STAG Industrial Logo. (PRNewsFoto/STAG Industrial, Inc.)

STAG Industrial Logo. (PRNewsFoto/STAG Industrial, Inc.)

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BOSTON, July 27, 2021 /PRNewswire/ -- STAG Industrial, Inc. (the "Company") (NYSE:STAG), today announced its financial and operating results for the quarter ended June 30, 2021.

"The second quarter demonstrated the strength of the STAG platform," said Ben Butcher, Chief Executive Officer of the Company. "The increasing demand for space in our portfolio combined with our strong external growth has resulted in upward revisions to our outlook for the remainder of 2021."

Second Quarter 2021 Highlights

  • Reported $0.20 of net income per basic and diluted common share for the second quarter of 2021, compared to $0.12 of net income per basic and diluted common share for the second quarter of 2020. Reported $32.6 million of net income attributable to common stockholders for the second quarter of 2021, compared to net income attributable to common stockholders of $17.6 million for the second quarter of 2020.
  • Achieved $0.52 of Core FFO per diluted share for the second quarter of 2021, an increase of 10.6% compared to second quarter 2020 Core FFO per diluted share of $0.47. Generated Core FFO of $86.3 million for the second quarter of 2021, compared to $71.8 million for the second quarter of 2020, an increase of 20.2%.
  • Produced Cash NOI of $108.8 million for the second quarter of 2021, an increase of 12.6% compared to the second quarter of 2020 of $96.6 million.
  • Produced Same Store Cash NOI of $90.9 million for the second quarter of 2021, an increase of 4.4% compared to the second quarter of 2020 of $87.0 million.
  • Produced Cash Available for Distribution of $74.8 million for the second quarter of 2021, an increase of 8.3% compared to the second quarter of 2020 of $69.0 million.
  • Acquired nine buildings in the second quarter of 2021, consisting of 1.3 million square feet, for $126.7 million, with a Cash Capitalization Rate of 5.7% and a Straight-Line Capitalization Rate of 6.2%.
  • Achieved an Occupancy Rate of 96.8% on the total portfolio and 97.2% on the Operating Portfolio as of June 30, 2021.
  • Commenced Operating Portfolio leases of 3.9 million square feet for the second quarter of 2021, resulting in a Cash Rent Change and Straight-Line Rent Change of 8.1% and 15.1%, respectively.
  • Experienced 80.0% Retention for 3.4 million square feet of leases expiring in the quarter.
  • Raised gross proceeds of $42.2 million of equity through the Company's at-the-market offering ("ATM") program for the second quarter of 2021.
  • Subsequent to quarter end, on July 8, 2021, originated $325 million of fixed rate senior unsecured notes in a private placement offering.

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.

The Company will host a conference call tomorrow, Wednesday, July 28, 2021 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

SECOND QUARTER 2021 KEY FINANCIAL MEASURES





Three months ended June 30,







Six Months Ended June 30,







Metrics



2021



2020



% Change



2021



2020



% Change



(in $000s, except per share data)



























Net income attributable to common stockholders



$32,576



$17,552



85.6

%



$53,507



$79,635



(32.8)

%



Net income per common share — basic



$0.20



$0.12



66.7

%



$0.34



$0.54



(37.0)

%



Net income per common share — diluted



$0.20



$0.12



66.7

%



$0.33



$0.54



(38.9)

%



Cash NOI



$108,768



$96,630



12.6

%



$212,446



$190,351



11.6

%



Same Store Cash NOI (1)



$90,881



$87,033



4.4

%



$179,821



$173,577



3.6

%



Adjusted EBITDAre



$99,031



$86,663



14.3

%



$193,480



$171,271



13.0

%



Core FFO



$86,259



$71,784



20.2

%



$166,098



$142,415



16.6

%



Core FFO per share / unit — basic



$0.53



$0.47



12.8

%



$1.02



$0.94



8.5

%



Core FFO per share / unit — diluted



$0.52



$0.47



10.6

%



$1.02



$0.94



8.5

%



Cash Available for Distribution



$74,759



$69,003



8.3

%



$147,217



$124,980



17.8

%



(1) The Same Store pool accounted for 84.9% of the total portfolio square footage as of June 30, 2021.

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 June 30, 2021, the Company acquired nine buildings for $126.7 million with an Occupancy Rate of 86.2% upon acquisition. The chart below details the acquisition activity for the quarter:

SECOND QUARTER 2021 ACQUISITION ACTIVITY

Market

Date

Acquired

Square Feet

Buildings

Purchase

Price ($000s)

W.A. Lease

Term (Years)

Cash

Capitalization

Rate

Straight-Line

Capitalization

Rate

Indianapolis, IN

5/17/2021

154,440

1

$13,655





Baltimore, MD

5/17/2021

46,851

1

6,228

4.1





Detroit, MI

6/1/2021

248,040

1

23,786

7.1





Green Bay, WI

6/7/2021

152,000

1

7,249

8.6





Phoenix, AZ

6/14/2021

41,504

1

8,670

6.2





Cleveland, OH

6/17/2021

179,577

1

19,602

3.8





Reno/Sparks, NV

6/30/2021

183,435

1

13,892

8.6





Washington, DC

6/30/2021

193,420

1

17,521

15.0





Stockton/Modesto, CA

6/30/2021

150,000

1

16,118

3.5





Total / weighted average



1,349,267

9

$126,721

6.8

5.7%

6.2%

The chart below details the 2021 acquisition activity and Pipeline through July 27, 2021:

2021 ACQUISITION ACTIVITY AND PIPELINE DETAIL



Square Feet

Buildings

Purchase Price

($000s)

W.A. Lease

Term (Years)

Cash

Capitalization

Rate

Straight-Line

Capitalization

Rate

Q1

1,252,323

6

$100,228

7.9

6.0%

6.4%

Q2

1,349,267

9

126,721

6.8

5.7%

6.2%

Total / weighted average

2,601,590

15

$226,949

7.3

5.8%

6.3%















As of July 27, 2021













Subsequent to quarter-end acquisitions

316,578

3

$36.8 million





















Pipeline

38.2 million

183

$3.6 billion







The chart below details the disposition activity for the six months ended June 30, 2021:

2021 DISPOSITION ACTIVITY



Square Feet

Buildings

Sale Price ($000s)

Q1

483,586

4

$25,208

Q2

444,663

2

16,400

Total

928,249

6

$41,608

Leasing Activity

The chart below details the leasing activity for leases commenced during the three months ended June 30, 2021:

SECOND QUARTER 2021 OPERATING PORTFOLIO LEASING ACTIVITY

Lease Type

Square

Feet

W.A.

Lease

Term

(Years)

Cash

Base Rent

$/SF

SL Base Rent

$/SF

Lease

Commissions

$/SF

Tenant

Improvements

$/SF

Cash Rent

Change 

SL Rent

Change

Retention



New Leases

1,128,576

7.1

$4.16

$4.33

$1.36

$0.47

7.3%

13.6%





Renewal Leases

2,732,292

6.4

$4.14

$4.36

$0.49

$0.61

8.4%

15.7%

80.0%



Total / weighted average

3,860,868

6.6

$4.15

$4.35

$0.75

$0.57

8.1%

15.1%





The chart below details the leasing activity for leases commenced during the six months ended June 30, 2021:

2021 YEAR TO DATE OPERATING PORTFOLIO LEASING ACTIVITY

Lease Type

Square

Feet

W.A.

Lease

Term

(Years)

Cash

Base Rent

$/SF

SL Base Rent

$/SF

Lease

Commissions

$/SF

Tenant

Improvements

$/SF

Cash Rent

Change 

SL Rent

Change

Retention



New Leases

1,468,264

7.2

$4.10

$4.32

$1.54

$0.71

7.5%

15.3%





Renewal Leases

4,984,685

5.8

$4.28

$4.49

$0.58

$0.54

9.0%

16.9%

87.9%



Total / weighted average

6,452,949

6.1

$4.24

$4.45

$0.80

$0.58

8.7%

16.5%





Additionally, for the three and six months ended June 30, 2021, leases commenced totaling 32,864 and 139,064 square feet, respectively, related to Value Add assets and first generation leasing. These are excluded from the Operating Portfolio statistics above.

Capital Market Activity

The chart below details the ATM program activity for the six months ended June 30, 2021:

 

2021 ATM ACTIVITY

Equity (1)

Shares Issued

Price per Share

(Weighted Avg)

Gross

Proceeds

($000s)

Net

Proceeds

($000s)



Q1

680,276

$32.35

$22,005

$21,785



Q2

1,208,014

$34.95

$42,221

$41,799



Total / weighted average

1,888,290

$34.01

$64,226

$63,583



(1) Includes only ATM program proceeds settled in the six months ended June 30, 2021 and excludes any ATM issuance on a forward basis.

On April 5, 2021, the Company sold 1,446,760 shares on a forward basis under the ATM common stock offering program at a price of $34.56 per share, or $50.0 million. The Company does not initially receive any proceeds from the sale of shares on a forward basis. The Company has until April 5, 2022 to settle the forward contract, which had net proceeds of $48.9 million available as of June 30, 2021.

Subsequent to June 30, 2021, the Company sold 1,719,849 shares under the ATM common stock offering program at a price of $37.98 per share, or $65.3 million, and $37.67 per share net of sales agent fees.

As of June 30, 2021, net debt to annualized Run Rate Adjusted EBITDAre was 4.7x and Liquidity was $477.7 million.

On July 8, 2021, the Company entered into a note purchase agreement to issue $325 million of fixed rate senior unsecured notes in a private placement offering with a weighted average interest rate of 2.82% as of the issuance date. The transaction consists of $275 million of 2.80% notes with a ten-year term maturing on September 29, 2031, and $50 million of 2.95% notes with a twelve-year term maturing on September 28, 2033.

Conference Call

The Company will host a conference call tomorrow, Wednesday, July 28, 2021, 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 13720904.

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

Supplemental Schedule

The Company has provided a supplemental information package with additional disclosure and financial information on its website (www.stagindustrial.com) under the "Quarterly Results" tab in the Investor Relations section.

 

 

CONSOLIDATED BALANCE SHEETS

STAG Industrial, Inc.

(unaudited, in thousands, except share data) 

 



June 30, 2021



December 31, 2020

Assets







Rental Property:







Land

$

510,413





$

492,783



Buildings and improvements, net of accumulated depreciation of $552,967 and $495,348,

respectively

3,630,823





3,532,608



Deferred leasing intangibles, net of accumulated amortization of $260,893 and $258,005,

respectively

482,672





499,802



Total rental property, net

4,623,908





4,525,193



Cash and cash equivalents

14,588





15,666



Restricted cash

3,927





4,673



Tenant accounts receivable

83,262





77,796



Prepaid expenses and other assets

51,639





43,471



Interest rate swaps

1,704







Operating lease right-of-use assets

24,634





25,403



Assets held for sale, net

2,737





444



Total assets

$

4,806,399





$

4,692,646



Liabilities and Equity







Liabilities:







Unsecured credit facility

$

284,000





$

107,000



Unsecured term loans, net

970,930





971,111



Unsecured notes, net

573,390





573,281



Mortgage notes, net

55,811





51,898



Accounts payable, accrued expenses and other liabilities

65,269





69,765



Interest rate swaps

28,795





40,656



Tenant prepaid rent and security deposits

30,732





27,844



Dividends and distributions payable

19,803





19,379



Deferred leasing intangibles, net of accumulated amortization of $17,510 and $15,759,

respectively

32,929





32,762



Operating lease liabilities

27,838





27,898



Total liabilities

2,089,497





1,921,594



Equity:







Preferred stock, par value $0.01 per share, 20,000,000 shares authorized at June 30, 2021 and

December 31, 2020,







Series C, -0- and 3,000,000 shares (liquidation preference of $25.00 per share) issued and

outstanding at June 30, 2021 and December 31, 2020, respectively





75,000



Common stock, par value $0.01 per share, 300,000,000 shares authorized at June 30, 2021

and December 31, 2020, respectively, 160,315,538 and 158,209,823 shares issued and

outstanding at June 30, 2021 and December 31, 2020, respectively

1,603





1,582



Additional paid-in capital

3,486,942





3,421,721



Cumulative dividends in excess of earnings

(804,113)





(742,071)



Accumulated other comprehensive loss

(26,742)





(40,025)



Total stockholders' equity

2,657,690





2,716,207



Noncontrolling interest

59,212





54,845



Total equity

2,716,902





2,771,052



Total liabilities and equity

$

4,806,399





$

4,692,646











 

 

CONSOLIDATED STATEMENTS OF OPERATIONS

STAG Industrial, Inc.

(unaudited, in thousands, except per share data)

 



Three months ended June 30,



Six months ended June 30,



2021



2020



2021



2020

Revenue















Rental income

$

137,805





$

117,471





$

271,630





$

235,810



Other income

622





146





792





355



Total revenue

138,427





117,617





272,422





236,165



Expenses















Property

25,356





20,392





52,358





42,339



General and administrative

12,578





9,406





25,368





19,779



Depreciation and amortization

57,332





53,606





115,739





106,294



Other expenses

511





588





1,363





1,064



Total expenses

95,777





83,992





194,828





169,476



Other income (expense)















Interest and other income

30





156





62





235



Interest expense

(15,273)





(15,333)





(30,631)





(30,197)



Debt extinguishment and modification expenses





(834)





(679)





(834)



Gain on involuntary conversion





657









657



Gain on the sales of rental property, net

5,976





1,045





12,385





47,804



Total other income (expense)

(9,267)





(14,309)





(18,863)





17,665



Net income

$

33,383





$

19,316





$

58,731





$

84,354



Less: income attributable to noncontrolling interest after preferred

stock dividends

733





407





1,206





2,005



Net income attributable to STAG Industrial, Inc.

$

32,650





$

18,909





$

57,525





$

82,349



Less: preferred stock dividends





1,289





1,289





2,578



Less: redemption of preferred stock









2,582







Less: amount allocated to participating securities

74





68





147





136



Net income attributable to common stockholders

$

32,576





$

17,552





$

53,507





$

79,635



Weighted average common shares outstanding — basic

159,736





148,663





159,086





148,116



Weighted average common shares outstanding — diluted

161,367





149,027





160,249





148,341



Net income per share — basic and diluted















Net income per share attributable to common stockholders — basic

$

0.20





$

0.12





$

0.34





$

0.54



Net income per share attributable to common stockholders — diluted

$

0.20





$

0.12





$

0.33





$

0.54



















 

 

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

STAG Industrial, Inc.

(unaudited, in thousands) 

 



Three months ended June 30,



Six months ended June 30,



2021



2020



2021



2020

NET OPERATING INCOME RECONCILIATION















Net income

$

33,383





$

19,316





$

58,731





$

84,354



General and administrative

12,578





9,406





25,368





19,779



Transaction costs

59





8





79





59



Depreciation and amortization

57,332





53,606





115,739





106,294



Interest and other income

(30)





(156)





(62)





(235)



Interest expense

15,273





15,333





30,631





30,197



Gain on involuntary conversion





(657)









(657)



Debt extinguishment and modification expenses





834





679





834



Other expenses

452





580





1,284





1,005



Gain on the sales of rental property, net

(5,976)





(1,045)





(12,385)





(47,804)



Net operating income

$

113,071





$

97,225





$

220,064





$

193,826



















Net operating income

$

113,071





$

97,225





$

220,064





$

193,826



Straight-line rent adjustments, net

(5,414)





(3,529)





(11,261)





(8,514)



Straight-line termination, solar and other income adjustments, net

786





1,766





1,844





2,887



Amortization of above and below market leases, net

325





1,168





1,799





2,152



Cash net operating income

$

108,768





$

96,630





$

212,446





$

190,351



















Cash net operating income

$

108,768















Cash NOI from acquisitions' and dispositions' timing

1,179















Cash termination, solar and other income

(1,663)















Run Rate Cash NOI

$

108,284































Same Store Portfolio NOI















Total NOI

$

113,071





$

97,225





$

220,064





$

193,826



Less: NOI non-same-store properties

(18,159)





(7,179)





(34,988)





(13,106)



Termination, solar and other adjustments, net

(875)





(728)





(404)





(789)



Same Store NOI

$

94,037





$

89,318





$

184,672





$

179,931



Less: straight-line rent adjustments, net

(3,892)





(3,349)





(6,289)





(8,319)



Amortization of above and below market leases, net

736





1,064





1,438





1,965



Same Store Cash NOI

$

90,881





$

87,033





$

179,821





$

173,577



















EBITDA FOR REAL ESTATE (EBITDAre) RECONCILIATION















Net income

$

33,383





$

19,316





$

58,731





$

84,354



Depreciation and amortization

57,332





53,606





115,739





106,294



Interest and other income

(30)





(156)





(62)





(235)



Interest expense

15,273





15,333





30,631





30,197



Gain on the sales of rental property, net

(5,976)





(1,045)





(12,385)





(47,804)



EBITDAre

$

99,982





$

87,054





$

192,654





$

172,806



















ADJUSTED EBITDAre RECONCILIATION















EBITDAre

$

99,982





$

87,054





$

192,654





$

172,806



Straight-line rent adjustments, net

(4,997)





(3,415)





(10,731)





(8,385)



Amortization of above and below market leases, net

325





1,168





1,799





2,152



Non-cash compensation expense

4,539





2,938





9,154





5,790



Termination, solar and other income, net

(877)





(1,267)





(554)





(1,328)



Transaction costs

59





8





79





59



Non-recurring other expenses









400







Gain on involuntary conversion





(657)









(657)



Debt extinguishment and modification expenses





834





679





834



Adjusted EBITDAre

$

99,031





$

86,663





$

193,480





$

171,271



















Adjusted EBITDAre

$

99,031















Adjusted EBITDAre from acquisitions' and dispositions' timing

1,179















Run Rate Adjusted EBITDAre

$

100,210































 

 

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

STAG Industrial, Inc.

(unaudited, in thousands, except per share data)

 



Three months ended June 30,



Six months ended June 30,



2021



2020



2021



2020

CORE FUNDS FROM OPERATIONS RECONCILIATION















Net income

$

33,383





$

19,316





$

58,731





$

84,354



Rental property depreciation and amortization

57,291





53,537





115,630





106,154



Gain on the sales of rental property, net

(5,976)





(1,045)





(12,385)





(47,804)



Funds from operations

$

84,698





$

71,808





$

161,976





$

142,704



Preferred stock dividends





(1,289)





(1,289)





(2,578)



Redemption of preferred stock









(2,582)







Amount allocated to restricted shares of common stock and unvested units

(224)





(196)





(461)





(406)



Funds from operations attributable to common stockholders

and unit holders

$

84,474





$

70,323





$

157,644





$

139,720



















Funds from operations attributable to common stockholders

and unit holders

$

84,474





$

70,323





$

157,644





$

139,720



Amortization of above and below market leases, net

325





1,168





1,799





2,152



Transaction costs

59





8





79





59



Non-recurring dead deal costs





108





412





307



Debt extinguishment and modification expenses





834





679





834



Gain on involuntary conversion





(657)









(657)



Redemption of preferred stock









2,582







Retirement plan adoption

1,401









2,903







Core funds from operations

$

86,259





$

71,784





$

166,098





$

142,415



















Weighted average common shares and units















Weighted average common shares outstanding

159,736





148,663





159,086





148,116



Weighted average units outstanding

3,164





3,291





3,148





3,351



Weighted average common shares and units - basic

162,900





151,954





162,234





151,467



Dilutive shares

1,631





364





1,163





225



Weighted average common shares, units, and other dilutive

shares - diluted

164,531





152,318





163,397





151,692



Core funds from operations per share / unit - basic

$

0.53





$

0.47





$

1.02





$

0.94



Core funds from operations per share / unit - diluted

$

0.52





$

0.47





$

1.02





$

0.94



















CASH AVAILABLE FOR DISTRIBUTION RECONCILIATION















Core funds from operations

$

86,259





$

71,784





$

166,098





$

142,415



Non-rental property depreciation and amortization

41





69





109





140



Straight-line rent adjustments, net

(4,997)





(3,415)





(10,731)





(8,385)



Straight-line termination, solar and other income adjustments, net

786





1,766





1,844





2,887



Recurring capital expenditures

(258)





(152)





(263)





(471)



Non-recurring capital expenditures

(5,000)





(2,742)





(8,817)





(10,200)



Capital expenditures reimbursed by tenants

(1,267)





(576)





(1,635)





(3,363)



New lease commissions and tenant improvements

(1,417)





(338)





(3,121)





(3,518)



Renewal lease commissions and tenant improvements

(1,813)





(1,077)





(3,794)





(1,737)



Non-cash portion of interest expense

789





746





1,276





1,422



Non-cash compensation expense

1,636





2,938





6,251





5,790



Cash available for distribution

$

74,759





$

69,003





$

147,217





$

124,980



















 

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, 2020. 

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, debt extinguishment and modification expenses, 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.

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, debt extinguishment and modification expenses, 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, debt extinguishment and modification expenses, 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.

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.

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, 2020.

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.

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, 2020, 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.

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/stag-industrial-announces-second-quarter-2021-results-301342464.html

SOURCE STAG Industrial, Inc.

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