Earnings call transcript: STAG Industrial Q2 2025 shows steady growth

STAG Industrial Inc. reported its financial performance for the second quarter of 2025, highlighting a steady increase in core funds from operations (FFO) per share and a solid liquidity position. The company’s stock demonstrated resilience, closing at $36.82, trading near its 52-week high of $39.20. According to InvestingPro data, STAG has maintained a strong dividend track record, raising payments for 15 consecutive years, with a current yield of 4.1%. The firm remains focused on strategic growth through its development platform and acquisition pipeline, positioning itself strongly within the industrial real estate sector.

Key Takeaways

• Core FFO per share increased by 3.3% year-over-year.
• Liquidity stands robust at $961 million.
• Moody’s upgraded the corporate credit rating to Baa2.
• Development projects cover 3 million square feet, with 42% under construction.
• Strong leasing activity with a 24.5% cash leasing spread.

Company Performance

STAG Industrial’s performance in Q2 2025 reflects its strategic focus on growth and stability. The company reported a 3.3% year-over-year increase in core FFO per share, reaching $0.63. This performance is backed by robust revenue growth of 8.6% and an impressive gross profit margin of 79.8%. The stable liquidity position of $961 million and favorable credit rating upgrade by Moody’s further strengthen its position. The firm continues to expand its development platform with 3 million square feet in progress, indicating a proactive approach to meeting market demand.

Financial Highlights

• Core FFO per share: $0.63, up 3.3% year-over-year
• Liquidity: $961 million
• Same-store cash NOI growth: 3% for the quarter, 3.2% year-to-date
• Moody’s credit rating: Upgraded to Baa2

Outlook & Guidance

STAG Industrial maintains a positive outlook, with guidance for core FFO per share set between $2.48 and $2.52 for the year. Analyst consensus shows optimism, with price targets ranging from $35 to $46 per share. The company anticipates same-store cash NOI growth of 3.75% to 4% and expects to retain a strong retention rate of 75%. These projections, combined with InvestingPro’s "GOOD" Financial Health score of 2.97, underline STAG’s solid operational strategy and market position.

Executive Commentary

CEO Bill Crooker expressed optimism, stating, "These large sophisticated tenants expect that market rent growth will start increasing probably at a little faster pace." CFO Mads Pinard highlighted the company’s financial health, noting, "We retain north of $100 million of cash flow after dividends paid." CIO Mike Chase shared a positive outlook for the latter half of the year, saying, "We’re cautiously optimistic about the fact that we will have an active second half of the year."

Risks and Challenges

• Supply chain diversification remains crucial amidst global trade tensions.
• Potential market saturation in key regions could impact growth.
• Economic fluctuations and interest rate changes present ongoing challenges.
• The competitive landscape requires disciplined acquisition strategies.

STAG Industrial’s Q2 2025 earnings call underscores its strategic focus on growth and operational efficiency. With a strong financial foundation and a proactive approach to market demands, the company is well-positioned to navigate future challenges and capitalize on emerging opportunities in the industrial real estate sector. For deeper insights into STAG’s valuation and growth prospects, investors can access comprehensive analysis through InvestingPro’s detailed research reports, which include over 30 additional financial metrics and exclusive ProTips.

Full transcript - STAG Industrial Inc (STAG) Q2 2025:

Conference Operator: Ladies and gentlemen, greetings and welcome to the STAG Industrial, Inc. second quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please signal the operator by pressing star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Steve Zaros, Vice President Investor Relations. Please go ahead.

Mads Pinard, Chief Financial Officer, STAG Industrial: Thank you.

Steve Zaros, Vice President Investor Relations, STAG Industrial: Welcome to STAG Industrial’s conference call covering the second quarter 2025 results. In addition to the press release distributed yesterday, we have posted an unaudited quarterly supplemental information presentation on the company’s website at www.stagindustrial.com under the Investor Relations section. On today’s call, the company’s prepared remarks and answers to your questions will contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today. Examples of forward-looking statements include forecasted core FFO, same-store NOI, G&A, acquisition and disposition volumes, retention rates and other guidance, leasing prospects, rent collections, industry and economic trends, and other matters.

We encourage all listeners to review the more detailed discussion related to these forward-looking statements contained in the company’s filings with the SEC and the definitions and reconciliations of non-GAAP measures contained in the supplemental information package available on the company’s website. As a reminder, forward-looking statements represent management’s estimates as of today. STAG Industrial assumes no obligation to update any forward-looking statements. On today’s call, you’ll hear from Bill Crooker, our Chief Executive Officer, and Mads Pinard, our Chief Financial Officer. Also here with us today is Mike Chase, our Chief Investment Officer, and Steve Kimball, EVP of Real Estate Operations, who are available to answer questions specific to the areas of focus. I’ll now turn the call over to Bill.

Bill Crooker, Chief Executive Officer, STAG Industrial: Thank you, Steve. Good morning, everybody, and welcome to the second quarter earnings call for STAG Industrial. We are pleased to have you join us and look forward to sharing the second quarter 2025 results. Our year to date results have exceeded our initial business plan. For the first half of the year, we had favorable results in our operating portfolio and meaningful progress leasing our development portfolio. I’m pleased to report that we have leased 90.8% of the operating portfolio square feet. We currently expect to lease in 2025, achieving cash leasing spreads of 24.5%. This level of leasing is at a relatively similar pace to last year and consistent over the last few years. In the first quarter, news related to the global trade war drove significant market volatility. Broadly speaking, today the theme has shifted to a general desensitization to tariff headlines.

We are witnessing businesses continue to grow and make corporate decisions in an uncertain environment, a change to the broad pause seen in the past 12 months. While it’s certainly not business as usual, users cannot delay space decisions in perpetuity, and supply chain diversification remains a priority for many companies. On the supply side, we have seen.

The pipeline moderated materially.

New starts are down significantly from the first half of last year. The transaction market has been slow. We are seeing positive leading indicators that the transaction market is becoming more active. We have experienced an uptick in underwritten deals within the last three weeks and maintain a healthy deal pipeline. In June, STAG closed on a 183,000 square foot building in a submarket of Milwaukee, Wisconsin for $18.4 million. This building was acquired at a cash cap rate of 7.1%. The building was a build to suit for the tenant. The site serves as a national distribution facility and is located less than 10 miles away from one of the tenant’s primary manufacturing plants. This acquisition secured a newly constructed Class A asset with a strong credit profile at an accretive level. We had one disposition this quarter.

We sold one non-core building in Calhoun, Georgia for gross proceeds of $9.1 million, representing a cash cap rate of 7.4% and an unlevered IRR of 14%. In terms of our development platform, we have approximately 3 million square feet of development activity across 12 buildings in the U.S. Roughly 42% of the 3 million square feet is under construction. The remaining 58% has been delivered and is currently 69% leased. Included in these numbers is a 95.5% joint venture we entered into in May. We will construct a 500,000 square foot cross-docked warehouse located in a submarket of Louisville, Kentucky. This is an infill site in a supply constrained market due to topography, entitlement, and zoning difficulties. The project is estimated to cost $47 million and is expected to stabilize with a cash yield of 7.1%. The building is expected to be delivered in the second quarter of 2026.

I’m happy with the progress we make in our development initiative. This initiative will be a key component of STAG’s future growth. With that, I will turn it over to Mads, who will cover our remaining results and updates to guidance.

Mads Pinard, Chief Financial Officer, STAG Industrial: Thank you Bill and good morning everyone. Core FFO per share was $0.63 for the quarter, an increase of 3.3% as compared to last year. Leverage remains low with net debt to annualized run-rate adjusted EBITDA equal to 5.1 times. Liquidity stood at $961 million at quarter end. During the quarter we commenced 32 leases totaling 4.2 million square feet, which generated cash and straight-line leasing spreads of 24.6% and 41.1% respectively. Of the 4.2 million square feet of leases commenced, 1.6 million square feet was new leasing. This compares to 280,000 square feet of new leasing in the fourth quarter of 2024 and 280,000 square feet of new leasing in the first quarter of this year. Retention for the quarter was 75.3%. As Bill mentioned, we’ve accomplished 90.8% of the operating portfolio square feet we expect to lease in 2025, achieving 24.5% cash leasing spreads.

Demonstrating the strength of our portfolio, we expect cash leasing spreads to be between 23% and 25% for the year. We achieved same-store cash NOI growth at 3% for the quarter and 3.2% year to date. The primary drivers of our same-store growth in the first half of the year include the leasing spreads of 26.1% and annual escalators of 2.9%, partially offset by average occupancy loss of 90 basis points. In May, Moody’s raised STAG’s corporate credit rating to Baa2 with a stable outlook. Achieving this upgrade despite this year’s market turmoil is a testament to the strength of the STAG platform and balance sheet. On June 25, we funded $550 million of fixed-rate senior unsecured notes from a private placement offering completed in April of this year.

The notes consisted of 5, 8, and 10 year tenors with a weighted average fixed interest rate of 5.65% and a weighted average tenor of 6.5 years. The proceeds were used to pay down the outstanding revolver balance. This quarter we resolved two credit situations we have discussed previously. We reached an agreement with American Tire Distributors, which resulted in the assumption of all seven of our leases. As part of this resolution, STAG granted one month of free rent across five of the seven facilities. Flitem and Chop assumed their lease with no adjustments and no credit loss incurred. Through June 30, we have experienced approximately 17 basis points of cash credit loss, 6 basis points of which was related to the free rent granted to American Tire Distributors. Moving to guidance, we have made the following updates.

Our expected ending same-store portfolio occupancy loss is moderated to 75 basis points as compared to our previous guidance of 100 basis points. We’ve increased our retention guidance to 75% based on leases signed to date. Credit loss guidance has been reduced from 75 basis points to 50 basis points, reflecting the resolution of the American Tire Distributors and Vitamin Shop leases. Cash stands for guidance has been increased to a range of 3.75% to 4% for the year, an increase of 25 basis points at the low end of the range. G&A expectations for the year have been updated to a range of $52 million to $53 million, a decrease of $500,000 at the midpoint. These guidance changes result in a core FFO per share guidance revision to a range of $2.48 to $2.52 per share, an increase of $0.02 at the midpoint.

I will now turn it back over to Bill.

Bill Crooker, Chief Executive Officer, STAG Industrial: Thank you, Mads.

I want to thank our team for their continued hard work and execution in 2025. The team has done an excellent job executing our operating plan in the first half of the year. This strong first half sets us up.

For the rest of the year.

With that, I will now turn it back over to the operator for questions.

Conference Operator: Thank you, ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press STAR and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press STAR and two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the STAR keys. Ladies and gentlemen, we request you to limit to one question and one follow-up question per participant. One moment, please, while we poll for questions. The first question comes from the line of Craig Mailman from Citi. Please go ahead.

Bill Crooker, Chief Executive Officer, STAG Industrial: Hey, good morning Bill. Just want to touch back on leasing. You noted that things are getting better, but it’s clearly not back to normal. Could you just walk through maybe what markets you’re seeing better early signs of recovery versus markets that maybe are a little bit lagging at this point? Yeah, sure, Craig. This quarter was a really strong quarter for leasing. 4 million square feet leased, $1.6 million of that new leasing. As we look at some of the leasing that we’ve addressed in July, we’ve already, I think we’re going to sign about 500,000 square feet of, we’re going to commence about 400,000 to 500,000 square feet of new leases just in July thus far and signings, executed leases in July for around 760,000 square feet. That’s about 600,000 of renewals and about another 100,000 of signed leases for new leases in July.

If you think about markets, the Midwest markets are still doing really well. Minneapolis, Milwaukee, Louisville, Detroit, Cleveland, Nashville has done really well, Houston’s done really well. Some of the weaker markets, I would say, categorize it as more kind of bulk distribution markets: Indianapolis, Columbus, Memphis, still a little bit weaker. You’ve got some markets that have some short-term, I think, tariff uncertainty. Some of the border markets like El Paso would be one that has a little uncertainty short term. We really like that market kind of medium term. That’s helpful. Just to follow up, and maybe it comes at it from two parts, you had mentioned that the transaction market is starting to get a little bit better.

We’ve noticed that there are definitely some users out there, particularly ones like a Samsung that is going to be opening mega plants and they’re buying some assets down in Atlanta. Could you just talk about maybe some of the competition from well-funded users and the impact that could have on some of your markets from a net absorption standpoint, where it may not get picked up as a lease, but it’s essentially a lease of some bigger companies because it’ll be occupied by that user? Yeah, that’s definitely a theme we’re seeing. Our Q1 sale was to a user. We see some sales in our pipeline for dispositions that are going to be some user sales, and those are pretty attractive cap rates and pricing for those transactions. As you noted, it’s taking some vacancy out of the market, which net net is good for landlords in that market.

Where this is happening is really, as we mentioned before, more of those onshore manufacturing markets where you’ve got Midwest, Southeast, and some Texas markets.

Thanks Greg.

Conference Operator: Thank you. The next question comes from the line of Nick Tillman from STAG. Please go ahead.

Hey, good morning guys. Maybe wanted to touch a little bit more on just the leasing and demand, and maybe talking a little bit more on the vacancy within the portfolio and the operating portfolio, less so on the development side and just on the assets. Maybe we’ll call it like stubborn vacancy or areas where you’ve seen just maybe more downtime. Is there any specific markets or asset types that you’re seeing that particular? You guys have a broad breadth of markets, so just kind of want to get some more color there.

Steve Zaros, Vice President Investor Relations, STAG Industrial: Thanks.

Bill Crooker, Chief Executive Officer, STAG Industrial: Yeah, I mean, it’s a broad breadth of markets, and I would even go a step further to say it really depends on the building type in a particular market. Some markets, if you’ve got a 200,000 square foot building, vacancy rates could be 3.5%. If you’ve got a 500,000 square foot building or above, you could be high single digits vacancy rates. It really is a story of building and markets. The markets I just mentioned, I think those are pretty indicative of where you’re seeing some of the higher vacancy rates, but those are really on bigger boxes. I would say overall, when you think about lease up times or down times, when things were really going well there for a while, it was three to six to nine months of lease up time. I think we’re more in 12 months of lease up time for our assets.

Some take a little bit longer and some are a little bit less. In the second quarter, we had a 500,000 square foot facility that we leased up with no downtime. When you take the mix of all that, we’re probably still looking at, you know, on average, 9 to 12 months of lease up for our assets. We’re in a really good spot. I mean, really happy with the results we put forth to date and really happy with the guidance range we had this quarter. Guidance range increase, that’s helpful.

Maybe just following up a little bit, it looks from your expiration schedule that you kind of started working through some of 2026, maybe like 2.7 million square feet of renewals. I guess just a little bit more color on that. Is the timeline on those discussions tracking similar to what it has historically? Have you seen any sort of changes, whether it be in escalators or term, when you kind of are going into those renewal discussions?

Yeah, I mean, that’s another theme, and I’m glad you brought that up, is early renewals for large sophisticated tenants are very active. We’re in active discussions with them. We’ve ticked off a lot of the upcoming expirations in 2026. We’re ahead of where we were last year and the year before with respect to addressing the next year’s lease expirations. I think that speaks to the market in that these large sophisticated tenants expect that market rent growth will start increasing probably at a little faster pace as some of this supply continues to get eaten through this year. Really happy with what we’re doing with the early renewals within our portfolio.

Conference Operator: Thank you. The next question comes from the line of Eric Borden from BMO Capital Markets. Please go ahead.

Steve Zaros, Vice President Investor Relations, STAG Industrial: Hey, good morning, everyone.

Mads Pinard, Chief Financial Officer, STAG Industrial: Bill, I just want to go back.

Steve Zaros, Vice President Investor Relations, STAG Industrial: To your remarks on the acquisition market and how it’s been improving.

Bill Crooker, Chief Executive Officer, STAG Industrial: Underwriting picking up, you know, you left the guidance fairly wide. I’m just curious, what does the.

Steve Zaros, Vice President Investor Relations, STAG Industrial: Pipeline currently consists of in terms of maybe singles and doubles, larger chunkier deals and portfolios today?

Bill Crooker, Chief Executive Officer, STAG Industrial: Mike, do you want to talk specifically about the pipeline, the makeup?

Mike Chase, Chief Investment Officer, STAG Industrial: Yeah, I mean, the pipeline makeup is very similar to what we’ve seen in the past. I think the majority of the pipeline, I’d say 60% plus is kind of our one-off assets, and then 20% to 30% in portfolios, and then beyond that, some development deals. The market has come alive a little bit in the last couple of weeks. We’ve been seeing and underwriting and offering on more assets than we did in the second quarter.

Mads Pinard, Chief Financial Officer, STAG Industrial: So.

Mike Chase, Chief Investment Officer, STAG Industrial: We’re cautiously optimistic about the fact that we will have an active second.

Mads Pinard, Chief Financial Officer, STAG Industrial: Half of the year.

Bill Crooker, Chief Executive Officer, STAG Industrial: Yeah, when you look at the pipeline from Q1 to Q2, I think it’s down a couple hundred million bucks. It’s like $3.4 billion in Q2. What’s more important to note is the pipeline. That $3.4 billion, the bid-ask spread between buyers and sellers is much narrower than it was in Q1. You’re seeing more one-off transactions get done. We’ve been very close on pricing on a number of deals, but we’re continuing to maintain our discipline. We’re looking at transactions that we feel like are good fits for the portfolio. Those buildings fit their submarket and they’re good accretive transactions to us. We kept the range wide, but we maintained our range because, given our team that we have in place, we’ve had quarters where we’ve done $700 million, $800 million of acquisitions in a quarter. I think even last Q4, we did $300 million of acquisitions.

We’ll maintain our discipline, but it certainly feels like that market is improving and it’s improving quite rapidly.

Conference Operator: That’s helpful.

Steve Zaros, Vice President Investor Relations, STAG Industrial: For my follow up just.

Bill Crooker, Chief Executive Officer, STAG Industrial: On the credit upgrade in May, does that provide you additional, you.

Steve Zaros, Vice President Investor Relations, STAG Industrial: Know, debt, borrowing cost savings either in the line or potential future debt raises?

Mads Pinard, Chief Financial Officer, STAG Industrial: Eric, this is Mads. Number one, we’re very happy and very pleased that we’re able to achieve the upgrade, particularly with the backdrop which I mentioned in the prepared remarks. We’ve historically been a private placement issuer. I think, yes, on the margin, if we were to go back to the private placement market, we expect to receive some benefit. What the upgrade does is it allows us to take the next step towards becoming a public bond issuer. We would like to take down an S&P investment grade rating, so we’d have the Moody’s, the Baa2, and the S&P prior to going to that market. It’s our expectation we’ll start working with S&P. I could foresee in the coming 12 months that we would switch from the private to the public bond market. We maintain optionality. We’ve been incredibly successful in the private placement market.

Short answer, we’re very happy. We think there’s maybe some modest benefit in the private placement market that absolutely sets us up for potential public bonds.

Steve Zaros, Vice President Investor Relations, STAG Industrial: All right, thank you very much.

Conference Operator: Thank you. The next question comes from Steve Sakwa from Evercore ISI. Please go ahead. Hi, thanks. This is Sanket on for Steve. Steve, in case of like, how are you guys thinking in terms of financing the deals that you’re trying to close in the second half of this year on the acquisition side? I think you guys have $300 million of that that’s coming due in the first quarter of next year. How are you guys thinking around the financing for this?

Bill Crooker, Chief Executive Officer, STAG Industrial: Yeah, absolutely.

Mads Pinard, Chief Financial Officer, STAG Industrial: Hi, this is Mads again. Good morning. Why don’t I take the second one first? That’s a $300 million term loan returning early next year, and we’re in the process of refinancing it. Typically with bank term loans, you start that process six to nine months prior to expiration. We’re in the middle of that process. We expect a successful transaction. It really is kind of a down the middle rolling back term loan. Hopefully something to announce in the next four to five weeks on that front. In terms of financing generally, as I mentioned, when we look at our long term debt, we look to the private placement market. We funded our $550 million private placement in June, weighted average interest expense of 5.65%, six and a half year tenure. Those proceeds were used to retire the balances on the revolver. We have liquidity approaching $1 billion.

That was the purpose. From a financing perspective and liquidity specifically, we have roughly $1 billion of liquidity in terms of the way that we would finance obviously the apportioned debt. I always like to remember, people paying attention to the STAG stock, we retain north of $100 million of cash flow after dividends paid. That money can be used to finance our development platform and potential acquisitions as well. To the extent necessary and it makes sense, incremental ATM issuance is on the table as well.

Conference Operator: Makes sense. In terms of your development pipeline, how has the demand been on the leasing side for those assets? How are you guys thinking in terms of timing to get those assets leased?

Mads Pinard, Chief Financial Officer, STAG Industrial: Yeah, it’s Steve here.

Steve Kimball, EVP of Real Estate Operations, STAG Industrial: Let me answer that one. Thanks for the question. I look at the development pipeline in three different buckets. We’ve got the in service, which is 76% leased, and we really have two vacancies there. Those two vacancies are in the Greenville market, a market that we’re heavily invested in. There have been notable improvements from prior calls in that market. Their vacancies are now sub 10% and there’s very good activity. We have prospects on both of our vacant spaces there. The second bucket I look at is the complete not in service where we’re 47% leased. What we have is a single building in Tampa. It’s in the Tampa East market, which is again, a good solid market, about 5% vacancy. The fundamentals are good there. We have prospects looking at that building as well. The second building in that bucket is in Nashville.

We leased 200,000 of that building in the second quarter with about 95,000 left there. Again, very healthy market, very strong fundamentals out that I-40 East corridor.

Mads Pinard, Chief Financial Officer, STAG Industrial: We feel really good about that.

Steve Kimball, EVP of Real Estate Operations, STAG Industrial: Those portions when we get into the under construction, when we’re in Reno and Concord, which is Charlotte and Louisville, all good markets, all good product. We’re too early into the construction process. Not a lot of leasing activity to report right now.

Conference Operator: Sounds good. Thanks. That’s it for us. Thank you. The next question comes from the line of Michael Carroll from RBC Capital Markets. Please go ahead. Thanks.

Mads Pinard, Chief Financial Officer, STAG Industrial: I guess.

Bill Crooker, Chief Executive Officer, STAG Industrial: Bill, I wanted to circle back on.

Mads Pinard, Chief Financial Officer, STAG Industrial: Your comments saying that you’re starting to see an uptick in overall acquisition activity. I believe you mentioned that you’re just seeing more underwritten deals in the market the past three weeks. Is there any driver related to that?

Bill Crooker, Chief Executive Officer, STAG Industrial: Is it just related to tariff concerns?

Mads Pinard, Chief Financial Officer, STAG Industrial: Kind of abating and stakeholders just getting much more comfortable bringing assets to market? Is that kind of the driver of what you’re seeing, the improvement over the past three weeks?

Bill Crooker, Chief Executive Officer, STAG Industrial: Yeah, I mean, that’s certainly a component of it. I think seller expectations is a component of it too. Understanding where the capital markets are and what buyers are willing to pay. I think a little bit more conviction on the buyer side, not just us, but just other buyers of, hey, what’s happening in the market is, as time passes, I think people understand that maybe the tariff threats aren’t as bad as they were initially thought to be. I think all that helps. I mean, just the number when we say underwritten deals and we evaluate a lot of deals, we evaluate a lot of deals in the first quarter and then when we take them to further underwriting and presenting them to our internal investment committee, those are deals that we think we’ve got a legitimate shot of winning.

Having that uptick the past three weeks has given us a little that conviction to maintain our guidance range for acquisitions. Now, I do want to note, we’ve said this before, we still anticipate a much more back end weighted acquisition cadence this year. Our initial guidance included that. Very little contribution to core for this year, but we still feel comfortable with the range. The last three weeks of activity has given us a little bit more conviction of that.

Mads Pinard, Chief Financial Officer, STAG Industrial: Okay, great. I know activity is usually back into it, maybe more so this year than normal. How long does it typically take? When do you need to have.

Mike Chase, Chief Investment Officer, STAG Industrial: A deal locked in to close it before year end?

Mads Pinard, Chief Financial Officer, STAG Industrial: I mean, does that happen pretty quickly?

Mike Chase, Chief Investment Officer, STAG Industrial: Do you need like several months to actually close a transaction?

Mads Pinard, Chief Financial Officer, STAG Industrial: You need to start working on it.

Mike Chase, Chief Investment Officer, STAG Industrial: These deals now to get them done before year end.

Bill Crooker, Chief Executive Officer, STAG Industrial: Yeah, I’ll let Mike talk specifically. Year end is interesting. You’ve got sellers that really want to close quick at year end, so when you get from price agreement to PNS to closing, it’s a much more compressed time frame. Mike can walk through a little more details.

Mike Chase, Chief Investment Officer, STAG Industrial: Yeah, I mean, typically a deal from price agreement to closing can be anywhere from 30 to 45 days and maybe 60, depending on the seller and how quickly people are responding. At the year end, typically if we’re within 30 days of the year end, 45 days of the year end, we can close on new transactions. It goes up until mid-November that we can put transactions under contract.

Bill Crooker, Chief Executive Officer, STAG Industrial: We kind of soft circle Thanksgiving as kind of, we can get a deal under price agreement by then, or we’re looking at deals right around Thanksgiving. I think we could still close those by year end.

Conference Operator: Very great.

Mads Pinard, Chief Financial Officer, STAG Industrial: Thank you.

Conference Operator: Thank you. The next question comes from the line of Jason Belcher from Wells Fargo. Please go ahead.

Bill Crooker, Chief Executive Officer, STAG Industrial: Yeah, hi, good morning. Just following up on the development pipeline and specifically the Greenville assets. Just wondering if you could kind of.

Remind us what your timing is.

Your convention is for the timing of capitalized interest and whether you’re still capitalizing.

Mads Pinard, Chief Financial Officer, STAG Industrial: Interest on those assets, and if so.

Bill Crooker, Chief Executive Officer, STAG Industrial: When that’s expected to cease.

Mads Pinard, Chief Financial Officer, STAG Industrial: Hey, Jason, it’s Mads. In terms of capitalized interest, we cease capitalizing interest once the building is complete. These buildings are complete. We are not capitalizing.

Bill Crooker, Chief Executive Officer, STAG Industrial: Got it.

Mads Pinard, Chief Financial Officer, STAG Industrial: Thank you.

Bill Crooker, Chief Executive Officer, STAG Industrial: If you could just give.

us an update on how your embedded.

Rent bumps are trending in the current environment, and any shifts you might have.

Seen there in the last few quarters and what the average is across the portfolio. Yeah, absolutely.

Mads Pinard, Chief Financial Officer, STAG Industrial: As we sit here today, our weighted average rental escalator across the portfolio is 2.9%. That’s going to continue to tick up. Just basically math. We’re not seeing leases that don’t begin with a 3% rental escalator. I would say 12, 18 months ago, you would see the high threes, 3.75%, maybe even 4%. We’re seeing much closer to the 3% to 3.5%. It has been a slight moderation, but that’s not a new trend. That’s something that we’ve been seeing over the last six months. If we’re sitting at 2.9% today and we’re signing leases at 3.25%, that 2.9% is going to continue to edge up. Just simply the weighted math.

Conference Operator: That’s helpful.

Bill Crooker, Chief Executive Officer, STAG Industrial: Thank you all.

Conference Operator: Thank you. The next question comes from the line of Mike Mueller from J.P. Morgan. Please go ahead.

Bill Crooker, Chief Executive Officer, STAG Industrial: Yeah, hi. I guess, following up on acquisitions, a couple things. One, did you think at all about reducing the acquisition guidance or it just wasn’t on the table because it seems like you’re feeling a little bit better. I know you said there’s a little, just a little impact to the 2025 range, but if the past three weeks was, say, a bit of a false start and acquisitions don’t materialize, what’s the sensitivity to 2026? I guess the impact to 2026 if you kind of blank the balance of the year from an acquisition standpoint.

Yeah.

We haven’t given any 2026 guidance, Mike, so we could certainly run some back of the envelope math. I don’t have those numbers right now. If we blank the acquisition numbers for 2025, which I do not expect to happen, it’s probably $0.005 to $0.0075 for the year. With respect to guidance, I mean every piece of guidance we evaluate and we go through.

So.

We want to raise same-store guidance by 25 basis points or keep it flat or raise it 50. Do we want to keep acquisition guidance or raise it or reduce it? I mean those are all conversations we have across every piece of our guidance. I think what’s important is, you know, we spend a lot of time on our guidance, we’re thoughtful about it, and we’re very comfortable with it.

Conference Operator: Got it. Okay.

Bill Crooker, Chief Executive Officer, STAG Industrial: Appreciate it. Thank you.

Conference Operator: Thank you. The next question comes from the line of Jessica Zhang from Green Street. Please go ahead. Morning.

You have a mix of multi and single tenant buildings in your development pipeline today. I’m just curious if the multi tenant category is easier to lease in the current environment, and what are some considerations when deciding which route to take when you start a development project?

Bill Crooker, Chief Executive Officer, STAG Industrial: Jessica, it’s Steve here.

Mads Pinard, Chief Financial Officer, STAG Industrial: Appreciate the question.

Steve Kimball, EVP of Real Estate Operations, STAG Industrial: I think when we set out to build these buildings, we spent a lot of time making sure that they would demise down to multi tenant because there was greater demand in the smaller tenant space at that time and the bulk was moving more slowly. We wanted to make sure we had flexibility. What’s been interesting in the lease up of our portfolio, if you look through it, is we’ve actually done a number of single tenant deals and larger deals. I think the answer is we’ve maintained flexibility in the design of our building in order to deal with all different tenant sizes. So far we’ve been fortunate to land larger tenants than maybe we had originally underwritten.

Bill Crooker, Chief Executive Officer, STAG Industrial: Yeah, I mean, two examples of that, Jessica, are our Tampa building that’s 100% leased and our Greenville building that’s 100% leased. If you look back when those were under construction, those were both identified as multi-tenant buildings. We anticipated leasing those multi-tenant, and as Steve said, we had full building users come by to lease those buildings. When you look at the under construction or even the, you know, the not in service buildings that are multi, those could easily flip to single tenant if we find a full building user. Really, maintaining optionality, getting optionality is important for us.

That’s very helpful. Just as a follow up, I was wondering if you can share some colors around the fundamentals in Nashville. In your mind, what’s been driving the outperformance in that market recently? I know there are several REITs, including yourself, that have active developments in that market right now. What’s the supply backdrop in Nashville today?

Steve Kimball, EVP of Real Estate Operations, STAG Industrial: I’ll go first on the split. First of all, it is often referenced as one of the more healthy markets, the Nashville market. We do have a balance there of both manufacturing and with auto, and we have the distribution market as well. We’re finding in general that markets that have some balance of distribution and manufacturing have remained in a little bit better supply-demand condition. The supply in Nashville was regulated relative to some of the other markets. It didn’t get the attention of the large bulk markets where everyone went in and created an oversupply. It stayed in a good balance and it has a broad range of demand.

Bill Crooker, Chief Executive Officer, STAG Industrial: Yeah, I mean, the broad range of demand. As Steve said, you have manufacturing, good distribution, but you’ve had population growth in that market for the past 10 years. It’s a high consumption market, and that’s also a demand driver.

Great. That’s very helpful. Thank you.

Thank you.

Conference Operator: Thank you, ladies and gentlemen. As there are no further questions, I would now hand the conference over to Bill Crooker for his closing comments.

Bill Crooker, Chief Executive Officer, STAG Industrial: Thanks everybody for joining the call. As always, appreciate the thoughtful questions and we look forward to talking to you soon. Thank you.

Conference Operator: Thank you. The conference of STAG Industrial has now concluded. Thank you for your participation. You may now disconnect your lines.

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