | $117,096 | $108,675 | | Net Operating Income (NOI) | $161,896 | $148,472 | - FFO increased by $8.4 million (7.7%) year-over-year, while NOI increased by $13.4 million (9.0%) year-over-year[187][190] Cash Flows | Cash Flow Activity (in thousands) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | Change (YoY) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Net cash provided by operating activities | $103,540 | $105,162 | $(1,622) (-1.5%) | | Net cash used in Investing Activities | $(24,926) | $(76,260) | $51,334 (+67.3% (decrease in cash used)) | | Net cash used in Financing Activities | $(67,954) | $(37,680) | $(30,274) (-80.3% (increase in cash used)) | - The decrease in net cash from operating activities was due to fluctuations in working capital[192] - The significant decrease in cash used in investing activities was primarily due to higher proceeds from property sales ($63.8 million) in Q1 2025[193] - The increase in cash used in financing activities was mainly driven by the redemption of $100.0 million in unsecured notes[194] Liquidity and Capital Resources - The company's liquidity needs are met through operating cash flows, disposition proceeds, and financing activities, with capital markets being the primary source for acquisition funding[195][197] - As of March 31, 2025, immediate liquidity totaled approximately $493.1 million, comprising $9.3 million in cash and cash equivalents and $483.8 million available on its unsecured credit facility[198] - Short-term liquidity covers operating expenses, debt service, recurring capital expenditures, and REIT distributions, while long-term needs include property acquisitions and debt maturities[196][197] Indebtedness Outstanding | Debt Capital Structure (March 31, 2025) | Value | | :-------------------------------------- | :------------------- | | Total principal outstanding (in thousands) | $3,041,267 | | Weighted average duration (years) | 4.4 | | % Secured debt | 0.1% | | % Debt maturing next 12 months | 12.3% | | Net Debt to Real Estate Cost Basis | 38.1% | - The company redeemed $100.0 million of Series D Unsecured Notes on February 20, 2025[204] - Subsequent to quarter-end, the company entered into an agreement for a $550.0 million private placement of senior unsecured notes with maturities in 2030, 2033, and 2035[205] Equity - The company has 20,000,000 shares of preferred stock authorized but none issued or outstanding as of March 31, 2025[211] - A new $750 million ATM common stock offering program was established on February 13, 2025, with $749.821 million available[215] - During Q1 2025, 4,830 shares were sold on a forward basis under the ATM program, with gross sales of $179 thousand and a weighted average gross sales price of $37.02 per share[217] Noncontrolling Interest - As of March 31, 2025, the company owned approximately 97.9% of the common units in its Operating Partnership, with the remaining 2.1% held by current/former officers, directors, employees, and third parties[218] - The company also holds 90.0% and 95.3% interests in joint ventures in Concord, NC, and Reno, NV, respectively[219] Interest Rate Risk - The company uses interest rate swaps to fix the rate of its variable rate debt, with all outstanding variable rate debt (except the unsecured credit facility) fixed through initial maturity as of March 31, 2025[220][225] - As of March 31, 2025, the company had $1,537.0 million of variable rate debt outstanding, with $512.0 million on its unsecured credit facility not fixed by swaps[225] - A 100 basis point increase in interest rates would increase interest expense by approximately $1.3 million for Q1 2025, assuming the unsecured credit facility balance[228] Off-balance Sheet Arrangements - As of March 31, 2025, the company had approximately $4.2 million in letters of credit related to development projects and other agreements, with no other material off-balance sheet arrangements[226] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section details the company's exposure to market risk, primarily interest rate risk. It explains the use of derivative financial instruments, specifically interest rate swaps, to manage this risk and quantifies the potential impact of interest rate changes on its unhedged variable rate debt - The primary market risk exposure is interest rate risk, managed through interest rate swaps to hedge borrowings[227] - As of March 31, 2025, $1,537.0 million of variable rate debt was outstanding, with all but the $512.0 million unsecured credit facility fixed by interest rate swaps[228] - A 100 basis point increase in interest rates would have increased interest expense by approximately $1.3 million for the three months ended March 31, 2025, on the unhedged unsecured credit facility[228] Item 4. Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes in internal control over financial reporting during the quarter ended March 31, 2025 Evaluation of Disclosure Controls and Procedures - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of March 31, 2025, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[229] Changes in Internal Controls - There were no material changes to internal control over financial reporting during the quarter ended March 31, 2025[230] PART II. Other Information Item 1. Legal Proceedings This section states that the company is not currently a party to any legal proceedings that would individually or in aggregate have a material adverse effect on its business, financial condition, or results of operations - The company is not involved in any legal proceedings expected to have a material adverse effect on its business, financial condition, or results of operations[231] Item 1A. Risk Factors This section highlights an updated risk factor concerning the potential adverse impact of trade policies, tariffs, and related government actions on the company's business, tenants, and development projects - Changes in trade policies, tariffs, and related government actions (e.g., U.S. tariffs on foreign goods, retaliatory tariffs) could increase costs, decrease margins, and adversely affect tenants' revenues and profitability[233] - Such actions or uncertainties could depress economic activity and have a material adverse effect on the company's business, financial condition, and results of operations[233] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the unregistered sales of equity securities, specifically the issuance of common units upon exchange of LTIP units and the subsequent redemption of common units for common stock, and reports on issuer purchases of equity securities related to tax withholdings Recent Sales of Unregistered Equity Securities - During Q1 2025, the Operating Partnership issued 53,360 common units upon exchange of outstanding LTIP units[234] - The company issued 53,360 shares of common stock upon redemption of 53,360 common units in the Operating Partnership, relying on Section 4(a)(2) of the Securities Act for exemption from registration[235] Issuer Purchases of Equity Securities | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :-------------------------------- | :----------------------------- | :--------------------------- | | January 1, 2025 - January 31, 2025 | 19,207 | $33.79 | | February 1, 2025 - February 28, 2025 | — | $— | | March 1, 2025 - March 31, 2025 | — | $— | | Total/weighted average | 19,207 | $33.79 | - Shares purchased reflect those surrendered to the company for tax withholding obligations related to the vesting of common stock issued under the 2011 Plan[237] Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities occurred during the quarter ended March 31, 2025[238] Item 4. Mine Safety Disclosures This section indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to STAG Industrial, Inc[239] Item 5. Other Information This section confirms that no directors or officers adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements during the three months ended March 31, 2025 - No directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025[240] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including the Note Purchase Agreement, certifications from the CEO and CFO, and Inline XBRL documents - Key exhibits include the Note Purchase Agreement (Exhibit 10.1), CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1), and Inline XBRL documents (Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[242] SIGNATURES This section contains the required signatures for the Form 10-Q report, affirming its submission by STAG Industrial, Inc. through its Chief Financial Officer and Chief Accounting Officer - The report is duly signed on behalf of STAG Industrial, Inc. by Matts S. Pinard, Chief Financial Officer, Executive Vice President and Treasurer, and Jaclyn M. Paul, Chief Accounting Officer, on April 29, 2025[248]