Use these links to rapidly review the document

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

---

FORM 10-K

---

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2016

OR

For the fiscal year ended December 31, 2013
OR
o¨		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                to                .

For the transition period from                  to                 .

Commission file number 1-34907

STAG INDUSTRIAL, INC.

(Exact name of registrant as specified in its charter)

Maryland (State or other jurisdiction of incorporation or organization)		27-3099608 (IRS Employer Identification No.)
One Federal Street, 23rd Floor Boston, Massachusetts (Address of principal executive offices)		02110 (Zip Code)

(617) 574-4777

(Registrant'sRegistrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

	Title of each class				Name of each exchange on which registered
Common Stock, $0.01 par value		New York Stock Exchange
9.0% 6.625% Series AB Cumulative Redeemable Preferred Stock, $0.01 par value		New York Stock Exchange
6.625%6.875% Series BC Cumulative Redeemable Preferred Stock, $0.01 par value		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ýx  No o¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o¨  No ýx

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ýx  No o¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ýx  No o¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant'sregistrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-acceleratednon‑accelerated filer or a smaller reporting company. See the definitions of "large“large accelerated filer," "accelerated filer"” “accelerated filer” and "smaller“smaller reporting company"company” in Rule 12b-2 of the Exchange Act. Check one:

Large accelerated filer ýx		Accelerated filer o¨		Non-accelerated filer o ¨ (Do not check if a smaller reporting company)		Smaller reporting company o¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o¨  No ýx

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was approximately $836.9$1,618 million based on the closing price on the New York Stock Exchange as of June 28, 2013.

30, 2016.

Number of shares of the registrant'sregistrant’s common stock outstanding as of February 24, 2014: 45,101,276

           Number of shares of 9.0% Series A Cumulative Redeemable Preferred Stock as of February 24, 2014: 2,760,000

14, 2017: 82,051,501

Number of shares of 6.625% Series B Cumulative Redeemable Preferred Stock as of February 24, 2014:14, 2017: 2,800,000

Number of shares of 6.875% Series C Cumulative Redeemable Preferred Stock as of February 14, 2017: 3,000,000

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant'sregistrant’s definitive Proxy Statement with respect to its 20142017 Annual Meeting of Stockholders to be filed not later than 120 days after the end of the registrant'sregistrant’s fiscal year are incorporated by reference into Part II, Item 5 and Part III, Items 10, 11, 12, 13 and 14 hereof as noted therein.

---

Table of Contents

STAG INDUSTRIAL, INC.

Table of Contents

STAG INDUSTRIAL, INC.

Table of Contents 

			PART I.
	Item 1.	Business	3
Item 1A.	Risk Factors	11
Item 1B.	Unresolved Staff Comments	27
Item 2.	Properties	27
Item 3.	Legal Proceedings	35
Item 4.	Mine Safety Disclosures	35
	PART II. Business			2
	Item 1A.		Risk Factors			8
	Item 1B.		Unresolved Staff Comments			29
	Item 2.		Properties			29
	Item 3.		Legal Proceedings			38
	Item 4.		Mine Safety Disclosures			38
			PART II.
	Item 5.		Market for Registrant'sRegistrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			3836
	Item 6.		Selected Financial Data			4138
	Item 7.		Management'sManagement’s Discussion and Analysis of Financial ConditionsCondition and Results of Operations			4339
	Item 7A.		Quantitative and Qualitative Disclosures About Market Risk			6562
	Item 8.		Financial Statements and Supplementary Data			6763
	Item 9.		Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	65
Item 9A.	Controls and Procedures	65
Item 9B.	Other Information	65
		67PART III.
	Item 9A.		Controls and Procedures			67
	Item 9B.		Other Information			68
			PART III.
	Item 10.		Directors, Executive Officers and Corporate Governance			6965
	Item 11.		Executive Compensation			6966
	Item 12.		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			6966
	Item 13.		Certain Relationships and Related Transactions, and Director Independence			6966
	Item 14.		Principal Accountant Fees and Services	66
		69PART IV.
			PART IV.
	Item 15.		Exhibits and Financial Statement Schedules	66
Item 16.	Form 10-K Summary	7068

---

PART I.

Table

Introduction

As used herein, except where the context otherwise requires, “Company,” “we,” “our” and “us,” refer to STAG Industrial, Inc. and our consolidated subsidiaries and partnerships, including our operating partnership, STAG Industrial Operating Partnership, L.P. (“Operating Partnership”).

Revision of Contents

Previously Reported Consolidated Financial Statements

In connection with the preparation of our consolidated financial statements for the year ended December 31, 2016, we identified an error in the estimated useful life of a building acquired in the fourth quarter of 2014. As a result of the error, depreciation expense had been overstated and thereby rental property, net and equity were understated. We concluded that the amounts were not material to any of our previously issued consolidated financial statements. Accordingly, we revised these balances in our consolidated financial statements for the years ended December 31, 2015 and December 31, 2014. For more information on this revision, see Note 2 in the accompanying Notes to Consolidated Financial Statements, “Revision of Previously Reported Consolidated Financial Statements” included elsewhere in this Annual Report on Form 10-K.

Forward-Looking Statements

This report, including the information incorporated by reference, contains "forward-looking statements"“forward-looking statements” within the meaning of the safe harbor from civil liability provided for such statements by the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended ("Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"“Exchange Act”)). You can identify forward-lookingforward‑looking statements by the use of words such as "anticipates," "believes," "estimates," "expects," "intends," "may," "plans," "projects," "seeks," "should," "will,"“anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “will,” and variations of such words or similar expressions. Forward-lookingForward‑looking statements in this report include, among others, statements about our future financial condition, results of operations, capitalization rates on future acquisitions, our business strategy and objectives, including our acquisition strategy, occupancy and leasing rates and trends, and expected liquidity needs and sources (including capital expenditures and the ability to obtain financing or raise capital). Our forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by our forward-looking statements are reasonable, we can give no assurance that our plans, intentions, expectations, strategies or prospects will be attained or achieved and you should not place undue reliance on these forward-lookingforward‑looking statements. Furthermore, actual results may differ materially from those described in the forward-lookingforward‑looking statements and may be affected by a variety of risks and factors including, without limitation:

•

the factors included in this report, including those set forth under the headings "Business," "Risk“Business,” “Risk Factors,"” and "Management's“Management’s Discussion and Analysis of Financial Condition and Results of Operations;"”

our ability to raise equity capital on attractive terms;

•

the competitive environment in which we operate;

•

real estate risks, including fluctuations in real estate values and the general economic climate in local markets and competition for tenants in such markets;

•

decreased rental rates or increasingincreased vacancy rates;

•

potential defaults (including bankruptcies or insolvency) on or non-renewal of leases by tenants;

•

potential bankruptcy or insolvency of tenants;

•

acquisition risks, including our ability to identify and complete accretive acquisitions and/or failure of such acquisitions to perform in accordance with projections;

•

the timing of acquisitions and dispositions;

•

potential natural disasters and other potentially catastrophic events such as hurricanes;acts of war and/or terrorism;

•

international, national, regional and local economic conditions;

•

the general level of interest rates;rates and currencies;

•

potential changes in the law or governmental regulations that affect us and interpretations of those laws and regulations, including changes in real estate and zoning laws or real estate investment trust ("REIT"(“REIT”) or corporate income tax laws, and potential increases in real property tax rates;

•

financing risks, including the risks that our cash flows from operations may be insufficient to meet required payments of principal and interest and we may be unable to refinance our existing debt upon maturity or obtain new financing on attractive terms or at all;

credit risk in the event of non-performance by the counterparties to the interest rate swaps and revolving and unfunded debt;

•

lack of or insufficient amounts of insurance;

•

our failure to complete acquisitions;

•

our failure to successfully integrate acquired buildings;

Table of Contents

•

our ability to maintain our qualification as a REIT;




our ability to retain key personnel; 




•

litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; and

•

possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by us.

Any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise over time, and it is not possible for us to predict those events or how they may affect us. Except as required by law, we are not obligated to, and do not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

PART I.

Item 1.  Business

As used herein "our company," "we," "our" and "us," refer“total annualized base rental revenue” refers to STAG Industrial, Inc. and our consolidated subsidiaries and partnerships except where the context otherwise requires. The combined financial information presented for periods on or prior to April 19, 2011 relate solely to the STAG Predecessor Group or our "predecessor business", our "predecessor" for accounting purposes. The combined financial statements for the periods after April 20, 2011 include the financial information of our company, STAG Industrial Operating Partnership, L.P. (our "operating partnership") and our subsidiaries.

Overview

        STAG Industrial, Inc. is an industrial real estate company focused on the acquisition, ownership and management of single-tenant net-leased industrial buildings throughout the United States. We were incorporated in Maryland on July 21, 2010 to continue and grow the single-tenant industrial business conducted by our predecessor business. We completed our initial public offering on April 20, 2011.

        As of December 31, 2013, we owned 209 buildings in 34 states with approximately 38.1 million rentable square feet, consisting of 142 warehouse/distribution properties, 47 light manufacturing properties and 20 flex/office properties. We also owned one vacant land parcel adjacent to one of our buildings. As of December 31, 2013, our buildings were 95.6% leased to 191 tenants, with no single tenant accounting for more than 2.8% of our total annualized rent and no single industry accounting for more than 12.6% of our total annualized rent. As used herein, the definition of annualized rent is the contractual monthly base rent as of December 31, 20132016 (which differs from rent calculated in accordance with generally accepted accounting principles in the United States of America ("GAAP")) multiplied by 12. If a tenant is in a free rent period as of December 31, 2013,2016, the annualized rent is calculated based on the first contractual monthly base rent amount multiplied by 12.

Overview

We ownare a REIT focused on the acquisition, ownership, and operation of single-tenant, industrial properties throughout the United States. We seek to (i) identify properties for acquisition that offer relative value across all locations, industrial property types, and tenants through the principled application of our interestsproprietary risk assessment model, (ii) operate our properties in an efficient, cost-effective manner, and (iii) capitalize our business appropriately given the characteristics of our assets. We are a Maryland corporation and our common stock is publicly traded on the New York Stock Exchange (“NYSE”) under the symbol “STAG.”

We are organized and conduct our operations to qualify as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), and generally are not subject to federal income tax to the extent we currently distribute our income to our stockholders and maintain our qualification as a REIT.  We remain subject to state and local taxes on our income and property and to U.S. federal income and excise taxes on our undistributed income.

As of December 31, 2016, we owned 314 buildings in 37 states with approximately 60.9 million rentable square feet, consisting of 243 warehouse/distribution buildings, 54 light manufacturing buildings, 16 flex/office buildings, and one building in redevelopment. As of December 31, 2016, our buildings were approximately 94.7% leased to 275 tenants, with no single tenant accounting for more than approximately 3.1% of our total annualized base rental revenue and no single industry accounting for more than approximately 13.6% of our total annualized base rental revenue. We intend to maintain a diversified mix of tenants to limit our exposure to any single tenant.

The industrial property market in the United States is a large and fragmented market that we believe offers sustainable acquisition opportunities throughout all phases of the economic cycle. Based on this estimate, our current share of our target market is less than 1%. We have a fully-integrated acquisition, leasing and asset management platform, and our senior management team has a significant amount of single-tenant, industrial real estate experience.

Our mission is to continue to be a disciplined, relative value investor and a leading owner and operator of single-tenant, industrial properties in the United States.  We seek to deliver attractive stockholder returns in all market environments by providing a covered dividend combined with accretive growth.

We are structured as an umbrella partnership REIT, also known as an UPREIT, and own all of our properties and conduct substantially all of our business through our operating partnership. We serve as the sole member of the sole general partner of,Operating Partnership, which we control and own approximately 86.65% of the outstanding limited partnership interests in, our operating partnership asmanage. As of December 31, 2013. The remaining 13.35% limited partnership interests in2016, we owned approximately 95.7% of the common equity of our operating partnership are owned by certain ofOperating Partnership, and our current and former executive officers, directors, certain ofsenior employees and their affiliates, and other outside investors. On April 20, 2011, we closed onthird parties who contributed properties to us in exchange for common equity in our Operating Partnership, owned the remaining 4.3%.  We completed our initial public offering ("IPO") of common stock (“IPO”) and completed ourrelated formation transactions, (the "formation transactions").

pursuant to which we succeeded to the business of our predecessor, on April 20, 2011.

Table of Contents

        We target the acquisition of individual Class B, single-tenant industrial properties predominantly in secondary markets throughout the United States with purchase prices ranging from $5 million to $50 million.

Our Investment Thesis

We believe due to observed market inefficiencies, that our focus on owning and expandingoperating a portfolio of suchindividually-acquired, single-tenant industrial properties throughout the United States will, when compared to other real estate portfolios, generate returns for our stockholders that are attractive in light of the associated risks associatedfor the following reasons:

Buyers tend to price an individual, single-tenant, industrial property according to the binary nature of its cash flows:  with only one potential tenant, any one property is either generating revenue or not.  Furthermore, tenants typically cover operating expenses at a property and when a property is not generating revenue, we, as owners, are responsible for paying these returns because we believe:

•

expenses.  We believe the market prices these properties based upon a higher risk profile due to the single-tenant nature of these properties and therefore applies a lower value relative to a diversified cash flowing investment.

The acquisition and contribution of these single-tenant properties to an aggregated portfolio of these individual binary risk cash flows creates diversification, thereby lowering risk and creating value.

Industrial properties generally require less capital expenditure than other commercial property types and single-tenant properties generally require less expenditure for leasing, operating and capital costs per property than multi-tenant properties.

•

Investment yields on single-tenant individual property acquisitions are typically greater than investment yields on portfolio acquisitions. With appropriate asset diversification, individual asset risk can be mitigated across an aggregated portfolio.

•

Class B industrial properties tend to have higher current returns and lower volatility than Class A industrial properties.

•

Secondary markets generally have less occupancy and rental rate volatility than primary markets.

•

Other institutional, industrial real estate buyers tend to focus on larger properties and portfolios in a select few primary markets, resulting inmarkets. In contrast, we focus on smaller, individual properties across many markets; as a result, our typical competitors beingare local investors who often do not have readythe same access to debt or equity capital.capital as us. In our fragmented, predominantly non-institutional environment, a sophisticated, institutional platform with access to capital has execution and operational advantages.

•

TenantsWhile we invest in our target properties tend to manage their properties directly, which allows us to grow our portfolio without substantially increasing the size of our asset management infrastructure.

For a description of what we consider to be Class A and Class B properties, see "Item 2. Properties" below.

        Reflecting the market inefficiencies we have observed, our target properties are generally leased to:

•

investment grade credit tenants on shorter term leases (less than four to six years);



•

sub-investment grade credit tenants on longer term leases (greater than four to six years); or



•

a variable combination of the above.

        We believe the market inefficiently prices our target properties because investors typically either underestimate the probability of tenant retention beyond the primary lease term or overestimate the expected cost of tenant default. Further, we believe our relationships with a national network of commercial real estate brokers and our underwriting processes, utilizingin all locations, our proprietary risk assessment model allow us to acquire properties at a discount to their intrinsic values, where intrinsic values are determined bytypically identifies the properties' future cash flows. best relative value in primary and secondary markets. We elected to be taxeddefine our Operating Portfolio as a REITincluding all warehouse and light manufacturing assets and excluding non-core flex/office assets and assets under the Internal Revenue Code of 1986, as amended (the "Code"), beginning with our taxable year ended December 31, 2011redevelopment. Our Operating Portfolio also excludes billboard, parking lot and intend to continue to qualify as REIT. So long as we qualify as a REIT, we generally will not be subject to federal income taxes to the extent we currently distribute our income to our stockholders and maintain our qualification as a REIT.

Competitive Strengths

        We believe that our investment strategy and operating model distinguish us from other owners, operators and acquirers of industrial real estate in a number of ways, including:

•

Proven Growth Profile:cell tower leases.   Since January 1, 2013, we have acquired 39 buildings representing approximately 9.0 million square feet for a total cost of approximately $346 million. Since

Table of Contents

January 1, 2012, we have acquired 109 buildings representing approximately 21.9 million square feet for a total cost of approximately $773 million. Since the closing of our IPO offering on April 20, 2011, we have acquired 124 buildings representing approximately 25.3 million square feet for a total cost of approximately $898 million.

•

Established Intermediary Relationships:  We believe we have developed a reputation as a credible and active buyer of single-tenant industrial real estate, which provides us access to significant acquisition opportunities that may not be available to our competitors.



•

Scalable Platform:  Our focus on net lease properties ensures that our current staff of 44 employees as of December 31, 2013 (with incremental additions of employees) is sufficient to support our continued growth.



•

Expertise in Underwriting Single-Tenant Properties:  We have developed a proprietary underwriting process that integrates real estate and corporate credit analysis to project the future cash flows of potential acquisitions. We believe that our expertise and procedures in assessing tenant retention and vacancy costs are advantages in identifying, underwriting and closing on attractive acquisition opportunities.



•

Stable and Predictable Cash Flows:  Our portfolio is diversified by tenant, industry and geography, which tends to reduce risk and earnings volatility. As of December 31, 2013, no single tenant accounted2016, our Operating Portfolio investments in primary, secondary, and tertiary markets are summarized in the table below.

					Square Footage									Total Annualized  Base Rental Revenue
Operating Portfolio Market Type		Number of  Buildings			Amount			%			Occupancy			Amount (in thousands)				%
Primary (greater than 200 million net rentable square feet)		68			14,445,533			24.2	%		95.4	%		$	58,532			26.1	%
Secondary (25 million to 200 million net rentable square feet)		184			38,126,550			64.0	%		96.1	%		141,730				63.2	%
Tertiary (less than 25 million net rentable square feet)		45			7,028,220			11.8	%		93.7	%		24,066				10.7	%
Total/weighted average		297			59,600,303			100.0	%		95.7	%		$	224,328			100.0	%

We have found, and the charts below indicate, that primary and secondary markets have similar occupancy and rent growth experiences. Furthermore, secondary industrial property markets generally provide similar rent volatility and equivalent occupancy, compared to primary industrial property markets. The charts below, based on data provided by CB Richard Ellis—Econometric Advisors (“CBRE-EA”), show the quarter-over-quarter (“Q-o-Q”) percentage changes in warehouse rent and occupancy for more than 2.8% of our total annualized rent; no single industry represented more than 12.6% of our total annualized rent;primary and no single state was the site for properties generating more than 8.9% of our total annualized rent. Cash flow consistency across our portfolio is enhanced by our weighted (by rental revenue per square foot) average in-place remaining lease term of approximately 4.8 years as of December 31, 2013, low costs for tenant improvements and leasing commissions and low capital expenditures.

•

Experienced Management Team:  The five senior members of our management team have significant real estate industry experience, averaging approximately 27 years, with four members having previous public REIT or public real estate company experience.

secondary markets.

Our Strategies

Our primary business objectives are to own and operate a balanced and diversified portfolio of binary risk investments (individual single-tenant industrial propertiesproperties) that maximizesmaximize cash flows available for distribution to our stockholders, and to enhance stockholder value over time by achieving sustainable long-term growth in fundsdistributable cash flow from operations per share through the following strategies:

Investment Strategy

        Our primary investment strategy is to acquire individual Class B, single-tenant industrial properties predominantly in secondary markets throughout the United States through third-party purchases and structured sale-leasebacks featuring high initial yields and strong ongoing cash-on-cash returns. Where appropriate potential returns present themselves, we also may acquire assets in primary markets.

Growth Strategy

strategies.

External Growth through Acquisitions:    Our target acquisitions are predominantly in the $5 million to $50 million range. The competition for our target assets is primarily local investors who are not likely to have ready access to debt or equity capital. Strategy

We focus our acquisition activities (assuming our market opportunity remains attractive) on our core property types: warehouse/distribution facilities and light manufacturing facilities. From time to time, if an attractive opportunity presents itself, we may consider portfolio acquisitions. As of December 31, 2013, we were evaluating approximately $728 million of specific potential acquisitions that we have identified as warranting further investment consideration after an initial review.

Table of Contents

        Internal Growth through Asset Management:    Our asset management team utilizes our tenant relationships and leasing expertise to maintain occupancy and increase rental rates. It also collaborates with our internal credit function to actively monitor the credit profile of each of our tenants on an ongoing basis. The team's efforts have resulted in our achieving a tenant retention rate of 59% for those tenants whose leases were scheduled to expire in 2013 and 84% for those tenants whose leases were scheduled to expire in 2012. The 2013 non-renewal total is dwarfed by the approximately 1.4 million square feet of new leases executed by us for previously vacant space. As of December 31, 2013, our portfolio had approximately 1.7 million square feet, or 4.4% of our total rentable square feet, available for lease, compared to 1.4 million square feet or 4.9% as of December 31, 2012.

Underwriting Strategy

We blend fundamental real estate analysis with corporate credit analysis in our proprietary model to make a probabilistic assessment of future cash flows that will be realized inflows. We focus on quality real estate, long-term ownership, and the present value of estimated future periods.cash flows.

Our underwriting strategy involves our asset management and leasing, credit, capital markets and legal departments. For each asset, our analysis focuses on:

•

on the following and determines the inputs into our risk assessment model.

Real Estate.Asset Management and Leasing.  We evaluate the physical real estate within the context of the market (and submarket) in which it is located and the prospect for re-tenanting the building if it becomes vacant by estimating the following:

•

current and future market rent for this building in this location;

•

downtime to re-lease and related carrying costs;

•

cost (tenant improvements, leasing commissions and required capital expenditures) to achieve the occupancy and the projected market rent within the projected downtime;

the fungibility of the property with other properties in the market and

•

the flexibility of the property for other uses, including single-tenant or multi-tenant reuse.reuse; and

renewal probability, which we determine by the tenant’s use of the property and the degree to which the property is central to the tenant’s ongoing operations, the tenant’s potential cost to relocate, the supply/demand dynamic in the relevant submarket and the availability of suitable alternative properties.

Credit.    

•

Deal Parameters.  We evaluate the tenant and landlord obligations contained within the existing or proposed lease and other transaction documents.

•

Tenant Credit.We apply fundamental credit analysis to evaluate the tenant'stenant’s credit profile by focusing on the tenant'stenant’s current and historical financial status, general business plan, operating risks, capital sources, industry trends, and earnings expectations. We also analyze Securities and Exchange Commission ("SEC"(“SEC”) filings, press releases, management calls, rating agency reports, macroeconomic variables, analyst reports, and other public information.market signals. In the case of a private, non-ratednon‑rated firm, we will generally obtain financial information from the tenant, and calculate common measures of credit strength such as debt-to-EBITDA and coverage ratios.ratios, evaluate qualitative factors including but not limited to competition and customer/supplier concentration, obtain third party references, and conduct tenant interviews. For publicly rated firms, we use our own internal underwriting model, as well as the credit information issued by Moody'sMoody’s Investor Services, Standard & Poor's,Poor’s, Fitch Ratings, and Fitch Ratings.other ratings agencies. Using this data and publicly available bond default studies of comparable tenant credits, we estimate the probability of future rent loss due to tenant default.

•

Tenant Retention.  We assessdefault, as well as the tenant's usepossibility of the property and the degree to which the property is central to the tenant's ongoing operations, the tenant's potential cost to relocate, the supply/demand dynamica reorganization or liquidation in the relevant submarketcase of a tenant default or bankruptcy event.

Capital Markets.  We evaluate the leverage levels, credit spreads, and costs associated with the availabilitycapital used to fund the proposed acquisition.  In addition, we estimate future inflation rates and interest rates.

Legal.  We evaluate transaction documents, the tenant and landlord obligations contained within the existing or proposed leases, and other legal issues associated with the building, such as zoning, encroachments and environmental conditions.

For our portfolio as a whole, we use risk management guidelines to ensure diversification by tenant, industry, lease term and geography.

Real Estate Operation Strategy

We establish direct, long-term relationships with our tenants and use our in-house expertise in asset management and leasing to oversee all operational aspects of suitable alternative properties.our portfolio.  We believealso engage and actively manage high-quality third parties for localized leasing, property management, and construction services. Our asset management team utilizes our direct tenant relationships and leasing expertise to strive to achieve better than market levels of occupancy and rental rates. We utilize third party real estate brokers for the execution of new and renewal leases. The team also collaborates with our internal credit function to monitor the credit profile

of each of our tenants through financial statement review, tenant management calls, and press releases. The team’s efforts have resulted in our achieving an Operating Portfolio tenant retention tendsrate of approximately 69.8% for those tenants whose leases expired during the period from January 1, 2014 to be greaterDecember 31, 2016. As of December 31, 2016, our portfolio had approximately 5.3% of our total rentable square feet available for properties that are criticallease, compared to the tenants' businesses.

4.4% as of December 31, 2015.

Financing Strategy

Our main focus is to preserve a flexible capital structure.structure and maintain a relatively low-leveraged balance sheet designed to allow us to capitalize on market opportunities throughout the economic cycle. We will utilizeseek tomaintain a conservative balance sheet and we achieve this by capitalizing new acquisitions with approximately 60% equity and 40% debt, and by managing our consolidated leverage ratio, as defined in our respective loan agreements, to sub 45%. As of December 31, 2016, our ratio of net debt to real estate cost basis was approximately 41.0% and our ratio of total long-term indebtedness to enterprise value was approximately 32.6%. For purposes of these ratios, we define:

“net debt” as our total long-term indebtedness outstanding, less cash and cash equivalents on hand;

“long-term indebtedness” as the principal balance on our unsecured credit facility, unsecured term loans, unsecured notes and mortgage notes;

“real estate cost basis” as the book value of rental property and deferred leasing intangibles, exclusive of the related accumulated depreciation and amortization; and

“enterprise value” as the market value of our common stock (based on the period-end closing price on the NYSE multiplied by our common stock and units) plus the liquidation value of our preferred stock plus the amounts outstanding under our unsecured credit facility, unsecured term loans, unsecured notes, and mortgage notes.

We raise capital markets through secondary equity offerings, including but not limited to "atdiscrete marketed offerings and ongoing “at the market" equitymarket” (“ATM”) offerings, while also obtaining primarilyand through unsecured debt whichofferings such as bank borrowings and private placement issuances. We believe unsecured indebtedness is generally more efficient and less restrictive operationally than secured debt givenindebtedness. We continue to utilize our granular acquisition strategy.

TableATM program as our primary source of Contents

equity capital when required and available. As a supplement to the ATM activity, we have also executed marketed overnight equity offerings. From time to time, we issue common units of limited partnership interest in our Operating Partnership to acquire properties from owners who desire a tax-deferred transaction.

Regulation

General

Our properties are subject to various laws, ordinances and regulations, including regulations relating to common areas and fire and safety requirements. We believe that we and/or our tenants, as applicable, have the necessary permits and approvals to operate each of our properties.

Americans with Disabilities Act

Our properties must comply with Title III of the Americans with Disabilities Act of 1990, as amended (the "ADA"“ADA”) to the extent that such properties are "public accommodations"“public accommodations” as defined under the ADA. Under the ADA, all public accommodations must meet federal requirements related to access and use by disabled persons. The ADA may require removal of structural barriers to access by persons with disabilities in certain public areas of our properties where such removal is readily achievable. Although we believe that the properties in our portfolio in the aggregate substantially comply with current requirements of the ADA, and we have not received any notice for correction from any regulatory agency, we have not conducted a comprehensive audit or investigation of all of our properties to determine whether we are in compliance and therefore we may own properties that are not in compliance with the ADA.

ADA compliance is dependent upon the tenant'stenant’s specific use of the property, and as the use of a property changes or improvements to existing spaces are made, we will take steps to ensure compliance. Noncompliance with the ADA could result in additional costs to attain compliance, imposition of fines by the U.S. government or an award of damages or attorney'sattorney’s fees to private litigants. The obligation to make readily achievable accommodations is an ongoing one, and we will continue to assess our properties and to make alterations to achieve compliance as necessary.

Environmental Matters

Our properties are subject to various federal, state and local environmental laws. Under these laws, courts and government agencies have the authority to require us, as owner of a contaminated property, to clean up the property, even if we did not know of or were not responsible for the contamination. These laws also apply to persons who owned a property at the time it became contaminated, and therefore it is possible we could incur these costs even after we sell some of our properties. In addition to the costs of cleanup, environmental contamination can affect the value of a property and, therefore, an owner'sowner’s ability to borrow using the property as collateral or to sell the property. Under applicable environmental laws, courts and government agencies also have the authority to require that a person who sent waste to a waste disposal facility, such as a landfill or an incinerator, pay for the clean-up of that facility if it becomes contaminated and threatens human health or the environment. We invest in properties historically used for industrial, light manufacturing and commercial purposes. Certain of our properties are on or are adjacent to or near other properties upon which others, including former owners or tenants of our properties have engaged, or may in the future engage, in activities that may generate or release petroleum products or other hazardous or toxic substances.

Environmental laws in the United States also require that owners or operators of buildings containing asbestos properly manage and maintain the asbestos, adequately inform or train those who may come into contact with asbestos and undertake special precautions, including removal or other abatement, in the event that asbestos is disturbed during building renovation or demolition. These laws may impose fines and penalties on building owners or operators who fail to comply with these requirements and may allow third parties to seek recovery from owners or operators for personal injury associated with exposure to asbestos. According to Phase I environmental assessments prepared at the time of acquisition, 17Some of our buildings are known to have asbestos containing materials. No immediate action was recommended to address these instancesmaterials, and as a result, we do not currently plan to take

Table of Contents

any actions to address these instances. Additionally, 31 of our buildings are suspected of having asbestos containing materialsothers, due to the age of the building and observed conditions. Noconditions, are suspected of having asbestos containing materials.  We do not believe these conditions will materially and adversely affect us.  In most or all instances, no immediate action was recommended to address these instances and, as a result, we do not currently plan to take any actions to address these instances. In the event of a building renovation or demolition, a comprehensive asbestos inspection would be performed to determine proper handling and disposal of any asbestos containing materials.

conditions.

Furthermore, various court decisions have established that third parties may recover damages for injury caused by property contamination. For instance, a person exposed to asbestos at one of our properties may seek to recover damages if he or she suffers injury from the asbestos. Lastly, some of these environmental laws restrict the use of a property or place conditions on various activities. An example would be laws that require a business using chemicals to manage them carefully and to notify local officials that the chemicals are being used.

We could be responsible for any of the costs discussed above. The costs to clean up a contaminated property, to defend against a claim, or to comply with environmental laws could be material and could adversely affect the funds available for distribution to our shareholders.stockholders. All of our properties were subject to a Phase I or similar environmental assessment by independent environmental consultants at the time of acquisition. We generally expect to continue to obtain a Phase I or similar environmental assessment by independent environmental consultants on each property prior to acquiring it. However, these environmental assessments may not reveal all environmental costs that might have a material adverse effect on our business, assets, results of operations or liquidity and may not identify all potential environmental liabilities.

At the time of acquisition, we add each property to our portfolio environmental insurance policy that provides coverage for potential environmental liabilities, subject to the policy'spolicy’s coverage conditions and limitations.

We can make no assurances that future laws, ordinances or regulations will not impose material environmental liabilities on us, or the current environmental condition of our properties will not be affected by tenants, the condition of land or operations in the vicinity of our properties (such as releases from underground storage tanks), or by third parties unrelated to us.

Insurance

We carry comprehensive general liability, fire, extended coverage and rental loss insurance covering all of the properties in our portfolio under a blanket insurance policy. In addition, we maintain a portfolio environmental insurance policy that provides coverage for potential environmental liabilities, subject to the policy'spolicy’s coverage conditions and limitations. Generally, we do not carry insurance for certain losses, including, but not limited to, losses caused by floods (unless the property is located in a flood plain), earthquakes, acts of war, acts of terrorism or riots. We believe the policy specifications and insured limits are appropriate and adequate given the relative risk of loss, the cost of the coverage and standard industry practice; however, our insurance coverage may not be sufficient to fully cover all of our losses. We carry employment practices liability insurance that covers us against claims by employees, former employeeemployees or potential employees for various employment related matters including wrongful termination, discrimination, sexual harassment in the workplace, hostile work environment, and retaliation, subject to the policy'spolicy’s coverage conditions and limitations. We also carry comprehensive cyber liability insurance coverage that covers us against claims related to certain first party and third party losses including data restoration costs, crisis management expenses, credit monitoring costs, failure to implement and maintain reasonable security procedures, invasion of customer'scustomer’s privacy and negligence, subject to the policy'spolicy’s coverage conditions and limitations.

We also carry directors and officers insurance. We believe the policy specifications and insured limits are appropriate and adequate given the relative risk of loss, the cost of the coverage and standard industry practice; however, our insurance coverage may not be sufficient to cover all of our losses.

Table of Contents

Competition

In acquiring our target properties, we compete primarily with local individuals or local operators due to the smaller, single asset (versus portfolio) focus of our acquisition strategy. From time to time we compete with other public industrial property sector REITs, single-tenant REITs, income oriented non-traded REITs, and private real estate fund managers and local real estate investors and developers.funds. Local real estate investors and developers historically have represented our predominant competition for deals butand they typically do not have readythe same access to credit.capital that we do as a publicly traded institution. We also face significant competition from owners and managers of competing properties in leasing our properties to prospective tenants and in re-leasing space to existing tenants.

Operating Segments

We manage our operations on an aggregated, single segment basis for purposes of assessing performance and making operating decisions, and accordingly, have only one reporting and operating segment. See Note 2 in the accompanying Notes to Consolidated Financial Statements under “Segment Reporting.”

Employees

As of December 31, 2013,2016, we employed 4468 full-time employees. We believe that our relationships with our employees are good. None of our employees are represented by a labor union.

Our Corporate Structure

We were incorporated in Maryland on July 21, 2010, and our Operating Partnership was formed as a Delaware limited partnership on December 21, 2009.

We are structured as an UPREIT; our publicly-traded entity, STAG Industrial, Inc., is the REIT in the UPREIT structure, and our Operating Partnership is the umbrella partnership. We own a majority, but not all, of the Operating Partnership. We also wholly own the sole general partner (the manager) of the Operating Partnership. Substantially all of our assets are held in, and substantially all of our operations are conducted through, the Operating Partnership. Shares of our common stock are listed and traded on the NYSE. The limited partnership interests in the Operating Partnership, which we sometimes refer to as “units,” are not and cannot be publicly traded, although they may provide liquidity through an exchange feature described below. Our UPREIT structure allows us to acquire a property from an owner on a tax-deferred basis by issuing units in exchange for the property.

The common units of limited partnership interest in our Operating Partnership correlate on a one-for-one economic basis to the shares of common stock in the REIT. Each common unit receives the same distribution as a share of our common stock, the value of each common unit is tied to the value of a share of our common stock and each common unit, after one year, generally may be redeemed (that is, exchanged) for cash in an amount equivalent to the value of a share of common stock or, if we choose, for a share of common stock on a one-for-one basis.

The following is a simplified diagram of our UPREIT structure at December 31, 2016.

Additional Information

        Effective January 27, 2014, our

Our principal executive offices are located at One Federal Street, 23^rd Floor, Boston, Massachusetts 02110. Prior to January 27, 2014, our principal executive offices were located at 99 High Street, 28th23rd Floor, Boston, Massachusetts 02110. Our telephone number is (617) 574-4777.

Our website is www.stagindustrial.com. The information found on, or otherwise accessible through, our website is not incorporated into, and does not form a part of, this report or any other report or document we file with or furnish to the SEC.

How to Obtain Our SEC Filings

        All reports we file with the SEC are available free of charge via EDGAR through the SEC website at www.sec.gov. In addition, the public may read and copy materials we file with the SEC at the SEC's public reference room located at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the public reference room can be obtained by calling the SEC at 1-800-SEC-0330. Our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and any amendments to any of those reports that we file with the SEC are available free of charge as soon as reasonably practicable through our website at www.stagindustrial.com. Also posted on our website, and available in print upon request, are charters of each committee of the board of directors, our code of business conduct and ethics and our corporate governance guidelines. Within the time period required by the SEC, we will post on our website any amendment to the code of business conduct and ethics and any waiver applicable to any executive officer, director or senior financial officer. The information found on, or otherwise accessible through, our website is not incorporated into, and does not form a part of, this report or any other report or document we file with or furnish to the SEC.

All reports, proxy and information statements and other information we file with the SEC are also available free through the SEC's website at www.sec.gov. In addition, the public may read and copy materials we file with the SEC at the SEC’s public reference room located at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the public reference room can be obtained by calling the SEC at 1-800-SEC-0330.

Item 1A.  Risk Factors

The following risk factors and other information included in this Annual Report on Form 10-K should be carefully considered. The risks and uncertainties described below are not the only risks we face. Additional risks and uncertainties not presently known to us or that we may currently deem immaterial also may impair our business operations. If any of the following or other risks occur, our business, financial condition, operating results, and cash flows, and distributions, as well as the market prices for our securities, could be materially adversely affected.

Risks Related to Our Business and Operations

Our investments are concentrated in the industrial real estate sector, and our businesswe would be adversely affected by an economic downturn in that sector.

As of December 31, 2013, all2016, most of our 209314 buildings were industrial properties, including 142243 warehouse/distribution facilities, 4754 light manufacturing facilities, and 2016 flex/office facilities.facilities, and one building in redevelopment. This concentration may expose us to the risk of economic downturns in the industrial real estate sector to a greater extent than if our properties were more diversified across other sectors of the real estate industry.

Table of Contents

Adverse economic conditions will negatively affectharm our returns and profitability.

Table of Contents

We are subject to industry concentrations that make us susceptible to adverse events with respect to certain industries.

Table of Contents

predecessor business and our Chief Executive Officer, President and Chairman. The policy has limits in the amount of $5.0 million and covers us in the event of Mr. Butcher's death.

We also believe that, as we expand, our future success depends, in large part, upon our ability to hire and retain highly skilled managerial, investment, financing, operational and marketing personnel. Competition for such personnel is intense, and we cannot assure you that we will be successful in attracting and retaining such skilled personnel.

Table of Contents

Consequently, we may not continue our current level of distributions to stockholders, and our distribution levels may fluctuate.

Table of Contents

Risks Related to Our Organization and Structure

Certain of our officers and directors have duties to Fund II, which may create conflicts of interest and may impede business decisions that could benefit our stockholders.

        Certain of our executive officers and one of our directors also serve as officers or on the board of managers of STAG Investments II, LLC ("Fund II"), a private equity real estate fund that continues to operate as a private, fully invested fund. Our officers and director may have conflicting duties because they have a duty to both us and to Fund II, which retained ownership of certain of its properties and continues as a private, fully-invested fund until liquidated. Prior to the completion of the formation transactions, Fund II was fully invested and, as a result, will not be making any additional investments in income properties. However, some Fund II properties may be competitive with our current or future properties. It is possible that the officers' and board members' fiduciary duty to Fund II, including, without limitation, their interests in Fund II, will conflict with what will be in the best interests of our company.

Our fiduciary duties as sole member of the general partner of our operating partnership could create conflicts of interest, which may impede business decisions that could benefit our stockholders.

        We, as the sole member of the general partner of our operating partnership, have fiduciary duties to the other limited partners in our operating partnership, the discharge of which may conflict with the interests of our stockholders. The limited partners of our operating partnership have agreed that, in the event of a conflict in the fiduciary duties owed by us to our stockholders and, in our capacity as indirect general partner of our operating partnership, to such limited partners, we are under no obligation to give priority to the interests of such limited partners. In addition, those persons holding common units will have the right to vote on certain amendments to the operating partnership agreement (which require approval by a majority in interest of the limited partners, including us) and individually to approve certain amendments that would adversely affect their rights. These voting rights may be exercised in a manner that conflicts with the interests of our stockholders. For example, we are unable to modify the rights of limited partners to receive distributions as set forth in the operating partnership agreement in a manner that adversely affects their rights without their consent, even though such modification might be in the best interest of our stockholders.

        In addition, conflicts may arise when the interests of our stockholders and the limited partners of our operating partnership diverge, particularly in circumstances in which there may be an adverse tax consequence to the limited partners. Tax consequences to holders of common units upon a sale or refinancing of our properties may cause the interests of our senior management to differ from your own. As a result of unrealized built-in gain attributable to contributed property at the time of contribution, some holders of common units, including our principals, may suffer different and more adverse tax consequences than holders of our securities upon the sale or refinancing of the properties owned by our operating partnership, including disproportionately greater allocations of items of taxable income and gain upon a realization event. As those holders will not receive a correspondingly greater distribution of cash proceeds, they may have different objectives regarding the appropriate pricing, timing and other material terms of any sale or refinancing of certain properties, or whether to sell or refinance such properties at all.

        We may experience conflicts of interest with several members of our senior management team and board who have or may become limited partners in our operating partnership through the receipt of common units or long-term incentive plan units in our operating partnership ("LTIP units") granted under our 2011 Equity Incentive Plan.

Table of Contents

Our growth depends on external sources of capital, which are outside of our control which mayand affect our ability to seize strategic opportunities, satisfy debt obligations and make distributions to our stockholders.

Table

Table of Contents

Our charter, bylaws, the partnership agreement for our operating partnershipOperating Partnership and Maryland law also contain other provisions that may delay, defer or prevent a transaction or a change of control that might be in the best interest of our stockholders.

Table of Contents

•

determine that it is no longer in our best interests to continue to qualify as a REIT.

Table of Contents

General Real Estate Risks

Table of Contents

Table of Contents

Contingent or unknown liabilities could adversely affect our financial condition.

Table of Contents

Increases in interest rates could increase the amount of our debt payments and adversely affect our ability to make distributions to our stockholders.

Table of Contents

Table of Contents

To maintain our REIT status, we may be forced to forego otherwise attractive opportunities, which may delay or hinder our ability to meet our investment objectives and reduce our stockholders'stockholders’ overall return.

Table of Contents

•

Class B industrial properties typically vary from Class A industrial properties in that they have some but not all of the features of the Class A industrial properties. These properties remain functional but are less attractive to high volume distribution users.

Our definition of Class A and Class B may be different from those used by other companies.