stag-20201105
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549


FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): November 5, 2020

STAG INDUSTRIAL, INC.
(Exact name of registrant as specified in its charter)
Maryland1-3490727-3099608
(State or Other Jurisdiction(Commission(IRS Employer
of Incorporation)File Number)Identification No.)
One Federal Street, 23rd Floor
Boston, Massachusetts 02110
(Address of principal executive offices, zip code)

Registrant’s telephone number, including area code: (617) 574-4777

Not applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, $0.01 par value per shareSTAGNew York Stock Exchange
6.875% Series C Cumulative Redeemable Preferred Stock ($0.01 par value)STAG-PCNew York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities and Exchange Act of 1934 (§240.12b-2 of this chapter).

                                        Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.





ITEM 2.02.     RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On November 5, 2020, STAG Industrial, Inc. (the “Company”) issued a press release announcing its results of operations for the three and nine months ended September 30, 2020, and its financial condition as of September 30, 2020. A copy of such press release is furnished as Exhibit 99.1 to this report. The press release referred to certain supplemental information that is available in the Investor Relations section of the Company’s website at www.stagindustrial.com.

As previously announced and as further detailed in the press release furnished with this report, the Company will conduct a conference call at 10:00 a.m. eastern time on Friday, November 6, 2020, to discuss its third quarter results of operations and financial condition.

The information in Item 2.02 of this report, including the information in the press release attached as Exhibit 99.1 to this report, is furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. Furthermore, the information in Item 2.02 of this report, including the information in the press release attached as Exhibit 99.1 to this report, shall not be deemed to be incorporated by reference in the filings of the registrant under the Securities Act of 1933, as amended.

ITEM 9.01.     FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits.
Exhibit NumberDescription
99.1
104Cover Page Interactive Data File (embedded within the XBRL document)



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


STAG INDUSTRIAL, INC.
By:/s/ Jeffrey M. Sullivan
Jeffrey M. Sullivan
Executive Vice President, General Counsel
and Secretary
Dated: November 5, 2020




Document

 
STAG INDUSTRIAL ANNOUNCES THIRD QUARTER
2020 RESULTS
 
Boston, MA — November 5, 2020 - STAG Industrial, Inc. (the “Company”) (NYSE:STAG), today announced its financial and operating results for the quarter ended September 30, 2020.

“The strength of the industrial sector continues to be reflected in STAG’s performance,” said Ben Butcher, Chief Executive Officer of the Company. “The execution by our team this quarter produced historic leasing levels and an acceleration in acquisition activity. We are excited with the opportunities at hand as we look into the fourth quarter and 2021.”

Third Quarter 2020 Highlights

Reported $0.15 of net income per basic and diluted common share for the third quarter of 2020, as compared to $0.07 of net income per basic and diluted common share for the third quarter of 2019. Reported $22.4 million of net income attributable to common stockholders for the third quarter of 2020 compared to net income attributable to common stockholders of $9.5 million for the third quarter of 2019.

Achieved $0.46 of Core FFO per diluted share for the third quarter of 2020, equal to the third quarter of 2019 Core FFO per diluted share. Generated Core FFO of $70.7 million for the third quarter of 2020 compared to $60.6 million for the third quarter of 2019, an increase of 16.7%.
 
Produced Cash NOI of $95.2 million for the third quarter of 2020, an increase of 15.4% compared to the third quarter of 2019 of $82.5 million.

Produced Same Store Cash NOI of $73.5 million for the third quarter of 2020, an increase of 0.8% compared to the third quarter of 2019 of $72.9 million.
 
Produced Cash Available for Distribution of $54.8 million for the third quarter of 2020, an increase of 10.1% compared to the third quarter of 2019 of $49.8 million.

Acquired five buildings in the third quarter of 2020, consisting of 629,681 square feet, for $64.7 million, with a Cash Capitalization Rate of 6.3% and a Straight-Line Capitalization Rate of 6.8%.

Sold one building in the third quarter of 2020, consisting of 425,300 square feet for $20.0 million, resulting in a gain of $9.1 million.

Achieved an Occupancy Rate of 96.3% on the total portfolio and 96.9% on the Operating Portfolio as of September 30, 2020.
 
Commenced Operating Portfolio leases of 5.6 million square feet for the third quarter of 2020, resulting in a Cash Rent Change and Straight-line Rent Change of 1.3% and 4.7%, respectively.
 
Experienced 72.1% Retention for 5.6 million square feet of leases expiring in the quarter.

As of November 5, 2020, the Company collected 98.2% of third quarter base rental billings and granted rent deferral equal to 0.60%.

Please refer to the Non-GAAP Financial Measures and Other Definitions section at the end of this release for definitions of capitalized terms used in this release.

1


The Company will host a conference call tomorrow, Friday, November 6, 2020 at 10:00 a.m. (Eastern Time), to discuss the quarter’s results and provide information about acquisitions, operations, capital markets and corporate activities. Details of the call can be found at the end of this release.
Key Financial Measures
 
THIRD QUARTER 2020 KEY FINANCIAL MEASURES
 Three months ended September 30,Nine months ended September 30, 2020
Metrics20202019% Change20202019% Change
(in $000s, except per share data)      
Net income attributable to common stockholders$22,386$9,533134.8 %$102,021$27,734267.9 %
Net income per common share — basic $0.15$0.07114.3 %$0.69$0.23200.0 %
Net income per common share — diluted$0.15$0.07114.3 %$0.69$0.23200.0 %
Cash NOI$95,169$82,47715.4 %$285,520$235,00721.5 %
Same Store Cash NOI (1)
$73,455$72,8950.8 %$220,215$216,3611.8 %
Adjusted EBITDAre
$87,268$75,71015.3 %$258,539$214,51520.5 %
Core FFO$70,741$60,59616.7 %$213,156$171,89424.0 %
Core FFO per share / unit — basic$0.47$0.462.2 %$1.41$1.363.7 %
Core FFO per share / unit — diluted$0.46$0.460.0 %$1.40$1.362.9 %
Cash Available for Distribution$54,813$49,78610.1 %$179,793$145,39323.7 %
 (1) The Same Store pool accounted for 79.1% of the total portfolio square footage as of September 30, 2020.

Definitions of the above-mentioned non-GAAP financial measures, together with reconciliations to net income (loss) in accordance with GAAP, appear at the end of this release. Please also see the Company’s supplemental information package for additional disclosure.
Acquisition and Disposition Activity

For the three months ended September 30, 2020, the Company acquired five buildings for $64.7 million with an Occupancy Rate of 100.0% upon acquisition. The chart below details the acquisition activity for the quarter:

THIRD QUARTER 2020 ACQUISITION ACTIVITY
MarketDate AcquiredSquare FeetBuildingsPurchase Price ($000s)W.A. Lease Term (Years)Cash Capitalization RateStraight-Line Capitalization Rate
Philadelphia, PA8/31/2020112,2941$8,4274.0
Pittsburgh, PA9/3/2020125,000115,58015.0
Pittsburgh, PA9/24/202066,38716,6856.9
Charlotte, NC9/28/202050,00015,72910.0
Cleveland, OH9/29/2020276,000128,2615.4
Total / weighted average629,6815$64,6827.66.3%6.8%

The chart below details the 2020 acquisition activity and Pipeline through November 5, 2020:

2020 ACQUISITION ACTIVITY AND PIPELINE DETAIL
Square FeetBuildingsPurchase Price ($000s)W.A. Lease Term (Years)Cash Capitalization RateStraight-Line Capitalization Rate
Q11,599,3899$119,3437.36.7%7.2%
Q2122,280211,9146.76.4%6.8%
Q3629,681564,6827.66.3%6.8%
Total / weighted average2,351,35016$195,9397.46.5%7.0%
As of November 5, 2020
Subsequent to quarter-end acquisitions3.7 million9$258.0 million
Pipeline32.4 million173$2.8 billion

2


The chart below details the disposition activity for the nine months ended September 30, 2020:

2020 DISPOSITION ACTIVITY
Square FeetBuildingsSale Price ($000s)
Q11,182,6063$101,500
Q252,50012,363
Q3425,300120,000
Total1,660,4065$123,863

Leasing Activity
 
The chart below details the leasing activity for leases commenced during the three months ended September 30, 2020:
 
THIRD QUARTER 2020 OPERATING PORTFOLIO LEASING ACTIVITY
Lease TypeSquare FeetW.A. Lease Term (Years)Cash
Base Rent
$/SF
SL Base Rent
$/SF
Lease
Commissions
$/SF
Tenant Improvements $/SF
Cash Rent Change
SL Rent ChangeRetention
New leases1,576,2654.4$4.00$3.97$1.08$0.16(4.7)%(5.2)%
Renewal Leases4,006,3406.2$3.86$4.01$0.40$0.203.1%7.9%72.1%
Total / weighted average5,582,6055.7$3.90$4.00$0.60$0.191.3%4.7%

The chart below details the leasing activity for leases commenced during the nine months ended September 30, 2020:

2020 YEAR TO DATE OPERATING PORTFOLIO LEASING ACTIVITY
Lease TypeSquare FeetW.A. Lease Term (Years)Cash Base Rent $/SFSL Base Rent $/SFLease Commissions $/SFTenant Improvements $/SFCash Rent ChangeSL Rent ChangeRetention
New leases2,448,6885.8$3.99$4.09$1.36$0.58(4.9)%(1.2)%
Renewal Leases7,629,2865.7$4.13$4.31$0.46$0.303.6%9.8%81.4%
Total / weighted average10,077,9745.7$4.10$4.26$0.68$0.361.7%7.4%

Additionally, for the three and nine months ended September 30, 2020, leases commenced totaling 82,420 and 564,358 square feet, respectively, related to Value Add assets and are excluded from the Operating Portfolio statistics above.

As of November 5th, 96.9% of October base rental billings have been collected. An additional 0.6% of October base rental billings yet to be received relates to investment grade tenants and tenants who pay at the end of the month, bringing the total to 97.5%. The timing of these expected payments is consistent with past practices. Of the remaining 2.5% of uncollected base rental billings, 1.0% of October base rental billings have been deferred.

Capital Market Activity
 
As of September 30, 2020, net debt to annualized Run Rate Adjusted EBITDAre was 4.4x and Liquidity was $567.1 million. The Company has the ability to settle the remaining $132.5 million in net proceeds from the January 13, 2020 equity offering between now and January 13, 2021.

Conference Call
 
The Company will host a conference call tomorrow, Friday, November 6, 2020, at 10:00 a.m. (Eastern Time) to discuss the quarter’s results.  The call can be accessed live over the phone toll-free by dialing (877) 407-4018, or for international callers, (201) 689-8471.  A replay will be available shortly after the call and can be accessed by dialing (844) 512-2921, or for international callers, (412) 317-6671.  The passcode for the replay is 13711004.
 
Interested parties may also listen to a simultaneous webcast of the conference call by visiting the Investor Relations section of the Company’s website at www.stagindustrial.com, or by clicking on the following link:
 
http://ir.stagindustrial.com/QuarterlyResults
3






Supplemental Schedule
 
The Company has provided a supplemental information package to provide additional disclosure and financial information on its website (www.stagindustrial.com) under the “Quarterly Results” tab in the Investor Relations section.
 
Additional information is also available on the Company’s website at www.stagindustrial.com.


4


CONSOLIDATED BALANCE SHEETS
STAG Industrial, Inc.
(unaudited, in thousands, except share data) 
 September 30, 2020December 31, 2019
Assets  
Rental Property:  
Land$447,356 $435,923 
Buildings and improvements, net of accumulated depreciation of $473,369 and $387,633, respectively3,164,553 3,087,435 
Deferred leasing intangibles, net of accumulated amortization of $264,262 and $241,304, respectively439,046 475,149 
Total rental property, net4,050,955 3,998,507 
Cash and cash equivalents70,137 9,041 
Restricted cash4,623 2,823 
Tenant accounts receivable66,761 57,592 
Prepaid expenses and other assets49,157 38,231 
Interest rate swaps— 303 
Operating lease right-of-use assets24,124 15,129 
Assets held for sale, net— 43,019 
Total assets$4,265,757 $4,164,645 
Liabilities and Equity  
Liabilities:  
Unsecured credit facility$— $146,000 
Unsecured term loans, net970,696 871,375 
Unsecured notes, net573,181 572,883 
Mortgage notes, net52,365 54,755 
Accounts payable, accrued expenses and other liabilities74,619 53,737 
Interest rate swaps45,812 18,819 
Tenant prepaid rent and security deposits23,413 21,993 
Dividends and distributions payable18,302 17,465 
Deferred leasing intangibles, net of accumulated amortization of $14,176 and $12,064, respectively24,991 26,738 
Operating lease liabilities26,414 16,989 
Total liabilities1,809,793 1,800,754 
Equity:  
Preferred stock, par value $0.01 per share, 20,000,000 shares authorized at September 30, 2020 and December 31, 2019,  
Series C, 3,000,000 shares (liquidation preference of $25.00 per share) issued and outstanding at September 30, 2020 and December 31, 201975,000 75,000 
Common stock, par value $0.01 per share, 300,000,000 shares authorized at September 30, 2020 and December 31, 2019, respectively, 149,227,013 and 142,815,593 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively1,492 1,428 
Additional paid-in capital3,155,271 2,970,553 
Cumulative dividends in excess of earnings(782,037)(723,027)
Accumulated other comprehensive loss(45,055)(18,426)
Total stockholders’ equity2,404,671 2,305,528 
Noncontrolling interest51,293 58,363 
Total equity2,455,964 2,363,891 
Total liabilities and equity$4,265,757 $4,164,645 
5


CONSOLIDATED STATEMENTS OF OPERATIONS
STAG Industrial, Inc.
(unaudited, in thousands, except per share data)
Three months ended September 30,Nine months ended September 30,
 2020201920202019
Revenue            
Rental income$117,247 $102,294 $353,057 $294,271 
Other income48 127 403 498 
Total revenue117,295 102,421 353,460 294,769 
Expenses   
Property20,817 18,157 63,156 54,623 
General and administrative9,537 8,924 29,316 26,723 
Depreciation and amortization53,921 46,908 160,215 133,844 
Loss on impairments3,172 4,413 3,172 9,757 
Other expenses436 458 1,500 1,284 
Total expenses87,883 78,860 257,359 226,231 
Other income (expense)   
Interest and other income 165 12 400 30 
Interest expense(15,928)(14,053)(46,125)(39,080)
Loss on extinguishment of debt— — (834)— 
Gain on involuntary conversion 1,500 — 2,157 — 
Gain on the sales of rental property, net9,060 1,670 56,864 3,261 
Total other income (expense)(5,203)(12,371)12,462 (35,789)
Net income$24,209 $11,190 $108,563 $32,749 
Less: income attributable to noncontrolling interest after preferred stock dividends466 290 2,471 912 
Net income attributable to STAG Industrial, Inc.$23,743 $10,900 $106,092 $31,837 
Less: preferred stock dividends1,289 1,289 3,867 3,867 
Less: amount allocated to participating securities68 78 204 236 
Net income attributable to common stockholders$22,386 $9,533 $102,021 $27,734 
Weighted average common shares outstanding — basic148,997 127,272 148,412 122,460 
Weighted average common shares outstanding — diluted149,905 127,469 148,865 122,720 
Net income per share — basic and diluted    
Net income per share attributable to common stockholders — basic$0.15 $0.07 $0.69 $0.23 
Net income per share attributable to common stockholders — diluted$0.15 $0.07 $0.69 $0.23 
6


RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
STAG Industrial, Inc.
(unaudited, in thousands) 
Three months ended September 30,Nine months ended September 30,
2020201920202019
NET OPERATING INCOME RECONCILIATION
Net income$24,209 $11,190 $108,563 $32,749 
General and administrative9,537 8,924 29,316 26,723 
Transaction costs23 94 82 247 
Depreciation and amortization53,921 46,908 160,215 133,844 
Interest and other income(165)(12)(400)(30)
Interest expense15,928 14,053 46,125 39,080 
Loss on impairments3,172 4,413 3,172 9,757 
Gain on involuntary conversion (1,500)— (2,157)— 
Loss on extinguishment of debt— — 834 — 
Other expenses413 364 1,418 1,037 
Gain on the sales of rental property, net(9,060)(1,670)(56,864)(3,261)
Net operating income$96,478 $84,264 $290,304 $240,146 
Net operating income$96,478 $84,264 $290,304 $240,146 
Straight-line rent adjustments, net(3,648)(3,029)(12,162)(8,440)
Straight-line termination, solar and other income adjustments, net862 — 3,749 (43)
Amortization of above and below market leases, net1,477 1,242 3,629 3,344 
Cash net operating income$95,169 $82,477 $285,520 $235,007 
Cash net operating income$95,169 
Cash NOI from acquisitions' and dispositions' timing620 
Cash termination, solar and other income(1,011)
Run Rate Cash NOI$94,778 
Same Store Portfolio NOI
Total NOI$96,478 $84,264 $290,304 $240,146 
Less: NOI non-same-store properties(22,574)(9,883)(67,224)(18,774)
Termination, solar and other adjustments, net361 (15)(428)(104)
Same Store NOI$74,265 $74,366 $222,652 $221,268 
Less: straight-line rent adjustments, net(1,632)(2,425)(5,186)(7,760)
Amortization of above and below market leases, net822 954 2,749 2,853 
Same Store Cash NOI$73,455 $72,895 $220,215 $216,361 
EBITDA FOR REAL ESTATE (EBITDAre) RECONCILIATION
Net income$24,209 $11,190 $108,563 $32,749 
Depreciation and amortization53,921 46,908 160,215 133,844 
Interest and other income(165)(12)(400)(30)
Interest expense15,928 14,053 46,125 39,080 
Loss on impairments3,172 4,413 3,172 9,757 
Gain on the sales of rental property, net(9,060)(1,670)(56,864)(3,261)
EBITDAre
$88,005 $74,882 $260,811 $212,139 
ADJUSTED EBITDAre RECONCILIATION
EBITDAre
$88,005 $74,882 $260,811 $212,139 
Straight-line rent adjustments, net(3,534)(3,064)(11,919)(8,543)
Amortization of above and below market leases, net1,477 1,242 3,629 3,344 
Non-cash compensation expense2,946  2,556 8,736 7,371 
Termination, solar and other income, net(149)— (1,477)(43)
Transaction costs23 94 82 247 
Gain on involuntary conversion (1,500)— (2,157)— 
Loss on extinguishment of debt— — 834 — 
Adjusted EBITDAre
$87,268 $75,710 $258,539 $214,515 
Adjusted EBITDAre
$87,268 
Adjusted EBITDAre from acquisitions' and dispositions' timing
620 
Run Rate Adjusted EBITDAre
$87,888 
7


RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
STAG Industrial, Inc.
(unaudited, in thousands, except per share data)
Three months ended September 30,Nine months ended September 30,
2020201920202019
CORE FUNDS FROM OPERATIONS RECONCILIATION
Net income$24,209 $11,190 $108,563 $32,749 
Rental property depreciation and amortization53,853 46,834 160,007 133,622 
Loss on impairments3,172 4,413 3,172 9,757 
Gain on the sales of rental property, net(9,060)(1,670)(56,864)(3,261)
Funds from operations$72,174 $60,767 $214,878 $172,867 
Preferred stock dividends(1,289)(1,289)(3,867)(3,867)
Amount allocated to restricted shares of common stock and unvested units(184)(218)(590)(697)
Funds from operations attributable to common stockholders and unit holders$70,701 $59,260 $210,421 $168,303 
Funds from operations attributable to common stockholders and unit holders$70,701 $59,260 $210,421 $168,303 
Amortization of above and below market leases, net1,477 1,242 3,629 3,344 
Transaction costs23 94 82 247 
Loss on extinguishment of debt— — 834 — 
Gain on involuntary conversion (1,500)— (2,157)— 
Non-recurring dead deal costs
40 — 347 — 
Core funds from operations$70,741 $60,596 $213,156 $171,894 
Weighted average common shares and units
Weighted average common shares outstanding148,997 127,272 148,412 122,460 
Weighted average units outstanding2,994 3,456 3,231 3,568 
Weighted average common shares and units - basic151,991 130,728 151,643 126,028 
Dilutive shares908 197 453 260 
Weighted average common shares, units, and other dilutive shares - diluted152,899 130,925 152,096 126,288 
Core funds from operations per share / unit - basic$0.47 $0.46 $1.41 $1.36 
Core funds from operations per share / unit - diluted$0.46 $0.46 $1.40 $1.36 
CASH AVAILABLE FOR DISTRIBUTION RECONCILIATION
Core funds from operations$70,741 $60,596 $213,156 $171,894 
Non-rental property depreciation and amortization68 74 208 222 
Straight-line rent adjustments, net(3,534)(3,064)(11,919)(8,543)
Straight-line termination, solar and other income adjustments, net862 — 3,749 (43)
Recurring capital expenditures(502)(1,484)(973)(2,414)
Non-recurring capital expenditures(8,848)(6,357)(19,048)(17,184)
Capital expenditures reimbursed by tenants(349)— (3,712)— 
New lease commissions and tenant improvements(4,695)(1,752)(8,213)(3,214)
Renewal lease commissions and tenant improvements(2,626)(1,456)(4,363)(4,605)
Non-cash portion of interest expense750 673 2,172 1,909 
Non-cash compensation expense2,946 2,556 8,736 7,371 
Cash available for distribution$54,813 $49,786 $179,793 $145,393 

8


Non-GAAP Financial Measures and Other Definitions
 
Acquisition Capital Expenditures: We define Acquisition Capital Expenditures as Recurring and Non-Recurring Capital Expenditures identified at the time of acquisition. Acquisition Capital Expenditures also include new lease commissions and tenant improvements for space that was not occupied under the Company's ownership.

Cash Available for Distribution: Cash Available for Distribution represents Core FFO, excluding non-rental property depreciation and amortization, straight-line rent adjustments, non-cash portion of interest expense, non-cash compensation expense, and deducts capital expenditures reimbursed by tenants, recurring and non-recurring capital expenditures, and leasing commissions and tenant improvements.

Cash Available for Distribution should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance, and we believe that to understand our performance further, these measurements should be compared with our reported net income or net loss in accordance with GAAP, as presented in our consolidated financial statements.

Cash Available for Distribution excludes, among other items, depreciation and amortization and capture neither the changes in the value of our buildings that result from use or market conditions of our buildings, all of which have real economic effects and could materially impact our results from operations, the utility of these measures as measures of our performance is limited. In addition, our calculation of Cash Available for Distribution may not be comparable to similarly titled measures disclosed by other REITs.

Cash Capitalization Rate: We define Cash Capitalization Rate as calculated by dividing (i) the Company’s estimate of year one cash net operating income from the applicable property’s operations stabilized for occupancy (post-lease-up for vacant properties), which does not include termination income, solar income, miscellaneous other income, capital expenditures, general and administrative costs, reserves, tenant improvements and leasing commissions, credit loss, or vacancy loss, by (ii) the GAAP purchase price plus estimated Acquisition Capital Expenditures. These Capitalization Rate estimates are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control, including those risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2019.

Cash Rent Change: We define Cash Rent Change as the percentage change in the base rent of the lease commenced during the period compared to the base rent of the Comparable Lease for assets included in the Operating Portfolio. The calculation compares the first base rent payment due after the lease commencement date compared to the base rent of the last monthly payment due prior to the termination of the lease, excluding holdover rent. Rent under gross or similar type leases are converted to a net rent based on an estimate of the applicable recoverable expenses.

Comparable Lease: We define a Comparable Lease as a lease in the same space with a similar lease structure as compared to the previous in-place lease, excluding new leases for space that was not occupied under our ownership.

Earnings before Interest, Taxes, Depreciation, and Amortization for Real Estate (EBITDAre), Adjusted EBITDAre, Annualized Adjusted EBITDAre, and Run Rate Adjusted EBITDAre: We define EBITDAre in accordance with the standards established by the National Association of Real Estate Investment Trusts (“NAREIT”). EBITDAre represents net income (loss) (computed in accordance with GAAP) before interest expense, interest and other income, tax, depreciation and amortization, gains or losses on the sale of rental property, and loss on impairments. Adjusted EBITDAre further excludes transaction costs, termination income, solar income, revenue associated with one-time tenant reimbursements of capital expenditures, straight-line rent adjustments, non-cash compensation expense, amortization of above and below market leases, net, gain (loss) on involuntary conversion, loss on extinguishment of debt, and other non-recurring items.

We define Annualized Adjusted EBITDAre as Adjusted EBITDAre multiplied by four.

We define Run Rate Adjusted EBITDAre as Adjusted EBITDAre plus incremental Adjusted EBITDAre adjusted for a full period of acquisitions and dispositions. Run Rate Adjusted EBITDAre does not reflect the Company’s historical results and does not predict future results, which may be substantially different.

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EBITDAre, Adjusted EBITDAre, and Run Rate Adjusted EBITDAre should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance, and we believe that to understand our performance further, EBITDAre, Adjusted EBITDAre, and Run Rate Adjusted EBITDAre should be compared with our reported net income or net loss in accordance with GAAP, as presented in our consolidated financial statements. We believe that EBITDAre, Adjusted EBITDAre, and Run Rate Adjusted EBITDAre are helpful to investors as supplemental measures of the operating performance of a real estate company because they are direct measures of the actual operating results of our properties. We also use these measures in ratios to compare our performance to that of our industry peers.

Funds from Operations (FFO) and Core FFO: We define FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (“NAREIT”). FFO represents net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, gains (losses) from sales of land, impairment write-downs of depreciable real estate, real estate related depreciation and amortization (excluding amortization of deferred financing costs and fair market value of debt adjustment) and after adjustments for unconsolidated partnerships and joint ventures. Core FFO excludes transaction costs, amortization of above and below market leases, net, loss on extinguishment of debt, gain (loss) on involuntary conversion, gain (loss) on swap ineffectiveness, and non-recurring other expenses.

None of FFO or Core FFO should be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance, and we believe that to understand our performance further, these measurements should be compared with our reported net income or net loss in accordance with GAAP, as presented in our consolidated financial statements. We use FFO as a supplemental performance measure because it is a widely recognized measure of the performance of REITs. FFO may be used by investors as a basis to compare our operating performance with that of other REITs. We and investors may use Core FFO similarly as FFO.

However, because FFO and Core FFO exclude, among other items, depreciation and amortization and capture neither the changes in the value of our buildings that result from use or market conditions of our buildings, all of which have real economic effects and could materially impact our results from operations, the utility of these measures as measures of our performance is limited. In addition, other REITs may not calculate FFO in accordance with the NAREIT definition as we do, and, accordingly, our FFO may not be comparable to such other REITs’ FFO. Similarly, our calculation of Core FFO may not be comparable to similarly titled measures disclosed by other REITs.

GAAP: We define GAAP as generally accepted accounting principles in the United States.

Liquidity: We define Liquidity as the amount of aggregate undrawn nominal commitments the Company could immediately borrow under the Company’s unsecured debt instruments, consistent with the financial covenants, plus unrestricted cash balances.

Market: We define Market as the market defined by CoStar based on the building address. If the building is located outside of a CoStar defined market, the city and state is reflected.

Net operating income (NOI), Cash NOI, and Run Rate Cash NOI: We define NOI as rental income, including reimbursements, less property expenses, which excludes depreciation, amortization, loss on impairments, general and administrative expenses, interest expense, interest income, transaction costs, gain (loss) on involuntary conversion, loss on extinguishment of debt, gain on sales of rental property, and other expenses.

We define Cash NOI as NOI less straight-line rent adjustments and less amortization of above and below market leases, net.

We define Run Rate Cash NOI as Cash NOI plus Cash NOI adjusted for a full period of acquisitions and dispositions, less cash termination income, solar income and revenue associated with one-time tenant reimbursements of capital expenditures. Run Rate Cash NOI does not reflect the Company’s historical results and does not predict future results, which may be substantially different.




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We consider NOI, Cash NOI and Run Rate Cash NOI to be appropriate supplemental performance measures to net income because we believe they help us, and investors understand the core operations of our buildings. None of these measures should be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance, and we believe that to understand our performance further, these measurements should be compared with our reported net income or net loss in accordance with GAAP, as presented in our consolidated financial statements. Further, our calculations of NOI, Cash NOI and Run Rate NOI may not be comparable to similarly titled measures disclosed by other REITs.

Non-Recurring Capital Expenditures: We define Non-Recurring Capital Expenditures as capital items for upgrades or items that previously did not exist at a building or capital items which have a longer useful life, such as roof replacements. Non-Recurring Capital Expenditures funded by parties other than the Company or capital expenditures reimbursed by tenants in lump sum and Acquisition Capital Expenditures are excluded.

Occupancy Rate: We define Occupancy Rate as the percentage of total leasable square footage for which either revenue recognition has commenced in accordance with GAAP or the lease term has commenced as of the close of the reporting period, whichever occurs earlier.

Operating Portfolio: We define the Operating Portfolio as all warehouse and light manufacturing assets that were acquired stabilized or have achieved Stabilization. The Operating Portfolio excludes non-core flex/office assets, assets contained in the Value Add Portfolio, and assets classified as held for sale.

Pipeline: We define Pipeline as a point in time measure that includes all of the transactions under consideration by the Company’s acquisitions group that have passed the initial screening process. The pipeline also includes transactions under contract and transactions with non-binding LOIs.

Recurring Capital Expenditures: We define Recurring Capital Expenditures as capital items required to sustain existing systems and capital items which generally have a shorter useful life. Recurring Capital Expenditures funded by parties other than the Company are excluded.

Renewal Lease: We define a Renewal Lease as a lease signed by an existing tenant to extend the term for 12 months or more, including (i) a renewal of the same space as the current lease at lease expiration, (ii) a renewal of only a portion of the current space at lease expiration, or (iii) an early renewal or workout, which ultimately does extend the original term for 12 months or more.

Retention: We define Retention as the percentage determined by taking Renewal Lease square footage commencing in the period divided by square footage of leases expiring in the period for assets included in the Operating Portfolio.

Same Store: We define Same Store properties as properties that were in the Operating Portfolio for the entirety of the comparative periods presented. Same Store GAAP NOI and Same Store Cash NOI exclude termination fees, solar income, and revenue associated with one-time tenant reimbursements of capital expenditures.

Stabilization: We define Stabilization for assets under development or redevelopment to occur as the earlier of achieving 90% occupancy or 12 months after completion. Stabilization for assets that were acquired and immediately added to the Value Add Portfolio occurs under the following:
if acquired with less than 75% occupancy as of the acquisition date, Stabilization will occur upon the earlier of achieving 90% occupancy or 12 months from the acquisition date;
if acquired and will be less than 75% occupied due to known move-outs within two years of the acquisition date, Stabilization will occur upon the earlier of achieving 90% occupancy after the known move-outs have occurred or 12 months after the known move-outs have occurred.








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Straight-Line Capitalization Rate: We define Straight-Line Capitalization Rate as calculated by dividing (i) the Company’s estimate of average annual net operating income from the applicable property’s operations stabilized for occupancy (post-lease-up for vacant properties), which does not include termination income, solar income, miscellaneous other income, capital expenditures, general and administrative costs, reserves, tenant improvements and leasing commissions, credit loss, or vacancy loss, by (ii) the GAAP purchase price plus estimated Acquisition Capital Expenditures. These Capitalization Rate estimates are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control, including those risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2019.

Straight-Line Rent Change (SL Rent Change): We define SL Rent Change as the percentage change in the average monthly base rent over the term of the lease that commenced during the period compared to the Comparable Lease for assets included in the Operating Portfolio. Rent under gross or similar type leases are converted to a net rent based on an estimate of the applicable recoverable expenses, and this calculation excludes the impact of any holdover rent.

Value Add Portfolio: We define the Value Add Portfolio as properties that meet any of the following criteria:
less than 75% occupied as of the acquisition date;
will be less than 75% occupied due to known move-outs within two years of the acquisition date;
out of service with significant physical renovation of the asset;
development.

Weighted Average Lease Term: We define Weighted Average Lease Term as the contractual lease term in years as of the lease start date weighted by square footage. Weighted Average Lease Term related to acquired assets reflects the remaining lease term in years as of the acquisition date weighted by square footage.




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Forward-Looking Statements

This earnings release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. STAG Industrial, Inc. (STAG) intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe STAG’s future plans, strategies and expectations, are generally identifiable by use of the words “believe,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “should”, “project” or similar expressions. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond STAG’s control and which could materially affect actual results, performances or achievements. Factors that may cause actual results to differ materially from current expectations include, but are not limited to, the risk factors discussed in STAG’s most recent Annual Report on Form 10-K for the year ended December 31, 2019, as updated by the Company’s subsequent reports filed with the Securities and Exchange Commission. Accordingly, there is no assurance that STAG’s expectations will be realized. Except as otherwise required by the federal securities laws, STAG disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in STAG’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.


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v3.20.2
Document And Entity Information
Nov. 05, 2020
Entity Information [Line Items]  
Document Type 8-K
Document Period End Date Nov. 05, 2020
Entity Registrant Name STAG INDUSTRIAL, INC.
Entity Incorporation, State or Country Code MD
Entity File Number 1-34907
Entity Tax Identification Number 27-3099608
Entity Address, Address Line One One Federal Street, 23rd Floor
Entity Address, City or Town Boston
Entity Address, State or Province MA
Entity Address, Postal Zip Code 02110
City Area Code 617
Local Phone Number 574-4777
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity Emerging Growth Company false
Entity Central Index Key 0001479094
Amendment Flag false
Common stock, $0.01 par value per share  
Entity Information [Line Items]  
Title of 12(b) Security Common stock, $0.01 par value per share
Trading Symbol STAG
Security Exchange Name NYSE
6.875% Series C Cumulative Redeemable Preferred Stock ($0.01 par value)  
Entity Information [Line Items]  
Title of 12(b) Security 6.875% Series C Cumulative Redeemable Preferred Stock ($0.01 par value)
Trading Symbol STAG-PC
Security Exchange Name NYSE