STAG Industrial(US:STAG)2024-07-31 17:42Financial Data and Key Metrics Changes - Core FFO per share increased by 8.9% year-over-year to $0.61 for the quarter [9] - Cash available for distribution totaled $95.1 million, with approximately $55.8 million retained after dividends [9] - Same-store cash NOI growth was 6.1% for the quarter and 6.5% year-to-date [10] - Leverage remains low with net debt to annualized run rate adjusted EBITDA at 4x to 5x [9] Business Line Data and Key Metrics Changes - Acquisition volume for Q2 totaled $225.6 million, consisting of 10 buildings with cash and straight-line cap rates of 6.7% and 7% respectively [6] - Dispositions included seven buildings sold for aggregate proceeds of $78.2 million, primarily non-core assets [7] - 26 leases commenced totaling 3.5 million square feet, generating cash and straight-line leasing spreads of 36.8% and 51.8% respectively [10] Market Data and Key Metrics Changes - Market rent growth is expected to be between 4% and 5% for the year [4] - The construction pipeline continues to shrink, with a notable decrease in availability and vacancy rates [4] - Demand remains subdued but is improving, with absorption accelerating in Q2 [4] Company Strategy and Development Direction - The company is focused on quality acquisition opportunities that are accretive and provide prospects for future growth [6] - Nearshoring and onshoring trends are expected to drive future industrial demand, with a successful lease signed with a foreign-based company [5] - The company aims to maintain pricing discipline on acquisitions while exploring new development projects [6][8] Management's Comments on Operating Environment and Future Outlook - Management remains cautiously optimistic about the transaction market, anticipating an increase in deal flow if macro conditions improve [20] - The company has updated its guidance for same-store portfolio occupancy loss to 25 basis points, down from 50 basis points [11] - Management noted that credit loss guidance remains at 50 basis points, with approximately $1 million of credit loss incurred year-to-date [32] Other Important Information - The company closed on a permanent vacant land parcel for $8.2 million in Portland, Oregon, for a build-to-suit project [8] - The company has retained approximately $100 million of cash after dividends paid, positioning itself well for future investments [31] Q&A Session Summary Question: Guidance and Performance - Inquiry about the reasons for maintaining guidance despite better performance in acquisitions and same-store growth [14] - Management explained that while same-store guidance was increased, acquisition and disposition activities influenced overall corporate guidance [15] Question: Investment Market Health - Questions regarding the health of the investment markets and seller behavior [20] - Management indicated that seller expectations are aligning with buyers, and a healthy pipeline exists for transactions [20] Question: Future Rent Spread Trends - Inquiry about potential future rent spread trends compared to current guidance [51] - Management stated that visibility into 2025 rent trends will improve as the year progresses [52] Question: Credit Loss and Tenant Issues - Questions about credit loss assumptions and potential tenant issues for the back half of the year [32] - Management confirmed that credit loss guidance remains unchanged and is in line with historical averages [32] Question: Development Pipeline and Leasing Expectations - Inquiry about leasing expectations for the development pipeline [28] - Management noted that while there has been significant activity, no leases have been signed yet [28] Question: Trends Across Tenant Industries - Questions regarding trends across different tenant industries [46] - Management reported healthy demand across various sectors without significant pullbacks in any specific industry [46]