STAG Industrial(US:STAG)2021-02-11 19:25Financial Data and Key Metrics Changes - Core FFO was $0.49 for Q4 2020 and $1.89 for the year, an increase of 2.7% compared to 2019, aligning with pre-COVID guidance [24] - The company collected 99.6% of rental billings for 2020 and 97.3% for January 2021, consistent with 2020 performance [28][19] - Retention rates were 63.9% for the quarter and 78.4% for the year, exceeding the original pre-COVID guidance of 75% [27] Business Line Data and Key Metrics Changes - Acquisition volume for Q4 totaled $579.9 million, with full-year acquisition volume reaching $775.8 million [25] - Disposition volume for Q4 was $155.5 million, with full-year dispositions totaling $279.4 million at a cap rate of 5.4% [26] - Cash same-store NOI grew 1.7% during 2020, at the high end of the revised guidance range [27] Market Data and Key Metrics Changes - The company noted that e-commerce continues to drive strong tenant demand, with a shift in supply and demand dynamics in the industrial real estate sector [13] - The company observed that excess supply is concentrated in larger markets, which is not expected to significantly dampen rent growth prospects [14] Company Strategy and Development Direction - The company plans to continue its acquisition strategy with guidance of $800 million to $1.2 billion for 2021, supported by a $2.1 billion acquisition pipeline [17] - The company emphasized the importance of market-specific evaluations in its underwriting process to identify opportunities [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2021, citing strong tenant demand and a resilient portfolio despite the challenges faced in 2020 [12][38] - The company acknowledged the ongoing uncertainty in the economy but indicated a return to more normal conditions reflected in their guidance [35] Other Important Information - The company completed a forward equity offering in Q4, resulting in net proceeds of $276.2 million, which were used to fund acquisitions [29] - The company refinanced a $300 million term loan, extending its maturity to February 2026 and reducing the credit spread [31] Q&A Session Summary Question: Can you discuss the mix of acquisitions in the quarter and the competitiveness of those markets? - Management confirmed that the fourth quarter included a mix of assets, with successful entries into previously unvisited markets like South Florida, which contributed to slightly lower acquisition cap rates [41][42] Question: What are your funding sources and potential need for equity? - Management highlighted their ability to access various capital sources and indicated a return to a more normalized leverage range in 2021 [50][52] Question: How is tenant demand trending between larger and smaller tenants? - Management noted strong demand for larger tenants, particularly driven by e-commerce, while smaller suite sizes also maintained demand [53][54] Question: Are you expecting further cap rate compression this year? - Management indicated that cap rates have compressed in larger markets, but they focus on cash flow rather than just cap rates [59][60] Question: Can you elaborate on your exposure to Amazon and tenant diversification? - Management expressed comfort with their exposure to Amazon, which increased to 3.8%, and emphasized their focus on diversification across various tenants [69][71] Question: What is the outlook for shorter-term leases and reverse logistics? - Management acknowledged an increase in short-term leasing inquiries and noted that reverse logistics demand continues to grow due to the pandemic's impact on online shopping [85][86] Question: How do you expect G&A expenses to trend moving forward? - Management indicated that G&A expenses are expected to grow due to investments in the platform, but they aim to drive the G&A number down as a percentage of NOI [106][109]