BOSTON, Nov. 1, 2018 /PRNewswire/ -- STAG
Industrial, Inc. (the "Company") (NYSE: STAG), today announced
its financial and operating results for the quarter ended
September 30, 2018.
"The third quarter results were strong across the organization"
said Ben Butcher, Chief Executive
Officer of the Company. "The third quarter and year-to-date results
set up for a strong finish to 2018. We continue to be focused
on delivering bottom line per share growth and we are confident in
our ability to do so based on our attractive internal and external
growth opportunities."
Third Quarter 2018 Highlights
- Reported $0.07 of net income per
basic and diluted common share for the third quarter of 2018, as
compared to $0.20 of net income per
basic and diluted common share for the third quarter of 2017.
Reported $7.2 million of net income
attributable to common stockholders for the third quarter of 2018
compared to net income attributable to common stockholders of
$18.5 million for the third quarter
of 2017.
- Achieved $0.45 of Core FFO per
diluted share for the third quarter of 2018, an increase of 4.7%
compared to the third quarter of 2017 of $0.43. Generated Core FFO of $49.9 million for the third quarter of 2018
compared to $42.4 million for the
third quarter of 2017, an increase of 17.7%.
- Generated Cash NOI of $70.2
million for the third quarter of 2018, an increase of 13.2%
compared to the third quarter of 2017 of $62.0 million.
- Acquired 15 buildings in the third quarter of 2018, consisting
of 3.3 million square feet, for $194.5
million with a weighted average Capitalization Rate of
6.9%.
- Sold four buildings in the third quarter of 2018, consisting of
339,956 square feet for $10.5
million, resulting in a gain of $3.2
million.
- Achieved an Occupancy Rate of 95.4% on the total portfolio and
96.0% on the Operating Portfolio as of September 30, 2018.
- Executed Operating Portfolio leases for 1.1 million square feet
for the third quarter of 2018, resulting in a Cash Rent Change and
Straight-line Rent Change of 5.9% and 10.6%, respectively.
- Experienced 77.3% Retention for 1.3 million square feet of
leases expiring in the quarter.
- Produced Same Store cash NOI growth of 1.4% for the third
quarter of 2018 compared to the third quarter of 2017, and 0.5% for
the nine months ended September 30,
2018 compared to the nine months ended September 30, 2017.
- Raised gross proceeds of $99.7
million of equity through the Company's at-the-market
offering ("ATM") program for the third quarter of 2018.
- On July 11, 2018, the Company
redeemed all $70 million of the
outstanding 6.625% Series B Preferred Stock.
- On July 26, 2018, the Company
refinanced and upsized the unsecured revolving credit facility and
originated a new five and a half year, $175
million unsecured term loan.
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,
November 2, 2018 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 2018
KEY FINANCIAL MEASURES
|
|
|
Three months ended
September 30,
|
|
|
|
Nine months ended
September 30,
|
|
|
|
|
2018
|
|
2017
|
|
% Change
|
|
2018
|
|
2017
|
|
% Change
|
(in $000s, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$7,237
|
|
$18,478
|
|
(60.8)
|
%
|
|
$38,215
|
|
$15,008
|
|
154.6
|
%
|
Net income per
common share — basic
|
|
$0.07
|
|
$0.20
|
|
(65.0)
|
%
|
|
$0.38
|
|
$0.17
|
|
123.5
|
%
|
Net income per
common share — diluted
|
|
$0.07
|
|
$0.20
|
|
(65.0)
|
%
|
|
$0.38
|
|
$0.17
|
|
123.5
|
%
|
Cash NOI
|
|
$70,169
|
|
$61,976
|
|
13.2
|
%
|
|
$201,944
|
|
$176,470
|
|
14.4
|
%
|
Same Store Cash NOI
(1)
|
|
$58,577
|
|
$57,762
|
|
1.4
|
%
|
|
$152,693
|
|
$151,925
|
|
0.5
|
%
|
Adjusted
EBITDAre
|
|
$63,196
|
|
$55,728
|
|
13.4
|
%
|
|
$181,804
|
|
$157,195
|
|
15.7
|
%
|
Core FFO
|
|
$49,886
|
|
$42,395
|
|
17.7
|
%
|
|
$141,720
|
|
$116,278
|
|
21.9
|
%
|
Core FFO per share
/ unit — basic
|
|
$0.45
|
|
$0.44
|
|
2.3
|
%
|
|
$1.34
|
|
$1.27
|
|
5.5
|
%
|
Core FFO per share
/ unit — diluted
|
|
$0.45
|
|
$0.43
|
|
4.7
|
%
|
|
$1.33
|
|
$1.26
|
|
5.6
|
%
|
AFFO
|
|
$48,749
|
|
$40,954
|
|
19.0
|
%
|
|
$136,654
|
|
$114,726
|
|
19.1
|
%
|
(1) The Same
Store pool accounted for 82.0% and 73.1% of the total portfolio
square footage for the three and nine months ended
September 30, 2018, respectively.
|
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, 2018, the Company
acquired 15 buildings for $194.5
million with an Occupancy Rate of 100% upon acquisition. The
chart below details the acquisition activity for the quarter:
THIRD QUARTER 2018
ACQUISITION ACTIVITY
|
Market
|
Date
Acquired
|
Square
Feet
|
Buildings
|
Purchase Price
($000s)
|
W.A. Lease Term
(Years)
|
Capitalization
Rate
|
Knoxville,
TN
|
7/10/2018
|
106,000
|
1
|
$6,477
|
9.9
|
|
Pittsburgh,
PA
|
8/2/2018
|
265,568
|
1
|
19,186
|
3.0
|
|
Raleigh/Durham,
NC
|
8/2/2018
|
365,000
|
1
|
21,067
|
19.0
|
|
Detroit,
MI
|
8/6/2018
|
439,150
|
1
|
21,077
|
5.5
|
|
Des Moines,
IA
|
8/8/2018
|
121,922
|
1
|
6,053
|
9.7
|
|
McAllen/Edinburg/Pharr,TX
|
8/9/2018
|
270,084
|
1
|
18,523
|
9.9
|
|
Pittsburgh,
PA
|
8/15/2018
|
200,500
|
1
|
11,327
|
8.2
|
|
Minneapolis/St Paul,
MN
|
8/24/2018
|
120,606
|
1
|
8,422
|
6.3
|
|
Milwaukee/Madison,
WI
|
9/28/2018
|
100,800
|
1
|
7,484
|
4.9
|
|
Milwaukee/Madison,
WI
|
9/28/2018
|
174,633
|
2
|
13,288
|
7.8
|
|
Chicago,
IL
|
9/28/2018
|
105,637
|
1
|
6,368
|
4.8
|
|
Indianapolis,
IN
|
9/28/2018
|
478,721
|
1
|
29,085
|
11.0
|
|
Augusta/Richmond
County, GA
|
9/28/2018
|
203,726
|
1
|
9,379
|
10.0
|
|
Charlotte,
NC
|
9/28/2018
|
301,000
|
1
|
16,807
|
4.8
|
|
Total / weighted
average
|
|
3,253,347
|
15
|
$194,543
|
8.8
|
6.9%
|
The chart below details the 2018 acquisition activity and
Pipeline through November 1, 2018:
2018 ACQUISITION
ACTIVITY AND PIPELINE DETAIL
|
|
Square
Feet
|
Buildings
|
Purchase Price
($000s)
|
W.A. Lease Term
(Years)
|
Capitalization
Rate
|
Q1
|
1,091,868
|
6
|
$78,821
|
6.2
|
6.7%
|
Q2
|
2,726,162
|
15
|
185,300
|
7.7
|
7.1%
|
Q3
|
3,253,347
|
15
|
194,543
|
8.8
|
6.9%
|
Total / weighted
average
|
7,071,377
|
36
|
$458,664
|
8.0
|
7.0%
|
|
|
|
|
|
|
As of November 1,
2018
|
|
|
|
|
|
Subsequent to
quarter-end acquisitions
|
297,731
|
3
|
$23,977
|
|
|
|
|
|
|
|
|
Pipeline
|
35.3
million
|
156
|
$2.2
billion
|
|
|
The chart below details the disposition activity for the nine
months ended September 30, 2018:
2018 DISPOSITION
ACTIVITY
|
|
Square
Feet
|
Buildings
|
Sale Price
($000s)
|
Q1
|
650,636
|
2
|
$50,379
|
Q2
|
1,009,021
|
5
|
31,200
|
Q3
|
339,956
|
4
|
10,495
|
Total
|
1,999,613
|
11
|
$92,074
|
Operating Portfolio Leasing Activity
The chart below details the leasing activity for leases signed
during the three months ended September 30, 2018:
THIRD QUARTER 2018
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
|
New leases
|
544,253
|
5.6
|
$4.26
|
$4.41
|
$1.14
|
$1.41
|
(4.1)%
|
(0.4)%
|
Renewal
Leases
|
523,306
|
3.6
|
4.37
|
4.52
|
0.47
|
0.07
|
13.9%
|
19.5%
|
Total / weighted
average
|
1,067,559
|
4.6
|
$4.31
|
$4.46
|
$0.81
|
$0.76
|
5.9%
|
10.6%
|
The chart below details the leasing activity for leases signed
during the nine months ended September 30, 2018:
2018 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
|
New leases
|
1,756,935
|
6.8
|
$3.73
|
$3.87
|
$1.35
|
$0.92
|
9.9%
|
17.7%
|
Renewal
Leases
|
5,254,633
|
4.6
|
3.98
|
4.11
|
0.38
|
0.23
|
7.4%
|
14.1%
|
Total / weighted
average
|
7,011,568
|
5.1
|
$3.91
|
$4.05
|
$0.63
|
$0.40
|
7.9%
|
14.7%
|
The chart below details the Retention activity for the nine
months ended September 30, 2018:
2018
RETENTION
|
|
Expiring Square
Footage
|
Retained Square
Footage
|
W.A. Lease Term
(Years)
|
Retention
|
Q1
|
5,579,301
|
4,640,916
|
5.5
|
83.2%
|
Q2
|
1,740,723
|
1,523,971
|
3.8
|
87.5%
|
Q3
|
1,330,937
|
1,028,546
|
4.6
|
77.3%
|
Total / weighted
average
|
8,650,961
|
7,193,433
|
5.0
|
83.2%
|
Liquidity and Capital Market Activity
As of September 30, 2018, the net debt to annualized Run
Rate Adjusted EBITDAre was 5.1x.
On July 11, 2018, the Company
redeemed all $70 million of the
outstanding 6.625% Series B Preferred Stock.
On July 26, 2018, the Company
closed on the refinancing of the unsecured revolving credit
facility ("revolver"). The transaction included extending the
maturity date, increasing the size of the revolver, and reducing
the borrowing costs of the revolver. The revolver matures on
January 15, 2023, the size was
increased to $500 million, and the
credit spread was reduced to 1.05% at current leverage levels.
Additionally, on July 26, 2018,
the Company closed on a new $175
million, five and half year unsecured term loan. The
new term loan bears a current interest rate of LIBOR plus a spread
of 1.20% and matures on January 15,
2024. On July 24, 2018, the
Company entered into four interest rate swaps to fix the interest
rate on the new term loan, which will bear a fixed interest rate of
4.12% inclusive of these swaps.
On July 27, 2018, the Company drew
the remaining $75 million of
unsecured term loan D.
The chart below details the ATM program activity for the nine
months ended September 30, 2018:
2018 ATM
ACTIVITY
|
ATM
|
Shares
Issued
|
Price per
Share
(Weighted Avg)
|
Gross
Proceeds
($000s)
|
Net
Proceeds
($000s)
|
Q1
|
-
|
-
|
-
|
-
|
Q2
|
6,819,580
|
$25.92
|
176,762
|
175,003
|
Q3
|
3,568,382
|
$27.94
|
99,695
|
98,566
|
Total / weighted
average
|
10,387,962
|
$26.61
|
$276,457
|
$273,569
|
Subsequent to quarter end, the Company sold 1,064,152 shares
under its ATM program for gross proceeds of $28.8 million.
Conference Call
The Company will host a conference call tomorrow, Friday, November 2, 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 13683770.
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 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.
CONSOLIDATED
BALANCE SHEETS
|
STAG
Industrial, Inc.
|
(unaudited, in
thousands, except share data)
|
|
|
September 30,
2018
|
|
December 31,
2017
|
Assets
|
|
|
|
Rental
Property:
|
|
|
|
Land
|
$
|
355,590
|
|
|
$
|
321,560
|
|
Buildings and
improvements, net of accumulated depreciation of $301,787 and
$249,057, respectively
|
2,202,755
|
|
|
1,932,764
|
|
Deferred leasing
intangibles, net of accumulated amortization of $237,892 and
$280,642, respectively
|
327,734
|
|
|
313,253
|
|
Total rental
property, net
|
2,886,079
|
|
|
2,567,577
|
|
Cash and cash
equivalents
|
6,024
|
|
|
24,562
|
|
Restricted
cash
|
5,231
|
|
|
3,567
|
|
Tenant accounts
receivable, net
|
39,170
|
|
|
33,602
|
|
Prepaid expenses and
other assets
|
35,122
|
|
|
25,364
|
|
Interest rate
swaps
|
17,649
|
|
|
6,079
|
|
Assets held for sale,
net
|
—
|
|
|
19,916
|
|
Total
assets
|
$
|
2,989,275
|
|
|
$
|
2,680,667
|
|
Liabilities and
Equity
|
|
|
|
Liabilities:
|
|
|
|
Unsecured credit
facility
|
$
|
95,000
|
|
|
$
|
271,000
|
|
Unsecured term loans,
net
|
596,085
|
|
|
446,265
|
|
Unsecured notes,
net
|
572,389
|
|
|
398,234
|
|
Mortgage notes,
net
|
56,993
|
|
|
58,282
|
|
Accounts payable,
accrued expenses and other liabilities
|
53,445
|
|
|
43,216
|
|
Interest rate
swaps
|
—
|
|
|
1,217
|
|
Tenant prepaid rent
and security deposits
|
19,328
|
|
|
19,045
|
|
Dividends and
distributions payable
|
14,530
|
|
|
11,880
|
|
Deferred leasing
intangibles, net of accumulated amortization of $13,043 and
$13,555, respectively
|
20,708
|
|
|
21,221
|
|
Total
liabilities
|
1,428,478
|
|
|
1,270,360
|
|
Equity:
|
|
|
|
Preferred stock, par
value $0.01 per share, 15,000,000 shares authorized,
|
|
|
|
Series B, -0- and
2,800,000 shares (liquidation preference of $25.00 per share)
issued and
outstanding at September 30, 2018 and December 31, 2017,
respectively
|
—
|
|
|
70,000
|
|
Series C, 3,000,000
shares (liquidation preference of $25.00 per share) issued and
outstanding at September 30, 2018 and December 31,
2017
|
75,000
|
|
|
75,000
|
|
Common stock, par
value $0.01 per share, 150,000,000 shares authorized, 107,825,791
and
97,012,543 shares issued and outstanding at September 30, 2018 and
December 31, 2017,
respectively
|
1,078
|
|
|
970
|
|
Additional paid-in
capital
|
2,003,983
|
|
|
1,725,825
|
|
Cumulative dividends
in excess of earnings
|
(589,785)
|
|
|
(516,691)
|
|
Accumulated other
comprehensive income
|
16,485
|
|
|
3,936
|
|
Total stockholders'
equity
|
1,506,761
|
|
|
1,359,040
|
|
Noncontrolling
interest
|
54,036
|
|
|
51,267
|
|
Total
equity
|
1,560,797
|
|
|
1,410,307
|
|
Total liabilities
and equity
|
$
|
2,989,275
|
|
|
$
|
2,680,667
|
|
|
|
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
STAG
Industrial, Inc.
|
(unaudited, in
thousands, except per share data)
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Revenue
|
|
|
|
|
|
|
|
Rental
income
|
$
|
75,159
|
|
|
$
|
65,673
|
|
|
$
|
217,227
|
|
|
$
|
186,621
|
|
Tenant
recoveries
|
13,518
|
|
|
12,366
|
|
|
39,443
|
|
|
32,952
|
|
Other
income
|
269
|
|
|
105
|
|
|
1,033
|
|
|
244
|
|
Total
revenue
|
88,946
|
|
|
78,144
|
|
|
257,703
|
|
|
219,817
|
|
Expenses
|
|
|
|
|
|
|
|
Property
|
17,112
|
|
|
15,401
|
|
|
50,735
|
|
|
42,312
|
|
General and
administrative
|
8,911
|
|
|
8,380
|
|
|
25,637
|
|
|
25,090
|
|
Property acquisition
costs
|
—
|
|
|
1,386
|
|
|
—
|
|
|
4,684
|
|
Depreciation and
amortization
|
44,355
|
|
|
38,186
|
|
|
125,221
|
|
|
110,286
|
|
Loss on
impairments
|
—
|
|
|
—
|
|
|
2,934
|
|
|
—
|
|
Loss on involuntary
conversion
|
—
|
|
|
—
|
|
|
—
|
|
|
330
|
|
Other
expenses
|
223
|
|
|
58
|
|
|
864
|
|
|
1,502
|
|
Total
expenses
|
70,601
|
|
|
63,411
|
|
|
205,391
|
|
|
184,204
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
Interest and other
income
|
3
|
|
|
2
|
|
|
16
|
|
|
10
|
|
Interest
expense
|
(12,698)
|
|
|
(10,446)
|
|
|
(35,602)
|
|
|
(31,557)
|
|
Loss on
extinguishment of debt
|
(13)
|
|
|
(13)
|
|
|
(13)
|
|
|
(15)
|
|
Gain on the sales of
rental property, net
|
3,239
|
|
|
17,563
|
|
|
32,276
|
|
|
19,225
|
|
Total other income
(expense)
|
(9,469)
|
|
|
7,106
|
|
|
(3,323)
|
|
|
(12,337)
|
|
Net
income
|
$
|
8,876
|
|
|
$
|
21,839
|
|
|
$
|
48,989
|
|
|
$
|
23,276
|
|
Less: income
attributable to noncontrolling interest after preferred
stock dividends
|
281
|
|
|
828
|
|
|
1,589
|
|
|
673
|
|
Net income
attributable to STAG Industrial, Inc.
|
$
|
8,595
|
|
|
$
|
21,011
|
|
|
$
|
47,400
|
|
|
$
|
22,603
|
|
Less: preferred stock
dividends
|
1,289
|
|
|
2,449
|
|
|
6,315
|
|
|
7,345
|
|
Less: redemption of
preferred stock
|
—
|
|
|
—
|
|
|
2,661
|
|
|
—
|
|
Less: amount
allocated to participating securities
|
69
|
|
|
84
|
|
|
209
|
|
|
250
|
|
Net income
attributable to common stockholders
|
$
|
7,237
|
|
|
$
|
18,478
|
|
|
$
|
38,215
|
|
|
$
|
15,008
|
|
Weighted average
common shares outstanding — basic
|
105,783
|
|
|
92,787
|
|
|
101,095
|
|
|
87,632
|
|
Weighted average
common shares outstanding — diluted
|
106,333
|
|
|
93,435
|
|
|
101,495
|
|
|
88,238
|
|
Net income per
share — basic and diluted
|
|
|
|
|
|
|
|
Net income per share
attributable to common stockholders — basic
|
$
|
0.07
|
|
|
$
|
0.20
|
|
|
$
|
0.38
|
|
|
$
|
0.17
|
|
Net income per share
attributable to common stockholders — diluted
|
$
|
0.07
|
|
|
$
|
0.20
|
|
|
$
|
0.38
|
|
|
$
|
0.17
|
|
|
|
|
|
|
|
|
|
RECONCILIATIONS OF
GAAP TO NON-GAAP MEASURES
|
STAG
Industrial, Inc.
|
(unaudited, in
thousands)
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
NET OPERATING
INCOME RECONCILIATION
|
|
|
|
|
|
|
|
Net
income
|
$
|
8,876
|
|
|
$
|
21,839
|
|
|
$
|
48,989
|
|
|
$
|
23,276
|
|
Asset management fee
income
|
—
|
|
|
(9)
|
|
|
—
|
|
|
(52)
|
|
General and
administrative
|
8,911
|
|
|
8,380
|
|
|
25,637
|
|
|
25,090
|
|
Property acquisition
costs
|
94
|
|
|
1,386
|
|
|
170
|
|
|
4,684
|
|
Depreciation and
amortization
|
44,355
|
|
|
38,186
|
|
|
125,221
|
|
|
110,286
|
|
Interest and other
income
|
(3)
|
|
|
(2)
|
|
|
(16)
|
|
|
(10)
|
|
Interest
expense
|
12,698
|
|
|
10,446
|
|
|
35,602
|
|
|
31,557
|
|
Loss on
impairments
|
—
|
|
|
—
|
|
|
2,934
|
|
|
—
|
|
Loss on involuntary
conversion
|
—
|
|
|
—
|
|
|
—
|
|
|
330
|
|
Loss on
extinguishment of debt
|
13
|
|
|
13
|
|
|
13
|
|
|
15
|
|
Other
expenses
|
129
|
|
|
260
|
|
|
694
|
|
|
813
|
|
(Gain) loss on
incentive fee
|
—
|
|
|
(202)
|
|
|
—
|
|
|
689
|
|
Gain on the sales of
rental property, net
|
(3,239)
|
|
|
(17,563)
|
|
|
(32,276)
|
|
|
(19,225)
|
|
Net operating
income
|
$
|
71,834
|
|
|
$
|
62,734
|
|
|
$
|
206,968
|
|
|
$
|
177,453
|
|
|
|
|
|
|
|
|
|
Net operating
income
|
$
|
71,834
|
|
|
$
|
62,734
|
|
|
$
|
206,968
|
|
|
$
|
177,453
|
|
Straight-line rent
adjustments, net
|
(2,739)
|
|
|
(1,709)
|
|
|
(8,173)
|
|
|
(4,378)
|
|
Straight-line
termination income adjustments, net
|
(76)
|
|
|
(367)
|
|
|
(57)
|
|
|
(478)
|
|
Intangible
amortization in rental income, net
|
1,150
|
|
|
1,318
|
|
|
3,206
|
|
|
3,873
|
|
Cash net operating
income
|
$
|
70,169
|
|
|
$
|
61,976
|
|
|
$
|
201,944
|
|
|
$
|
176,470
|
|
|
|
|
|
|
|
|
|
Cash net operating
income
|
$
|
70,169
|
|
|
|
|
|
|
|
Cash NOI from
acquisitions' and dispositions' timing
|
2,014
|
|
|
|
|
|
|
|
Cash termination
income
|
(136)
|
|
|
|
|
|
|
|
Run Rate Cash
NOI
|
$
|
72,047
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Store
Portfolio NOI
|
|
|
|
|
|
|
|
Total NOI
|
$
|
71,834
|
|
|
$
|
62,734
|
|
|
$
|
206,968
|
|
|
$
|
177,453
|
|
Less: NOI
non-same-store properties
|
(12,254)
|
|
|
(4,014)
|
|
|
(51,434)
|
|
|
(24,140)
|
|
Less: termination
income
|
(212)
|
|
|
(214)
|
|
|
(352)
|
|
|
(717)
|
|
Same Store
NOI
|
$
|
59,368
|
|
|
$
|
58,506
|
|
|
$
|
155,182
|
|
|
$
|
152,596
|
|
Less: straight-line
rent adjustments, net
|
(1,805)
|
|
|
(1,763)
|
|
|
(4,525)
|
|
|
(3,193)
|
|
Plus: intangible
amortization in rental income, net
|
1,014
|
|
|
1,019
|
|
|
2,036
|
|
|
2,522
|
|
Same Store Cash
NOI
|
$
|
58,577
|
|
|
$
|
57,762
|
|
|
$
|
152,693
|
|
|
$
|
151,925
|
|
|
|
|
|
|
|
|
|
EBITDA FOR REAL
ESTATE (EBITDAre) RECONCILIATION
|
|
|
|
|
|
|
|
Net
income
|
$
|
8,876
|
|
|
$
|
21,839
|
|
|
$
|
48,989
|
|
|
$
|
23,276
|
|
Depreciation and
amortization
|
44,355
|
|
|
38,186
|
|
|
125,221
|
|
|
110,286
|
|
Interest and other
income
|
(3)
|
|
|
(2)
|
|
|
(16)
|
|
|
(10)
|
|
Interest
expense
|
12,698
|
|
|
10,446
|
|
|
35,602
|
|
|
31,557
|
|
Loss on
impairments
|
—
|
|
|
—
|
|
|
2,934
|
|
|
—
|
|
Gain on the sales of
rental property, net
|
(3,239)
|
|
|
(17,563)
|
|
|
(32,276)
|
|
|
(19,225)
|
|
EBITDAre
|
$
|
62,687
|
|
|
$
|
52,906
|
|
|
$
|
180,454
|
|
|
$
|
145,884
|
|
|
|
|
|
|
|
|
|
ADJUSTED
EBITDAre RECONCILIATION
|
|
|
|
|
|
|
|
EBITDAre
|
$
|
62,687
|
|
|
$
|
52,906
|
|
|
$
|
180,454
|
|
|
$
|
145,884
|
|
Straight-line rent
adjustments, net
|
(2,772)
|
|
|
(1,710)
|
|
|
(8,240)
|
|
|
(4,377)
|
|
Intangible
amortization in rental income, net
|
1,150
|
|
|
1,318
|
|
|
3,206
|
|
|
3,873
|
|
Non-cash compensation
expense
|
2,236
|
|
|
2,384
|
|
|
6,671
|
|
|
7,159
|
|
Termination
income
|
(212)
|
|
|
(367)
|
|
|
(470)
|
|
|
(1,062)
|
|
Property acquisition
costs
|
94
|
|
|
1,386
|
|
|
170
|
|
|
4,684
|
|
Loss on involuntary
conversion
|
—
|
|
|
—
|
|
|
—
|
|
|
330
|
|
Loss on
extinguishment of debt
|
13
|
|
|
13
|
|
|
13
|
|
|
15
|
|
(Gain) loss on
incentive fee
|
—
|
|
|
(202)
|
|
|
—
|
|
|
689
|
|
Adjusted
EBITDAre
|
$
|
63,196
|
|
|
$
|
55,728
|
|
|
$
|
181,804
|
|
|
$
|
157,195
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDAre
|
$
|
63,196
|
|
|
|
|
|
|
|
Adjusted
EBITDAre from acquisitions' and dispositions'
timing
|
2,014
|
|
|
|
|
|
|
|
Run Rate Adjusted
EBITDAre
|
$
|
65,210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
CORE FUNDS FROM
OPERATIONS RECONCILIATION
|
|
|
|
|
|
|
|
Net
income
|
$
|
8,876
|
|
|
$
|
21,839
|
|
|
$
|
48,989
|
|
|
$
|
23,276
|
|
Rental property
depreciation and amortization
|
44,281
|
|
|
38,114
|
|
|
124,999
|
|
|
110,069
|
|
Loss on
impairments
|
—
|
|
|
—
|
|
|
2,934
|
|
|
—
|
|
Gain on the sales of
rental property, net
|
(3,239)
|
|
|
(17,563)
|
|
|
(32,276)
|
|
|
(19,225)
|
|
Funds from
operations
|
$
|
49,918
|
|
|
$
|
42,390
|
|
|
$
|
144,646
|
|
|
$
|
114,120
|
|
Preferred stock
dividends
|
(1,289)
|
|
|
(2,449)
|
|
|
(6,315)
|
|
|
(7,345)
|
|
Redemption of
preferred stock
|
—
|
|
|
—
|
|
|
(2,661)
|
|
|
—
|
|
Funds from
operations attributable to common stockholders
and unit holders
|
$
|
48,629
|
|
|
$
|
39,941
|
|
|
$
|
135,670
|
|
|
$
|
106,775
|
|
|
|
|
|
|
|
|
|
Funds from
operations attributable to common stockholders and unit
holders
|
$
|
48,629
|
|
|
$
|
39,941
|
|
|
$
|
135,670
|
|
|
$
|
106,775
|
|
Intangible
amortization in rental income, net
|
1,150
|
|
|
1,318
|
|
|
3,206
|
|
|
3,873
|
|
Property acquisition
costs
|
94
|
|
|
1,386
|
|
|
170
|
|
|
4,684
|
|
Loss on
extinguishment of debt
|
13
|
|
|
13
|
|
|
13
|
|
|
15
|
|
Loss on involuntary
conversion
|
—
|
|
|
—
|
|
|
—
|
|
|
330
|
|
(Gain) loss on
incentive fee
|
—
|
|
|
(202)
|
|
|
—
|
|
|
689
|
|
Gain on swap
ineffectiveness
|
—
|
|
|
(61)
|
|
|
—
|
|
|
(88)
|
|
Redemption of
preferred stock
|
—
|
|
|
—
|
|
|
2,661
|
|
|
—
|
|
Core funds from
operations
|
$
|
49,886
|
|
|
$
|
42,395
|
|
|
$
|
141,720
|
|
|
$
|
116,278
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares, participating securities, performance units and
other units
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding
|
105,783
|
|
|
92,787
|
|
|
101,095
|
|
|
87,632
|
|
Weighted average
participating securities outstanding
|
193
|
|
|
129
|
|
|
197
|
|
|
141
|
|
Weighted average
units outstanding
|
4,080
|
|
|
4,150
|
|
|
4,189
|
|
|
3,875
|
|
Weighted average
common shares, participating securities, and other units -
basic
|
110,056
|
|
|
97,066
|
|
|
105,481
|
|
|
91,648
|
|
Weighted average
performance units and outperformance plan
|
235
|
|
|
143
|
|
|
382
|
|
|
170
|
|
Dilutive common share
equivalents
|
550
|
|
|
648
|
|
|
400
|
|
|
606
|
|
Weighted average
common shares, participating securities, performance and other
units - diluted
|
110,841
|
|
|
97,857
|
|
|
106,263
|
|
|
92,424
|
|
Core funds from
operations per share / unit - basic
|
$
|
0.45
|
|
|
$
|
0.44
|
|
|
$
|
1.34
|
|
|
$
|
1.27
|
|
Core funds from
operations per share / unit - diluted
|
$
|
0.45
|
|
|
$
|
0.43
|
|
|
$
|
1.33
|
|
|
$
|
1.26
|
|
|
|
|
|
|
|
|
|
ADJUSTED FUNDS
FROM OPERATIONS RECONCILIATION
|
|
|
|
|
|
|
|
Core funds from
operations
|
$
|
49,886
|
|
|
$
|
42,395
|
|
|
$
|
141,720
|
|
|
$
|
116,278
|
|
Non-rental property
depreciation and amortization
|
74
|
|
|
72
|
|
|
222
|
|
|
217
|
|
Straight-line rent
adjustments, net
|
(2,772)
|
|
|
(1,710)
|
|
|
(8,240)
|
|
|
(4,377)
|
|
Straight-line
termination income adjustments, net
|
(76)
|
|
|
(367)
|
|
|
(57)
|
|
|
(478)
|
|
Recurring capital
expenditures
|
(695)
|
|
|
(894)
|
|
|
(2,466)
|
|
|
(1,529)
|
|
Renewal lease
commissions and tenant improvements
|
(521)
|
|
|
(1,472)
|
|
|
(2,894)
|
|
|
(4,097)
|
|
Non-cash portion of
interest expense
|
617
|
|
|
546
|
|
|
1,698
|
|
|
1,553
|
|
Non-cash compensation
expense
|
2,236
|
|
|
2,384
|
|
|
6,671
|
|
|
7,159
|
|
Adjusted funds
from operations (1)
|
$
|
48,749
|
|
|
$
|
40,954
|
|
|
$
|
136,654
|
|
|
$
|
114,726
|
|
|
|
|
|
|
|
|
|
(1) Excludes
Non-Recurring Capital Expenditures of approximately $6,581,
$14,607, $4,281 and $12,560 and new leasing commissions and tenant
improvements of approximately $907, $3,327, $1,831 and $3,619 for
the three and nine months ended September 30, 2018 and
2017, respectively.
|
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.
Adjusted Earnings before Interest, Taxes, Depreciation, and
Amortization (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
income and expense, tax, depreciation and amortization, gains or
losses on the sale of rental property, and loss on impairments.
Adjusted EBITDAre further excludes property acquisition
costs, termination income, straight-line rent adjustments, non-cash
compensation, intangible amortization in rental income, gain or
loss on involuntary conversion, loss on extinguishment of debt,
loss on incentive fee, 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.
Capitalization Rate: We define Capitalization Rate as the
estimated weighted average cash Capitalization Rate, 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, 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, 2017.
Cash Rent Change: We define Cash Rent Change as
the percentage change in the base rent of the lease executed 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. This resulted in 192,707 and
1,532,343 square feet to be deemed non-comparable for three and
nine months ended September 30, 2018,
respectively.
Funds from Operations (FFO), Core FFO, and Adjusted FFO
(AFFO): 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, 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 and AFFO
exclude property acquisition costs, intangible amortization in
rental income, loss on extinguishment of debt, gain on involuntary
conversion, gain (loss) on swap ineffectiveness, loss on incentive
fee, and non-recurring other expenses. AFFO also excludes
non-rental property depreciation and amortization, straight-line
rent adjustments, non-cash portion of interest expense, non-cash
compensation expense and deducts Recurring Capital Expenditures and
lease renewal commissions and tenant improvements.
None of FFO, Core FFO or AFFO 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
and AFFO similarly as FFO.
However, because FFO, Core FFO and AFFO 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 calculations of Core FFO and AFFO may not be comparable to
similarly titled measures disclosed by other REITs.
GAAP: U.S. generally accepted accounting principles.
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
and miscellaneous income, less property expenses and real estate
taxes, which excludes depreciation, amortization, loss on
impairments, general and administrative expenses, interest expense,
interest income, asset management fee income, property acquisition
costs, gain or loss on involuntary conversion, loss on
extinguishment of debt, gain on sales of rental property, loss on
incentive fee, and other expenses.
We define Cash NOI as NOI less straight-line rent adjustments
and less intangible amortization in rental income.
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. 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 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 and assets contained
in the Value Add Portfolio.
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 twelve 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 and (iii) an early renewal or
workout, which ultimately does extend the original term for twelve
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.
Stabilization: We define Stabilization for assets under
redevelopment to occur upon 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 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, calculated on a straight-line
basis, of the lease executed 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
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, 2017, 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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SOURCE STAG Industrial, Inc.