Stag Industrial Inc (STAG) Q3 2024 Earnings Call Highlights: Strong Leasing Activity and ...

GuruFocus News
4 min read

In This Article:

  • Market Rent Growth: 3.2% through September 30, with a full-year expectation of approximately 4%.

  • Cash Leasing Spreads: Achieved 24.1% for 2025 leasing commitments.

  • Core FFO per Share: $0.60 for the quarter, a 1.7% increase compared to the previous year.

  • Cash Available for Distribution: $88 million for the third quarter.

  • Net Debt to Adjusted EBITDA: 5.1x at quarter end.

  • Liquidity: $974 million at quarter end.

  • Same Store Cash NOI Growth: 4.4% for the quarter and 6.1% year-to-date.

  • Acquisition Volume: $113 million for the third quarter, including a 5-property portfolio for $78.1 million.

  • Annual Same Store Cash NOI Guidance: Increased to a range of 5.25% to 5.5%.

  • G&A Expectations: Decreased to a range of $49 million to $50 million.

  • Core FFO Guidance: Revised to a range of $2.38 to $2.40 per share.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Stag Industrial Inc (NYSE:STAG) reported strong operating results for the third quarter, with stable absorption and contracting industrial supply pipeline.

  • The company achieved a cash leasing spread of 24.1% for 38% of the square feet expected to be leased in 2025, indicating strong leasing activity.

  • Acquisition volume for the third quarter totaled $113 million, with a noticeable acceleration in activity post-Labor Day.

  • Core FFO per share increased by 1.7% compared to the third quarter of last year, reflecting financial growth.

  • Same Store Cash NOI growth was 4.4% for the quarter and 6.1% year-to-date, leading to an increase in annual guidance.

Negative Points

  • American Tire Distributors, a tenant representing 1% of annualized base rent, filed for Chapter 11 bankruptcy, creating uncertainty.

  • The acquisition market's momentum is subject to interest rate fluctuations and seller expectations, which could impact future growth.

  • The company experienced a $1.4 million credit loss through September 30, indicating some tenant financial challenges.

  • There is a potential risk of occupancy loss, with a guidance of 25 basis points average occupancy loss for the year.

  • Election uncertainty is causing delays in decision-making in the leasing market, potentially affecting future leasing activity.

Q & A Highlights

Q: What factors are contributing to the increased activity in the acquisition market for STAG Industrial? A: William Crooker, President, CEO, and Director, explained that the acquisition market has seen increased activity due to pent-up seller demand and stabilized interest rates, which have reduced bid-ask spreads. This has led to more properties being available on the market. STAG's acquisition pipeline is robust, with a significant portion consisting of individual assets across various markets. The pace of acquisitions will depend on interest rates and seller expectations, but the company is optimistic about its current acquisition momentum.

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