STAG Industrial(US:STAG)2025-10-29 20:08Economic Overview - In Q2 2025, U.S. real GDP growth increased by 3.8% after a decline of 0.5% in Q1 2025[153]. - Unemployment rose to 4.3% as of August 2025, up from 4.1% at the end of June 2025[153]. - The Federal Open Market Committee lowered the federal funds rate range by 25 basis points to 4.00-4.25% in September 2025[153]. Company Performance - Total net income for the total portfolio increased by approximately $6.9 million, or 16.2%, to approximately $49.6 million for the three months ended September 30, 2025 compared to approximately $42.7 million for the same period in 2024[186]. - Same store rental income increased by approximately $7.9 million, or 4.5%, to approximately $186.3 million for the three months ended September 30, 2025 compared to approximately $178.4 million for the same period in 2024[188]. - Same store lease income increased by approximately $7.0 million, or 4.8%, to approximately $152.4 million for the three months ended September 30, 2025 compared to approximately $145.4 million for the same period in 2024[189]. - Net income for the three months ended September 30, 2025, was $49,649,000, compared to $42,731,000 for the same period in 2024, representing a year-over-year increase of 16.5%[228]. - Net income for the total portfolio increased by $52.8 million, or 37.4%, to $194.1 million for the nine months ended September 30, 2025, compared to $141.3 million for the same period in 2024[205]. - Same store rental income increased by approximately $20.7 million, or 3.9%, to approximately $556.0 million for the nine months ended September 30, 2025, compared to approximately $535.2 million for the same period in 2024[207]. - Same store lease income rose by approximately $19.3 million, or 4.4%, to approximately $453.2 million for the nine months ended September 30, 2025, driven by an increase in rental income from new leases and renewals[208]. Rental and Leasing Activity - New leases totaled 596,845 square feet with a cash basis rent of $6.98 per square foot, reflecting a 35.0% change compared to previous leases[161]. - Renewal leases amounted to 1,557,344 square feet with a cash basis rent of $6.35 per square foot, showing a 24.2% change[161]. - Total weighted average cash rent for the operating portfolio was $6.53 per square foot, with a total of 2,154,189 square feet leased[161]. - Approximately 9.2% of total annualized base rental revenue is expected to expire between October 1, 2025, and September 30, 2026[165]. - Same store occupancy decreased by approximately 1.0% to 96.9% as of September 30, 2025, compared to 97.9% as of September 30, 2024[181]. Property Transactions - The company acquired 1,563,174 square feet across six buildings for a total purchase price of $171.7 million during the nine months ended September 30, 2025[170]. - Three buildings were sold during the nine months ended September 30, 2025, totaling approximately 0.6 million rentable square feet, with net proceeds of approximately $78.3 million[172]. - The company acquired 36 buildings consisting of approximately 7.2 million square feet and sold 13 buildings consisting of approximately 2.2 million square feet after January 1, 2024[195]. - Buildings acquired after January 1, 2024 contributed approximately $13.2 million to NOI for the three months ended September 30, 2025[195]. - Buildings acquired after January 1, 2024 contributed approximately $38.1 million to NOI for the nine months ended September 30, 2025, compared to $7.5 million for the same period in 2024[215]. Financial Metrics - Funds from Operations (FFO) attributable to common stockholders for the nine months ended September 30, 2025, was $360,820,000, up from $341,531,000 in 2024, reflecting a growth of 5.6%[228]. - Net Operating Income (NOI) for the nine months ended September 30, 2025, was $498,039,000, compared to $453,495,000 in 2024, indicating an increase of 9.8%[231]. - Net cash provided by operating activities increased by approximately $3.6 million to $358,921,000 for the nine months ended September 30, 2025, compared to $355,363,000 in 2024, a growth of 1.0%[233]. - Total other expenses increased approximately $2.0 million, or 0.8%, to approximately $264.7 million for the nine months ended September 30, 2025, mainly due to higher depreciation and amortization expenses[219]. - Total other income (expense) decreased approximately $10.3 million, or 20.8%, to approximately $39.3 million for the nine months ended September 30, 2025, primarily due to an increase in gains from the sales of rental property[221]. Debt and Liquidity - Total immediate liquidity as of September 30, 2025, was approximately $904.1 million, consisting of $17.3 million in cash and cash equivalents and $886.8 million available on the unsecured credit facility[240]. - Total indebtedness outstanding as of September 30, 2025, was $3,101,686,000, with a weighted average interest rate of 4.22%[243]. - The company has a net debt to real estate cost basis ratio of 37.9% as of September 30, 2025[258]. - The company has no preferred stock issued or outstanding as of September 30, 2025[261]. - The company has a maximum aggregate offering price of $750 million under its ATM common stock offering program, with $702.229 million available as of September 30, 2025[264]. - The company redeemed $75.0 million of Series G Unsecured Notes at a fixed interest rate of 4.10% on June 13, 2025[253]. - The company issued $350.0 million of Series O Unsecured Notes at a fixed interest rate of 5.50%, maturing on June 25, 2030[254]. - As of September 30, 2025, the company had $1,135.0 million of variable rate debt, with all but the unsecured credit facility fixed through interest rate swaps[277]. - The company entered into four interest rate swaps with an aggregate notional value of $300.0 million, fixing Daily SOFR at 3.09% effective February 5, 2026[273]. - The company is in compliance with all applicable financial covenants as of September 30, 2025[255]. - The company had letters of credit related to development projects totaling approximately $3.2 million as of September 30, 2025[275]. Market Trends - The company anticipates continued demand for industrial space driven by e-commerce growth and onshoring trends[154]. - Vacancy and availability rates are rising but remain near historical standards in many markets[155]. - The supply pipeline for industrial properties remains robust but is concentrated in very large warehouses[155]. - The company’s portfolio is diversified across geographies, tenant industries, and lease terms, which is expected to support competitive rental rates and strong occupancy[156]. - Future economic downturns could impair the ability to renew or re-lease space, affecting rental rates[159]. - The company’s rental income is primarily dependent on occupancy and rental rates from tenants[158]. - The top 20 markets accounted for 59.3% of total annualized base rental revenue, with Chicago, IL being the largest market at 8.1%[174]. - The top 20 tenant industries represented 82.0% of total annualized base rental revenue, with Air Freight & Logistics leading at 10.8%[176]. - The largest tenant, Amazon, accounted for 2.8% of total annualized base rental revenue, with a total of 7 leases[178].