STAG Industrial(US:STAG)2022-02-17 19:03Financial Data and Key Metrics Changes - Core FFO for Q4 2021 was $0.51 and $2.06 for the year, representing a 9% increase compared to 2020 [25] - Cash available for distribution totaled $293.8 million in 2021, a year-over-year increase of 20.5% [25] - The dividend payout ratio decreased from 90% in 2020 to 82.4% at year-end 2021 [25][41] - Leverage at year-end remained near the lower end of the range with net debt to run rate adjusted EBITDA equal to 5x [25] Business Line Data and Key Metrics Changes - Acquisition volume for Q4 2021 totaled $689.5 million across 35 buildings with stabilized cash and straight-line cap rates of 5% and 5.2%, respectively [16] - For the year, acquisition volume totaled $1.3 billion with stabilized cash and straight-line cap rates of 5.2% and 5.6%, respectively [16] - Cash same-store NOI grew 3.4% for the quarter and 3.8% for the year, the highest level on record [25][26] Market Data and Key Metrics Changes - Demand exceeded supply in almost all U.S. markets throughout 2021, driving the strongest market rent growth in the company's operating history [13] - The company expects continued strong market rent growth throughout 2022 [13] Company Strategy and Development Direction - The company plans to continue growing its portfolio with expected acquisition volume between $1 billion and $1.2 billion for 2022 [22] - The company is focusing on granular acquisitions across 60-plus markets nationwide, leveraging its ability to evaluate over 1,000 transactions per year [16] - The inaugural environmental, social, and governance (ESG) report was published, indicating a commitment to sustainability [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the industrial fundamentals remaining strong as they enter 2022, with projections for continued healthy demand [13] - The transition of leadership was discussed, with the outgoing CEO expressing confidence in the team's capabilities and the company's future [10][12] Other Important Information - The company completed an equity offering at $42.50 per share, resulting in net proceeds of approximately $386.3 million [28] - The company refinanced its $750 million unsecured revolving credit facility, maturing in October 2025 [29] Q&A Session Summary Question: What kind of premium yield are you thinking about when buying a development? - The specific project will stabilize around a 5 cap with a 33% pro forma development yield, and there are other development projects in the pipeline [37] Question: What is driving the higher disposition guidance for 2022? - A small 2-property portfolio is on the market, and the guidance for dispositions is elevated due to the competitive environment [38] Question: Do you expect the dividend payout ratio to improve further in 2022? - The company aims to continue reducing the payout ratio, which was 82.4% at the end of 2021 [40][41] Question: What is the outlook for lease expirations and occupancy loss in 2022? - There are no large lease expirations expected, and the average lease size is around 200,000 to 250,000 square feet [45] Question: How is the company planning to run the balance sheet and leverage profile? - The company is comfortable with a leverage ratio of 5x and has $500 million of forward equity available [62] Question: What is the breakdown of the acquisition pipeline? - The pipeline consists of approximately 20% multi-tenant and 80% single-tenant properties, with some development transactions included [82]