0001479094stag:SpartanburgSC12419Member2022-12-31
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
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x☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 20172022
OR
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¨☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission file number 1-34907
STAG INDUSTRIAL, INC.
(Exact name of registrant as specified in its charter)
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| Maryland | | 27-3099608 |
| (State or other jurisdiction of | | (IRS Employer Identification No.) |
| incorporation or organization) | | |
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Maryland
(State or other jurisdiction
of incorporation or organization)
| 27-3099608
(IRS Employer
Identification No.)
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One Federal Street
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| 23rd Floor | | |
| Boston, | Massachusetts | | 02110 |
| (Address of principal executive offices) | 02110
| (Zip Code)code) |
(617) 574-4777
(Registrant’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:
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| Title of each class | Trading symbol(s) | Name of each exchange on which registered |
| Common Stock, $0.01 par value | STAG | New York Stock Exchange |
6.625% Series B Cumulative Redeemable Preferred Stock, $0.01 par value
| | New York Stock Exchange |
6.875% Series C 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. Yesx ☒ No ¨☐
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 ¨☐ No x☒
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. Yesx ☒ No ¨☐
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). Yesx ☒ No ¨
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’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. ¨☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer x
| Accelerated filer ¨
| Non-accelerated filer ¨
(Do not check if a smaller reporting company)
| Smaller reporting company ¨
| Emerging growth company ¨
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Large accelerated filer ☒Accelerated filer ☐Non-accelerated filer ☐Smaller reporting company ☐Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐ No x☒
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was approximately $2,517$5,526 million based on the closing price on the New York Stock Exchange as of June 30, 2017.2022.
Number of shares of the registrant’s common stock outstanding as of February 13, 2018: 97,234,7202023: 179,329,037
Number of shares of 6.625% Series B Cumulative Redeemable Preferred Stock as of February 13, 2018: 2,800,000
Number of shares of 6.875% Series C Cumulative Redeemable Preferred Stock as of February 13, 2018: 3,000,000
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive Proxy Statement with respect to its 20182023 Annual Meeting of Stockholders to be filed not later than 120 days after the end of the registrant’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.
STAG INDUSTRIAL, INC.
Table of Contents
PART I.
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(our “Operating Partnership”).
Forward-Looking Statements
This report, including the information incorporated by reference, contains “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 (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). You can identify forward-looking statements by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “will,” and variations of such words or similar expressions. Forward-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 Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations;”
•the risk of global or national recessions and international, national, regional, and local economic conditions;
•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;markets, and the repurposing or redevelopment of retail properties into industrial properties (in part or whole);
•decreased rental rates or increased vacancy rates;
•potential defaults (including bankruptcies or insolvency) on or non-renewal of leases by 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;
•technological developments, particularly those affecting supply chains and logistics;
•potential natural disasters, epidemics, pandemics or outbreak of infectious disease, such as the novel coronavirus disease (“COVID-19”), and other potentially catastrophic events such as acts of war and/or terrorism;terrorism (including the conflict between Russia and Ukraine and the related impact on macroeconomic conditions as a result of such conflict);
international, national, regional and local economic conditions;
•the general level of interest rates and currencies;
•potential changes in the law or governmental regulations and interpretations of those laws and regulations, including changes in real estate and zoning laws or real estate investment trust (“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;
•how and when pending forward equity sales may settle;
•lack of or insufficient amounts of insurance;
•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.
Item 1. Business
As used herein “total
Certain Definitions
In this report:
“GAAP” means generally accepted accounting principles in the United States.
“Total annualized base rental revenue” refers tomeans the contractual monthly base rent as of December 31, 20172022 (which differs from rent calculated in accordance with generally accepted accounting principles in the United States (“GAAP”))GAAP) multiplied by 12. If a tenant is in a free rent period as of December 31, 2017,2022, the total annualized base rentrental revenue is calculated based on the first contractual monthly base rent amount multiplied by 12.
“Occupancy rate” means the percentage of total leasable square footage for which either revenue recognition has commenced in accordance with GAAP or the lease term has commenced as of the close of the reporting period, whichever occurs earlier.
“Value Add Portfolio” means our properties that meet any of the following criteria: (i) less than 75% occupied as of the acquisition date (ii) will be less than 75% occupied due to known move-outs within two years of the acquisition date; (iii) out of service with significant physical renovation of the asset; or (iv)development.
“Stabilization” for properties under development or being redeveloped means, the earlier of achieving 90% occupancy or 12 months after completion. With respect to properties acquired and immediately added to the Value Add Portfolio, (i) if acquired with less than 75% occupancy as of the acquisition date, Stabilization will occur upon the earlier of achieving 90% occupancy or 12 months from the acquisition date; or (ii) if acquired and will be less than 75% occupied due to known move-outs within two years of the acquisition date, Stabilization will occur upon the earlier of achieving 90% occupancy after the known move-outs have occurred or 12 months after the known move-outs have occurred.
“Operating Portfolio” means all warehouse and light manufacturing assets that were acquired stabilized or have achieved Stabilization. The Operating Portfolio excludes non-core flex/office assets, assets contained in the Value Add Portfolio, and assets classified as held for sale.
“Comparable Lease” means a lease in the same space with a similar lease structure as compared to the previous in-place lease, excluding new leases for space that was not occupied under our ownership.
“SL Rent Change” means the percentage change in the average monthly base rent over the term of the lease that commenced during the period compared to the Comparable Lease for assets included in the Operating Portfolio. Rent under gross or similar type leases are converted to a net rent based on an estimate of the applicable recoverable expenses, and this calculation excludes the impact of any holdover rent.
“Cash Rent Change” means the percentage change in the base rent of the lease commenced during the period compared to the base rent of the Comparable Lease for assets included in the Operating Portfolio. The calculation compares the first base rent payment due after the lease commencement date compared to the base rent of the last monthly payment due prior to the termination of the lease, excluding holdover rent. Rent under gross or similar type leases are converted to a net rent based on an estimate of the applicable recoverable expenses.
“New Lease” means a lease that is signed for an initial term equal to or greater than 12 months for any vacant space, including a lease signed by a new tenant or an existing tenant that is expanding into new (additional) space.
“Renewal Lease” means a lease signed by an existing tenant to extend the term for 12 months or more, including (i) a renewal of the same space as the current lease at lease expiration, (ii) a renewal of only a portion of the current space at lease expiration, or (iii) an early renewal or workout, which ultimately does extend the original term for 12 months or more.
“Weighted Average Lease Term” means the contractual lease term in years, assuming that tenants exercise no renewal options, purchase options, or early termination rights, weighted by square footage.
Overview
We are 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 proprietary 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 qualifymaintain our qualification 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, 2017,2022, we owned 356562 buildings in 3741 states with approximately 70.2111.7 million rentable square feet, consisting of 287484 warehouse/distribution buildings, 5274 light manufacturing buildings, 14one flex/office buildings,building, and three buildings in redevelopment or classified as held for sale.Value Add Portfolio buildings. While the majority of our portfolio consists of single-tenant properties, we also own multi-tenant properties and may re-lease originally single-tenant properties to multiple tenants. As of December 31, 2017,2022, our buildings were approximately 95.3%98.5% leased, to 312 tenants, with no single tenant accounting for more than approximately 2.6%3.0% of our total annualized base rental revenue and no single industry accounting for more than approximately 13.8%10.9% of our total annualized base rental revenue. We intend to maintain a diversified mix of tenants to limit our exposure to any single tenant.We define Occupancy Rate as
As of December 31, 2022, our Operating Portfolio was approximately 99.0% leased and our SL Rent Change on new and renewal leases together grew approximately 24.3% and 17.6% during the percentage of total leasable square footage for which either revenue recognition has commenced in accordance with GAAP oryears ended December 31, 2022 and 2021, respectively, and our Cash Rent Change on new and renewal leases together grew approximately 14.3% and 10.4% during the lease term has commenced as of the close of the reporting period, whichever occurs earlier. Buildings remain in the redevelopment portfolio for non-GAAP purposes upon the earlier of stabilization or 12 months from the completion of the redevelopment. We define stabilization as achieving at least 90% occupancy, excluding the impact of leases with terms less than 12 months.years ended December 31, 2022 and 2021, respectively.
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, which we control and manage. As of December 31, 2017, we owned approximately 95.9% of the common equity of our Operating Partnership, and our current and former executive officers, directors, senior employees and their affiliates, and third parties who contributed properties to us in exchange for
common equity in our Operating Partnership, owned the remaining 4.1%. We completed our initial public offering of common stock (“IPO”) and related formation transactions, pursuant to which we succeeded our predecessor, on April 20, 2011.
Our Strategy
Our primary business objectives are to own and operate a balanced and diversified portfolio of binary risk investments (individual single-tenant industrial properties) that maximize cash flows available for distribution to our stockholders, and to enhance stockholder value over time by achieving sustainable long-term growth in distributable cash flow from operations per share.
We believe that our focus on owning and operating a portfolio of individually-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 for the following reasons:reasons.
Buyers•Since many industrial properties have a single tenant, buyers tend to price an individual single-tenant, industrial property according to the binary nature of its cash flows:flows – with only one potential tenant, any onethe property is either generating revenue or not. Furthermore, tenants typically coverif a single-tenant industrial property is vacant and not generating revenue, the owner will be responsible for paying the operating expenses at the property (which are typically covered by the tenant). As a property and when a property is not generating revenue,result of these factors, we as owners, are responsible for paying these expenses. We believe the market prices thesesingle-tenant industrial 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 theseindividual single-tenant industrial properties (and each property’s binary risk cash flows) 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.
•Other institutional, industrial real estate buyers tend to focus on larger properties and portfolios in a select fewcertain primary markets. In contrast, we focus on smaller, individual industrial properties across many markets. As a result, our typical competitors for acquisition opportunities are local investors who often domay not have the same access to debt or equity capital as us. In our fragmented, predominantly non-institutional environment, a sophisticated, institutional platform with access to capital has execution and operational advantages.
Regulation
General
Our propertiesWe are subject to various laws, ordinances, rules and regulations of the United States and the states and local municipalities in which we own properties, 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”) to the extent that such properties are “public accommodations” as defined under the ADA. Under the ADA, allplaces of public accommodationsaccommodation must meet certain 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’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, the imposition of fines by the U.S.federal government or anthe award of damages or attorney’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 the 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.a property. In addition to the costs of cleanup, environmental contamination can affect the value of a property and, therefore, an owner’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. CertainSome of our properties contain, or may have contained, or are adjacent to or near other properties that have contained or currently contain, underground storage tanks used to store petroleum products and other hazardous or toxic substances, which create a potential for the release of petroleum products or other hazardous or toxic substances. We also own properties that are on or are adjacent to or near other properties upon which others,other persons, 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. Some of our buildings are known to have asbestos containing materials, and others, due to the age of the building and observed conditions, 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 the 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 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’s coverage conditions and limitations.
Compliance with these environmental laws, rules and regulations has not had, and is not expected to have, a material effect on our capital expenditures, results of operations and competitive position as compared to prior periods. 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’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 carry employment practices liability insurance that covers us against claims by employees, former employees 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’s coverage conditions and limitations. We 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’s privacy and negligence, subject to the policy’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.
Competition
In acquiring our target properties, we compete primarily with local individuals or localregional 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 funds. Local real estate investors historically have represented our predominant competition for deals and they typically do not have the same access to 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.”
EmployeesCorporate Responsibility Program
We are committed to maintaining a robust corporate responsibility program that incorporates environmental, social and governance (“ESG”) initiatives into our overall business, investment, and asset management strategies. We are also committed to transparent reporting of our ESG initiatives. In December 2021, we published our inaugural 2020-2021 Environmental,
Social and Governance Report, which includes information regarding our ESG policies and programs, historic results, and performance targets, including a new long-term greenhouse gas (GHG) reduction goal as approved by the Science-Based Targets Initiative (SBTi). In addition, annually we participate in the public disclosure rating process of the Global Real Estate Sustainability Benchmark, which is an entity that provides a ranking system to evaluate and compare ESG practices in the real estate industry.
Additional information regarding our corporate responsibility program will be included in our definitive Proxy Statement for our 2023 Annual Meeting of Stockholders and our 2020-2021 Environmental, Social and Governance Report is currently available under the “Corporate Responsibility” section of our website at www.stagindustrial.com. However, the information located on, or accessible from, our website, including our sustainability report, is not, and should not be deemed to be, part of this report or incorporated into any other filing that we submit to the Securities and Exchange Commission (“SEC”).
Human Capital Management
We believe that demonstrating strong financial performance while also promoting awareness and respect for fundamental human rights is important to long-term value creation, business continuity and corporate success. As part of our commitment to providing a work environment that attracts, develops and retains high-performing individuals and that treats employees with dignity and respect:
•We offer equal employment opportunities to all of our employees and seek to foster a diverse and vibrant workplace with employees who possess a broad range of experiences, backgrounds, and skills. We continually assess and strive to enhance employee satisfaction and engagement. Our employees, many of whom have a relatively long tenure with the Company, have regular opportunities to participate in personal growth and professional development programs and social or team building events. We seek to identify and develop future leaders within the Company and periodically review with our Chief Executive Officer and board of directors the identity, skills, and characteristics of those persons who could succeed to senior and executive positions.
•We endeavor to maintain a workplace free from discrimination or harassment on the basis of race, color, religion, creed, gender, gender identity or expression, sexual orientation, genetic information, national origin, ancestry, age, disability, military or veteran status, and political affiliate or activities, among others.We conduct training to prevent discrimination and harassment and monitor and address employee conduct.
•We are committed to compensating our employees well and at competitive industry rates while, at the same time, monitoring our compensation programs to ensure that we are continuously attracting and retaining top talent. We also provide our employees with highly competitive health and wellness benefits, including medical, dental, vision, life, and short-term disability insurance, with premiums that are entirely paid for by the Company. We also offer flexible spending accounts for medical and dependent care, a program to pay commuting and office parking costs with pre-tax income, and a competitive vacation policy, including paid holidays, personal time off, and other leave benefits.
•We seek to foster a corporate culture where our stakeholders, including our employees, engage in, and collaborate to extend resources towards, community development. In furtherance of this commitment, we partner with, and support, local charitable organizations that we believe are contributing to the growth and development of the community, particularly organizations assisting at-risk youth. Through our partnerships with these organizations, in recent years, our employees have committed significant time and resources to support children and young adults, including through personal donations, fundraising, and volunteer work.
As of December 31, 2017,2022, we employed 72had 93 employees. None of our employees are represented by a labor union.
Additional information regarding our human capital programs and initiatives will be included in our definitive Proxy Statement for our 2023 Annual Meeting of Stockholders and is currently available under the “Corporate Responsibility” section of our website at www.stagindustrial.com. However, the information located on, or accessible from, our website is not, and should not be deemed to be, part of this report or incorporated into any other filing that we submit to the SEC.
Our Corporate Structure
We wereSTAG Industrial, Inc. was incorporated in Maryland on July 21, 2010, and2010. Shares of our common stock are publicly traded on the NYSE New York Stock Exchange (“NYSE”) under the symbol “STAG.”
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 theour properties and conduct substantially all of our business through our Operating Partnership. We also wholly ownare the sole member of the sole general partner (the manager)of our Operating Partnership. As of December 31, 2022, we owned approximately 97.9% 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 on the NYSE. The limited partnership interests in the Operating Partnership, which we sometimes refer to as “common 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 properties on a tax-deferred basis by issuing common 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(“common units”), and our current and former executive officers, directors, employees and their affiliates, and third parties owned the shares ofremaining 2.1%. The common stock in the REIT. Eachunits are not publicly traded, but 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 our common stock or, if we choose, for a share of common stock on a one-for-one basis. When redeeming common units for cash, the value of a share of our common stock is calculated as the average common stock closing price on the NYSE for the 10 trading days immediately preceding the redemption notice date.
We are structured as an umbrella partnership REIT, also known as an “UPREIT,” with our publicly-traded entity, STAG Industrial, Inc., operating as the REIT in the UPREIT structure, and our Operating Partnership operating as the umbrella partnership. This UPREIT structure provides us an opportunity to acquire properties on a tax-deferred basis by issuing common units in our Operating Partnership in exchange for properties.
The following is a simplified diagram of our UPREIT structure at December 31, 2017.2022.
Additional Information
Our principal executive offices are located at One Federal Street, 23rd Floor, Boston, Massachusetts 02110. Our telephone number is (617) 574-4777.
Our website is www.stagindustrial.com. 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 of charge 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-Kreport 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
occur, our business, financial condition, operating results, 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
Adverse economic conditions may adversely affect our operating results and financial condition.
Our operating results and financial condition may be affected by market and economic challenges and uncertainties, which may result from a general economic downturn experienced by the nation as a whole, by the local economies where our properties are located or our tenants conduct business, or by the real estate industry, including the following: (i) poor economic conditions may result in tenant defaults under leases and extended vacancies at our properties; (ii) re-leasing may require concessions or reduced rental rates under the new leases due to reduced demand; (iii) adverse capital and credit market conditions may restrict our operating activities; and (iv) constricted access to credit may result in tenant defaults, non-renewals under leases or inability of potential buyers to acquire properties held for sale.
Also, to the extent we purchase real estate in an unstable market, we are subject to the risk that if the real estate market ceases to attract the same level of capital investment in the future, or the number of companies seeking to acquire properties decreases, the value of our investments may not appreciate or may decrease significantly below the amount we paid for these investments. Our operating results and financial condition could be negatively affected to the extent that an economic slowdown or downturn is prolonged or becomes more severe.
Recent macroeconomic trends, including inflation and rising interest rates, may adversely affect our business, financial condition and results of operations.
During the year ended December 31, 2022, inflation in the United States accelerated and is currently expected to continue at an elevated level in the near-term. Beginning in 2022, in an effort to combat inflation and restore price stability, the Federal Reserve significantly raised its benchmark federal funds rate, which led to increases in interest rates in the credit markets. The Federal Reserve may continue to raise the federal funds rate, which will likely lead to higher interest rates in the credit markets and the possibility of slowing economic growth and/or a recession. Additionally, U.S. government policies implemented to address inflation, including actions by the Federal Reserve to increase interest rates, could negatively impact consumer spending, our tenants’ businesses, and/or future demand for industrial space.
Rising inflation could also have an adverse impact on our financing costs (either through near-term borrowings on our variable rate debt, including our unsecured credit facility, or refinancing of existing debt at higher interest rates), and general and administrative expenses and property operating expenses, as these costs could increase at a rate higher than our rental and other revenue. To the extent our exposure to increases in interest rates is not eliminated through interest rate swaps or other protection agreements, such increases may also result in higher debt service costs, which will adversely affect our cash flows. Historically, during periods of increasing interest rates, real estate valuations have generally decreased due to rising capitalization rates, which tend to move directionally with interest rates. Consequently, prolonged periods of higher interest rates may negatively impact the valuation of our real estate assets and could result in the decline of the market price of our common stock, which may adversely impact our ability and willingness to raise equity capital on favorable terms, including through our at-the-market (“ATM”) common stock offering program. Although the extent of any prolonged periods of higher interest rates remains unknown at this time, negative impacts to our cost of capital may adversely affect our future business plans and growth, at least in the near term.
Our investments are concentrated in the industrial real estate sector, and we would be adversely affected by an economic downturn in that sector.
As of December 31, 2017, most2022, the majority of our 356 buildings were industrial properties, including 287 warehouse/distribution facilities, 52 light manufacturing facilities, 14 flex/office facilities, and three buildings in redevelopment or classified as held for sale.properties. 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.
Adverse economic conditions will harm our returns and profitability.
Our operating results may be affected by market and economic challenges and uncertainties, which may result from a continued or exacerbated general economic slowdown experienced by the nation as a whole, by the local economies where our properties may be located or our tenants may conduct business, or by the real estate industry, including the following:
poor economic conditions may result in tenant defaults under leases and extended vacancies at our properties;
re-leasing may require concessions or reduced rental rates under the new leases due to reduced demand;
adverse capital and credit market conditions may restrict our operating activities; and
constricted access to credit may result in tenant defaults, non-renewals under leases or inability of potential buyers to acquire properties held for sale.
Also, to the extent we purchase real estate in an unstable market, we are subject to the risk that if the real estate market ceases to attract the same level of capital investment in the future that it attracts at the time of our purchases, or the number of companies seeking to acquire properties decreases, the value of our investments may not appreciate or may decrease significantly below the amount we paid for these investments. The length and severity of any economic slowdown or downturn cannot be predicted. Our operations could be negatively affected to the extent that an economic slowdown or downturn is prolonged or becomes more severe.
Substantial international, national and local government deficits and the weakened financial condition of these governments may adversely affect us.
The values of, and the cash flows from, the properties we own may be affected by historical or future developments in global, national and local economies. As a result of the global economic crisis and the significant government interventions, federal, state and local governments have incurred record deficits and assumed or guaranteed liabilities of private financial institutions or other private entities. These increased budget deficits and the weakened financial condition of federal, state and local governments may lead to reduced governmental spending, tax increases, public sector job losses, increased interest rates, currency devaluations, defaults on debt obligations or other adverse economic events, which may directly or indirectly adversely affect our business, financial condition and results of operations.
Events or occurrences that affect areas in which our properties are geographically concentrated may impact financial results.
In addition to general, regional, national and international economic conditions, our operating performance is impacted by the economic conditions of the specific markets in which we have concentrations of properties. We have holdings in the following states, which, as of December 31, 2017, were the three largest when accounting for the percentage of our total annualized base rental revenue: Illinois (8.2%, spread over two CBSA’s); Ohio (7.8%, spread over eight CBSA’s); and Texas (7.6%, spread over six CBSA’s). We define Core Based Statistical Area ("CBSA") as a U.S. geographic area defined by the Office of Management and Budget that consists of one or more counties (or equivalents) anchored by an urban center of at least 10,000 people plus adjacent counties that are socioeconomically tied to the urban center by commuting. Our operating performance could be adversely affected if conditions become less favorable in any of the states or regions in which we have a concentration of properties.
We are subject to geographic and industry concentrations that make us susceptible to adverse events with respect to certain markets and industries.
We are subject to certain geographic and industry concentrations with respect to our properties, including the following, which, asproperties. As a result of December 31, 2017, were the three largest when accounting for the percentage of our total annualized base rental revenue: Automotive (13.8%); Air Freight & Logistics (12.5%); and Industrial Equipment, Components, and Metals (11.0%). Such industries are subject to specific risks that could result in downturns within the industries. Anythese concentrations, any adverse event or downturn in onelocal economic conditions or moreindustry conditions, changes in state or local governmental rules and regulations, acts of nature, epidemics, pandemics or other public health crises and actions taken in response thereto, and other factors affecting these industries,markets or in any other industry in which we may have a significant concentration now or in the future,industries could adversely affect us and our tenants who are involvedoperating in suchthose markets or industries. If any of these tenantstenant is unable to withstand such adverse event or downturn or is otherwise unable to
compete effectively in its market or business, it may be forced to declare bankruptcy, failunable to meet its rental obligations, seek rental concessions, or be unable to enter into new leases or forced to declare bankruptcy and reject our leases, which could materially and adversely affect us.
We have owned many of our properties for a limited time, and we may not be aware of characteristics or deficiencies involving any one or all of them.
Of the properties in our portfolio at December 31, 2022, 266 buildings totaling approximately 52.3 million rentable square feet have been acquired in the past five years. These properties may have characteristics or deficiencies unknown to us that could affect their valuation or revenue potential and such properties may not ultimately perform up to our expectations. We cannot assure you that the operating performance of the properties will not decline under our management.
Our growth depends upon future acquisitions of properties, and we may be unable to consummate acquisitions on advantageous terms and acquisitions may not perform as we expect.
The acquisition of properties entails various risks, including the risk that our investments may not perform as we expect. Our ability to continue to acquire properties in our pipeline that we believe to be suitable and compatible with our growth strategy may be constrained by numerous factors, including our ability to negotiate and execute a mutually-acceptable definitive purchase and sale agreement with the seller, our completion of satisfactory due diligence and the satisfaction of customary closing conditions, including the receipt of third-party consents and approvals. Further, we face competition for attractive investment opportunities from other well-capitalized real estate investors, including publicly-traded and non-traded REITs, private equity investors and other institutional investment funds that may have greater financial resources and a greater ability to borrow funds to acquire properties, the ability to offer more attractive terms to prospective tenants and the willingness to accept greater risk or lower returns than we can prudently manage. This competition may increase the demand for our target properties and, therefore, reduce the number of, or increase the price for, suitable acquisition opportunities, all of which could materially and adversely affect us. This competition will increase as investments in real estate become increasingly attractive relative to other forms of investment. In addition, we expect to finance future acquisitions through a combination of secured and unsecured borrowings, proceeds from equity or debt offerings by us or our Operating Partnership or its subsidiaries and proceeds from property contributions and divestitures which may not be available and which could adversely affect our cash flows.
We may face risks associated with acquiring properties in unfamiliar markets.
We have acquired, and may continue to acquire, properties in markets that are new to us. When we acquire properties located in these markets, we face risks associated with a lack of market knowledge or understanding of the local economy (including that competitors and counterparties may have much greater knowledge and understanding), forging new business relationships in the area and unfamiliarity with local government and laws.
A significant portion of our properties have leases that expire in the next two years and we may be unable to renew leases, lease vacant space or re-lease space on favorable terms.
Our operating results, cash flows, cash available for distribution, and the market price of our securities would be adversely affected if we are unable to lease, on economically favorable terms, a significant amount of space in our properties. Our properties may have some level of vacancy at the time of our acquisition and may incur a vacancy either by the continued default of a tenant under its lease or the expiration of one of our leases. As of December 31, 2022, leases with respect to approximately 19.5% (excluding month-to-month leases) of our total annualized base rental revenue will expire before December 31, 2024. We cannot assure you that expiring leases will be renewed or that our properties will be re-leased at base rental rates equal to or above the current market rental rates. In addition, our ability to release space at attractive rental rates will depend on (i) whether the property is specifically suited to the particular needs of a tenant, and (ii) the number of vacant or partially vacant industrial properties in a market or sub-market. In connection with a vacancy at one of our properties, we may face difficulty obtaining, or be unable to obtain, a new tenant for the vacant space. If the vacancy continues for a long period of time, we may suffer reduced revenue resulting in less cash available for distribution to stockholders and the resale value of the property could be diminished.
We face significant competition for tenants, which may negatively impact the occupancy and rental rates at our properties.
We compete with other owners, operators and developers of real estate, some of which own industrial properties in the same markets and sub-markets in which our properties are located. If our competitors offer space at rental rates below current market rates or below the rental rates we currently charge our tenants, we may lose potential tenants, and we may be pressured to lower
our rental rates or to offer more substantial tenant improvements, early termination rights, below-market renewal options or other lease incentive payments to remain competitive. Competition for tenants could negatively impact the occupancy and rental rates of our properties.
Default by one or more of our tenants could materially and adversely affect us.us, and bankruptcy laws limit our remedies in the event of a tenant default.
The success of our tenants in operating their businesses will continue to be impacted by many current economic challenges, which impact their cost of doing business, including, but not limited to, inflation, labor shortages, supply chain constraints and increasing energy prices and interest rates. Additionally, macroeconomic and geopolitical risks create challenges that may exacerbate current market conditions in the United States. Any of our tenants may experience aan adverse event or downturn in its business at any time that may significantly weaken its financial condition or cause its failure. As a result, such a tenant may fail to make rental payments when due, decline to extend or renew its lease upon expiration fail to make rental payments when due and/or declare bankruptcy.bankruptcy and reject our lease. The default, financial distress or bankruptcy of a tenant could cause interruptions in the receipt of rental revenue and/or result in a vacancy, which is, in the case of a single-tenant property, likely to result in the complete reduction in the operating cash flows generated by the property and may decrease the value of that property. In addition, a majority of our leases generally require the tenant to pay all or substantially all of the operating expenses normally associated with the ownership of the property, such as utilities, real estate taxes, insurance and routine maintenance. Following a vacancy at a single-tenant property, we will be responsible for all of the operating costs at such property until it can be re-let, if at all.
The bankruptcy or insolvency of a tenant could diminish the income we receive from that tenant’s lease and we may not be able to evict a tenant solely because of its bankruptcy filing. On the other hand, a bankruptcy court might authorize the tenant to terminate its lease with us. If that happens, our claim against the bankrupt tenant for unpaid future rent would be an unsecured pre-petition claim, subject to statutory limitations, and therefore such amounts received in bankruptcy are likely to be substantially less than the remaining rent we otherwise were owed under the lease. In addition, any claim we have for unpaid past rent could be substantially less than the amount owed.
If our tenants are unable to obtain financing necessary to continue to operate their businesses and pay us rent, we could be materially and adversely affected.
Many of our tenants rely on external sources of financing to operate their businesses. The U.S. financial and credit markets may experiencehave recently experienced liquidity disruptions, resulting in volatility in the markets and the unavailability of financing for many businesses. If oursuch disruptions worsen or continue for a prolonged period of time, any of these tenants aremay be unable to obtain financing necessary to continue to operate their businesses, they may beits business, unable to meet theirits rental obligations, unable to us or enter into new leases with us or be forced to declare bankruptcy and reject our leases, which could materially and adversely affect us.
We depend
The COVID-19 pandemic or any future public health crisis, pandemic, epidemic or outbreak of infectious disease could have material and adverse effects on key personnel; the loss of their full service could adversely affect us.
Our success depends to a significant degree upon the continued contributions of certain key personnel including, but not limited to, our executive officers, whose continued service is not guaranteed, and each of whom would be difficult to replace. While we have entered into employment contracts with our executive officers, they may nevertheless cease to provide services to us at any time. If any of our key personnel were to cease employment with us, ourbusiness, operating results, could suffer. Our ability to retain our management group or to attract suitable replacements should any members of the management group leave is dependent on the competitive nature of the employment market. The loss of services from key members of the management group or a limitation in their availability could adversely impact our financial condition and cash flows. Further,
Any future public health crisis, pandemic, epidemic or outbreak of infectious disease, such as the COVID-19 pandemic, could have material and adverse effects on our business, operating results, financial condition and cash flows due to, among other factors: (i) government authorities requiring the closure of offices or other businesses or instituting quarantines of personnel; (ii) disruption in global supply and delivery chains; (iii) a loss could be negatively perceivedgeneral decline in the capital markets. Asbusiness activity and demand for real estate; (iv) repurposing or redevelopment of December 31, 2017, we have not obtaineddefunct retail properties into industrial properties; (v) reduced economic activity, general economic decline or recession, which may impact our tenants’ businesses and do not expect to obtain key man life insurance on anymay cause one or more of our key personnel.
We also believe that, as we expand,tenants to be unable to make rent payments to us timely, or at all, or to otherwise seek modifications of lease obligations; (vi) difficulty accessing debt and equity capital on attractive terms, or at all; and (vii) the potential negative impact on the health of our future success depends, in large part, uponpersonnel or our ability to hirerecruit 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.key employees.
Our growth will depend upon future acquisitions of properties, and we may be unable to consummate acquisitions on advantageous terms or acquisitions may not perform as we expect.
We acquire and intend to continue to acquire primarily warehouse/distribution properties and light manufacturing properties. The acquisition of properties entails various risks, including the risk that our investments may not perform as we expect. Further, we face competition for attractive investment opportunities from other well-capitalized real estate investors, including both publicly-traded REITs and private institutional investment funds, and these competitors may have greater financial resources and a greater ability to borrow funds to acquire properties. This competition will increase as investments in real estate become increasingly attractive relative to other forms of investment. As a result of competition, we may be unable to acquire additional properties for the purchase price we desire. In addition, we expect to finance future acquisitions through a combination of secured and unsecured borrowings, proceeds from equity or debt offerings by us or our Operating Partnership or its subsidiaries and proceeds from property contributions and divestitures which may not be available and which could adversely affect our cash flows.
The cash available for distribution to stockholders may not be sufficient to pay dividends at expected levels, nor can we assure you of our ability to make distributions in the future.
Distributions will be authorized and determined by our board of directors in its sole discretion from time to time and will depend upon a number of factors, including:
cash available for distribution;
our results of operations;
our financial condition, especially in relation to the anticipated future capital needs of our properties;
the distribution requirements for REITs under the Code;
our operating expenses; and
other factors our board of directors deems relevant.
Consequently, we may not continue our current level of distributions to stockholders, and our distribution levels may fluctuate.
In addition, some of our distributions may include a return of capital. To the extent that we make distributions in excess of our current and accumulated earnings and profits, such distributions would generally be considered a return of capital for federal income tax purposes to the extent of the holder’s adjusted tax basis in its shares. A return of capital is not taxable, but it has the effect of reducing the holder’s adjusted tax basis in its investment. To the extent that distributions exceed the adjusted tax basis of a holder’s shares, they will be treated as gain from the sale or exchange of such stock. If we borrow to fund distributions, our future interest costs would increase, thereby reducing our earnings and cash available for distribution from what they otherwise would have been.
We have owned our properties for a limited time, and we may not be aware of characteristics or deficiencies involving any one or all of them.
The majority of our properties have been under management for less than five years. In addition, in the past five years, we have acquired 317 buildings totaling approximately 64.9 million rentable square feet. These properties may have characteristics or deficiencies unknown to us that could affect their valuation or revenue potential and such properties may not ultimately perform up to our expectations. We cannot assure you that the operating performance of the properties will not decline under our management.
We face risks associated with security breaches through cyber attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology (IT) networks and related systems.
We face risks associated with security breaches, whether through cyber attacks or cyber intrusions over the Internet, malware, computer viruses, attachments to e-mails, persons inside our organization or persons with access to systems inside our organization, and other significant disruptions of our IT networks and related systems. The risk of a security breach or disruption, particularly through cyber attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Our IT networks and related systems are essential to the operation of our business and our ability to perform day-to-day operations and, in some cases, may be critical to the operations of certain of our tenants. Although we make efforts to maintain the security and integrity of these types of IT networks and related systems, and we have implemented various measures to manage the risk of a security breach or disruption, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging. Even the most well protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target, and in some cases are designed to not be detected and, in fact, may not be detected. Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us to mitigate this risk entirely. A security breach or other significant disruption involving our IT networks and related systems could disrupt the proper functioning of our networks and systems; result in misstated financial reports, violations of loan covenants and/or missed reporting deadlines; result in our inability to monitor our compliance with the rules and regulations regarding our qualification as a REIT; result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive or otherwise valuable information of ours or others, which others could use to compete against us or for disruptive, destructive or otherwise harmful purposes and outcomes; require significant management attention and resources to remedy any damages that result; subject us to claims for breach of contract, damages, credits, penalties or termination of leases or other agreements; or damage our reputation among our tenants and investors generally.
Risks Related to Our Organization and Structure
Our growth depends on external sources of capital, which are outside of our control and affect our ability to finance acquisitions, take advantage of strategic opportunities, satisfy debt obligations and make distributions to our stockholders.
In order to maintain our qualification as a REIT, we are generally required under the Code to annually distribute at least 90% of our net taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain. In addition, we will be subject to federal income tax at regular corporate rates to the extent that we distribute less than 100% of our net taxable income, including any net capital gains. Because of these distribution requirements, we may not be able to fund future capital
needs, including acquisition financing, from operating cash flow. Consequently, we mayflow and rely on third-party sources to fund our capital needs. We may not be able to obtain financing on favorable terms or at all. In addition, any additional debt we incur will increase our leverage and debt service obligations. Our access to third-party sources of capital depends, in part, on:
on general market conditions;
conditions, the market’s perception of our growth potential;
potential, our current debt levels;
levels, our current and expected future earnings;
earnings, our cash flow and dividends;distributions and
the market price per share of our common stock.
If we cannot raise equity or obtain capitalfinancing from third-party sources on favorable terms, or at all, we may not be able to acquire properties when strategic opportunities exist, meet the capital and operating needs of our existing properties or satisfy our debt service obligations. To the extent that capital is not available to acquire properties, profits may not be realized or their realization may be delayed, which could result in an earnings stream that is less predictable than some of our competitors or a failure to meet our projected earnings and distributable cash flow levels in a particular reporting period. Further, in order to meet the REIT distribution requirements and maintain our REIT status and to avoid the payment of income and excise taxes, we may need to borrow funds on a short-term basis even if the then-prevailing market conditions are not favorable for these borrowings. These short-term borrowing needs could result from differences in timing between the actual receipt of cash and inclusion of income for federal income tax purposes or the effect of non-deductible capital expenditures, the creation of reserves, certain restrictions on distributions under loan documents or required debt or amortization payments.
To the extent that capital is not available to acquire properties, profits may not be realized or their realization may be delayed, which could result in an earnings stream that is less predictable than some
Certain provisions of our competitorsgoverning documents and Maryland law may delay or prevent a transaction or a failure to meet our projected earnings and distributable cash flow levels in a particular reporting period. Such a failure to meet our projected earnings and distributable cash flow levels in a particular reporting period could have an adverse effect on our financial condition and on the market pricechange of our stock.
We have experienced historical net losses and accumulated deficits after depreciation and amortization and we may experience future losses.
We had a historical net loss attributable to common stockholders for the year ended December 31, 2015 of approximately $38.6 million. There can be no assurancecontrol that we will not incur net losses in the future after excluding the effects of depreciation and amortization, which could adversely affect our ability to service our indebtedness and our ability to make distributions, any of which could adversely affect the trading price of our securities.
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 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, as amended (the “2011 Plan”).
We are subject to financial reporting and other requirements for which our accounting, internal audit and other management systems and resources may not be adequately prepared and we may not be able to accurately report our financial results.
We are subject to reporting and other obligations under the Exchange Act, including the requirements of Section 404 of the Sarbanes-Oxley Act of 2002. Section 404 requires annual management assessments of the effectiveness of our internal controls over financial reporting and a report by our independent registered public accounting firm addressing these assessments. These reporting and other obligations place significant demands on our management, administrative, operational, internal audit and accounting resources and cause us to incur significant expenses. We may need to upgrade our systems or create new systems; implement additional financial and management controls, reporting systems and procedures; expand our internal audit function; or hire additional accounting, internal audit and finance staff. Any failure to maintain effective internal controls could have a material adverse effect on our business, operating results and trading price of our securities.
Our charter and bylaws, the partnership agreement of our Operating Partnership agreement and Maryland law contain provisions that may delay or prevent a transaction or a change of control, transaction.including, among other provisions, the following:
Our charter contains 9.8% ownership limits. Our charter, subject to certain exceptions, authorizes our directors to take such actions as are necessary and desirable to limit any person to actual or constructive ownership of no more than 9.8% in value or in number of shares, whichever is more restrictive, of the outstanding shares of our capital stock and no more than 9.8% in value or in number of shares, whichever is more restrictive, of the outstanding shares of our common stock. In addition, the articles supplementary forWhile our 6.625% Series B Cumulative Redeemable Preferred Stock, par value $0.01 per share (the “Series B Preferred Stock”), and our 6.875% Series C Cumulative Redeemable Preferred Stock, par value $0.01 per share (the “Series C Preferred Stock”) provide that generally no person may own, or be deemed to own by virtue of the attribution provisions of the Code, either more than 9.8% in value or in number of shares, whichever is more restrictive, of our outstanding Series B Preferred Stock or Series C Preferred Stock. Our board of directors, in its sole discretion, may exempt a proposed transferee from the ownership limits. However, our board of directorslimits, it may not grant an exemption from the ownership limits to any proposed transferee whose ownership direct or indirect, of more than 9.8% of the value or number of our outstanding shares of our common stock, our Series B Preferred Stock or our Series C Preferred Stock could jeopardize our status as a REIT. TheREIT status. These ownership limits contained in our charter and the restrictions on ownership of our common stock may delay or prevent a transaction or a change of control that might be in the best interest of our stockholders.
Our board of directors may create and issue a class or series of preferred stock without stockholder approval. Subject to the rights of holders of Series B Preferred Stock and Series C Preferred Stock to approve the classification or issuance of any class or series of stock ranking senior to the Series B Preferred Stock or Series C Preferred Stock, our Our board of directors is empowered under our charter tomay amend our charter, without stockholder approval, to (i) increase or decrease the aggregate number of shares of our common stock or the number of shares of stock of any class or series, that we have authority to issue, to(ii) designate and issue from time to time one or more classes or series of preferred stock, and to(iii) classify or reclassify any unissued shares of our common stock, or preferred stock without stockholder approval. Subject to the rights of holders of Series B Preferred Stock and Series C Preferred Stock discussed above, our board of directors may(iv) determine the relative rights, preferences and privileges of any class or series of preferred stock issued.stock. The issuance of preferred stock could also have the effect of delaying or preventing a transaction or a change of control transaction that might otherwise be in the best interests of our stockholders.
Certain provisions in the partnership agreement for our Operating Partnership agreement may delay or prevent unsolicited acquisitionsa change of us.control. Provisions in the partnership agreement for our Operating Partnership agreement could discourage third parties from making proposals involving an unsolicited acquisition of us or change of our control transaction, although some stockholders might consider such proposals, if made, desirable. These provisions include, among others:
others, redemption rights, of qualifying parties;
transfer restrictions on ourthe common units;
units, the ability of the general partner in some cases to amend certain provisions in the partnershipOperating Partnership agreement without the consent of the limited partners;partners and
the right of the limited partners to consent to certain mergers and transfers of the general partnership interest and mergers under specified circumstances.
Anyinterest. In addition, any potential change of control transaction may be further limited as a result of provisions ofrelated to the partnership unit designation forlong-term incentive plan units in our Operating Partnership (“LTIP units”) granted under the LTIP units,STAG Industrial, Inc. 2011 Equity Incentive Plan, as amended and restated (the “2011 Plan”), which require us to preserve the rights of LTIP unit holders and may restrict us from amending the partnership agreement for our Operating Partnership agreement in a manner that would have an adverse effect on the rights of LTIP unit holders.
Certain provisions of Maryland law could inhibit changesdelay or prevent a change in control.
Title 8, Subtitle 3 of the Maryland General Corporation Law (“MGCL”), permits our board of directors, without stockholder approval, and regardless of what is currently provided in our charter or our bylaws, to implement certain takeover defenses, some of which (for example, a classified board) we do not currently have. These provisions and other provisions of Maryland law may have the effect of inhibiting a third party from making an acquisition proposal for our company or of delaying deferring or preventing a change inof control of our company under circumstances that might be in the best interest of our stockholders.
Our charter and bylaws, the partnership agreement for our Operating Partnership and Maryland law 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.
Under their employment agreements, our executive officers have the right to terminate their employment and, under certain conditions, receive severance, which may adversely affect us.
The employment agreements with our executive officers provide that each executive may terminate his or her employment and, under certain conditions, receive severance based on two or three times (depending on the officer) the annual total of salary and bonus and immediate vesting of equity-based awards. In the case of certain terminations, they would not be restricted from competing with us after their departure.
Compensation awards to our management may not be tied to or correspond with our improved financial results or the stock price, which may adversely affect us.
The compensation committee of our board of directors is responsible for overseeing our compensation and employee benefit plans and practices, including our executive compensation plans and our incentive compensation and equity-based compensation plans. Our compensation committee has significant discretion in structuring compensation packages and may make compensation decisions based on any number of factors. As a result, compensation awards may not be tied to or correspond with improved financial results at our company or the share price of our common stock.
Our board of directors can take many actions without stockholder approval.
Our board of directors has overallthe general authority to oversee our operations and determine our major corporate policies. This authority includes significant flexibility.flexibility and allows the board to take many actions, without stockholder approval, that could increase our operating expenses, impact our ability to make distributions or reduce the value of our assets. For example, our board of directors can, do the following:
amend or revise at any time and from time to timeamong other things, (i) change our investment, financing and borrowing and dividend policiesstrategies and our policies with respect to all other activities, including growth,distributions, leasing, debt, capitalization and operations;operations (including creditworthiness
standards with respect to conflicts of interest provided that such changes are consistent with applicable legal requirements;
within the limits providedour tenants), (ii) subject to provisions in our charter, prevent the ownership, transfer and/orand accumulation of shares in order to protect our status as a REIT or for any other reason deemed to be in the best interests of us and our stockholders;
stockholders, (iii) issue additional shares without obtaining stockholder approval, which(which could dilute the ownership of existing stockholders;
amend our charter tostockholders) and increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series without obtaining stockholder approval;
subject to the rights of holders of Series B Preferred Stock and of Series C Preferred Stock,or classify or reclassify any unissued shares, of our common stock or preferred stock, set the preferences, rights and other terms of such classified or reclassified shares, without obtaining stockholder approval;
make certain amendments to our equity incentive plan;
employapproval, and compensate affiliates;
direct our resources toward investments that do not ultimately appreciate over time;
change creditworthiness standards with respect to third-party tenants; and
(iv) determine that it is no longer in our best interests to continue to qualify as a REIT.
Any of these actions could increase our operating expenses, impact our ability to make distributions or reduce the value of our assets without giving you, as a stockholder, the right to vote.
Our rights and the rights of our stockholders to take action against our directors and officers are limited.
Maryland law provides that a director or officer has no liability in that capacity if he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in our best interests and with the care that an ordinarily prudent person in a like position would use under similar circumstances. In addition, our charter eliminates our directors’ and officers’ liability to us and our stockholders for moneymonetary damages, except for liability resulting from actual receipt of an improper benefit or profit in money, property or services or active and deliberate dishonesty established by a final judgment and which is material to the cause of action. Our bylaws require us to indemnify our directors and officers to the maximum extent permitted by Maryland law for liability actually incurred in connection with any proceeding to which they may be made, or threatened to be made, a party, except to the extent that the act or omission of the director or officer was material to the matter giving rise to the proceeding and was either committed in bad faith or was the result of active and deliberate dishonesty, the director or officer actually received an improper personal benefit in money, property or services, or, in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. Additionally, the Operating Partnership agreement limits our liability and requires our Operating Partnership to indemnify us and our directors and officers to the maximum extent permitted by Delaware law against all claims that relate to the operations of our Operating Partnership, except for actions taken in bad faith, or with gross negligence or willful misconduct. As a result, we and our stockholders may have more limited rights against our directors and officers than might otherwise exist under common law. In addition, we may be obligated to fund the defense costs incurred by our directors and officers.
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 have fiduciary duties to the other limited partners in our Operating Partnership, including members of our management team and board of directors, the discharge of which may conflict with the interests of our stockholders. In addition, those persons holding common units will have the right to vote on certain amendments to the Operating Partnership agreement. 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.
Conflicts also 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. As a result of unrealized built-in gain attributable to contributed properties at the time of contribution, some holders of common units, including members of our management team, may suffer more adverse tax consequences than our stockholders upon the sale or refinancing of certain properties, 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 are subject to financial reporting and other requirements for which our accounting, internal audit and other systems and resources may not be adequately prepared and we may not be able to accurately report our financial results.
We are subject to reporting and other obligations under the Exchange Act, including the requirements of Section 404 of the Sarbanes-Oxley Act of 2002. Section 404 requires annual management assessments of the effectiveness of our internal controls over financial reporting and a report by our independent registered public accounting firm addressing these assessments. These reporting and other obligations place significant demands on our management, administrative, operational, internal audit and accounting resources and cause us to incur significant expenses. We may need to upgrade our systems, implement additional financial and management controls and procedures, expand our internal audit function, or hire additional accounting, internal audit and finance staff. Any failure to maintain effective internal controls could have a material adverse effect on our business, operating results and market prices of our securities.
Risks Related to Ownership of Our Common Stock
The market price and trading volume of our common stock may be volatile.
The market price for our common stock has experienced significant price and volume fluctuations, often without regard to our operating performance. If the market price of our common stock declines significantly, you may be unable to sell your shares at or above the price at which you acquired them. A number of factors could negatively affect the market price or trading volume of our common stock, many of which are out of our control, including:
•actual or anticipated variations in our quarterly operating results or those of our competitors;
•publication of research reports about us, our competitors, our tenants or the real estate industry;
•changes in our distribution policy;
•increases in market interest rates that lead purchasers of our shares to demand a higher yield;
•the market’s perception of equity investments in REITs and changes in market valuations of similar REITs;
•difficulties or inability to access capital or extend or refinance existing debt or an adverse market reaction to any increased indebtedness we incur in the future;
•a change in credit ratings issued by analysts or nationally recognized statistical rating organizations;
•additions or departures of key management personnel;
•actions by institutional stockholders or speculation in the press or investment community; and
•general U.S. and worldwide market and economic conditions.
The cash available for distribution to stockholders may not be sufficient to make distributions at expected levels, nor can we assure you of our ability to make distributions in the future.
Distributions will be authorized and determined by our board of directors in its sole discretion from time to time and will depend upon a number of factors, including cash available for distribution, our operating results, operating expenses and financial condition (especially in relation to our anticipated future capital needs), REIT distribution requirements under the Code and other factors the board deems relevant. Consequently, our distribution levels may fluctuate. In addition, to the extent that we make distributions in excess of our current and accumulated earnings and profits, such distributions would generally be considered a return of capital for federal income tax purposes to the extent of the holder’s adjusted tax basis in its shares. A return of capital is not taxable, but it has the effect of reducing the holder’s adjusted tax basis in its investment. To the extent that distributions exceed the adjusted tax basis of a holder’s shares, they will be treated as gain from the sale or exchange of such stock. Further, if we borrow funds to make distributions, our future interest costs would increase, thereby reducing our earnings and cash available for distribution from what they otherwise would have been.
The number of shares of our common stock available for future sale, including by our affiliatesand future offerings of debt or investors in our Operating Partnership, couldequity securities may be dilutive to existing stockholders and adversely affect the market price of our common stock.
Our ability to execute our business strategy depends on our access to an appropriate blend of equity and debt financing, including common and preferred stock, and future sales by usdebt securities, lines of shares of our common stock may be dilutive to existing stockholders.
Sales of substantial amounts of shares of our common stock in the public market, or upon exchange of common units or exercise of any options, or the perception that such sales might occur could adversely affect the market price of our common stock. The exchange of common units for common stock, the exercise of any stock options or the vesting of any restricted stock granted under the 2011 Plan, the issuance of our common stock or common units in connection with property, portfolio or business acquisitionscredit and other issuancesforms of our common stock or common units could have an adverse effect on the market price of our common stock. The existence of shares of our common stock reserved for issuance under the 2011 Plan or upon exchange of common units may adversely affect the terms upon which we may be able to obtain additional capital through the sale of equity securities.secured and unsecured debt. We also have filed a registration statement with the SEC allowing us to offer, from time to time, an indefinite amount of equity and debt securities (including common or preferred stock) on an as-needed basis, and subject toincluding shares under our ability to affect offerings on satisfactory terms based on prevailing conditions. In addition, our board of directors authorized us to issue shares ofATM common stock in our ATMoffering program. Our ability to execute our business strategy depends on our access to an appropriate blendSales of debt financing, including unsecured linesa substantial number of credit and other forms of secured and unsecured debt, and equity financing, including issuances of common and preferred stock. No prediction can be made about the effect that future distributions or salesshares of our common stock will have on(or the market priceperception that such sales might occur), the vesting of our common stock. In addition, future sales by usequity awards under the 2011 Plan, the issuance of our common stock or common units in connection with acquisitions, and other equity issuances may be dilutive to existing stockholders.
Future offeringsdilute the holdings of debt securities, which would be senior to our common stock upon liquidation, or equity securities, which would dilute our existing stockholders and may be senior to our common stock for the purposes of distributions, may adversely affector reduce the market priceprices of our securities.
Our common stock is ranked junior to our Series B Preferred Stock and Series C Preferred Stock. Our outstanding Series B Preferred Stock and Series C Preferred Stock also hassecurities, or will have a preference upon our dissolution, liquidation or winding up in respect of assets available for distribution to our stockholders.both. Holders of our common stock are not entitled to preemptive rights or other protections against dilution. In the future,addition, we may attempt to increase our capital resources by making additional offerings ofissuing preferred stock or debt or equity securities including(including commercial paper, medium-term notes and senior or subordinated notes and classesnotes). Any future issuances of preferred orstock will rank senior to our common stock with respect to distributions and liquidation rights, which could limit our ability to make distributions to holders of common stock. UponIn addition, upon liquidation, holders of our debt securities and shares of preferred stock and lenders with respect to other borrowings willwould receive a distribution of our available assets prior to any distribution to the holders of our common stock. Additional equity offerings may dilute the holdings of our existing stockholders or reduce the market price of our securities or both. Because
our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, or nature of our future offerings. Thus, our stockholders bear the risk of our future offerings reducing the market priceprices of our securities and diluting their proportionate ownership.
We have in the past entered, and may in the future enter, into forward sale transactions that subject us to certain risks.
We have previously entered into forward sale agreements and may in the future enter into additional forward sale agreements, including under our ATM common stock offering program, that subject us to certain risks. The marketfuture issuance of any shares of
common stock upon settlement of any forward sale agreement will result in dilution to our earnings per share, return on equity, and dividends per share. The purchase of common stock in connection with the unwinding of the forward purchaser’s hedge position could cause our stock price to increase (or prevent a decrease) over such time, thereby increasing the amount of cash we would owe (or decreasing the amount of cash owed to us) upon a cash settlement. In addition, pursuant to each forward sale agreement, the relevant forward purchaser will have the right to accelerate the settlement of the forward sale agreement in connection with certain specified events. In such cases, we could be required to settle that particular forward sale agreement and trading volumeissue common stock irrespective of our common stock may be volatile.capital needs.
The market price
Under Section 1032 of our common stock may be volatile. In addition, the trading volumeCode, generally, no gains and losses are recognized by a corporation in our common stock may fluctuate and cause significant price variationsdealing in its own shares, including pursuant to occur. If the market price of our common stock declines significantly, you may be unable to resell your shares at or above the price at which they traded when you acquired them. We cannot assure you that the market price of our common stock will not fluctuate or decline significantlya “securities futures contract” as defined in the future. Some ofCode. However, because it is not clear whether a forward sale agreement qualifies as a “securities futures contract,” the factors that could negatively affect the market price of our common stock or result in fluctuations in the market price or trading volume of our common stock include:
actual or anticipated variations in our quarterly operating results;
changes in our operations or earnings estimates or publication of research reports about us or the industry;
changes in our dividend policy;
increases in market interest rates that lead purchasers of our shares to demand a higher yield;
changes in market valuations of similar companies;
adverse market reaction to any increased indebtedness we incur in the future;
our ability to comply with applicable financial covenants in our unsecured credit facility, unsecured term loans, unsecured notes, and other loan agreements;
additions or departures of key management personnel;
actions by institutional stockholders;
the realizationU.S. federal income tax treatment of any cash settlement payment is uncertain. In the event that we recognize a significant gain from a forward sale agreement, we may not be able to satisfy the gross income requirements applicable to REITs under the Code, may not be able to rely upon certain relief provisions and could lose our REIT status under the Code. Even if relief provisions apply, we would be subject to a tax based on the amount of the other risk factors presented in this report;non-qualifying income.
speculation in the press or investment community; and
general U.S. and worldwide market and economic conditions.
General Real Estate Risks
Our performance and value areis subject to general economic conditions and risks associated with our real estate assets.
The investment returns available from equity investments in real estate depend on the amount of income earned and capital appreciation generated by the properties, as well as the expenses incurred in connection with the properties. If our properties do not generate income sufficient to meet operating expenses, including debt service and capital expenditures, then our ability to paymake distributions to our stockholders could be adversely affected. In addition, there are significant expenditures associated with an investment in real estate (such as mortgagedebt payments, real estate taxes and maintenance costs) that generally do not decline when circumstances reduce the income from the property. Income from and the value of our properties may be adversely affected by:by, among other things:
changes•a global economic crisis that results in general orincreased budget deficits and weakened financial condition of international, national and local economic climate;
the attractiveness of our propertiesgovernments, which may lead to potential tenants;
changes in supply of or demand for similar or competing properties in an area;
bankruptcies, financial difficulties or lease defaults by our tenants;
changes inreduced governmental spending, tax increases, public sector job losses, increased interest rates, and availability of permanent mortgage funds that may render the sale of a property difficult or unattractive or otherwise reduce returns to stockholders;
changes in operating costs and expenses and our ability to control rents;
changes in or increased costs of compliance with governmental rules, regulations and fiscal policies, including changes in tax, real estate, environmental and zoning laws, and our potential liability thereunder;
our ability to provide adequate maintenance and insurance;
changes in the cost or availability of insurance, including coverage for mold or asbestos;
unanticipated changes in costs associated with known adverse environmental conditions or retained liabilities for such conditions;
periods of high interest rates and tight money supply;
tenant turnover;
general overbuilding or excess supply in the market; and
disruptions in the global supply chain caused by political, regulatorycurrency devaluations, defaults on debt obligations or other factors, including terrorism and geopolitical developments outside the United States, such as the effects of the United Kingdom’s referendum to withdraw from the European Union.adverse economic events;
In addition,•other periods of economic slowdown or recession, rising interest rates or declining demand for real estate, or the public perception that any of these events may occur, would resultoccur;
•tenant turnover, the attractiveness of our properties to potential tenants and changes in asupply of, or demand for, similar or competing properties in an area (including from general decreaseoverbuilding or excess supply in rentsthe market);
•technological changes, such as reconfiguration of supply chains, autonomous vehicles, drones, robotics, 3D printing, online marketplaces for industrial space, or an increased occurrenceother developments;
•our ability to control rental rates and changes in operating costs and expenses, including costs of defaults under existing leases, which would adversely affectcompliance with tax, real estate, environmental and zoning laws, rules and regulations and our financial conditionpotential liability thereunder;
•changes in the cost or availability of insurance, including coverage for mold or asbestos;
•unanticipated changes in costs associated with known adverse environmental conditions or retained liabilities for such conditions;
•periods of high interest rates and results of operations. Futuretight money supply;
•future terrorist attacks, which may result in declining economic activity, which could reduce the demand for, and the value of, our properties. To the extent that future attacks impactproperties, and may adversely affect our tenants, their businesses similarly could be adversely affected, includingtenants’ business and their ability to continue to honor their existing leases.lease; and
For these•disruptions in the global supply chain caused by political, regulatory or other factors, including geopolitical developments outside the United States.
In addition, our investments could be materially adversely affected by changes in national and international political, environmental and socioeconomic circumstances, such as the conflict between Russia and Ukraine and its impact on macroeconomic conditions. Coupled with changes in Federal Reserve policies on interest rates and other reasons, we cannot assure you that we will be profitable or that we will realize growth ineconomic disruptions, this war has, and may continue to, exacerbate inflation and adversely affect economic and market conditions, the value of our properties.
Actions by our competitors may decrease or prevent increases in the occupancylevel and rental rates of our properties.
We compete with other owners, operators and developersvolatility of real estate some of which own properties similar to ours inand securities prices and the same markets and sub-markets in which our properties are located. If our competitors offer space at rental rates below current market rates or below the rental rates we currently charge our tenants, we may lose potential tenants, and we may be pressured to reduce our rental rates below those we currently charge in order to retain tenants when our tenants’ leases expire.
A significant portionliquidity of our properties have leases that expire in the next three yearsinvestments. As military conflicts and we may be unablerelated economic sanctions continue to renew leases, lease vacant space or re-lease space as leases expire.
Our results of operations, cash flows, cash available for distribution, and the value of our securities would be adversely affected if we are unable to lease, on economically favorable terms, a significant amount of space in our operating properties. As of December 31, 2017, leases with respect to approximately 37.0% (excluding month-to-month leases, which comprise an additional 1.6%) of our total annualized base rental revenue will expire before December 31, 2020. We cannot assure you that expiring leases will be renewed or that our properties will be re-leased at base rental rates equal to or above the current market rental rates. In addition, the number of vacant or partially vacant industrial properties in a market or sub-market could adversely affect our ability to re‑lease the space at attractive rental rates.
A property that incurs a vacancy could beevolve, it has become increasingly difficult to sell or re-lease.predict the impact of these events.
A property may incur a vacancy either by the continued default
We may not have funding for future tenant improvements.
When a tenant at one of our properties does not renew its lease or otherwise vacates its space in one of our buildings, it is likely that, in order to attract one or more new tenants, we will be required to expend funds to construct new tenant improvements in the vacated space. Except with respect to our current reserves for capital expenditures, tenant improvements and leasing commissions, we cannot assure you that we will have adequate sources of funding available to us for such purposes in the future.
Bankruptcy laws will limit our remedies if a tenant becomes bankrupt and rejects the lease and we may be unable to collect balances due on our leases.
The bankruptcy or insolvency of a tenant could diminish the income we receive from that tenant’s lease. Our tenants may experience downturns in their operating results due to adverse changes to their business or economic conditions, and those tenants that are
highly leveraged may have a higher possibility of filing for bankruptcy or insolvency. We may not be able to evict a tenant solely because of its bankruptcy. On the other hand, a bankruptcy court might authorize the tenant to terminate its lease with us. If that happens, our claim against the bankrupt tenant for unpaid future rent would be an unsecured pre-petition claim subject to statutory limitations, and therefore such amounts received in bankruptcy are likely to be substantially less than the remaining rent we otherwise were owed under the lease. In addition, any claim we have for unpaid past rent could be substantially less than the amount owed. If the lease for such a property is rejected in bankruptcy, our revenue would be reduced and could adversely impact our ability to pay distributions to stockholders.
Real estate investments are not as liquid as other types of investments.
Real estate investments are not as liquid as other types of investments, and this
The lack of liquidity in real estate investments may limit our ability to vary our portfolio and react promptly to changes in economic or other conditions. In addition, significant expenditures associated with real estate investments, such as mortgage payments, real estate taxes and maintenance costs, are generally not reduced when circumstances cause a reduction in income from the investments. In addition, weWe intend to comply with the safe harbor rules relating to the number of properties that can be disposed of in asold each year, the tax basesbasis and the costs of improvements made to thesesuch sale properties, and other items that enable a REIT to avoid punitive taxation on the sale of assets.property sales. Thus, our ability at any time to sell assetsproperties or contribute assetsproperties to propertyreal estate funds or other entities in which we have an ownership interest may be restricted. This lack of liquidity may limit our ability to vary our portfolio promptly in response to changes in economic or other conditions.
Acquired properties may be located in new markets where we may face risks associated with investing in an unfamiliar market.
We have acquired, and may continue to acquire, properties in markets that are new to us. When we acquire properties located in these markets, we may face risks associated with a lack of market knowledge or understanding of the local economy, forging new business relationships in the area and unfamiliarity with local government and permitting procedures.
Uninsured losses relating to real property may adversely affect your returns.
We attempt to ensure that all of our properties are adequately insured to cover casualty losses. However, there
There are certain losses, including losses from floods, earthquakes, acts of war, acts of terrorism or riots, that are not generally insured against or that are not generally fully insured against because it is not deemed economically feasible or prudent to do so. In addition, changes in the cost or availability of insurance could expose us to uninsured casualty losses. In the event that any of our properties incurs a casualty loss that is not fully covered by insurance, the value of our assets will be reduced by the amount of any such uninsured loss, and we could experience a significant loss of invested capital invested and potential revenue in these properties andthe property, we could potentially remain obligated under any recourse debt associated with the property, and we may have no source of funding to repair or reconstruct the damaged property. Moreover, we as the indirect general partner of our Operating Partnership, generally willmay be liable for all of our Operating Partnership’s unsatisfied recourse obligations, including any obligations incurred by our Operating Partnership as the general partner of joint ventures. In addition, we may have no source of funding to repair or reconstruct the damaged property, and we cannot assure you that any such sources of funding will be available to us for such purposes in the future. We evaluate our insurance coverage annually in light of current industry practice through an analysis prepared by outside consultants.
Contingent or unknown liabilities could adversely affect our financial condition.
As part of the formation transactions related to our IPO, we assumed existing liabilities of contributed operating companies and liabilities in connection with contributed properties, some of which may be unknown or unquantifiable. Unknown liabilities might include liabilities for cleanup or remediation of undisclosed environmental conditions beyond the scope of our environmental insurance coverage, claims of tenants, vendors or other persons dealing with the entities prior to our IPO, tax liabilities, and accrued but unpaid liabilities whether incurred in the ordinary course of business or otherwise. In addition, we may in the future acquire properties, or may have previously owned properties, subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities. As a result, if a liability were asserted against us based on ownership of any of these entities or properties, then we might have to pay substantial sums to settle it, which could adversely affect our cash flows.
Environmentally hazardous conditions may adversely affect our operating results.
Under various federal, state and local environmental laws, a current or previous owner or operator of real property may be liable for the cost of remediation or removing hazardous or toxic substances on such property. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. Even if more than one person may have been responsible for the contamination, each person covered by the environmental laws may be held responsible for all of the clean‑up costs incurred. In addition, third parties may sue the property owner or operator of a site for damages based on personal injury, natural resources, or property damage or other costs, including investigation and clean‑up costs, resulting from the environmental contamination. The presence of hazardous or toxic substances on one of our properties, or the failure to properly remediate a contaminated property, could give rise to a lien in favor of the government for costs it may incur to address
the contamination, or otherwise adversely affect our ability to sell or lease the property or borrow using the property as collateral. Environmental laws also may impose restrictions on the manner in which property may be used or businesses may be operated. A property owner who violates environmental laws may be subject to sanctions which may be enforced by governmental agencies or, in certain circumstances, private parties. In connection with the acquisition and ownership of our properties, we may be exposed to such costs. The cost of defending against environmental claims,costs of compliance with environmental regulatory requirements, defending against environmental claims or of remediation of any contaminated property could materially adversely affect our business, assets oroperating results of operations and consequently, amountscash available for distribution to our stockholders.
Some of our properties contain asbestos‑containing building materials. 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. SomeIn addition, some of our properties contain asbestos‑containing building materials.
We invest in properties historically used for industrial, light manufacturing and commercial purposes. Some of these properties contain, or may have contained, underground storage tanks for the storage of petroleum products and other hazardous or toxic substances. All of these operations create a potential for the release of petroleum products or other hazardous or toxic substances. Some of our properties are adjacent to or near other properties that have contained or currently contain, underground storage tanks used to store petroleum products and other hazardous or toxic substances, which create a potential for the release of petroleum products or other hazardous or toxic substances. In addition, certain of ourWe also own properties that are on or are adjacent to or near other properties upon which others,other persons, including former owners or tenants of our properties, have engaged, or may in the future engage, in activities that may release petroleum products or other hazardous or toxic substances.
From time
Before acquiring a property, we typically obtain a preliminary assessment of environmental conditions at the property, often referred to time, weas “Phase I environmental site assessment.” However, this environmental assessment does not include soil sampling or subsurface investigations and typically does not include an asbestos survey. We may acquire properties, or interests in properties with known adverse environmental conditions where we believe thatand/or material environmental conditions, liabilities or compliance concerns may arise after the environmental liabilities associated with these conditions are quantifiable and that the acquisition will yield a superior risk‑adjusted return. In such an instance, we underwrite the costs of environmental investigation, clean‑up and monitoring into the cost.assessment has been completed. Further, in connection with property dispositions, we may agree to remain responsible for, and to bear the cost of, remediating or monitoring certain environmental conditions on the properties.
Before acquiring a property, we typically obtain a preliminary assessment of environmental conditions at the property that meets certain specifications, often referred to as “Phase I environmental site assessment” or “Phase I environmental assessment.” It is intended to discover and evaluate information regarding the environmental condition of the surveyed property and surrounding properties. A Phase I environmental assessment generally includes an historical review, a public records review, an investigation of the surveyed site and surrounding properties, and preparation and issuance of a written report, but does not include soil sampling or subsurface investigations and typically does not include an asbestos survey. Material environmental conditions, liabilities or compliance concerns may arise after the environmental assessment has been completed. Moreover, there can be no assurance that:
that future laws, ordinances or regulations will not impose any material environmental liability;
liability, or
the current environmental condition of our properties will not be affected by tenants, by 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.
We are exposed to the potential impacts of future climate change and climate change-related risks.
Our properties may be exposed to rare catastrophic weather events, such as severe storms, floods or wildfires. If the frequency of extreme weather events increases due to climate change, our exposure to these events could increase. In addition, in connection with any development, redevelopment or renovation project, we may be harmed by potential changes to the supply chain or stricter energy efficiency standards for industrial buildings. To the extent climate change causes shifts in weather patterns, our markets could experience negative consequences, including declining demand for industrial space and our inability to operate our buildings. Climate change may also have indirect negative effects on our business by increasing the cost of, or decreasing the availability of, property insurance on terms we find acceptable and increasing the cost of energy, building materials and snow removal at our properties. In addition, compliance with new laws or regulations relating to climate change, including “green” building codes, may require us to make improvements to our existing properties or result in increased operating costs. Any such laws or regulations could also impose substantial costs on our tenants, thereby impacting their financial condition and ability to meet their obligations and to lease or re-lease our properties.
Compliance or failure to comply with the ADA and other similar regulations could result in substantial costs.
Under the ADA, places of public accommodation must meet certain federal requirements related to access and use by disabled persons. Noncompliance with these requirements could result in additional costs to attain compliance, the imposition of fines by the federal government or the award of damages or attorney’s fees to private litigants. If we are required to make unanticipated expenditures to comply with the ADA or other regulations, including removing access barriers, then our cash flows and the amountscash available for distributions to our stockholdersdistribution may be adversely affected. While we believe that our properties are currently in material compliance with these regulatory requirements,In addition, changes to the requirements may changeset forth in the ADA or other regulations or the adoption of new requirements may be imposed that could require us to make significant unanticipated expenditures.
Some
The ownership of our properties are subject to ground leases that exposeexposes us to the loss of such property upon breach or termination of the ground leasecertain risks.
We currently own and may limit our abilityacquire additional properties subject to sell the property.
We own some properties throughground leases, or leasehold interests in the land underlying the building and we may acquire additional buildings in the future that are subject to similar ground leases.building. As lessee under a ground lease, we are exposed to the possibility of losing the property upon expiration, or an earlier breach by us, of the ground lease.
In the future, our Our ground leases may also contain certain provisions that may limit our ability to sell certainthe property or require us to obtain the consent of our properties. In addition, in the future,landlord in order to assign or transfer our rights and obligations under certain of ourthe ground leases, we may be required to obtain the consentlease in connection with a sale of the landlordproperty, which in turn, could adversely impact the price realized from any such sale.
We also own properties that benefit from payment in lieu of tax (“PILOT”) programs or similar programs and to facilitate such tax treatment our ownership in this property is structured as athrough leasehold interestinterests with the relevant municipality serving as lessor. With respect to such arrangements,While we have the right to purchase the fee interestinterests in the propertythese properties for a nominal purchase price, so the risk factors set forth above for traditional ground leases are mitigated by our ability to convert such leasehold interests to fee interests. Inin the event of such a conversion, of our ownership interests, however, any preferential tax treatment offered by the PILOT programs will be lost.
We may be unable to sell a property if or when we decide to do so,properties, including as a result of uncertain market conditions.
We expect to hold the various realour properties in which we invest until such time as we decide that a sale or other disposition is appropriate given our investment objectives. Our ability to dispose of propertiesany property on advantageous terms depends on factors beyond our control, including competition from other sellers and the availability of attractive financing for potential buyers of our properties. We cannot predict the various market conditions affecting real estate investments which will exist at any particular time in the future.buyers. Due to the uncertainty of market conditions whichthat may affect the future disposition of our properties,property dispositions, we cannot assure you that we will be able to sell our properties at a profit in the future.profit. Accordingly, the extent to which you will receive cash distributions and realize potential appreciation on our real estate investments will be dependent upon fluctuating market conditions.
Furthermore, we cannot assure you that we will have the funds that may be required to expend funds to correct defects or to make improvements before a property can be sold. We cannot assure you that we will have funds available to correct such defects or to make such improvements.
If we sell properties and provide financing to purchasers, defaults by the purchasers would adversely affect our cash flows.
If we decide to sell any of our properties, we presently intend to use our best efforts to sell them for cash. However, in some instances
Under certain circumstances, we may sell our properties by providing financing to purchasers. If we provide financing to purchasers, we will bear the risk that the purchaser may default, which could negatively impactadversely affect our cash flows and ability to make distributions to stockholders and may result in litigation and relatedincreased expenses. Even in the absence of a purchaser default, the reinvestment or distribution of the proceeds of sales to our stockholders, or their reinvestment in other assets,proceeds will be delayed until the promissory notes or(or other property we may accept upon a salesale) are actually paid, sold refinanced or otherwise disposed of.refinanced.
Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on co-venturers’ financial condition and disputes between us and our co-venturers.
We may in the future selectively acquire, own and/or develop properties through partnerships, joint ventures or other co-investment entities with third parties when we deem such transactions are warranted by the circumstances. In such event, we would not be in a position to exercise sole decision-making authority regarding the property, partnership, joint venture or other entity and would be subject to risks not present were a third party not involved, including the possibility that partners might become bankrupt or fail to fund required capital contributions. Partners may have economic or other business interests that are inconsistent with our objectives, take actions contrary to our policies, or have other conflicts of interest. Such investments may also have the potential risk of impasses on decisions, such as a sale, because neither we nor the partner would have full control over the partnership or joint venture. In addition, prior consent of the partner may be required for a sale or transfer to a third party of our interests in the joint venture, which would restrict our ability to dispose of our interest. In addition, in certain circumstances, we may be liable for the actions of our third-party partners. Joint ventures may be subject to debt and, in volatile credit markets, the refinancing of such debt may require equity capital calls.
Risks Related to Our Debt Financings
Our operating results and financial condition could be adversely affected if we are unable to make required payments on our debt.
Our charter and bylaws do not limit the amount or percentage of indebtedness that we may incur, and we are subject to risks normally associated with debt financing, including the risk that our cash flows will be insufficient to meet required payments of principal and interest. There can be no assurance that we will be able to refinance any maturing indebtedness, that such refinancing would be on terms as favorable as the terms of the maturing indebtedness or that we will be able to otherwise obtain funds by selling assets or raising equity to make required payments on maturing indebtedness.
In particular, loans obtained to fund property acquisitions may be secured by first mortgages on such properties. If we are unable to make our debt service payments as required, a lender could foreclose on the property or properties securing its debt. This coulddebt, which would cause us to lose part or all of our investment. Certain of our existing secured indebtedness is, and future secured indebtedness may be, cross-collateralized and, consequently, a default on this indebtedness could cause us to lose part or all of our investment in multiple properties.
Increases in interest rates could increase the amount of our required debt payments and adversely affect our ability to make distributions to our stockholders.
As of December 31, 2017,2022, we had total outstanding debt of approximately $1.2$2.5 billion, including $121.0approximately $175.0 million of debt subject to variable interest rates (excluding amounts that were hedged to fix rates), and we expect that we will incur additional indebtedness in the future. Interest we pay on outstanding debt reduces our cash available for distributions.distribution. Since we have incurred and may continue to incur variable rate debt, increases in interest rates by the Federal Reserve or changes in the Term Secured Overnight Financing Rate (“Term SOFR”) would raise our interest costs, which reduces our cash flows and our ability to make distributions to you.distributions. If we are unable to refinance our indebtedness at maturity or meet our payment obligations, the amount of our distributable cash flows and our financial condition and cash flows would be adversely affected, and we may lose the propertyproperties securing such indebtedness. In addition, if we need to repay existing debt during periods of rising interest rates, we could be required to sell one or more of our properties at times which may not permit realization of the maximum return on such investments.
Covenants inThe phase-out of LIBOR and transition to Term SOFR as a benchmark interest rate will have uncertain and possibly adverse effects.
In advance of the cessation of LIBOR on June 30, 2023, we amended our unsecured credit facility and term loans to be based on one-month Term SOFR, and as of December 31, 2022, we had no LIBOR-based debt or financial contracts. Due to the broad use of LIBOR as a reference rate, the impact of this transition to Term SOFR could adversely affect our financing costs, including spread pricing on our unsecured credit facility, unsecured term loans unsecured notes, mortgage notes, and any futureother variable rate debt instrumentsobligations, as well as our operations and cash flows. There is no guarantee that the transition from LIBOR to Term SOFR will not result in financial market disruptions, significant increases in benchmark rates, or borrowing costs to borrowers, any of which could affect our interest expense and earnings and may have an adverse effect on our business, results of operations, financial condition, and stock price. Whether or not Term SOFR attains market acceptance as a LIBOR replacement tool remains uncertain.
Our loan covenants could limit our flexibility prevent us from paying distributions, and adversely affect our financial condition or our status as a REIT.and ability to make distributions.
The terms of certain of our
Our existing mortgage notes and unsecured loan agreements require us to comply with loan-to-collateral-value ratios,certain financial and other covenants, including loan-to-value, debt service coverage, leverage and fixed charge coverage ratios and, in the case of an event of default, limitations on the ability of our subsidiaries that are borrowers under our mortgage notes to make distributions to us or our other subsidiaries.distributions. In addition, our existing unsecured credit facility, unsecured term loans and unsecured notes require us to comply with loan-to-collateral-value ratios, debt service coverage ratios, leverage ratios, recourse indebtedness thresholds, fixed charge coverage ratios and tangible net worth thresholds and limits. Our existing loan covenants may reduce flexibility in our operations, and breaches of these covenants could result in defaults under the instruments governing the applicable indebtedness even if we have satisfied our payment obligations. In addition, upon a default, our unsecured credit facility, unsecured term loans and unsecured notes, will limit, among other things, our ability to pay dividends, even if we are otherwise in compliance with our financial covenants. Other indebtedness that we may incur in the future may contain financial or other covenants more restrictive than those in our unsecured credit facility, unsecured term loans, unsecured notes and mortgage notes.
Our unsecured credit facility, unsecured term loans and unsecured notesagreements contain, and future borrowing facilitiesagreements may contain, certain cross-default provisions which are triggered in the event that our other material indebtedness is in default. These cross-default provisions may require us to repay or restructure the facilities in addition to any mortgage or other debt that is in default. IfFuture indebtedness may contain financial or other covenants more restrictive than those in our properties were foreclosed upon, or if we are unable to refinance our indebtedness at maturity or meet our payment obligations, we would be adversely affected.existing loan agreements.
We are a holding company and conduct substantially all of our business through our Operating Partnership. We do not have, apart from our ownership of our Operating Partnership, any independent operations. As a result, we will rely on distributions from our Operating Partnership to pay any dividends we might declare on our securities. We will also rely on distributions from our Operating Partnership toand meet our debt service and other obligations, including our obligations to make distributions required to maintain our REIT status.obligations. The ability of subsidiaries of our Operating Partnership to make distributions to our Operating Partnership, and the ability of our Operating Partnership to make distributions to us in turn, will dependdepends on theirthe operating results of our Operating Partnership and on the terms of any loans that encumber the properties owned by them.our properties. Such loans may contain lock box arrangements, reserve requirements, financial covenants, and other provisions that restrict the distribution of funds. Infunds in the event of a default under thesedefault.
If debt is unavailable at reasonable rates, we may not be able to finance acquisitions or refinance our existing debt.
If debt is unavailable at reasonable rates, we may not be able to finance acquisitions or refinance existing debt when the loans the defaulting subsidiary would be prohibited from distributing cash. For example, our subsidiaries are party to mortgage notes that prohibit, in the event of default, their distribution of any cash to a related party, including our Operating Partnership. As a result, a default under any of these loans by the borrower subsidiaries could cause us to have insufficient cash to make the distributions required to maintain our REIT status.
Financing arrangements involving balloon payment obligations may adversely affect us.
come due on favorable terms, or at all. Most of our financing arrangements require us to make a lump-sum or “balloon” payment at maturity. Our ability to make a balloon payment at maturity is uncertain and, in the event that we do not have sufficient funds, to repay the debt at maturity of these loans, we will need to refinance this debt. If interest rates are higher when we refinance such debt, our net income, cash flow, and, consequently, our cash available for distribution to stockholders could be reduced. If the credit environment is constrained at the time the balloona payment is due, we may not be able to refinance the existing financingdebt on acceptable terms and may be forced to choose from a number of unfavorable options. These options, include agreeing to otherwiseincluding accepting unfavorable financing terms, on one or more of our unencumbered assets, selling one or more properties on disadvantageous terms or defaulting on the loan and permitting the lender to foreclose. The effect of a refinancing or sale could affect the rate of return to stockholders and the projected time of disposition of our assets. In addition, payments of principal and interest made to service our debts may leave us with insufficient cash to pay the distributions that we are required to pay to maintain our qualification as a REIT.
If mortgage debt or unsecured debt is unavailable at reasonable rates, we may not be able to finance or refinance our properties.
If mortgage debt or unsecured debt is unavailable at reasonable rates, we may not be able to finance the purchase of properties. In addition, we run the risk of being unable to refinance mortgage debt or unsecured debt when the loans come due or of being unable to refinance such debt on favorable terms. If interest rates are higher when we refinance such debt, our net income could be reduced. We may be unable to refinance such debt at appropriate times, which may require us to sell properties on terms that are not advantageous to us or could result in the foreclosure of any mortgaged properties. In addition, we locked in our fixed-rate debt at a point in time when we were able to obtain favorable interest rates, principal amortization and other terms. When we refinance our debt, prevailing interest rates and other factors may result in paying a greater amount of debt service, which will adversely affect our cash flow, and, consequently, our cash available for distribution to our stockholders.
Our hedging strategies may not be successful in mitigating our risks associated with interest rates and could reduce the overall returns on your investment.rates.
We use
Our various derivative financial instruments to provide a level of protection against interest rate risks, but no hedging strategy can protect us completely. These instruments involve certain risks, such as the risk that the counterparties may fail to honor their obligations, under these arrangements, that these arrangements may not be effective in reducing our exposure to interest rate changes, and that a court could rulerules that such agreements are not legally enforceable. These instruments may also generate income that may not be treated as qualifying REIT income for purposes of the 75% or 95% REIT income tests. In addition, the nature, timing and timingcosts of hedging transactions may influence the effectiveness of our hedging strategies. Poorly designed strategies or improperly executed transactions could actually increase our risk and losses. Moreover, hedging strategies involve transaction and other costs. We cannot assure you that our hedging strategystrategies and the derivatives that we usederivative financial instruments will adequately offset the risk of interest rate volatility or that our hedging transactionssuch instruments will not result in losses that may reduceadversely impact our financial condition.
Adverse changes in our credit ratings could negatively affect our financing activity.
The credit ratings of our unsecured debt are based on our operating performance, liquidity and leverage ratios, overall financial position and other factors employed by the overall return on your investment.credit rating agencies. Our credit ratings can affect the amount of capital we can access, as well as the terms and pricing of our debt. There can be no assurance that we will be able to maintain our current credit ratings, and in the event our credit ratings are downgraded, we would incur greater borrowing costs and may encounter difficulty in obtaining additional financing. Also, a downgrade in our credit ratings may trigger additional payments or other negative consequences under our unsecured credit facility and other debt instruments. Adverse changes in our credit ratings could harm our capital market activities, ability to manage debt maturities, future growth and acquisition activity.
U.S. Federal Income Tax Risks
Failure to qualify as a REIT would reduce our net earnings available for investment or distribution.
Our qualification as a REIT will depend upon our ability to meet requirements regarding our organization and ownership, distributions of our income, the nature and diversification of our income and assets and other tests imposed by the Code. If we fail to qualify as a REIT for any taxable year after electing REIT status, we will be subject to federal income tax on our taxable income at regular corporate rates (a maximum rate of 35% applies through 2017 and 21% for subsequent years).rates. In addition, we would generally be disqualified from treatment as a REIT for the four taxable years following the year in which we failed to qualify as a REIT. Losing our REIT status would reduce our net earnings available for investment or distribution to stockholders because of the additional tax liability. In addition, dividends to stockholders would no longer qualify for the dividends‑paid deduction and we would no longer be required to make
distributions. If this occurs, we might be required to borrow funds or liquidate some investments in order to pay the applicable tax.
Even if we qualifymaintain our qualification as a REIT for federal income tax purposes, we may be subject to other tax liabilities that reduce our cash flow and our ability to make distributions to our stockholders.
Even if we qualifymaintain our qualification as a REIT for federal income tax purposes, we may be subject to some federal, state and local taxes on our income or property. taxes.
For example:
To qualify as a REIT, we must distribute annually at least 90% of our REIT taxable income to our stockholders (which is determined without regard to the dividends-paid deduction or net capital gain). To the extent that we satisfy the distribution requirement but distribute less than 100% of our REIT taxable income,example, (i) we will be subject to federal corporate income tax on the undistributed income.
Weincome to the extent that we satisfy the REIT distribution requirements but distribute less than 100% of our REIT taxable income, (ii) we will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions we pay in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years.
Ifyears, (iii) we will be subject to the highest corporate income tax rate if we have net income from the sale of foreclosure property that we hold primarily for sale to customers in the ordinary course of business or other non‑qualifying income from foreclosure property, (iv) we must paywill be subject to a 100% “prohibited transaction” tax on that income at the highest corporate income tax rate.
If we sellour gain from an asset sale, other than foreclosure property, that we hold primarily for sale to customers in the ordinary course of business, our gain would be subject to the 100% “prohibited transaction” tax unless such sale were made by our taxable REIT subsidiary (“TRS”) or if we qualify for a safe harbor from tax.harbor; and (v) our TRS will be subject to federal, state and local income tax at regular corporate rates on any income that it earns.
We intend to make distributions to our stockholders to comply with the REIT requirements of the Code.
REIT distribution requirements could adversely affect our ability to execute our business plan.
From time to time, we may generate taxable income greater than our income for financial reporting purposes, or our taxable income may be greater than our cash flow available for distribution to stockholders. If we do not have other funds available in these situations, we could be required to borrow funds,or raise equity on unfavorable terms, sell investments at disadvantageous prices, make taxable distributions of our stock or debt securities or find another alternative source of funds to make distributions sufficient to enable us to pay outdistribute enough of our taxable income to satisfy the REIT distribution requirement and to avoid corporate income tax and the 4% excise tax in a particular year. These alternatives could increase our costs or reduce the value of our equity. Thus, compliance with the REIT requirements may hinder our abilityIn addition, to operate solely on the basis of maximizing profits.
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’ overall return.
To qualifyqualification as a REIT, we must satisfy certain tests on an ongoing basis concerning, among other things, the sources of our income, nature of our assets and the amounts we distribute to our stockholders. We may be required to make distributions to stockholders at times when it would be more advantageous to reinvest cash in our business or when we do not have funds readily available for distribution. ComplianceThus, compliance with the REIT requirements may hinder our ability to operate solely on the basis of maximizing profits and the value of our stockholders’ investment.
Re-characterization of sale‑leaseback transactions may cause us to lose our REIT status.
In certain circumstances, we expect to purchase real properties and lease them back to the sellers of such properties. While we intend to structure any such a sale‑leaseback transaction such that the lease will be characterized as a “true lease” for tax purposes, thereby allowing us to be treated as the owner of the property for federal income tax purposes, we cannot assure you that the Internal Revenue Service (“(���IRS”) will not challenge such characterization. In the event that any such sale‑leaseback transaction is challenged and re-characterized as a financing transaction or loan for federal income tax purposes, deductions for depreciation and cost recovery relating to such property would be disallowed. If a sale‑leaseback transaction were so re-characterized, we might fail to satisfy the REIT qualification “asset tests” or “income tests” and, consequently, lose our REIT status effective with the year of re-characterization. Alternatively, the amount of our REIT taxable income could be recalculated which might also cause us to fail to meet the distribution requirement for a taxable year.
The prohibited transactions tax may limit our ability to engage in certain transactions.
A REIT’s net income from prohibited transactions is subject to a 100% tax. In general, prohibited transactions are dispositions of property, other than foreclosure property, held primarily for sale to customers in the ordinary course of business. Although a safe harbor to the characterization of a disposition as a prohibited transaction is available, we cannot assure you that we can comply with the safe harbor or that we will avoid owning property that may be characterized as held primarily for sale to customers in the ordinary course of business. Consequently, we may choose not to engage in certain dispositions or may conduct such dispositions through a TRS.
We may be subject to adverse legislative or regulatory tax changes.
The rules dealing with federal
Federal income taxation rules are constantly under review by the IRS, the U.S. Department of the Treasury and persons involved in the legislative process and by the IRS and the U.S. Department of the Treasury.process. Changes to the tax laws, with or without retroactive application, could adversely affect our stockholders or us. We cannot predict how changes in the tax laws might affect our stockholders or us. Newthrough new legislation,
Treasury Regulations, administrative interpretations or court decisions could significantly andadversely affect us or our stockholders, including by negatively affectaffecting our ability to qualify as a REIT or the federal income tax consequences of such qualification, or may reducereducing the relative attractiveness of an investment in a REIT compared to a corporation not qualified as a REIT. The recently enacted tax reform bill, informally known as the Tax Cuts and Jobs Act (“TCJA”), significantly changed the U.S. federal income tax laws applicable to businesses and their owners, including REITs and their stockholders. Technical corrections or other amendments to the TCJA or administrative guidance interpreting the TCJA may be forthcoming at any time. We cannot predict the long-term effect of the TCJA or any future law changes on REITsus or our stockholders.
Other General Risks
We face risks associated with system failures through security breaches or cyber-attacks, as well as other significant disruptions of our information technology (“IT”) networks and related systems.
We face risks associated with security breaches, cyber-attacks, and other significant disruptions of our IT networks and related systems. The risk of a security breach, cyber-attack or disruption has increased as the number, intensity and sophistication of attempted attacks from around the world have increased. There can be no assurance that our security measures taken to manage the risk of a security breach, cyber-attack or disruption will be effective or that attempted security breaches, cyber-attacks or disruptions would not be successful or damaging. Any failure of our IT networks and related systems could (i) disrupt the proper functioning of our networks and systems, (ii) result in misstated financial reports, violations of loan covenants or missed reporting deadlines, (iii) disrupt our inability to monitor our compliance with REIT requirements, (iv) result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive or otherwise valuable information, (v) require significant management attention and resources to remedy any damages that result, (vi) subject us to claims for breach of contract or failure to safeguard personal information or termination of leases or other agreements, or (vii) damage our reputation among our tenants and investors generally.
We depend on key personnel; the loss of their stockholders.full service could adversely affect us.
Our success depends to a significant degree upon the continued contributions of certain key personnel including, but not limited to, our executive officers, whose continued service is not guaranteed, and each of whom would be difficult to replace. Our ability to retain our management team or to attract suitable replacements should any members of the management team leave is dependent on the competitive nature of the employment market. Each executive officer may terminate his employment at any time and, under certain conditions, may receive cash severance, immediate vesting of equity awards and other benefits and may not be restricted from competing with us after their departure. The loss of services from key members of the management team or a limitation in their availability could be negatively perceived in the capital markets and may adversely impact our operating results, financial condition and cash flows. As of December 31, 2022, we have not obtained and do not expect to obtain key man life insurance on any of our key personnel. We also believe that, as we expand, our future success will depend 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.
An increased focus on metrics and reporting related to corporate responsibility, specifically related to ESG factors, may impose additional costs and expose us to new risks.
Investors and other stakeholders are focused on a variety of ESG matters and refer to rating systems developed by third party groups to compare companies. We do not participate, or may not score well, in some of these rating systems. Further, the criteria used in these rating systems change frequently, and our scores may drop as the criteria changes. We supplement our participation in these ratings systems with public disclosures regarding our ESG activities, but investors and other stakeholders may look for specific disclosures that we do not provide. Our failure to engage in certain ESG initiatives, to provide certain ESG disclosures or to participate, or score well, in certain ratings systems could result in reputational harm and could cause certain investors to be unwilling to invest in our stock, which could impair our ability to raise capital.
Our compensation plans may not be tied to or correspond with our improved financial results or the market prices for our securities, which may adversely affect us.
The compensation committee of our board of directors is responsible for overseeing our executive compensation plans. The compensation committee has significant discretion in structuring these compensation packages and may make compensation decisions based on any number of factors. As a result, compensation awards may not be tied to or correspond with improved financial results at the Company or the market prices for our securities.
Item 1B. UnresolvedStaff Comments
None.
Item 2. Properties
As of December 31, 2017,2022, we owned the properties listed below.in the following table.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| State | | City | | Number of Buildings | | Asset Type | | Total Rentable Square Feet |
| Alabama | | Birmingham | | 4 | | Warehouse / Distribution | | 362,916 |
| | Montgomery | | 1 | | Warehouse / Distribution | | 332,000 |
| | Moody | | 1 | | Warehouse / Distribution | | 595,346 |
| | Phenix City | | 1 | | Warehouse / Distribution | | 117,568 |
| | | | | | | | |
| Arkansas | | Bryant | | 1 | | Warehouse / Distribution | | 300,160 |
| | Rogers | | 1 | | Warehouse / Distribution | | 400,000 |
| | | | | | | | |
| Arizona | | Avondale | | 1 | | Warehouse / Distribution | | 186,643 |
| | Chandler | | 1 | | Light Manufacturing | | 104,352 |
| | Gilbert | | 1 | | Warehouse / Distribution | | 41,504 |
| | Mesa | | 1 | | Light Manufacturing | | 71,030 |
| | Tucson | | 1 | | Warehouse / Distribution | | 129,047 |
| | | | | | | | |
| California | | Fresno | | 1 | | Warehouse / Distribution | | 232,072 |
| | Hollister | | 1 | | Warehouse / Distribution | | 175,325 |
| | Lodi | | 1 | | Warehouse / Distribution | | 400,340 |
| | McClellan | | 1 | | Warehouse / Distribution | | 160,534 |
| | Morgan Hill | | 2 | | Light Manufacturing | | 107,126 |
| | Rancho Cordova | | 2 | | Warehouse / Distribution | | 106,718 |
| | Roseville | | 1 | | Warehouse / Distribution | | 114,597 |
| | Sacramento | | 6 | | Warehouse / Distribution | | 749,709 |
| | Sacramento | | 1 | | Light Manufacturing | | 130,000 |
| | San Diego | | 1 | | Warehouse / Distribution | | 205,440 |
| | Stockton | | 3 | | Warehouse / Distribution | | 263,716 |
| | | | | | | | |
| Colorado | | Grand Junction | | 1 | | Warehouse / Distribution | | 82,800 |
| | Johnstown | | 1 | | Warehouse / Distribution | | 132,194 |
| | Longmont | | 1 | | Light Manufacturing | | 64,750 |
| | Loveland | | 2 | | Warehouse / Distribution | | 195,674 |
| | | | | | | | |
| Connecticut | | Avon | | 1 | | Light Manufacturing | | 78,400 |
| | East Windsor | | 2 | | Warehouse / Distribution | | 271,111 |
| | Milford | | 2 | | Warehouse / Distribution | | 367,700 |
| | North Haven | | 3 | | Warehouse / Distribution | | 824,727 |
| | Wallingford | | 1 | | Warehouse / Distribution | | 105,000 |
| | | | | | | | |
| Delaware | | New Castle | | 1 | | Warehouse / Distribution | | 485,987 |
| | | | | | | | |
| Florida | | Daytona Beach | | 1 | | Light Manufacturing | | 142,857 |
| | Fort Myers | | 1 | | Warehouse / Distribution | | 260,620 |
| | Jacksonville | | 5 | | Warehouse / Distribution | | 1,256,750 |
| | Lake Worth | | 2 | | Warehouse / Distribution | | 157,758 |
| | Lake Worth | | 1 | | Light Manufacturing | | 42,158 |
| | Lakeland | | 1 | | Warehouse / Distribution | | 215,280 |
| | Ocala | | 1 | | Warehouse / Distribution | | 619,466 |
| | Orlando | | 1 | | Warehouse / Distribution | | 155,000 |
| | Orlando | | 1 | | Light Manufacturing | | 215,900 |
| | Tampa | | 1 | | Warehouse / Distribution | | 78,560 |
| | West Palm Beach | | 1 | | Light Manufacturing | | 112,353 |
| | | | | | | | |
| Georgia | | Atlanta | | 1 | | Warehouse / Distribution | | 159,048 |
| | Augusta | | 1 | | Warehouse / Distribution | | 203,726 |
| | Buford | | 1 | | Warehouse / Distribution | | 103,720 |
|
| | | | | | | |
| State | City | Number of Buildings | Asset Type | CBSA(1) | Total Rentable Square Feet | |
| Alabama | | | | | | |
| | Montgomery | 1 | Warehouse / Distribution | Montgomery, AL | 332,000 |
| |
| | Phenix City | 1 | Warehouse / Distribution | Columbus, GA-AL | 117,568 |
| |
| Arkansas | | | | | | |
| | Rogers | 1 | Warehouse / Distribution | Fayetteville-Springdale-Rogers, AR-MO | 400,000 |
| |
| Arizona | | | | | | |
| | Avondale | 1 | Warehouse / Distribution | Phoenix-Mesa-Scottsdale, AZ | 186,643 |
| |
| | Phoenix | 1 | Warehouse / Distribution | Phoenix-Mesa-Scottsdale, AZ | 102,747 |
| |
| California | | | | | | |
| | Camarillo | 2 | Warehouse / Distribution | Oxnard-Thousand Oaks-Ventura, CA | 732,606 |
| |
| | San Diego | 1 | Warehouse / Distribution | San Diego-Carlsbad, CA | 205,440 |
| |
| | Visalia | 1 | Warehouse / Distribution | Visalia-Porterville, CA | 635,281 |
| |
| Colorado | | | | | | |
| | Golden | 1 | Warehouse / Distribution | Denver-Aurora-Lakewood, CO | 227,500 |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| State | | City | | Number of Buildings | | Asset Type | | Total Rentable Square Feet |
| | Calhoun | | 1 | | Warehouse / Distribution | | 151,200 |
| | Dallas | | 1 | | Warehouse / Distribution | | 92,807 |
| | Forest Park | | 1 | | Warehouse / Distribution | | 373,900 |
| | Lithonia | | 1 | | Warehouse / Distribution | | 210,858 |
| | Norcross | | 1 | | Warehouse / Distribution | | 152,036 |
| | Savannah | | 1 | | Warehouse / Distribution | | 504,300 |
| | Shannon | | 1 | | Warehouse / Distribution | | 568,516 |
| | Smyrna | | 1 | | Warehouse / Distribution | | 102,000 |
| | Statham | | 1 | | Warehouse / Distribution | | 225,692 |
| | Stone Mountain | | 1 | | Warehouse / Distribution | | 78,000 |
| | | | | | | | |
| Iowa | | Ankeny | | 2 | | Warehouse / Distribution | | 400,968 |
| | Council Bluffs | | 1 | | Warehouse / Distribution | | 90,000 |
| | Des Moines | | 2 | | Warehouse / Distribution | | 301,381 |
| | Marion | | 1 | | Warehouse / Distribution | | 95,500 |
| | | | | | | | |
| Idaho | | Idaho Falls | | 1 | | Warehouse / Distribution | | 78,690 |
| | | | | | | | |
| Illinois | | Bartlett | | 1 | | Warehouse / Distribution | | 207,575 |
| | Batavia | | 2 | | Warehouse / Distribution | | 204,642 |
| | Batavia | | 1 | | Light Manufacturing | | 56,676 |
| | Belvidere | | 7 | | Warehouse / Distribution | | 1,169,222 |
| | Cary | | 1 | | Warehouse / Distribution | | 79,049 |
| | Crystal Lake | | 4 | | Warehouse / Distribution | | 506,096 |
| | DeKalb | | 1 | | Warehouse / Distribution | | 146,740 |
| | Elgin | | 2 | | Warehouse / Distribution | | 383,856 |
| | Elgin | | 1 | | Light Manufacturing | | 41,007 |
| | Elmhurst | | 1 | | Warehouse / Distribution | | 72,499 |
| | Gurnee | | 1 | | Warehouse / Distribution | | 338,740 |
| | Harvard | | 1 | | Light Manufacturing | | 126,304 |
| | Hodgkins | | 2 | | Warehouse / Distribution | | 518,109 |
| | Itasca | | 3 | | Warehouse / Distribution | | 311,355 |
| | Lisle | | 1 | | Light Manufacturing | | 105,925 |
| | Machesney Park | | 1 | | Warehouse / Distribution | | 80,000 |
| | McHenry | | 2 | | Warehouse / Distribution | | 169,311 |
| | Montgomery | | 1 | | Warehouse / Distribution | | 584,301 |
| | Saint Charles | | 2 | | Light Manufacturing | | 217,491 |
| | Sauk Village | | 1 | | Warehouse / Distribution | | 375,785 |
| | Schaumburg | | 1 | | Warehouse / Distribution | | 67,817 |
| | Vernon Hills | | 1 | | Warehouse / Distribution | | 95,486 |
| | Waukegan | | 1 | | Warehouse / Distribution | | 131,252 |
| | West Chicago | | 1 | | Warehouse / Distribution | | 249,470 |
| | West Chicago | | 5 | | Light Manufacturing | | 305,874 |
| | West Dundee | | 1 | | Warehouse / Distribution | | 154,475 |
| | Wood Dale | | 1 | | Light Manufacturing | | 137,607 |
| | Woodstock | | 1 | | Light Manufacturing | | 129,803 |
| | | | | | | | |
| Indiana | | Albion | | 2 | | Light Manufacturing | | 96,778 |
| | Elkhart | | 2 | | Warehouse / Distribution | | 170,100 |
| | Fort Wayne | | 1 | | Warehouse / Distribution | | 108,800 |
| | Goshen | | 1 | | Warehouse / Distribution | | 366,000 |
| | Greenwood | | 1 | | Warehouse / Distribution | | 154,440 |
| | Indianapolis | | 1 | | Warehouse / Distribution | | 78,600 |
| | Jeffersonville | | 1 | | Warehouse / Distribution | | 563,032 |
| | Lafayette | | 3 | | Warehouse / Distribution | | 466,400 |
| | Lebanon | | 3 | | Warehouse / Distribution | | 2,230,323 |
| | Marion | | 1 | | Warehouse / Distribution | | 249,920 |
| | Portage | | 2 | | Warehouse / Distribution | | 786,249 |
| | South Bend | | 1 | | Warehouse / Distribution | | 225,000 |
| | Yoder | | 1 | | Warehouse / Distribution | | 764,177 |
| | | | | | | | |
|
| | | | | | | |
| State | City | Number of Buildings | Asset Type | CBSA(1) | Total Rentable Square Feet | |
| | Grand Junction | 1 | Warehouse / Distribution | Grand Junction, CO | 82,800 |
| |
| | Longmont | 1 | Warehouse / Distribution | Boulder, CO | 159,611 |
| |
| Connecticut | | | | | | |
| | Avon | 1 | Light Manufacturing | Hartford-West Hartford-East Hartford, CT | 78,400 |
| |
| | East Windsor | 2 | Warehouse / Distribution | Hartford-West Hartford-East Hartford, CT | 271,111 |
| |
| | Milford | 1 | Warehouse / Distribution | New Haven-Milford, CT | 200,000 |
| |
| | North Haven | 3 | Warehouse / Distribution | New Haven-Milford, CT | 824,727 |
| |
| | Wallingford | 1 | Warehouse / Distribution | New Haven-Milford, CT | 105,000 |
| |
| Delaware | | | | | | |
| | Newark | 2 | Flex / Office | Philadelphia-Camden-Wilmington, PA-NJ-DE-MD | 52,665 |
| |
| | New Castle | 1 | Warehouse / Distribution | Philadelphia-Camden-Wilmington, PA-NJ-DE-MD | 485,987 |
| |
| Florida | | | | | | |
| | Daytona Beach | 1 | Light Manufacturing | Deltona-Daytona Beach-Ormond Beach, FL | 142,857 |
| |
| | Jacksonville | 4 | Warehouse / Distribution | Jacksonville, FL | 1,025,720 |
| |
| | Ocala | 1 | Warehouse / Distribution | Orlando-Kissimmee-Sanford, FL | 619,466 |
| |
| | Orlando | 1 | Light Manufacturing | Orlando-Kissimmee-Sanford, FL | 215,900 |
| |
| | Orlando | 1 | Warehouse / Distribution | Orlando-Kissimmee-Sanford, FL | 155,000 |
| |
| | Pensacola | 1 | Flex / Office | Pensacola-Ferry Pass-Brent, FL | 30,620 |
| |
| Georgia | | | | | | |
| | Calhoun | 1 | Warehouse / Distribution | Calhoun, GA | 151,200 |
| |
| | Dallas | 1 | Warehouse / Distribution | Atlanta-Sandy Springs-Roswell, GA | 92,807 |
| |
| | Forest Park | 2 | Warehouse / Distribution | Atlanta-Sandy Springs-Roswell, GA | 799,200 |
| |
| | LaGrange | 1 | Warehouse / Distribution | LaGrange, GA | 219,891 |
| |
| | Norcross | 1 | Warehouse / Distribution | Atlanta-Sandy Springs-Roswell, GA | 152,036 |
| |
| | Savannah | 1 | Warehouse / Distribution | Savannah, GA | 504,200 |
| |
| | Shannon | 1 | Warehouse / Distribution | Rome, GA | 568,516 |
| |
| | Smyrna | 1 | Warehouse / Distribution | Atlanta-Sandy Springs-Roswell, GA | 102,000 |
| |
| | Statham | 1 | Warehouse / Distribution | Atlanta-Sandy Springs-Roswell, GA | 225,680 |
| |
| | Stone Mountain | 1 | Warehouse / Distribution | Atlanta-Sandy Springs-Roswell, GA | 78,000 |
| |
| Idaho | | | | | | |
| | Idaho Falls | 1 | Warehouse / Distribution | Idaho Falls, ID | 90,300 |
| |
| | Pocatello | 1 | Flex / Office | Pocatello, ID | 43,353 |
| |
| Illinois | | | | | | |
| | Batavia | 1 | Warehouse / Distribution | Chicago-Naperville-Elgin, IL-IN-WI | 102,500 |
| |
| | Belvidere | 10 | Warehouse / Distribution | Rockford, IL | 1,469,222 |
| |
| | DeKalb | 1 | Warehouse / Distribution | Chicago-Naperville-Elgin, IL-IN-WI | 146,740 |
| |
| | Gurnee | 2 | Warehouse / Distribution | Chicago-Naperville-Elgin, IL-IN-WI | 562,500 |
| |
| | Harvard | 1 | Light Manufacturing | Chicago-Naperville-Elgin, IL-IN-WI | 126,304 |
| |
| | Itasca | 1 | Warehouse / Distribution | Chicago-Naperville-Elgin, IL-IN-WI | 202,000 |
| |
| | Libertyville | 1 | Warehouse / Distribution | Chicago-Naperville-Elgin, IL-IN-WI | 251,961 |
| |
| | Libertyville | 1 | Flex / Office | Chicago-Naperville-Elgin, IL-IN-WI | 35,141 |
| |
| | Machesney Park | 1 | Warehouse / Distribution | Rockford, IL | 80,000 |
| |
| | Montgomery | 1 | Warehouse / Distribution | Chicago-Naperville-Elgin, IL-IN-WI | 584,301 |
| |
| | Sauk Village | 1 | Warehouse / Distribution | Chicago-Naperville-Elgin, IL-IN-WI | 375,785 |
| |
| | South Holland | 1 | Warehouse / Distribution | Chicago-Naperville-Elgin, IL-IN-WI | 202,902 |
| |
| | Waukegan | 1 | Warehouse / Distribution | Chicago-Naperville-Elgin, IL-IN-WI | 131,252 |
| |
| | Waukegan | 1 | Light Manufacturing | Chicago-Naperville-Elgin, IL-IN-WI | 130,156 |
| |
| | West Chicago | 1 | Warehouse / Distribution | Chicago-Naperville-Elgin, IL-IN-WI | 249,470 |
| |
| | West Chicago | 5 | Light Manufacturing | Chicago-Naperville-Elgin, IL-IN-WI | 305,874 |
| |
| | Wood Dale | 1 | Light Manufacturing | Chicago-Naperville-Elgin, IL-IN-WI | 137,607 |
| |
| | Woodstock | 1 | Light Manufacturing | Chicago-Naperville-Elgin, IL-IN-WI | 129,803 |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| State | | City | | Number of Buildings | | Asset Type | | Total Rentable Square Feet |
| Kansas | | Edwardsville | | 1 | | Warehouse / Distribution | | 270,869 |
| | Lenexa | | 3 | | Warehouse / Distribution | | 581,059 |
| | Olathe | | 2 | | Warehouse / Distribution | | 725,839 |
| | Wichita | | 3 | | Warehouse / Distribution | | 248,550 |
| | | | | | | | |
| Kentucky | | Bardstown | | 1 | | Warehouse / Distribution | | 102,318 |
| | Danville | | 1 | | Warehouse / Distribution | | 757,047 |
| | Erlanger | | 1 | | Warehouse / Distribution | | 108,620 |
| | Florence | | 2 | | Warehouse / Distribution | | 641,136 |
| | Hebron | | 1 | | Warehouse / Distribution | | 109,000 |
| | Louisville | | 2 | | Warehouse / Distribution | | 499,217 |
| | | | | | | | |
| Louisiana | | Baton Rouge | | 3 | | Warehouse / Distribution | | 532,036 |
| | Shreveport | | 1 | | Warehouse / Distribution | | 420,259 |
| | | | | | | | |
| Massachusetts | | Chicopee | | 1 | | Warehouse / Distribution | | 217,000 |
| | Hudson | | 1 | | Light Manufacturing | | 128,000 |
| | Malden | | 2 | | Light Manufacturing | | 109,943 |
| | Middleborough | | 1 | | Light Manufacturing | | 80,100 |
| | Norton | | 1 | | Warehouse / Distribution | | 200,000 |
| | South Easton | | 1 | | Light Manufacturing | | 86,000 |
| | Sterling | | 1 | | Warehouse / Distribution | | 119,056 |
| | Stoughton | | 2 | | Warehouse / Distribution | | 258,213 |
| | Westborough | | 1 | | Warehouse / Distribution | | 121,700 |
| | | | | | | | |
| Maryland | | Elkridge | | 1 | | Warehouse / Distribution | | 167,223 |
| | Hagerstown | | 3 | | Warehouse / Distribution | | 1,424,620 |
| | Hampstead | | 1 | | Warehouse / Distribution | | 1,035,249 |
| | Hunt Valley | | 1 | | Warehouse / Distribution | | 46,851 |
| | White Marsh | | 1 | | Warehouse / Distribution | | 103,564 |
| | | | | | | | |
| Maine | | Biddeford | | 2 | | Warehouse / Distribution | | 265,126 |
| | Gardiner | | 1 | | Warehouse / Distribution | | 265,000 |
| | Lewiston | | 1 | | Flex Office | | 60,000 |
| | Portland | | 1 | | Warehouse / Distribution | | 100,600 |
| | | | | | | | |
| Michigan | | Belleville | | 1 | | Light Manufacturing | | 160,464 |
| | Canton | | 1 | | Warehouse / Distribution | | 491,049 |
| | Chesterfield | | 4 | | Warehouse / Distribution | | 478,803 |
| | Grand Rapids | | 4 | | Warehouse / Distribution | | 656,262 |
| | Holland | | 1 | | Warehouse / Distribution | | 195,000 |
| | Kentwood | | 2 | | Warehouse / Distribution | | 370,020 |
| | Kentwood | | 1 | | Light Manufacturing | | 85,157 |
| | Lansing | | 4 | | Warehouse / Distribution | | 770,425 |
| | Livonia | | 2 | | Warehouse / Distribution | | 285,306 |
| | Marshall | | 1 | | Light Manufacturing | | 57,025 |
| | Novi | | 3 | | Warehouse / Distribution | | 685,010 |
| | Plymouth | | 1 | | Warehouse / Distribution | | 125,214 |
| | Redford | | 1 | | Warehouse / Distribution | | 138,912 |
| | Romulus | | 1 | | Warehouse / Distribution | | 303,760 |
| | Romulus | | 1 | | Light Manufacturing | | 274,500 |
| | Sterling Heights | | 1 | | Warehouse / Distribution | | 108,000 |
| | Walker | | 1 | | Warehouse / Distribution | | 210,000 |
| | Warren | | 4 | | Warehouse / Distribution | | 981,540 |
| | Wixom | | 1 | | Warehouse / Distribution | | 126,720 |
| | Zeeland | | 1 | | Warehouse / Distribution | | 230,200 |
| | | | | | | | |
| Minnesota | | Blaine | | 1 | | Warehouse / Distribution | | 248,816 |
| | Bloomington | | 1 | | Light Manufacturing | | 145,351 |
| | Brooklyn Park | | 1 | | Warehouse / Distribution | | 200,720 |
| | Carlos | | 1 | | Light Manufacturing | | 196,270 |
|
| | | | | | | |
| State | City | Number of Buildings | Asset Type | CBSA(1) | Total Rentable Square Feet | |
| Indiana | | | | | | |
| | Albion | 7 | Light Manufacturing | Kendallville, IN | 261,013 |
| |
| | Elkhart | 2 | Warehouse / Distribution | Elkhart-Goshen, IN | 170,100 |
| |
| | Kendallville | 1 | Light Manufacturing | Kendallville, IN | 58,500 |
| |
| | Fort Wayne | 1 | Warehouse / Distribution | Fort Wayne, IN | 108,800 |
| |
| | Goshen | 1 | Warehouse / Distribution | Elkhart-Goshen, IN | 366,000 |
| |
| | Lafayette | 3 | Warehouse / Distribution | Lafayette-West Lafayette, IN | 466,400 |
| |
| | Marion | 1 | Warehouse / Distribution | Marion, IN | 249,920 |
| |
| | Portage | 1 | Warehouse / Distribution | Chicago-Naperville-Elgin, IL-IN-WI | 212,000 |
| |
| | South Bend | 1 | Warehouse / Distribution | South Bend-Mishawaka, IN-MI | 225,000 |
| |
| Iowa | | | | | | |
| | Council Bluffs | 1 | Warehouse / Distribution | Omaha-Council Bluffs, NE-IA | 90,000 |
| |
| | Marion | 1 | Warehouse / Distribution | Cedar Rapids, IA | 95,500 |
| |
| | Sergeant Bluff | 1 | Flex / Office | Sioux City, IA-NE-SD | 148,131 |
| |
| Kansas | | | | | | |
| | Edwardsville | 1 | Warehouse / Distribution | Kansas City, MO-KS | 270,869 |
| |
| | Lenexa | 2 | Warehouse / Distribution | Kansas City, MO-KS | 276,219 |
| |
| | Olathe | 1 | Warehouse / Distribution | Kansas City, MO-KS | 496,373 |
| |
| | Wichita | 3 | Warehouse / Distribution | Wichita, KS | 248,550 |
| |
| Kentucky | | | | | | |
| | Bardstown | 1 | Warehouse / Distribution | Louisville/Jefferson County, KY-IN | 102,318 |
| |
| | Danville | 1 | Warehouse / Distribution | Danville, KY | 757,047 |
| |
| | Erlanger | 1 | Warehouse / Distribution | Cincinnati, OH-KY-IN | 108,620 |
| |
| | Hebron | 1 | Warehouse / Distribution | Cincinnati, OH-KY-IN | 109,000 |
| |
| | Louisville | 2 | Warehouse / Distribution | Louisville/Jefferson County, KY-IN | 497,820 |
| |
| | Walton | 1 | Warehouse / Distribution | Cincinnati, OH-KY-IN | 224,921 |
| |
| Louisiana | | | | | | |
| | Shreveport | 1 | Warehouse / Distribution | Shreveport-Bossier City, LA | 420,259 |
| |
| Maine | | | | | | |
| | Belfast | 5 | Flex / Office | — | 306,554 |
| (2) |
| | Biddeford | 2 | Warehouse / Distribution | Portland-South Portland, ME | 265,126 |
| |
| | Gardiner | 1 | Warehouse / Distribution | Augusta-Waterville, ME | 265,000 |
| |
| | Lewiston | 1 | Flex / Office | Lewiston-Auburn, ME | 60,000 |
| |
| | Portland | 1 | Warehouse / Distribution | Portland-South Portland, ME | 100,600 |
| |
| Maryland | | | | | | |
| | Hampstead | 1 | Warehouse / Distribution | Baltimore-Columbia-Towson, MD | 1,035,249 |
| |
| Massachusetts | | | | | | |
| | Chicopee | 1 | Warehouse / Distribution | Springfield, MA | 217,000 |
| |
| | Malden | 2 | Light Manufacturing | Boston-Cambridge-Newton, MA-NH | 109,943 |
| |
| | Norton | 1 | Warehouse / Distribution | Providence-Warwick, RI-MA | 200,000 |
| |
| | South Easton | 1 | Light Manufacturing | Providence-Warwick, RI-MA | 86,000 |
| |
| | Stoughton | 2 | Warehouse / Distribution | Boston-Cambridge-Newton, MA-NH | 258,213 |
| |
| | Westborough | 1 | Warehouse / Distribution | Worcester, MA-CT | 121,700 |
| |
| Michigan | | | | | | |
| | Belleville | 1 | Light Manufacturing | Detroit-Warren-Dearborn, MI | 160,464 |
| |
| | Chesterfield | 4 | Warehouse / Distribution | Detroit-Warren-Dearborn, MI | 478,803 |
| |
| | Grand Rapids | 1 | Warehouse / Distribution | Grand Rapids-Wyoming, MI | 301,317 |
| |
| | Holland | 1 | Warehouse / Distribution | Grand Rapids-Wyoming, MI | 195,000 |
| |
| | Kentwood | 1 | Light Manufacturing | Grand Rapids-Wyoming, MI | 85,157 |
| |
| | Lansing | 4 | Warehouse / Distribution | Lansing-East Lansing, MI | 770,425 |
| |
| | Marshall | 1 | Light Manufacturing | Battle Creek, MI | 57,025 |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| State | | City | | Number of Buildings | | Asset Type | | Total Rentable Square Feet |
| | Eagan | | 1 | | Warehouse / Distribution | | 276,550 |
| | Inver Grove Heigh | | 1 | | Warehouse / Distribution | | 80,655 |
| | Maple Grove | | 2 | | Warehouse / Distribution | | 207,875 |
| | Mendota Heights | | 1 | | Warehouse / Distribution | | 87,183 |
| | New Hope | | 1 | | Light Manufacturing | | 107,348 |
| | Newport | | 1 | | Warehouse / Distribution | | 83,000 |
| | Oakdale | | 2 | | Warehouse / Distribution | | 210,044 |
| | Plymouth | | 3 | | Warehouse / Distribution | | 357,085 |
| | Savage | | 1 | | Warehouse / Distribution | | 244,050 |
| | Shakopee | | 1 | | Warehouse / Distribution | | 160,000 |
| | Shakopee | | 1 | | Light Manufacturing | | 136,589 |
| | South Saint Paul | | 1 | | Warehouse / Distribution | | 422,727 |
| | St. Paul | | 1 | | Warehouse / Distribution | | 316,636 |
| | | | | | | | |
| Missouri | | Berkeley | | 1 | | Warehouse / Distribution | | 121,223 |
| | Earth City | | 1 | | Warehouse / Distribution | | 116,783 |
| | Fenton | | 1 | | Warehouse / Distribution | | 127,464 |
| | Hazelwood | | 1 | | Warehouse / Distribution | | 305,550 |
| | Kansas City | | 1 | | Warehouse / Distribution | | 702,000 |
| | O’Fallon | | 2 | | Warehouse / Distribution | | 186,854 |
| | | | | | | | |
| Mississippi | | Southaven | | 1 | | Warehouse / Distribution | | 556,600 |
| | | | | | | | |
| North Carolina | | Catawba | | 1 | | Warehouse / Distribution | | 137,785 |
| | Charlotte | | 3 | | Warehouse / Distribution | | 243,880 |
| | Durham | | 1 | | Warehouse / Distribution | | 80,600 |
| | Garner | | 1 | | Warehouse / Distribution | | 150,000 |
| | Greensboro | | 1 | | Warehouse / Distribution | | 128,287 |
| | Huntersville | | 1 | | Warehouse / Distribution | | 185,570 |
| | Lexington | | 1 | | Warehouse / Distribution | | 201,800 |
| | Mebane | | 2 | | Warehouse / Distribution | | 606,840 |
| | Mebane | | 1 | | Light Manufacturing | | 202,691 |
| | Mocksville | | 1 | | Warehouse / Distribution | | 129,600 |
| | Mooresville | | 2 | | Warehouse / Distribution | | 799,200 |
| | Mountain Home | | 1 | | Warehouse / Distribution | | 146,014 |
| | Newton | | 1 | | Warehouse / Distribution | | 217,200 |
| | Pineville | | 1 | | Light Manufacturing | | 75,400 |
| | Rural Hall | | 1 | | Warehouse / Distribution | | 250,000 |
| | Salisbury | | 1 | | Warehouse / Distribution | | 288,000 |
| | Smithfield | | 1 | | Warehouse / Distribution | | 307,845 |
| | Troutman | | 1 | | Warehouse / Distribution | | 301,000 |
| | Winston-Salem | | 1 | | Warehouse / Distribution | | 385,000 |
| | Youngsville | | 1 | | Warehouse / Distribution | | 365,000 |
| | | | | | | | |
| Nebraska | | Bellevue | | 1 | | Warehouse / Distribution | | 370,000 |
| | La Vista | | 1 | | Warehouse / Distribution | | 178,368 |
| | Omaha | | 5 | | Warehouse / Distribution | | 465,468 |
| | | | | | | | |
| New Hampshire | | Londonderry | | 1 | | Warehouse / Distribution | | 125,060 |
| | Nashua | | 1 | | Warehouse / Distribution | | 337,391 |
| | | | | | | | |
| New Jersey | | Branchburg | | 1 | | Warehouse / Distribution | | 113,973 |
| | Burlington | | 2 | | Warehouse / Distribution | | 756,990 |
| | Franklin Township | | 1 | | Warehouse / Distribution | | 183,000 |
| | Lumberton | | 1 | | Light Manufacturing | | 120,000 |
| | Moorestown | | 2 | | Warehouse / Distribution | | 187,569 |
| | Mt. Laurel | | 1 | | Warehouse / Distribution | | 112,294 |
| | Pedricktown | | 1 | | Warehouse / Distribution | | 245,749 |
| | Swedesboro | | 1 | | Warehouse / Distribution | | 123,962 |
| | Westampton | | 1 | | Warehouse / Distribution | | 128,959 |
| | | | | | | | |
|
| | | | | | | |
| State | City | Number of Buildings | Asset Type | CBSA(1) | Total Rentable Square Feet | |
| | Novi | 2 | Warehouse / Distribution | Detroit-Warren-Dearborn, MI | 245,860 |
| |
| | Plymouth | 1 | Warehouse / Distribution | Detroit-Warren-Dearborn, MI | 125,214 |
| |
| | Redford | 1 | Warehouse / Distribution | Detroit-Warren-Dearborn, MI | 135,728 |
| |
| | Romulus | 1 | Warehouse / Distribution | Detroit-Warren-Dearborn, MI | 303,760 |
| |
| | Sterling Heights | 1 | Warehouse / Distribution | Detroit-Warren-Dearborn, MI | 108,000 |
| |
| | Walker | 1 | Warehouse / Distribution | Grand Rapids-Wyoming, MI | 210,000 |
| |
| | Warren | 2 | Warehouse / Distribution | Detroit-Warren-Dearborn, MI | 422,377 |
| |
| Minnesota | | | | | | |
| | Carlos | 1 | Light Manufacturing | Alexandria, MN | 196,270 |
| |
| | Brooklyn Park | 1 | Warehouse / Distribution | Minneapolis-St. Paul-Bloomington, MN-WI | 200,720 |
| |
| | Maple Grove | 1 | Warehouse / Distribution | Minneapolis-St. Paul-Bloomington, MN-WI | 108,628 |
| |
| | New Hope | 1 | Light Manufacturing | Minneapolis-St. Paul-Bloomington, MN-WI | 107,348 |
| |
| | Rogers | 1 | Warehouse / Distribution | Minneapolis-St. Paul-Bloomington, MN-WI | 386,724 |
| |
| | Savage | 1 | Warehouse / Distribution | Minneapolis-St. Paul-Bloomington, MN-WI | 244,050 |
| |
| Missouri | | | | | | |
| | Earth City | 1 | Warehouse / Distribution | St. Louis, MO-IL | 116,783 |
| |
| | Hazlewood | 1 | Warehouse / Distribution | St. Louis, MO-IL | 305,550 |
| |
| | Kansas City | 1 | Warehouse / Distribution | Kansas City, MO-KS | 226,576 |
| |
| | O'Fallon | 2 | Warehouse / Distribution | St. Louis, MO-IL | 186,854 |
| |
| Nevada | | | | | | |
| | Las Vegas | 1 | Warehouse / Distribution | Las Vegas-Henderson-Paradise, NV | 34,916 |
| |
| | Reno | 1 | Light Manufacturing | Reno, NV | 87,264 |
| |
| | Sparks | 1 | Warehouse / Distribution | Reno, NV | 161,986 |
| |
| New Hampshire | | | | | | |
| | Londonderry | 1 | Warehouse / Distribution | Boston-Cambridge-Newton, MA-NH | 125,060 |
| |
| | Nashua | 1 | Warehouse / Distribution | Manchester-Nashua, NH | 337,391 |
| |
| New Jersey | | | | | | |
| | Burlington | 2 | Warehouse / Distribution | Philadelphia-Camden-Wilmington, PA-NJ-DE-MD | 1,552,121 |
| |
| | Lopatcong | 1 | Warehouse / Distribution | Allentown-Bethlehem-Easton, PA-NJ | 237,500 |
| |
| | Pedricktown | 1 | Warehouse / Distribution | Philadelphia-Camden-Wilmington, PA-NJ-DE-MD | 245,749 |
| |
| | Franklin Township | 1 | Warehouse / Distribution | New York-Newark-Jersey City, NY-NJ-PA | 183,000 |
| |
| | Swedesboro | 1 | Warehouse / Distribution | Philadelphia-Camden-Wilmington, PA-NJ-DE-MD | 123,962 |
| |
| New York | | | | | | |
| | Buffalo | 1 | Warehouse / Distribution | Buffalo-Cheektowaga-Niagara Falls, NY | 117,000 |
| |
| | Cheektowaga | 1 | Warehouse / Distribution | Buffalo-Cheektowaga-Niagara Falls, NY | 121,760 |
| |
| | Farmington | 1 | Warehouse / Distribution | Rochester, NY | 149,657 |
| |
| | Gloversville | 3 | Warehouse / Distribution | Gloversville, NY | 211,554 |
| |
| | Johnstown | 3 | Warehouse / Distribution | Gloversville, NY | 169,602 |
| |
| | Johnstown | 1 | Light Manufacturing | Gloversville, NY | 42,325 |
| |
| North Carolina | | | | | | |
| | Charlotte | 4 | Warehouse / Distribution | Charlotte-Concord-Gastonia, NC-SC | 884,276 |
| (3) |
| | Charlotte | 1 | Light Manufacturing | Charlotte-Concord-Gastonia, NC-SC | 104,852 |
| (3) |
| | Durham | 1 | Warehouse / Distribution | Durham-Chapel Hill, NC | 80,600 |
| |
| | Huntersville | 1 | Warehouse / Distribution | Charlotte-Concord-Gastonia, NC-SC | 185,570 |
| |
| | Lexington | 1 | Warehouse / Distribution | Winston-Salem, NC | 201,800 |
| |
| | Mebane | 2 | Warehouse / Distribution | Burlington, NC | 606,840 |
| |
| | Mebane | 1 | Light Manufacturing | Burlington, NC | 202,691 |
| |
| | Mooresville | 2 | Warehouse / Distribution | Charlotte-Concord-Gastonia, NC-SC | 799,200 |
| |
| | Mountain Home | 1 | Warehouse / Distribution | Asheville, NC | 146,014 |
| |
| | Newton | 1 | Warehouse / Distribution | Hickory-Lenoir-Morganton, NC | 217,200 |
| |
| | Pineville | 1 | Light Manufacturing | Charlotte-Concord-Gastonia, NC-SC | 75,400 |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| State | | City | | Number of Buildings | | Asset Type | | Total Rentable Square Feet |
| New Mexico | | Santa Teresa | | 1 | | Warehouse / Distribution | | 92,325 |
| | | | | | | | |
| Nevada | | Fernley | | 1 | | Light Manufacturing | | 183,435 |
| | Las Vegas | | 1 | | Warehouse / Distribution | | 34,916 |
| | Las Vegas | | 1 | | Light Manufacturing | | 122,472 |
| | Paradise | | 2 | | Light Manufacturing | | 80,422 |
| | Reno | | 1 | | Light Manufacturing | | 87,264 |
| | Sparks | | 1 | | Warehouse / Distribution | | 161,986 |
| | | | | | | | |
| New York | | Buffalo | | 1 | | Warehouse / Distribution | | 117,000 |
| | Cheektowaga | | 1 | | Warehouse / Distribution | | 121,760 |
| | Farmington | | 1 | | Warehouse / Distribution | | 149,657 |
| | Gloversville | | 3 | | Warehouse / Distribution | | 211,554 |
| | Johnstown | | 2 | | Warehouse / Distribution | | 117,102 |
| | Johnstown | | 1 | | Light Manufacturing | | 42,325 |
| | Rochester | | 2 | | Warehouse / Distribution | | 252,860 |
| | Ronkonkoma | | 1 | | Warehouse / Distribution | | 64,224 |
| | | | | | | | |
| Ohio | | Bedford Heights | | 1 | | Warehouse / Distribution | | 173,034 |
| | Boardman | | 1 | | Warehouse / Distribution | | 176,930 |
| | Canal Winchester | | 2 | | Warehouse / Distribution | | 814,265 |
| | Columbus | | 4 | | Warehouse / Distribution | | 1,486,450 |
| | Dayton | | 1 | | Warehouse / Distribution | | 205,761 |
| | Etna | | 1 | | Warehouse / Distribution | | 1,232,149 |
| | Fairborn | | 1 | | Warehouse / Distribution | | 259,369 |
| | Fairfield | | 2 | | Warehouse / Distribution | | 364,948 |
| | Gahanna | | 1 | | Warehouse / Distribution | | 383,000 |
| | Groveport | | 1 | | Warehouse / Distribution | | 320,657 |
| | Hilliard | | 1 | | Warehouse / Distribution | | 237,500 |
| | Macedonia | | 2 | | Warehouse / Distribution | | 338,297 |
| | Maple Heights | | 1 | | Warehouse / Distribution | | 170,000 |
| | Mason | | 1 | | Light Manufacturing | | 116,200 |
| | North Jackson | | 2 | | Warehouse / Distribution | | 517,150 |
| | Oakwood Village | | 1 | | Warehouse / Distribution | | 75,000 |
| | Salem | | 1 | | Light Manufacturing | | 271,000 |
| | Seville | | 1 | | Warehouse / Distribution | | 75,000 |
| | Streetsboro | | 1 | | Warehouse / Distribution | | 343,416 |
| | Strongsville | | 2 | | Warehouse / Distribution | | 341,561 |
| | Toledo | | 1 | | Warehouse / Distribution | | 177,500 |
| | Twinsburg | | 2 | | Warehouse / Distribution | | 426,974 |
| | West Chester | | 1 | | Warehouse / Distribution | | 269,868 |
| | West Jefferson | | 1 | | Warehouse / Distribution | | 857,390 |
| | | | | | | | |
| Oklahoma | | Oklahoma City | | 2 | | Warehouse / Distribution | | 303,740 |
| | Tulsa | | 2 | | Warehouse / Distribution | | 309,600 |
| | | | | | | | |
| Oregon | | Salem | | 2 | | Light Manufacturing | | 155,900 |
| | Wilsonville | | 1 | | Warehouse / Distribution | | 78,000 |
| | | | | | | | |
| Pennsylvania | | Allentown | | 1 | | Warehouse / Distribution | | 292,092 |
| | Burgettstown | | 1 | | Warehouse / Distribution | | 455,000 |
| | Charleroi | | 1 | | Warehouse / Distribution | | 119,161 |
| | Clinton | | 7 | | Warehouse / Distribution | | 1,531,972 |
| | Croydon | | 1 | | Warehouse / Distribution | | 101,869 |
| | Elizabethtown | | 1 | | Warehouse / Distribution | | 206,236 |
| | Export | | 1 | | Warehouse / Distribution | | 138,270 |
| | Hazleton | | 1 | | Warehouse / Distribution | | 589,580 |
| | Imperial | | 1 | | Warehouse / Distribution | | 315,634 |
| | Lancaster | | 1 | | Warehouse / Distribution | | 240,528 |
| | Langhorne | | 2 | | Warehouse / Distribution | | 180,000 |
| | Langhorne | | 2 | | Light Manufacturing | | 287,647 |
|
| | | | | | | |
| State | City | Number of Buildings | Asset Type | CBSA(1) | Total Rentable Square Feet | |
| | Rural Hall | 1 | Warehouse / Distribution | Winston-Salem, NC | 250,000 |
| |
| | Smithfield | 1 | Warehouse / Distribution | Raleigh, NC | 191,450 |
| |
| | Winston-Salem | 1 | Warehouse / Distribution | Winston-Salem, NC | 385,000 |
| |
| | Salisbury | 1 | Warehouse / Distribution | Charlotte-Concord-Gastonia, NC-SC | 288,000 |
| |
| Ohio | | | | | | |
| | Bedford Heights | 1 | Warehouse / Distribution | Cleveland-Elyria, OH | 173,034 |
| |
| | Boardman | 1 | Warehouse / Distribution | Youngstown-Warren-Boardman, OH-PA | 175,900 |
| |
| | Cincinnati | 1 | Flex / Office | Cincinnati, OH-KY-IN | 114,532 |
| |
| | Columbus | 2 | Warehouse / Distribution | Columbus, OH | 333,645 |
| |
| | Dayton | 2 | Warehouse / Distribution | Dayton, OH | 775,727 |
| |
| | Fairborn | 1 | Warehouse / Distribution | Dayton, OH | 258,680 |
| |
| | Fairfield | 1 | Warehouse / Distribution | Cincinnati, OH-KY-IN | 206,448 |
| |
| | Gahanna | 1 | Warehouse / Distribution | Columbus, OH | 383,000 |
| |
| | Grove City | 1 | Warehouse / Distribution | Columbus, OH | 175,512 |
| |
| | Groveport | 1 | Warehouse / Distribution | Columbus, OH | 320,657 |
| |
| | Hamilton | 1 | Warehouse / Distribution | Cincinnati, OH-KY-IN | 245,000 |
| |
| | Hilliard | 1 | Warehouse / Distribution | Columbus, OH | 237,500 |
| |
| | Macedonia | 1 | Warehouse / Distribution | Akron, OH | 201,519 |
| |
| | Mason | 1 | Light Manufacturing | Cincinnati, OH-KY-IN | 116,200 |
| |
| | North Jackson | 1 | Warehouse / Distribution | Youngstown-Warren-Boardman, OH-PA | 209,835 |
| |
| | North Jackson | 1 | Redevelopment | Youngstown-Warren-Boardman, OH-PA | 307,315 |
| |
| | Oakwood Village | 1 | Warehouse / Distribution | Cleveland-Elyria, OH | 75,000 |
| |
| | Salem | 1 | Light Manufacturing | Salem, OH | 271,000 |
| |
| | Seville | 2 | Warehouse / Distribution | Cleveland-Elyria, OH | 345,000 |
| |
| | Streetsboro | 1 | Warehouse / Distribution | Akron, OH | 343,416 |
| |
| | Strongsville | 1 | Warehouse / Distribution | Cleveland-Elyria, OH | 161,984 |
| |
| | Toledo | 1 | Warehouse / Distribution | Toledo, OH | 177,500 |
| |
| | Twinsburg | 1 | Warehouse / Distribution | Akron, OH | 150,974 |
| |
| | West Chester | 1 | Warehouse / Distribution | Cincinnati, OH-KY-IN | 269,868 |
| |
| Oklahoma | | | | | | |
| | Oklahoma City | 2 | Warehouse / Distribution | Oklahoma City, OK | 303,740 |
| |
| | Tulsa | 1 | Warehouse / Distribution | Tulsa, OK | 175,000 |
| |
| Oregon | | | | | | |
| | Salem | 2 | Light Manufacturing | Salem, OR | 155,900 |
| |
| Pennsylvania | | | | | | |
| | Allentown | 1 | Warehouse / Distribution | Allentown-Bethlehem-Easton, PA-NJ | 289,900 |
| |
| | Clinton | 1 | Warehouse / Distribution | Pittsburgh, PA | 297,200 |
| |
| | Elizabethtown | 1 | Warehouse / Distribution | Lancaster, PA | 206,236 |
| |
| | Lancaster | 1 | Warehouse / Distribution | Lancaster, PA | 240,529 |
| |
| | Langhorne | 1 | Warehouse / Distribution | Philadelphia-Camden-Wilmington, PA-NJ-DE-MD | 102,000 |
| |
| | Langhorne | 2 | Light Manufacturing | Philadelphia-Camden-Wilmington, PA-NJ-DE-MD | 287,647 |
| |
| | Lebanon | 1 | Warehouse / Distribution | Lebanon, PA | 211,358 |
| |
| | Mechanicsburg | 3 | Warehouse / Distribution | Harrisburg-Carlisle, PA | 747,054 |
| |
| | Muhlenberg Townsh | 1 | Warehouse / Distribution | Reading, PA | 394,289 |
| |
| | New Kingston | 1 | Warehouse / Distribution | Harrisburg-Carlisle, PA | 330,000 |
| |
| | O'Hara Township | 1 | Warehouse / Distribution | Pittsburgh, PA | 887,084 |
| |
| | Pittston | 1 | Warehouse / Distribution | Scranton--Wilkes-Barre--Hazleton, PA | 437,446 |
| |
| | Reading | 1 | Warehouse / Distribution | Reading, PA | 248,000 |
| |
| | Williamsport | 1 | Warehouse / Distribution | Williamsport, PA | 250,000 |
| |
| | York | 1 | Warehouse / Distribution | York-Hanover, PA | 382,886 |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| State | | City | | Number of Buildings | | Asset Type | | Total Rentable Square Feet |
| | Lebanon | | 1 | | Warehouse / Distribution | | 211,358 |
| | Mechanicsburg | | 3 | | Warehouse / Distribution | | 747,054 |
| | Muhlenberg Township | | 1 | | Warehouse / Distribution | | 392,107 |
| | New Galilee | | 1 | | Warehouse / Distribution | | 410,389 |
| | New Kensington | | 1 | | Warehouse / Distribution | | 200,500 |
| | New Kingstown | | 1 | | Warehouse / Distribution | | 330,000 |
| | O’Hara Township | | 1 | | Warehouse / Distribution | | 887,084 |
| | Pittston | | 1 | | Warehouse / Distribution | | 437,446 |
| | Reading | | 1 | | Warehouse / Distribution | | 248,000 |
| | Warrendale | | 1 | | Warehouse / Distribution | | 179,394 |
| | York | | 5 | | Warehouse / Distribution | | 1,306,834 |
| | | | | | | | |
| South Carolina | | Columbia | | 1 | | Light Manufacturing | | 185,600 |
| | Duncan | | 3 | | Warehouse / Distribution | | 996,841 |
| | Edgefield | | 1 | | Light Manufacturing | | 126,190 |
| | Fountain Inn | | 2 | | Warehouse / Distribution | | 442,472 |
| | Fountain Inn | | 1 | | Light Manufacturing | | 203,888 |
| | Gaffney | | 1 | | Warehouse / Distribution | | 226,968 |
| | Goose Creek | | 1 | | Warehouse / Distribution | | 500,355 |
| | Greenwood | | 2 | | Light Manufacturing | | 175,055 |
| | Greer | | 7 | | Warehouse / Distribution | | 877,645 |
| | Laurens | | 1 | | Warehouse / Distribution | | 125,000 |
| | Piedmont | | 7 | | Warehouse / Distribution | | 1,387,556 |
| | Rock Hill | | 3 | | Warehouse / Distribution | | 720,120 |
| | Simpsonville | | 3 | | Warehouse / Distribution | | 1,138,494 |
| | Spartanburg | | 9 | | Warehouse / Distribution | | 1,802,623 |
| | Summerville | | 1 | | Warehouse / Distribution | | 88,583 |
| | West Columbia | | 6 | | Warehouse / Distribution | | 1,163,822 |
| | West Columbia | | 1 | | Light Manufacturing | | 464,206 |
| | | | | | | | |
| Tennessee | | Chattanooga | | 3 | | Warehouse / Distribution | | 646,200 |
| | Cleveland | | 1 | | Warehouse / Distribution | | 151,704 |
| | Clinton | | 1 | | Warehouse / Distribution | | 166,000 |
| | Jackson | | 1 | | Warehouse / Distribution | | 216,902 |
| | Knoxville | | 2 | | Warehouse / Distribution | | 335,550 |
| | Knoxville | | 1 | | Light Manufacturing | | 106,000 |
| | Lebanon | | 2 | | Warehouse / Distribution | | 407,552 |
| | Loudon | | 1 | | Warehouse / Distribution | | 104,074 |
| | Madison | | 1 | | Warehouse / Distribution | | 418,406 |
| | Mascot | | 1 | | Warehouse / Distribution | | 130,560 |
| | Mascot | | 1 | | Light Manufacturing | | 130,560 |
| | Memphis | | 2 | | Warehouse / Distribution | | 1,331,075 |
| | Murfreesboro | | 2 | | Warehouse / Distribution | | 212,312 |
| | Nashville | | 1 | | Warehouse / Distribution | | 154,485 |
| | Vonore | | 1 | | Warehouse / Distribution | | 342,700 |
| | | | | | | | |
| Texas | | Arlington | | 2 | | Warehouse / Distribution | | 290,324 |
| | Cedar Hill | | 1 | | Warehouse / Distribution | | 420,000 |
| | Conroe | | 1 | | Warehouse / Distribution | | 252,662 |
| | El Paso | | 12 | | Warehouse / Distribution | | 2,413,234 |
| | Garland | | 1 | | Light Manufacturing | | 253,900 |
| | Grapevine | | 2 | | Warehouse / Distribution | | 202,140 |
| | Houston | | 8 | | Warehouse / Distribution | | 999,124 |
| | Houston | | 3 | | Light Manufacturing | | 597,935 |
| | Humble | | 1 | | Warehouse / Distribution | | 289,200 |
| | Katy | | 2 | | Warehouse / Distribution | | 244,903 |
| | Laredo | | 2 | | Warehouse / Distribution | | 462,658 |
| | McAllen | | 1 | | Warehouse / Distribution | | 301,200 |
| | Mission | | 1 | | Warehouse / Distribution | | 270,084 |
| | Rockwall | | 1 | | Warehouse / Distribution | | 389,546 |
| | Stafford | | 1 | | Warehouse / Distribution | | 68,300 |
|
| | | | | | | |
| State | City | Number of Buildings | Asset Type | CBSA(1) | Total Rentable Square Feet | |
| South Carolina | | | | | | |
| | Columbia | 1 | Light Manufacturing | Columbia, SC | 185,600 |
| |
| | Duncan | 2 | Warehouse / Distribution | Spartanburg, SC | 787,380 |
| |
| | Edgefield | 1 | Light Manufacturing | Augusta-Richmond County, GA-SC | 126,190 |
| |
| | Fountain Inn | 2 | Warehouse / Distribution | Greenville-Anderson-Mauldin, SC | 432,472 |
| |
| | Gaffney | 1 | Warehouse / Distribution | Gaffney, SC | 226,968 |
| |
| | Graniteville | 1 | Warehouse / Distribution | Augusta-Richmond County, GA-SC | 450,000 |
| |
| | Greenville | 1 | Warehouse / Distribution | Greenville-Anderson-Mauldin, SC | 157,500 |
| |
| | Greenwood | 2 | Light Manufacturing | Greenwood, SC | 175,055 |
| |
| | Greer | 4 | Warehouse / Distribution | Greenville-Anderson-Mauldin, SC | 290,000 |
| |
| | Laurens | 1 | Warehouse / Distribution | Greenville-Anderson-Mauldin, SC | 125,000 |
| |
| | Piedmont | 3 | Warehouse / Distribution | Greenville-Anderson-Mauldin, SC | 400,000 |
| |
| | Rock Hill | 2 | Warehouse / Distribution | Charlotte-Concord-Gastonia, NC-SC | 590,520 |
| |
| | Simpsonville | 2 | Warehouse / Distribution | Greenville-Anderson-Mauldin, SC | 411,994 |
| |
| | Spartanburg | 6 | Warehouse / Distribution | Spartanburg, SC | 1,209,260 |
| |
| | Ware Shoals | 1 | Light Manufacturing | Greenwood, SC | 20,514 |
| |
| | West Columbia | 4 | Warehouse / Distribution | Columbia, SC | 769,532 |
| |
| South Dakota | | | | | | |
| | Rapid City | 1 | Flex / Office | Rapid City, SD | 132,365 |
| |
| Tennessee | | | | | | |
| | Chattanooga | 3 | Warehouse / Distribution | Chattanooga, TN-GA | 646,200 |
| |
| | Cleveland | 1 | Warehouse / Distribution | Cleveland, TN | 151,704 |
| |
| | Clinton | 1 | Warehouse / Distribution | Knoxville, TN | 166,000 |
| |
| | Jackson | 1 | Warehouse / Distribution | Jackson, TN | 216,902 |
| |
| | Jefferson City | 1 | Warehouse / Distribution | Morristown, TN | 486,109 |
| |
| | Knoxville | 1 | Warehouse / Distribution | Knoxville, TN | 108,400 |
| |
| | Loudon | 1 | Warehouse / Distribution | Knoxville, TN | 104,000 |
| |
| | Madison | 1 | Warehouse / Distribution | Nashville-Davidson--Murfreesboro--Franklin, TN | 418,406 |
| |
| | Mascot | 1 | Warehouse / Distribution | Knoxville, TN | 130,560 |
| |
| | Mascot | 1 | Light Manufacturing | Knoxville, TN | 130,560 |
| |
| | Murfreesboro | 1 | Warehouse / Distribution | Nashville-Davidson--Murfreesboro--Franklin, TN | 102,505 |
| |
| | Nashville | 1 | Warehouse / Distribution | Nashville-Davidson--Murfreesboro--Franklin, TN | 150,000 |
| |
| | Portland | 1 | Warehouse / Distribution | Nashville-Davidson--Murfreesboro--Franklin, TN | 414,043 |
| |
| | Vonore | 1 | Warehouse / Distribution | Knoxville, TN | 342,700 |
| |
| Texas | | | | | | |
| | Arlington | 2 | Warehouse / Distribution | Dallas-Fort Worth-Arlington, TX | 290,132 |
| |
| | Cedar Hill | 1 | Warehouse / Distribution | Dallas-Fort Worth-Arlington, TX | 420,000 |
| |
| | El Paso | 8 | Warehouse / Distribution | El Paso, TX | 1,886,621 |
| |
| | Fort Worth | 1 | Warehouse / Distribution | Dallas-Fort Worth-Arlington, TX | 101,500 |
| |
| | Garland | 1 | Light Manufacturing | Dallas-Fort Worth-Arlington, TX | 253,900 |
| |
| | Garland | 1 | Warehouse / Distribution | Dallas-Fort Worth-Arlington, TX | 164,914 |
| |
| | Houston | 5 | Warehouse / Distribution | Houston-The Woodlands-Sugar Land, TX | 585,634 |
| |
| | Houston | 2 | Light Manufacturing | Houston-The Woodlands-Sugar Land, TX | 408,599 |
| |
| | Laredo | 1 | Warehouse / Distribution | Laredo, TX | 206,810 |
| |
| | Rockwall | 1 | Warehouse / Distribution | Dallas-Fort Worth-Arlington, TX | 389,546 |
| |
| | San Antonio | 1 | Warehouse / Distribution | San Antonio-New Braunfels, TX | 247,861 |
| |
| | Stafford | 1 | Warehouse / Distribution | Houston-The Woodlands-Sugar Land, TX | 68,300 |
| |
| | Waco | 1 | Warehouse / Distribution | Waco, TX | 66,400 |
| |
| Virginia | | | | | | |
| | Buena Vista | 1 | Light Manufacturing | — | 172,759 |
| (2) |
| | Chester | 1 | Warehouse / Distribution | Richmond, VA | 100,000 |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| State | | City | | Number of Buildings | | Asset Type | | Total Rentable Square Feet |
| | Waco | | 1 | | Warehouse / Distribution | | 66,400 |
| | | | | | | | |
| Utah | | Provo | | 1 | | Warehouse / Distribution | | 177,071 |
| | | | | | | | |
| Virginia | | Chester | | 1 | | Warehouse / Distribution | | 100,000 |
| | Fredericksburg | | 1 | | Warehouse / Distribution | | 140,555 |
| | Harrisonburg | | 1 | | Warehouse / Distribution | | 357,673 |
| | Independence | | 1 | | Warehouse / Distribution | | 120,000 |
| | N. Chesterfield | | 1 | | Warehouse / Distribution | | 109,520 |
| | Norfolk | | 1 | | Warehouse / Distribution | | 102,512 |
| | Richmond | | 1 | | Light Manufacturing | | 78,128 |
| | | | | | | | |
| Washington | | Ridgefield | | 1 | | Warehouse / Distribution | | 141,400 |
| | | | | | | | |
| Wisconsin | | Appleton | | 1 | | Warehouse / Distribution | | 152,000 |
| | Caledonia | | 1 | | Light Manufacturing | | 53,680 |
| | Cudahy | | 1 | | Warehouse / Distribution | | 128,000 |
| | De Pere | | 1 | | Warehouse / Distribution | | 200,000 |
| | DeForest | | 1 | | Warehouse / Distribution | | 262,521 |
| | Delavan | | 2 | | Light Manufacturing | | 146,400 |
| | East Troy | | 1 | | Warehouse / Distribution | | 149,624 |
| | Elkhorn | | 1 | | Warehouse / Distribution | | 111,000 |
| | Elkhorn | | 1 | | Light Manufacturing | | 78,540 |
| | Franklin | | 1 | | Warehouse / Distribution | | 156,482 |
| | Germantown | | 4 | | Warehouse / Distribution | | 520,163 |
| | Hartland | | 1 | | Warehouse / Distribution | | 121,050 |
| | Hudson | | 1 | | Warehouse / Distribution | | 139,875 |
| | Janesville | | 1 | | Warehouse / Distribution | | 700,000 |
| | Kenosha | | 1 | | Light Manufacturing | | 175,052 |
| | Madison | | 2 | | Warehouse / Distribution | | 283,000 |
| | Mayville | | 1 | | Light Manufacturing | | 339,179 |
| | Mukwonago | | 1 | | Warehouse / Distribution | | 157,438 |
| | Muskego | | 1 | | Warehouse / Distribution | | 81,230 |
| | New Berlin | | 3 | | Warehouse / Distribution | | 590,663 | |
| | Oak Creek | | 2 | | Warehouse / Distribution | | 232,144 |
| | Pewaukee | | 2 | | Warehouse / Distribution | | 288,201 |
| | Pleasant Prairie | | 1 | | Warehouse / Distribution | | 291,599 |
| | Pleasant Prairie | | 1 | | Light Manufacturing | | 105,637 |
| | Sun Prairie | | 1 | | Warehouse / Distribution | | 427,000 |
| | West Allis | | 4 | | Warehouse / Distribution | | 243,478 |
| | Yorkville | | 1 | | Warehouse / Distribution | | 98,151 |
| | Total | | 562 | | | | 111,723,436 |
Not reflected in the table above are three buildings under development. |
| | | | | | | |
| State | City | Number of Buildings | Asset Type | CBSA(1) | Total Rentable Square Feet | |
| | Harrisonburg | 1 | Warehouse / Distribution | Harrisonburg, VA | 357,673 |
| |
| | Independence | 1 | Warehouse / Distribution | — | 120,000 |
| (2) |
| Wisconsin | | | | | | |
| | Chippewa Falls | 2 | Light Manufacturing | Eau Claire, WI | 97,400 |
| |
| | De Pere | 1 | Warehouse / Distribution | Green Bay, WI | 200,000 |
| |
| | DeForest | 1 | Warehouse / Distribution | Madison, WI | 254,431 |
| |
| | East Troy | 1 | Warehouse / Distribution | Whitewater-Elkhorn, WI | 149,624 |
| |
| | Germantown | 1 | Warehouse / Distribution | Milwaukee-Waukesha-West Allis, WI | 202,500 |
| |
| | Hartland | 1 | Warehouse / Distribution | Milwaukee-Waukesha-West Allis, WI | 121,050 |
| |
| | Janesville | 1 | Warehouse / Distribution | Janesville-Beloit, WI | 700,000 |
| |
| | Kenosha | 1 | Light Manufacturing | Chicago-Naperville-Elgin, IL-IN-WI | 175,052 |
| |
| | Madison | 2 | Warehouse / Distribution | Madison, WI | 283,000 |
| |
| | Mayville | 1 | Light Manufacturing | Beaver Dam, WI | 339,179 |
| |
| | New Berlin | 1 | Warehouse / Distribution | Milwaukee-Waukesha-West Allis, WI | 205,063 |
| |
| | Sun Prairie | 1 | Warehouse / Distribution | Madison, WI | 427,000 |
| |
| | West Allis | 4 | Warehouse / Distribution | Milwaukee-Waukesha-West Allis, WI | 241,977 |
| |
| | Yorkville | 1 | Warehouse / Distribution | Racine, WI | 98,151 |
| |
| | | 356 | | | 70,196,498 |
| |
| |
(1) | We define Core Based Statistical Area ("CBSA") as a U.S. geographic area defined by the Office of Management and Budget that consists of one or more counties (or equivalents) anchored by an urban center of at least 10,000 people plus adjacent counties that are socioeconomically tied to the urban center by commuting. |
| |
(2) | These buildings do not have a CBSA. |
| |
(3) | Includes buildings that are classified as held for sale at December 31, 2017. |
As of December 31, 2017, 252022, two of our 356562 buildings were encumbered by mortgage indebtedness totaling approximately $58.9$8.0 million (excluding unamortized deferred financing fees, debt issuance costs, and fair market value premiums)premiums or discounts). See Note 4 in the accompanying Notes to the Consolidated Financial Statements and the accompanying Schedule III for additional information.
Geographic Diversification
Top Markets
The following table sets forthsummarizes information about the ten20 largest markets in our portfolio based on total annualized base rental revenue as of December 31, 2017.
|
| | | | | | | | | | | |
Market Top 20 Markets(1)
| | | | | | % of Total Annualized Base Rental Revenue |
Philadelphia, PAChicago, IL | | 9.9 | | | | 7.7 | % |
Chicago, ILPhiladelphia, PA | | 8.8 | | | | 7.2 | % |
| Greenville/Spartanburg, SC | | 4.7 | | | | 5.5 | % |
Charlotte, NCMilwaukee/Madison, WI | | 4.2 | | | | 4.3 | % |
Milwaukee/Madison, WIDetroit, MI | | 3.8 | | | | 4.2 | % |
Cincinnati/Dayton, OHPittsburgh, PA | | 3.5 | | | | 4.1 | % |
Detroit, MIColumbus, OH | | 3.2 | | | | 4.0 | % |
| Minneapolis/St Paul, MN | | | | | | 3.7 | % |
| Houston, TX | | | | | | 2.8 | % |
| Charlotte, NC | | | | | | 2.5 | % |
| West Michigan, MI | | | | | | 2.5 | % |
| El Paso, TX | | 2.7 | | | | 2.5 | % |
West Michigan, MIIndianapolis, IN | | 2.6 | | | | 1.9 | % |
| Cleveland, OH | | | | | | 1.9 | % |
| Boston, MA | | | | | | 1.8 | % |
| Kansas City, MO | | | | | | 1.7 | % |
| Washington, DC | | | | | | 1.7 | % |
| Columbia, SC | | | | | | 1.6 | % |
| Westchester/So Connecticut, CT/NY | | 2.4 | | | | 1.5 | % |
TotalCincinnati/Dayton, OH | | 45.8 | | | | 1.5 | % |
| Total | | | | | | 64.6 | % |
(1) As defined by CoStar Realty Information, Inc.
Top Industries
Industry Diversification
The following table sets forthsummarizes information about the ten20 largest tenant industries in our portfolio based on total annualized base rental revenue as of December 31, 2017.2022. |
| | | | | | | | | | | | | |
Top Ten20 Tenant Industries(1) | | | | | | | | % of Total
Annualized Base Rental Revenue
|
Automotive | | 13.8 | % |
| Air Freight & Logistics | | 12.5 | | | | | | 10.9 | % |
Ind Equip, Component & Metals | | 11.0 | % |
| Containers & Packaging | | 9.8 | | | | | | 8.2 | % |
| Auto Components | | | | | | | | 7.3 | % |
| Commercial Services & Supplies | | | | | | | | 5.4 | % |
| Machinery | | | | | | | | 5.3 | % |
| Trading Companies & Distribution (Industrial Goods) | | | | | | | | 5.2 | % |
| Internet & Direct Market Retail | | | | | | | | 4.8 | % |
| Household Durables | | | | | | | | 4.4 | % |
| Distributors (Consumer Goods) | | | | | | | | 4.3 | % |
Food & BeveragesStaples Retailing | | 9.3 | | | | | | 3.4 | % |
RetailMedia | | 6.7 | | | | | | 3.3 | % |
Business ServicesBuilding Products | | 5.6 | | | | | | 3.1 | % |
Personal ProductsSpecialty Retail | | 5.1 | | | | | | 2.8 | % |
Household DurablesFood Products | | 4.9 | | | | | | 2.3 | % |
Building MaterialsChemicals | | 4.6 | | | | | | 2.2 | % |
TotalElectronic Equip, Instruments | | 83.3 | | | | | | 2.2 | % |
| Road & Rail | | | | | | | | 2.1 | % |
| Beverages | | | | | | | | 2.0 | % |
| Textiles, Apparel, Luxury Goods | | | | | | | | 1.9 | % |
| Health Care Equipment & Supplies | | | | | | | | 1.8 | % |
| Total | | | | | | | | 82.9 | % |
(1) Industry classification based on Global Industry Classification Standard methodology.
Tenant Diversification
As of December 31, 2017, our buildings were leased to 312 tenants. Top Tenants
The following table sets forthsummarizes information about the ten20 largest tenants in our portfolio based on total annualized base rental revenue as of December 31, 2017.2022.
| | | | | | | | | | | | | | |
Top 20 Tenants(1) | | Number of
Leases | | % of Total
Annualized Base
Rental Revenue |
| Amazon | | 7 | | 3.0 | % |
| Eastern Metal Supply, Inc. | | 5 | | 0.9 | % |
| American Tire Distributors, Inc. | | 7 | | 0.9 | % |
| Tempur Sealy International, Inc. | | 2 | | 0.8 | % |
| Hachette Book Group, Inc. | | 1 | | 0.8 | % |
| Lippert Component Manufacturing | | 5 | | 0.8 | % |
| Kenco Logistic Services, LLC | | 3 | | 0.8 | % |
| FedEx Corporation | | 3 | | 0.8 | % |
| Penguin Random House, LLC | | 1 | | 0.7 | % |
| WestRock Company | | 7 | | 0.7 | % |
| DS Smith North America | | 2 | | 0.7 | % |
| GXO Logistics, Inc. | | 2 | | 0.7 | % |
| Yanfeng US Automotive Interior | | 2 | | 0.7 | % |
| DHL Supply Chain | | 4 | | 0.7 | % |
| AFL Telecommunications LLC | | 2 | | 0.7 | % |
| Carolina Beverage Group | | 3 | | 0.7 | % |
| LKQ Corporation | | 4 | | 0.7 | % |
| Berlin Packaging L.L.C. | | 4 | | 0.6 | % |
| Iron Mountain Information Management | | 5 | | 0.6 | % |
| Ford Motor Company | | 1 | | 0.6 | % |
| Total | | 70 | | 16.9 | % |
|
| | | | | |
| Top Ten Tenants | | Number of Leases | | % of Total Annualized Base Rental Revenue |
| General Services Administration | | 1 | | 2.6 | % |
| XPO Logistics | | 4 | | 1.9 | % |
| Deckers Outdoor | | 2 | | 1.6 | % |
| TriMas Corporation | | 4 | | 1.4 | % |
| Solo Cup | | 1 | | 1.4 | % |
| DHL | | 4 | | 1.1 | % |
| FedEx | | 3 | | 1.0 | % |
| Generation Brands | | 1 | | 1.0 | % |
| Carolina Beverage Group | | 2 | | 1.0 | % |
| American Tire Distributors Inc | | 4 | | 0.9 | % |
| Total | | 26 | | 13.9 | % |
Scheduled Lease Expirations
As of December 31, 2017,2022, our weighted average in place remaining lease termWeighted Average Lease Term was approximately 4.84.7 years. The following table sets forth a summary ofsummarizes lease expirations for leases in place as of December 31, 2017,2022, plus available space, for each of the ten calendar years beginning with 20182023 and thereafter in our portfolio. The information in the following table assumes that tenants exercise no renewal options, purchase options, or early termination rights.
| | | Lease Expiration Year | | Number of Leases Expiring | | Total Rentable Square Feet | | % of Total Occupied Square Feet | | Total Annualized Base Rental Revenue (in thousands) | | % of Total Annualized Base Rental Revenue | Lease Expiration Year | | Number of
Leases
Expiring | | Total Rentable
Square Feet | | % of Total
Occupied
Square Feet | | Total Annualized
Base Rental Revenue
(in thousands) | | % of Total Annualized
Base Rental Revenue | |
| Available | | — | | 3,267,701 |
| | — |
| | $ | — |
| | — |
| Available | | — | | 1,667,523 | | | — | | | $ | — | | | — | | |
| Month-to-month leases | | 10 | | 1,279,284 |
| | 1.9 | % | | 4,433 |
| | 1.6 | % | Month-to-month leases | | 1 | | 29,892 | | | — | % | | 343 | | | 0.1 | % | |
| 2018 | | 41 | | 5,665,228 |
| | 8.5 | % | | 23,537 |
| | 8.6 | % | |
| 2019 | | 52 | | 9,298,500 |
| | 13.9 | % | | 36,853 |
| | 13.5 | % | |
| 2020 | | 48 | | 9,598,197 |
| | 14.3 | % | | 40,721 |
| | 14.9 | % | |
| 2021 | | 62 | | 10,234,381 |
| | 15.3 | % | | 42,251 |
| | 15.4 | % | |
| 2022 | | 46 | | 5,757,530 |
| | 8.6 | % | | 24,585 |
| | 9.0 | % | |
| 2023 | | 29 | | 5,870,859 |
| | 8.8 | % | | 21,547 |
| | 7.9 | % | 2023 | | 71 | | 8,912,511 | | | 8.1 | % | | 41,436 | | | 7.7 | % | |
| 2024 | | 20 | | 3,854,240 |
| | 5.8 | % | | 15,278 |
| | 5.6 | % | 2024 | | 100 | | 13,373,950 | | | 12.2 | % | | 63,798 | | | 11.8 | % | |
| 2025 | | 14 | | 2,397,342 |
| | 3.6 | % | | 9,894 |
| | 3.6 | % | 2025 | | 102 | | 14,316,715 | | | 13.0 | % | | 65,502 | | | 12.1 | % | |
| 2026 | | 21 | | 4,704,170 |
| | 7.0 | % | | 18,037 |
| | 6.6 | % | 2026 | | 121 | | 18,106,957 | | | 16.5 | % | | 87,444 | | | 16.2 | % | |
| 2027 | | 10 | | 1,768,969 |
| | 2.6 | % | | 7,722 |
| | 2.8 | % | 2027 | | 95 | | 14,196,659 | | | 12.9 | % | | 71,200 | | | 13.2 | % | |
| 2028 | | 2028 | | 62 | | 8,846,726 | | | 8.0 | % | | 41,801 | | | 7.7 | % | |
| 2029 | | 2029 | | 47 | | 7,977,761 | | | 7.3 | % | | 39,201 | | | 7.3 | % | |
| 2030 | | 2030 | | 29 | | 4,110,740 | | | 3.7 | % | | 23,014 | | | 4.3 | % | |
| 2031 | | 2031 | | 41 | | 7,312,872 | | | 6.6 | % | | 35,034 | | | 6.5 | % | |
| 2032 | | 2032 | | 18 | | 2,542,575 | | | 2.3 | % | | 17,608 | | | 3.3 | % | |
| Thereafter | | 30 | | 6,500,097 |
| | 9.7 | % | | 28,701 |
| | 10.5 | % | Thereafter | | 36 | | 10,328,555 | | | 9.4 | % | | 52,770 | | | 9.8 | % | |
| Total/weighted average | | 383 | | 70,196,498 |
| | 100.0 | % | | $ | 273,559 |
| | 100.0 | % | Total/weighted average | | 723 | | 111,723,436 | | | 100.0 | % | | $ | 539,151 | | | 100.0 | % | |
Item 3. Legal Proceedings
From time to time, we are a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business. We are not currently a party, as plaintiff or defendant, to any legal proceedings that, individually or in the aggregate, would be expected to have a material effect on our business, financial condition or results of operations if determined adversely to our company.the Company.
Item 4. Mine SafetyDisclosures
Not applicable.
PART II.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Information about our equity compensation plans and other related stockholder matters is incorporated by reference to our definitive Proxy Statement for our 20182023 Annual Meeting of Stockholders.
Market Information
Our common stock has beenis listed on the NYSE since April 15, 2011, and is traded under the symbol “STAG.” The closing share price for our common stock on February 13, 2018, as reported by the NYSE, was $23.39 per share. For the year ended December 31, 2017, our total stockholder return was 20.7%, assuming an investment in our common stock on December 31, 2016 and that all dividends were reinvested. The following table sets forth, for the periods indicated, the high and low sale prices in dollars on the NYSE for our common stock as well as the dividends declared per share of common stock.
|
| | | | | | | | | | | | |
| Quarter ended | | High | | Low | | Dividends Per Common Share(1) |
| December 31, 2017 | | $ | 28.91 |
| | $ | 27.10 |
| | $ | 0.352500 |
|
| September 30, 2017 | | $ | 28.95 |
| | $ | 26.43 |
| | $ | 0.352500 |
|
| June 30, 2017 | | $ | 28.66 |
| | $ | 24.84 |
| | $ | 0.350001 |
|
| March 31, 2017 | | $ | 26.24 |
| | $ | 22.70 |
| | $ | 0.350001 |
|
| December 31, 2016 | | $ | 24.41 |
| | $ | 21.21 |
| | $ | 0.347499 |
|
| September 30, 2016 | | $ | 25.51 |
| | $ | 22.68 |
| | $ | 0.347499 |
|
| June 30, 2016 | | $ | 23.83 |
| | $ | 19.42 |
| | $ | 0.347499 |
|
| March 31, 2016 | | $ | 20.54 |
| | $ | 14.97 |
| | $ | 0.347499 |
|
| |
(1) | On November 2, 2017, our board of directors declared the common stock dividend for the months ending January 31, 2018, February 28, 2018 and March 31, 2018 at a monthly rate of $0.118333 per share of common stock. |
Holders of Our Common Stock
As of February 13, 2018,2023, we had 6573 stockholders of record. This figure does not reflect the beneficial ownership of shares held in the nominee name.
Dividends
To maintain our qualification as a REIT, we must make annual distributions to our stockholders of at least 90% of our taxable net income (not including net capital gains). Dividends are declared at the discretion of our board of directors and depend on actual and anticipated cash from operations, our financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code and other factors our board of directors may consider relevant.
Unregistered Sales of Equity Securities and Use of Proceeds
Issuer PurchasesRecent Sales of Unregistered Equity Securities
During the quarter ended December 31, 2022, the Operating Partnership issued 33,494 common units upon exchange of outstanding LTIP units issued pursuant to the 2011 Plan. Subject to certain restrictions, common units may be redeemed for cash in an amount equal to the value of a share of common stock or, at our election, for a share of common stock on a one-for-one basis.
During the quarter ended December 31, 2022, we issued 33,494 shares of common stock upon redemption of 33,494 common units held by various limited partners. The issuance of such shares of common stock was either registered under the Securities Act or effected in reliance upon an exemption from registration provided by Section 4(a)(2) under the Securities Act and the rules and regulations promulgated thereunder. We relied on the exemption based on representations given by the holders of the common units.
All issuances of unregistered securities during the three months ended December 31, 2022, if any, have previously been disclosed in filings with the SEC.
|
| | | | | | | | | | | | | | |
| Year ended | | Total Number of Shares Purchased(1) | | Average Price Paid per Share(1) | | Total Number of Shares Purchased as Part of Publicity Announced Plans or Programs | | Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs |
| December 31, 2017 | | 40,836 |
| | $ | 23.73 |
| | — |
| | $ | — |
|
| Total | | 40,836 |
| | $ | 23.73 |
| | — |
| | $ | — |
|
| |
(1) | Reflects shares surrendered in January 2017 to the Company for payment of tax withholdings obligations in connection with the vesting of restricted shares of common stock. The average price paid reflects the average market value of shares withheld for tax purposes. |
Performance Graph
The following graph provides a comparison of the cumulative total return on our common stock with the cumulative total return on the Standard & Poor’s 500 Index and the MSCI US REIT Index. The MSCI US REIT Index represents performance of publicly-traded REITs. Returns over the indicated period are based on historical data and should not be considered indicative of future returns. The graph covers the period from December 31, 20122017 to December 31, 20172022 and assumes that $100 was invested in our common stock and in each index on December 31, 20122017 and that all dividends were reinvested.
This performance graph shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act, or incorporated by reference into any filing by us under the Securities Act, except as shall be expressly set forth by specific reference in such filing.
Item 6. Selected Financial DataReserved
The following sets forth selected financial and operating data for our company on a historical consolidated basis. The following data should be read in conjunction with the Consolidated Financial Statements and Notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Annual Report on Form 10-K. Our selected historical Consolidated Balance Sheet information as of December 31, 2017, 2016, 2015, 2014 and 2013, and our selected historical Consolidated Statement of Operations data for the years ended December 31, 2017, 2016, 2015, 2014 and 2013, have been derived from the audited financial statements of STAG Industrial, Inc. Certain prior year amounts have been reclassified to conform to the current year presentation. The results of operations for all periods presented have been adjusted to reflect discontinued operations.
|
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2017 | | 2016 | | 2015 | | 2014 | | 2013 |
| Statements of Operations Data: | | | | | | | | | | |
| Revenue | | | | | | | | | | |
| Total revenue | | $ | 301,087 |
| | $ | 250,243 |
| | $ | 218,633 |
| | $ | 173,816 |
| | $ | 133,893 |
|
| Expenses | | | | | | | | | | |
| Property | | 57,701 |
| | 48,904 |
| | 42,627 |
| | 33,388 |
| | 24,010 |
|
| General and administrative | | 33,349 |
| | 33,395 |
| | 28,750 |
| | 26,396 |
| | 17,867 |
|
| Property acquisition costs | | 5,386 |
| | 4,567 |
| | 4,757 |
| | 4,390 |
| | 3,427 |
|
| Depreciation and amortization | | 150,881 |
| | 125,444 |
| | 110,421 |
| | 87,703 |
| | 67,556 |
|
| Loss on impairments | | 1,879 |
| | 16,845 |
| | 29,272 |
| | 2,840 |
| | — |
|
| Gain on involuntary conversion | | (325 | ) | | — |
| | — |
| | — |
| | — |
|
| Other expenses | | 1,786 |
| | 1,149 |
| | 1,048 |
| | 803 |
| | 621 |
|
| Total expenses | | 250,657 |
| | 230,304 |
| | 216,875 |
| | 155,520 |
| | 113,481 |
|
| Other income (expense) | | | | | | | | | | |
| Interest income | | 12 |
| | 10 |
| | 9 |
| | 15 |
| | 13 |
|
| Interest expense | | (42,469 | ) | | (42,923 | ) | | (36,098 | ) | | (25,109 | ) | | (20,319 | ) |
| Loss on extinguishment of debt | | (15 | ) | | (3,261 | ) | | — |
| | (686 | ) | | — |
|
| Gain on the sales of rental property, net | | 24,242 |
| | 61,823 |
| | 4,986 |
| | 2,799 |
| | — |
|
| Total other income (expense) | | (18,230 | ) | | 15,649 |
| | (31,103 | ) | | (22,981 | ) | | (20,306 | ) |
| Net income (loss) from continuing operations | | $ | 32,200 |
| | $ | 35,588 |
| | $ | (29,345 | ) | | $ | (4,685 | ) | | $ | 106 |
|
| Total income attributable to discontinued operations | | — |
| | — |
| | — |
| | — |
| | 4,796 |
|
| Net income (loss) | | $ | 32,200 |
| | $ | 35,588 |
| | $ | (29,345 | ) | | $ | (4,685 | ) | | $ | 4,902 |
|
| Less: income (loss) attributable to noncontrolling interest after preferred stock dividends | | 941 |
| | 1,069 |
| | (1,962 | ) | | (992 | ) | | (620 | ) |
| Less: preferred stock dividends | | 9,794 |
| | 13,897 |
| | 10,848 |
| | 10,848 |
| | 9,495 |
|
| Less: amount allocated to participating securities | | 334 |
| | 384 |
| | 385 |
| | 345 |
| | 262 |
|
| Net income (loss) attributable to common stockholders | | $ | 21,131 |
| | $ | 20,238 |
| | $ | (38,616 | ) | | $ | (14,886 | ) | | $ | (4,235 | ) |
| Net income (loss) per share from continuing operations attributable to the common stockholders — basic | | $ | 0.24 |
| | $ | 0.29 |
| | $ | (0.58 | ) | | $ | (0.28 | ) | | $ | (0.20 | ) |
| Income per share from discontinued operation attributable to common stockholders — basic | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 0.10 |
|
| Net income (loss) per share attributable to common stockholders — basic | | $ | 0.24 |
| | $ | 0.29 |
| | $ | (0.58 | ) | | $ | (0.28 | ) | | $ | (0.10 | ) |
| Net income (loss) per share from continuing operations attributable to the common stockholders — diluted | | $ | 0.23 |
| | $ | 0.29 |
| | $ | (0.58 | ) | | $ | (0.28 | ) | | $ | (0.20 | ) |
| Income per share from discontinued operation attributable to common stockholders — diluted | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 0.10 |
|
| Net income (loss) per share attributable to common stockholders — diluted | | $ | 0.23 |
| | $ | 0.29 |
| | $ | (0.58 | ) | | $ | (0.28 | ) | | $ | (0.10 | ) |
| Balance Sheets Data (December 31): | | | | | | | | | | |
| Rental property, before accumulated depreciation and amortization | | $ | 3,097,276 |
| | $ | 2,541,705 |
| | $ | 2,188,642 |
| | $ | 1,809,895 |
| | $ | 1,389,214 |
|
| Rental property, after accumulated depreciation and amortization | | $ | 2,567,577 |
| | $ | 2,116,836 |
| | $ | 1,839,967 |
| | $ | 1,558,434 |
| | $ | 1,222,360 |
|
| Total assets | | $ | 2,680,667 |
| | $ | 2,186,156 |
| | $ | 1,901,782 |
| | $ | 1,623,802 |
| | $ | 1,266,460 |
|
| Total debt | | $ | 1,173,781 |
| | $ | 1,036,139 |
| | $ | 980,248 |
| | $ | 680,478 |
| | $ | 552,270 |
|
| Total liabilities | | $ | 1,270,360 |
| | $ | 1,119,230 |
| | $ | 1,043,925 |
| | $ | 731,924 |
| | $ | 591,896 |
|
| Total equity | | $ | 1,410,307 |
| | $ | 1,066,926 |
| | $ | 857,857 |
| | $ | 891,878 |
| | $ | 674,564 |
|
| Other Data: | | | | | | | | | | |
| Dividend declared per common share | | $ | 1.405002 |
| | $ | 1.389996 |
| | $ | 1.365 |
| | $ | 1.29 |
| | $ | 1.20 |
|
| Cash flow provided by operating activities | | $ | 162,562 |
| | $ | 135,423 |
| | $ | 121,707 |
| | $ | 96,676 |
| | $ | 82,687 |
|
| Cash flow used in investing activities | | $ | 566,053 |
| | $ | 347,112 |
| | $ | 372,038 |
| | $ | 421,713 |
| | $ | 325,231 |
|
| Cash flow provided by financing activities | | $ | 415,861 |
| | $ | 211,870 |
| | $ | 238,464 |
| | $ | 342,225 |
| | $ | 230,228 |
|
Item 7. Management’s Discussion and Analysisof Financial Condition and Results of Operations
The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this report. For the definitions of certain terms used in the following discussion, refer to Item 1, “Business - Certain Definitions” included elsewhere in this report..
Overview
We are a REIT focused on the acquisition, ownership, and operation of single-tenant, industrial properties throughout the United States. We seek to (i) identify properties that offer relative value across all locations, industrial property types, and tenants through the principled application of our proprietary 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 NYSE under the symbol “STAG.”
We are organized and conduct our operations to qualifymaintain our qualification as a REIT under Sections 856 through 860 of 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.
Our qualification and taxation as a REIT dependsdepend upon our ability to meet on a continuing basis, through actual annual operating results, qualification tests in the federal income tax laws. Those tests involve the percentage of income that we earn from specified sources, the percentage of our assets that falls within specified categories, the diversity of our capital stock ownership and the percentage of our earnings that we distribute.
On July 1, 2022, our board of directors appointed William R. Crooker to the role of Chief Executive Officer of the Company, in addition to his role as President, effective July 1, 2022. In addition, on June 29, 2022, our board of directors increased the size of the board from nine to 10 members and appointed Mr. Crooker to the board and the investment committee of the board, effective as of July 1, 2022, subject to re-election at the 2023 Annual Meeting of Stockholders. As Chief Executive Officer, Mr. Crooker leads and manages our business, executes the strategies developed by management and the board and serves as the chief spokesperson to our employees, stockholders and business counterparties. In addition, in connection with Mr. Crooker’s promotion, our board of directors appointed Benjamin S. Butcher as Executive Chair of the Company. As Executive Chair, Mr. Butcher manages the business of the board, regularly consults with Mr. Crooker on key corporate matters and serves as a liaison between the board and the management team.
As of December 31, 2017,2022, we owned 356562 buildings in 3741 states with approximately 70.2111.7 million rentable square feet, consisting of 287484 warehouse/distribution buildings, 5274 light manufacturing buildings, 14one flex/office buildings,building, and three buildings in redevelopment or classified as held for sale. Value Add Portfolio buildings. We own both single- and multi-tenant properties, although the majority of our portfolio is single-tenant.
As of December 31, 2017,2022, our buildings were approximately 95.3%98.5% leased, to 312 tenants, with no single tenant accounting for more than approximately 2.6%3.0% of our total annualized base rental revenue and no single industry accounting for more than approximately 13.8%10.9% of our total annualized base rental revenue.
We own the interests in all of our properties and conduct substantially all of our business through our Operating Partnership. We are the sole member of the sole general partner of the Operating Partnership.Partnership, which we control and manage. As of December 31, 2017,2022, we owned approximately 95.9%97.9% of the common equity ofunits in our Operating Partnership, and our current and former executive officers, directors, senior employees and their affiliates, and other third parties who contributed properties to us in exchange for common equity in our Operating Partnership, owned the remaining 4.1%2.1%. We completed our IPO and related formation transactions, pursuant to which we succeeded our predecessor, on April 20, 2011.
Factors That May Influence Future Results of Operations
Our ability to increase revenues or cash flow will depend in part on our (i) external growth, specifically acquisition activity, and (ii) internal growth, specifically occupancy and rental rates on our portfolio. A variety of other factors, including those noted below, also affect our future results of operations.
Outlook
The outlook for ourOur business remains positive, albeit on a moderated basis in light of over eight years of economic growth, someis affected by the uncertainty regarding the newcurrent high inflationary, rising interest rate environment, and geopolitical tensions in Europe. These factors are key drivers of recent financial market volatility, continued supply chain bottlenecks, and growing concerns of a global recession. In the first two quarters of 2022, U.S. presidential administrationGDP declined 1.6% and its policy initiatives,0.6% respectively before posting a gain of 3.5% in the third quarter of 2022. Labor conditions remained strong with a 3.7% unemployment rate as of December 2022. Going forward, the general consensus among economists is to expect an elevated risk of recession over the near term. While the macro-economic conditions continue to evolve and continued asset appreciation.could result in weakening tenant cash flows and rising vacancy rates, we believe we will continue to benefit from having a well-diversified portfolio across
various markets, tenant industries, and lease terms. Additionally, we believe that the COVID-19 pandemic and geopolitical tensions have accelerated a number of trends that positively impact U.S. industrial demand.
Over the course of the COVID-19 pandemic, the U.S. federal and state governments, as well as the Federal Reserve, responded to the profoundly uncertain outlook with a series of fiscal and monetary policies to ease the economic burden of COVID-19 closures on businesses and individuals. In December 2017,2022, given the federal funds target rate washistorically high inflation levels and strong employment reports, the Federal Reserve shifted away from an expansionary monetary policy. In February 2023, the Federal Reserve raised interest rates 25 basis points to a target range of 1.25%between 4.5% to 1.50%4.75%. This announcement combined withSince March 2022, the unwinding ofFederal Reserve has raised the Fed Funds Rate by 450 basis points and started shrinking its balance sheet by selling Treasury securities and anticipation of three rate increases in 2018 are signs of the Central Bank’s confidence in the economy.sheet. The current trajectory of the federal funds target rate alignsFederal Reserve indicates monetary policy will continue tightening with the Central Bank’s consistent commentary that future rate increases would be gradual and rates will likely remain historically low for an extended period of time. Ifhigher interest rates were to rise further asand a resultshrinking of Federal Reserve policy action (short-term interest rates) or changes in market expectations and capital flows (long-term interest rates),balance sheet until inflation measures approach its long-term target.
We believe that the current economic environment, while volatile, will provide us with an opportunity to demonstrate the diversification of our portfolio. Specifically, we believe strengthening economic conditions are likely to accompany these changes. This strengthening of economic conditions combined with the currently favorable industrial supply demand environment should translate to a net positive result for our business. Specifically, our existing portfolio should benefit from risingcompetitive rental rates and our acquisition activity should benefit from higher yields. Furthermore,strong occupancy. In addition, we believe that certain characteristics of our business and capital structure should position us well in a rising interest ratean uncertain environment, including the fact that we haveour minimal floating rate debt exposure (taking into account our hedging activities), strong liquidity, and access to capital, and the fact that many of our competitors for the assets we purchaseacquisitions tend to be smaller local and regional investors who are likely tomay be more heavily impacted by interest rate increases.
The new U.S. presidential administration finished 2017 with the signing of a new tax law, most notably cutting the corporate tax rate to 21% from 35%. The new tax law is expected to provide at least a short-term boost to gross domestic product (“GDP”), capital markets, the U.S. dollar, the unemployment rate, and wage growth. The positive capital markets continued their upward momentum during the fourth quarter of 2017 and look favorable for the first half of 2018. The U.S. presidential administration is expected to focus on key initiatives including trade, regulation, infrastructure, and healthcare. The U.S. dollar weakened throughout 2017, but remains historically strong. A strong U.S. dollar can harm U.S. exporters and U.S. multi-nationals; however, it can also benefit foreign multi-nationals positively which support U.S. subsidiaries and operate U.S. industrial properties. Oil prices remain relatively low after significant declines in 2014, however, they showed some rebound in 2017 with WTI Crude Oil up 15% to $60/bbl. If there is a sustained increase in oil prices, we may see improvement in the oil and gas sector credit profiles and real estate markets as well as weakening of margins in other industries (e.g. automotive, freight). The North American Free Trade Agreement (“NAFTA”)negotiations are ongoing, and the outcome is uncertain. We will continue to monitor NAFTA negotiations for short-term and long-term impacts to our business.
Several economic indicators and other factors provide insight into the U.S. economic environment and industrial demand. Presently, we believe the key factors include GDP growth rate, unemployment rate, non-farm payrolls, Conference Board consumer confidence index, manufacturing-purchasing manager index (“ISM”), the 10-year Treasury yield, U.S. light vehicle sales, and durable goods new orders. Below are recent trends in each of these factors.
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Economic Indicators(1) | | December 31, 2017 | | September 30, 2017 | | June 30, 2017 | | March 31, 2017 | | December 31, 2016 |
| GDP Growth Rate | | 2.6% | | 3.2% | | 3.1% | | 1.2% | | 1.8% |
| Unemployment Rate | | 4.1% | | 4.2% | | 4.4% | | 4.5% | | 4.7% |
| Change in Non-Farm Employment (in thousands) | | 148 | | 38 | | 210 | | 50 | | 155 |
| Consumer Confidence Index | | 122.1 | | 119.8 | | 118.9 | | 125.6 | | 113.3 |
ISM(2) | | 59.7% | | 60.8% | | 57.8% | | 57.2% | | 54.5% |
| 10-year Treasury Yield | | 2.40% | | 2.33% | | 2.31% | | 2.40% | | 2.45% |
| Seasonally Adjusted Annualized Rate US Light Vehicle Sales (in thousands) | | 17,765 | | 18,485 | | 16,608 | | 16,719 | | 18,051 |
| Manufacturing New Orders: Durable Goods (in millions) | | 249,448 | | 239,313 | | 245,705 | | 232,817 | | 223,681 |
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(1) | Sources: Bureau of Economic Analysis, Bureau of Labor Statistics, Conference Board, Board of Governors of the Federal Reserve System, U.S. Census Bureau, and Institute for Supply Management. Each statistic is the latest revision available at the time of publishing this report. |
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(2) | ISM is a composite index based on a survey of over 300 purchasing and supply executives from across the country who respond to a monthly questionnaire about changes in production, new orders, new export orders, imports, employment, inventories, prices, lead-times, and timelines of supplier deliveries in their companies. When the index is over 50, it indicates expansion, while a reading below 50 signals contraction. |
Currently, the GDP growth rate, average growth of non-farm employment, level of U.S. total vehicle sales, ISM level, consumer confidence, and lowrising interest rates are positive fundamental signs for industrial demand. Atand lack of available of capital.
Due to the end of December, the ISM levelCOVID-19 pandemic, geopolitical uncertainty, and consumer confidence were very robust. The average consumer FICO score remained at an all-time high and lending standards loosened during the fourth quarter of 2017. These factors, combined with an expanding job count and ongoing low unemployment rate suggests consumers will be spending more money on goods in the foreseeable future. The strongrecent legislative bills supporting U.S. dollar means that U.S. consumers may be purchasing a relatively larger amount of imported goods and that U.S. companies are likely to lower their rate of exports. This is likely to be a net positive for industrial real estate demand as imports tend to lead to greater net absorption than do exports.
From a corporate credit perspective,infrastructure, we expect U.S. default rates to be stableacceleration in the first half 2018 behind positive economic growth and lower corporate taxes. We believe improving commodity markets and capital markets stability will be important in supporting this outlook. Standard & Poor’s trailing 12-month December 2017 U.S. speculative grade corporate default rate declined to 3.0% compared to 5.1% at December 2016. We continue to closely monitor the energy sector and other industries for technology disruption. Most notably, the retail sector is challenged by e-commerce growth and the automotive industry is facing potential trade and technology challenges. Additionally, we note that U.S. light vehicle sales declined in 2017 and are projected to decline further in 2018. We expect an increase in industrial activity and more demand for industrial space in the foreseeable future given the job growth, low-interest rate environment, and GDP growth.
Severala number of industrial specific trends contribute to the expectedsupport stronger long-term demand, increase, including:
•the rise of e-commerce (as compared to the traditional retail store distribution model) and the concomitant demand by e-commerce industry participants for well-located, functional distribution space;
•the increasing attractiveness of the U.S.United States as a manufacturing and distribution location because of the size of the U.S. consumer market, an increase in overseas labor costs, a desire for greater supply chain resilience and redundancy which is driving higher inventory to sales ratios and greater domestic warehouse demand over the overall cost of supplying and shipping goodslong-term (i.e. the shortening and fattening of the supply chain); and
•the overall quality of the transportation infrastructure in the U.S.United States.
Furthermore,Our portfolio continues to benefit from historically low availability throughout the lack of material speculative developmentnational industrial market. The COVID-19 pandemic has caused both positive and negative impacts at varying levels across different industries and geographies. Ultimately, the acceleration in e-commerce, actions taken by federal and state governments and the broader failure ofFederal Reserve in response to the pandemic, and the growing desire for greater supply to keep pace withchain resilience has helped industrial space demand remain relatively strong going into 2023. The weakening global and U.S. economic trends could be a notable headwind and may result in manyrelatively less demand for space and higher vacancy. We believe that the diversification of our markets has improvedportfolio by market, tenant industry, and may modestly further improve occupancy levels and rental ratestenant credit will prove to be a strength in our portfolio. We believe, however, that industrial supply, more so than other real estate property types, has historically had a short lead time and can appear quickly. We have started to see a notable pick-up in development activity in a growing number of the more active industrial markets, and we believe this may be beginning to take a firmer hold on a broader scale. On the demand side, we note that the quality and availability of labor has taken a greater spotlight in recent months and is a major focus as tenants make occupancy decisions. We will continue to monitor the supply and demand fundamentals for industrial real estate and assess its impact on our business.environment.
Conditions in Our Markets
The buildings in our portfolio are located in markets throughout the United States. Positive or negative changes in economic or other conditions, new supply, adverse weather conditions, and natural disasters, epidemics, and other factors in these markets may affect our overall performance.
Rental Income
We receive income primarily in the form of rental income from the tenants who occupy our buildings. The amount of rental income generated by the buildings in our portfolio depends principally on occupancy and rental rates. As of December 31, 2017, our Operating Portfolio was approximately 95.7% leased and our lease rates as defined by GAAP on new and renewal leases together grew approximately 10.8% and 7.3% during the years ended December 31, 2017 and 2016, respectively. We define the Operating Portfolio as including all warehouse and light manufacturing assets and excluding non-core flex/office assets and assets under redevelopment or classified as held for sale. The Operating Portfolio also excludes billboard, parking lot and cellular tower leases.
Future economic downturns or regional downturns affecting our submarkets that impair our ability to renew or re-lease space and the ability of our tenants to fulfill their lease commitments, as in the case of tenant bankruptcies, could adversely affect our ability to maintain or increase rental rates at our buildings. Our ability to lease our properties and the attendant rental rate is dependent upon, among other things, (i) the overall economy, (ii) the supply/demand dynamic in our markets, (iii) the quality of our properties, including age, clear height, and configuration, and (iv) our tenants’ ability to meet their contractual obligations to us.
The following table provides a summary ofsummarizes our Operating Portfolio leases executedthat commenced during the yearsyear ended December 31, 2017 and 2016. Certain leases contain2022. Any rental concessions whichin such leases are accounted for on a straight-line basis over the term of the lease.
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| Operating Portfolio | | Square Feet | | Cash Basis Rent Per Square Foot | | SL Rent Per Square Foot | | Total Costs Per Square Foot(1) | | Cash Rent Change | | SL Rent Change | | Weighted Average Lease Term (years) | | Rental Concessions per Square Foot(2) |
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| Year ended December 31, 2022 | | | | | | | | | | | | | | | | |
| New Leases | | 4,376,929 | | | $ | 5.34 | | | $ | 5.67 | | | $ | 2.73 | | | 18.6 | % | | 31.2 | % | | 5.9 | | | $ | 0.58 | |
| Renewal Leases | | 7,795,545 | | | $ | 4.84 | | | $ | 5.10 | | | $ | 1.09 | | | 11.8 | % | | 20.5 | % | | 4.7 | | | $ | 0.12 | |
| Total/weighted average | | 12,172,474 | | | $ | 5.02 | | | $ | 5.30 | | | $ | 1.69 | | | 14.3 | % | | 24.3 | % | | 5.1 | | | $ | 0.28 | |
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| Operating Portfolio | | Square Feet | | Cash
Basis Rent Per
Square Foot | | GAAP Basis Rent Per
Square Foot | | Total Turnover Costs Per
Square
Foot(1) | | Cash
Rent Change(2) | | GAAP Rent Change(3) | | Weighted Average Lease
Term(4)
(years) | | Rental Concessions per Square Foot(5) |
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| Year ended December 31, 2017 | | | | | | | | | | | | | | | | |
New Leases(6) | | 2,554,246 |
| | $ | 4.04 |
| | $ | 4.29 |
| | $ | 1.46 |
| | 4.5 | % | | 10.6 | % | | 4.5 |
| | $ | 0.23 |
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Renewal Leases(7) | | 8,644,161 |
| | 3.89 |
| | 4.04 |
| | 0.66 |
| | 2.5 | % | | 10.9 | % | | 5.3 |
| | 0.29 |
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| Total/weighted average | | 11,198,407 |
| | $ | 3.92 |
| | $ | 4.10 |
| | $ | 0.84 |
| | 2.9 | % | | 10.8 | % | | 5.2 |
| | $ | 0.28 |
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| Year ended December 31, 2016 | | | | | | | | | | | | | | | | |
New Leases(6) | | 749,275 |
| | $ | 3.90 |
| | $ | 4.16 |
| | $ | 2.25 |
| | (0.5 | )% | | 4.0 | % | | 8.2 |
| | $ | 0.42 |
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Renewal Leases(7) | | 4,817,462 |
| | 4.02 |
| | 4.14 |
| | 0.56 |
| | 1.4 | % | | 7.4 | % | | 4.8 |
| | 0.15 |
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| Total/weighted average | | 5,566,737 |
| | $ | 4.00 |
| | $ | 4.14 |
| | $ | 0.79 |
| | 1.3 | % | | 7.3 | % | | 5.3 |
| | $ | 0.18 |
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(1) | We define Turnover Costs as the costs for improvements of vacant and renewal spaces, as well as the commissions for leasing transactions. Turnover Costs per square foot represent the total turnover costs expected to be incurred on the leases signed during the period and do not reflect actual expenditures for the period. |
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(2) | We define Cash Basis Rent Change as the percentage change in base rent (excluding straight-line rent adjustments and above/below market lease amortization as required by GAAP) of the Comparable Lease. We define a Comparable Lease as a lease with a similar lease structure as compared to the previous in-place lease, excluding new leases for space that was not occupied under our ownership, leases on space with downtime in excess of two years, leases with materially different lease structures, leases associated with known vacates at the time of acquisition, and leases with credit-related modifications.
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(3) | We define GAAP Rent Change as the percentage change in the average base rent over the contractual lease term (excluding above/below market lease amortization) of the Comparable Lease. |
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(4) | We define Weighted Average Lease Term as the contractual lease term in years as of the lease start date weighted by square footage. |
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(5) | Represents the total concession for the entire lease term. |
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(6) | We define a New Lease as any lease that is signed for an initial term equal to or greater than 12 months for any vacant space; this includes a new tenant or an existing tenant that is expanding into new (additional) space. |
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(7) | We define a Renewal Lease as a lease signed by an existing tenant to extend the term for twelve months or more, including (i) a renewal of the same space as the current lease at lease expiration, (ii) a renewal of only a portion of the current space at lease expiration and (iii) an early renewal or workout, which ultimately does extend the original term for twelve months or more. |
(2)Represents the total rental concessions for the entire lease term.
Additionally, for the year ended December 31, 2022, leases related to the Value Add Portfolio and first generation leasing, with a total of 1,069,650 square feet, are excluded from the Operating Portfolio statistics above.
Property Operating Expenses
Our property operating expenses generally consist of utilities, real estate taxes, management fees, insurance, and site repair and maintenance costs. For the majority of our tenants, our property operating expenses are controlled, in part, by the triple net provisions in tenant leases. In our triple net leases, the tenant is responsible for all aspects of and costs related to the building and its operation during the lease term, including utilities, taxes, insurance, and maintenance costs.costs, but typically excluding roof and building structure. However, we also have modified gross leases and gross leases in our building portfolio. The terms of those leases vary and on some occasions weportfolio, which may require us to absorb certain building related expenses of our tenants. In our modified gross leases, we are responsible for somecertain building related expenses during the lease term, but the cost of most of the expenses isare passed through to the tenant for reimbursement to us. In our gross leases, we are responsible for all costsexpenses related to the building and its operation during the lease term. Our overall performance will be affected by the extent to which we are able to pass-through property operating expenses to our tenants.
Scheduled Lease Expirations
Our ability to re-lease space subject to expiring leases will impact our results of operations and is affected by economic and competitive conditions in our markets and by the desirability of our individual buildings. Leases that comprise approximately 8.6%7.7% of our total annualized base rental revenue will expire during the period from January 1, 20182023 to December 31, 2018,2023, excluding month-to-month leases. We assume, based upon internal renewal probability estimates, that some of our tenants will renew and others will vacate and the associated space will be re-let subject to downtime assumptions. Using the aforementioned assumptions, we expect that the rental rates on the respective new leases will generally be lowergreater than the rates under existing leases expiring during the period January 1, 20182023 to December 31, 2018,2023, thereby resulting in slightly loweran increase in revenue from the same space.
Critical Accounting Estimates
The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Certain estimates, judgments and assumptions are inherently subjective and based on the existing business and market conditions, and are therefore continually evaluated based upon available information and experience. The following items require significant estimation or judgement.
Purchase Price Accounting
We have determined that judgments regarding the allocation of the purchase price of properties based upon the fair value of the assets acquired and liabilities assume represents a critical accounting estimate that has the potential to be material in future periods and has been material in all periods presented in this Form 10-K. As discussed below in “Critical Accounting Policies,” we allocate the purchase price of properties based upon the fair value of the assets acquired and liabilities assumed, which generally consist of land, buildings, tenant improvements, mortgage debt assumed, and deferred leasing intangibles, which includes in-place leases, above market and below market leases, and tenant relationships, and is therefore subject to subjective
analysis and uncertainty. The process for determining the allocation to these components requires estimates and assumptions, including rental rates, discount rates, exit capitalization rates, and land value per square foot. We do not believe that the conclusions we reached regarding the allocation of the purchase price of properties, in the current economic and operating environment, would result in a materially different conclusion within any reasonable range of assumptions that could have been applied. As discussed below, we continuously assess our portfolio for the impairment of tangible and intangible rental property and deferred leasing intangible liabilities.
Rental Property and Deferred Leasing Intangible Liabilities Impairment Assessment
We have determined that judgments regarding the impairment of tangible and intangible rental property and deferred leasing intangible liabilities represents a critical accounting estimate that has the potential to be material in future periods and has been material in certain periods presented in this Form 10-K. As discussed below in “Critical Accounting Policies,” we evaluate the carrying value of all tangible and intangible rental property assets and deferred leasing intangible liabilities (collectively, the “property”) held for use for possible impairment when an event or change in circumstance has occurred that indicates their carrying value may not be recoverable. The evaluation includes estimating and reviewing anticipated future undiscounted cash flows to be derived from the property. If such cash flows are less than the property’s carrying value, an impairment charge is recognized to the extent by which the asset’s carrying value exceeds the estimated fair value. Estimating future cash flows is highly subjective and is based in part on assumptions related to anticipated hold period, future occupancy, rental rates, capital requirements, and exit capitalization rates that could differ from actual results. The discount rate used to present value the cash flows for determining fair value is also subjective. We do not believe that the conclusions we reached regarding the assessment of our rental property assets for impairment, in the current economic and operating environment, would result in a materially different conclusion within any reasonable range of assumptions that could have been applied. Should economic conditions worsen, and the values of industrial assets decline in future periods, then the assumptions and estimates we may make in future impairment analyses, and potential future measurement of impairment charges, could be sensitive and could result in a material change in the range of potential outcomes.
Critical Accounting Policies
The preparation of financial statements in conformity with GAAP requires management to use judgment in the application of accounting policies, including making estimates and assumptions. We base our estimates on historical experience and on various other assumptions believed to be reasonable under the circumstances. These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. If our judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting policies would have been applied resulting in a
different presentation of our financial statements. From time to time, we evaluate our estimates and assumptions. In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current information. Below is a discussion of accounting policies that we consider critical in that they may require complex judgment in their application or require estimates about matters that are inherently uncertain.
Rental Property and Deferred Leasing Intangibles
Rental property is carried at cost less accumulated depreciation and amortization. Expenditures for maintenance and repairs are expensed as incurred. Significant renovations and betterments that extend the economic useful lives of assets are capitalized.
We capitalize costs directly and indirectly related to the development, pre-development, redevelopment, or improvement of rental property. Real estate taxes, compensation costs of development personnel, insurance, interest, and other directly related costs during construction periods are capitalized as incurred, and depreciatedwith depreciation commencing with the date the property is substantially completed. Such costs begin to be capitalized to the development projects from the point we are undergoing the necessary activities to get the development project ready for its intended use and cease when the development projects are substantially completed and held available for occupancy. Interest is capitalized based on actual capital expenditures from the period when development or redevelopment commences until the asset is ready for its intended use, at the weighted average borrowing rate of our unsecured indebtedness during the period.
For properties classified as held for sale, we cease depreciating and amortizing the rental property and value the rental property at the lower of depreciated and amortized cost or fair value less costs to dispose. We present those properties classified as held for sale with any qualifying assets and liabilities associated with those properties as held for sale in the accompanying Consolidated Balance Sheets.
Using information available at the time of acquisition, we allocate the purchase price of business combinations of properties acquired based upon the fair value of the assets acquired and liabilities acquired,assumed, which generally consist of land, buildings, tenant improvements, mortgage debt assumed, and deferred leasing intangibles, which includes in-place leases, above market and below market leases, and tenant relationships. The process for determining the allocation to these components requires estimates and assumptions, including rental rates, discount rates and exit capitalization rates, and land value per square foot, as well as available market information, and is therefore subject to subjective analysis and uncertainty. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant. The portion of the purchase price that is allocated to above and below market leases is valued based on the present value of the difference between prevailing market rates and the in-place rates measured over a period equal to the remaining term of the lease term plus the term of any bargain renewal options. The purchase price is further allocated to in-place lease values and tenant relationships based on our evaluation of the specific characteristics of each tenant’s lease and its overall relationship with the respective tenant.
The above and below market lease values are amortized into rental income over the remaining lease term. The value of in-place lease intangibles and tenant relationships are amortized over the remaining lease term (and expected renewal period of the respective lease for tenant relationships) as increases to depreciation and amortization expense. The remaining lease terms are adjusted for bargain renewal options or assumed exercises of early termination options, as applicable. If a tenant subsequently terminates its lease, any unamortized portion of above and below market leases is accelerated into rental income and the in-place lease value and tenant relationships are accelerated into depreciation and amortization expense over the shortened lease term.
The purchase price allocated to deferred leasing intangible assets are included in rental property, net on ourthe accompanying Consolidated Balance Sheets, and the purchase price allocated to deferred leasing intangible liabilities are included in deferred leasing intangibles, net on ourthe accompanying Consolidated Balance Sheets under the liabilities section.
In determining the fair value of the debt assumed, we discount the spread between the future contractual interest payments and hypothetical future interest payments on mortgage debt based on a current market rate. The associated fair market value debt adjustment is amortized through interest expense over the life of the debt on a basis which approximates the effective interest method.
Using information available at the time of acquisition, we allocate the total consideration to tangible assets and liabilities and identified intangible assets and liabilities, as discussed above. We may adjust the preliminary purchase price allocations after obtaining more information about asset valuations and liabilities assumed.
We evaluate the carrying value of all tangible and intangible real estaterental property assets and deferred leasing intangible liabilities (collectively, the “property”) held for use for possible impairment when an event or change in circumstance has occurred that indicates their carrying value may not be recoverable. The evaluation includes estimating and reviewing anticipated future undiscounted cash flows to be derived from the asset and the ultimate sale of the asset.property. If such cash flows are less than the asset’sproperty’s carrying value, an impairment charge is recognized to the extent by which the asset’sproperty’s carrying value exceeds the estimated fair value. Estimating future cash flows is highly subjective and such estimatesis based in part on assumptions regarding anticipated hold period, future occupancy, rental rates, capital requirements, and exit capitalization rates that could differ from actual results. The discount rate used to present value the cash flows for determining fair value is also subjective.
Depreciation expense is computed using the straight-line method based on the following estimated useful lives.
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BuildingDescription | 40 Years | Estimated Useful Life |
| Building | | 40 Years |
| Building and land improvements (maximum) | Up to | 20 years |
| Tenant improvements | | Shorter of useful life or terms of related lease |
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Leases
For leases in which we are the lessee, we recognize a right-of-use asset and corresponding lease liability on the accompanying Consolidated Balance Sheets equal to the present value of the fixed lease payments. In determining operating right-of-use asset and lease liability for our operating leases, we estimate an appropriate incremental borrowing rate on a fully-collateralized basis for the terms of the leases. We utilize a market-based approach to estimate the incremental borrowing rate for each individual lease. Since the terms under our ground leases are significantly longer than the terms of borrowings available to us on a fully-collateralized basis, the estimate of this rate requires significant judgment, and consider factors such as yields on outstanding public debt and other market based pricing on longer duration financing instruments.
Goodwill
In January of 2017, the Financial Accounting Standards Board issued Accounting Standards Update 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The new standard removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This standard is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted. We elected to early adopt this standard effective January 1, 2017. The adoption of this standard did not have a material effect on our consolidated financial statements.
The excess of the cost of an acquired business over the net of the amounts assigned to assets acquired (including identified intangible assets) and liabilities assumed is recorded as goodwill. Our goodwill of approximately $4.9 million represents amounts allocated to the assembled workforce from the acquired management company, and is presented in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets. GoodwillOur goodwill has an indeterminate life and is not amortized, but is tested for impairment on an annual basis at December 31, or more frequently if events or changes in circumstances indicate that the asset might be impaired. We take a qualitative approach to consider whether an impairment of goodwill exists prior to quantitatively determining the fair value of the reporting unit in step one of the impairment test. We have not recorded anyno impairments to goodwill throughas of December 31, 2017.2022.
Use of Derivative Financial Instruments
We record all derivatives on the accompanying Consolidated Balance Sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. We may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or we elect not to apply hedge accounting.
In accordance with fair value measurement guidance, we made an accounting policy election to measure the credit risk of our derivative financial instruments that are subject to master netting arrangements on a net basis by counterparty portfolio. Credit risk is the risk of failure of the counterparty to perform under the terms of the contract. We minimize the credit risk in the interest rate swapsour derivative financial instruments by entering into transactions with various high-quality counterparties. Our exposure to credit risk at any point is generally limited to amounts recorded as assets on the accompanying Consolidated Balance Sheets.
Fair Value of Financial Instruments
Financial instruments include cash and cash equivalents, restricted cash, tenant accounts receivable, interest rate swaps, accounts payable, accrued expenses, unsecured credit facility, unsecured term loans, unsecured notes, and mortgage notes. The fair values of the cash and cash equivalents, restricted cash, tenant accounts receivable, accounts payable and accrued expenses approximate their carrying or contract values because of the short term maturity of these instruments. See Note 4 in the accompanying Notes to Consolidated Financial Statements for the fair valuesvalue of our debt.indebtedness. See Note 5 in the accompanying Notes to Consolidated Financial Statements for the fair valuesvalue of our interest rate swaps.
We adopted fair value measurement provisions for our financial instruments recorded at fair value. The guidance establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
Incentive and Equity-Based Employee Compensation Plans
We grant equity-based compensation awards to our employees and directors in the form of restricted shares of common stock, LTIP units, outperformance programs, and performance units. See Notes 6, 7 and 8 in the accompanying Notes to Consolidated Financial Statements for further discussion of restricted shares of common stock, LTIP units, and the outperformance programs and performance units, respectively. We measure equity-based compensation expense based on the fair value of the awards on the grant date and recognize the expense ratably over the vesting period, and forfeitures are recognized in the period in which they occur.
On January 7, 2021, we adopted the STAG Industrial, Inc. Employee Retirement Vesting Program (the “Vesting Program”) to provide supplemental retirement benefits for eligible employees. For those employees who are retirement eligible or will become retirement eligible during the applicable vesting period under the terms of the Vesting Program, we accelerate equity-based compensation through the employee’s six-month retirement notification period or retirement eligibility date, respectively.
Revenue Recognition
All current leases are classified as operating leases and rental revenueincome is recognized on a straight-line basis over the term of the lease (and expected bargain renewal terms or assumed exercise of early termination options) when collectability is reasonably assured. Differences between rental revenueincome earned and amounts due under the lease are charged or credited, as applicable, to accrued rental revenue. Additional rents from expense reimbursementsincome.
We determined that for insurance, real estate taxesall leases where we are the lessor, that the timing and certain other expensespattern of transfer of the non-lease components and associated lease components are recognizedthe same, and that the lease components, if accounted for separately, would be classified as an operating lease. Accordingly, we have made an accounting policy election to recognize the combined component in accordance with Accounting Standards Codification Topic 842 as rental income on the period in which the related expenses are incurred.accompanying Consolidated Statements of Operations.
Rental income recognition commences when the tenant takes possession of or controls the physical use of the leased space and the leased space is substantially complete and ready for its intended use. In order to determine whether the leased space is substantially complete and ready for its intended use, we determine whether we or the tenant own the tenant improvements. When it is determined that we are the owner of the tenant improvements, rental income recognition begins when the tenant takes possession of or controls the physical use of the finished space, which is generally when our owned tenant improvements are completed. In instances when it is determined that the tenant is the owner of tenant improvements, rental income recognition begins when the tenant takes possession of or controls the physical use of the leased space.
When we are the owner of tenant improvements or other capital items, the cost to construct the tenant improvements or other capital items, including costs paid for or reimbursed by the tenants, is recorded as capital assets. For these tenant improvements or other capital items, the amount funded by or reimbursed by the tenants are recorded as deferred revenue, which is amortized on a straight-line basis as rental income over the shorter of the useful life of the capital asset or the term of the related lease.
Early lease termination fees are recorded in rental income on a straight-line basis from the notification date of such termination to the then remaining (not the original) lease term, if any, or upon collection if collection is not reasonably assured.
We earn revenue from asset management fees, which are included in our Consolidated Statementsevaluate cash basis versus accrual basis of Operations in other income. We recognize revenue from asset management fees whenrental income recognition based on the related fees are earned and are realized or realizable. Ascollectability of December 31, 2017, we no longer earned revenue from asset management fees.future lease payments.
By the terms of their leases, certain tenants are obligated to pay directly the costs of their properties’ insurance, real estate taxes and certain other expenses and these costs are not reflected in our Consolidated Financial Statements. To the extent any tenant responsible for these costs under its respective lease defaults on its lease or it is deemed probable that the tenant will fail to pay for such costs, we would record a liability for such obligation. We do not recognize recovery revenue related to leases where the tenant will pay expenses directly for real estate taxes, insurance, ground lease payments, and certain other expenses.
Results of Operations
Our results of operations are largely driven by our levels of occupancy as well as the rental rates we receive from tenants. From a rental rate standpoint, we have historically achieved overall rental increases in our tenant rollovers on a cash basis and GAAP basis.
The following discussion of ourthe results of our same store (as defined below) net operating income (“NOI”) should be read in conjunction with our Consolidated Financial Statements.consolidated financial statements included in this report. For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see “Non-GAAP Financial Measures” below. Same store results are considered to be useful to investors in evaluating our performance because they provide information relating to changes in building-level operating performance without taking into account the effects of acquisitions or dispositions. However, because we have generally acquired 100% occupied properties and grown the portfolio significantly every year since our IPO, our same store results do not represent a market portfolio with market occupancy. Because we have above market occupancy, our same store results may look unfavorable at times as we trend to market levels. We encourage the reader to not only look at our same store results, but also our total portfolio results, due to historic and future growth.
ComparisonWe define same store properties as properties that were in the Operating Portfolio for the entirety of the year endedcomparative periods presented. The results for same store properties exclude termination fees, solar income, and other income adjustments. Same store properties exclude Operating Portfolio properties with expansions placed into service after December 31, 2017 to the year ended December 31, 2016
Our same store portfolio excludes flex/office buildings, redevelopment buildings, buildings classified as held for sale on the accompanying Consolidated Balance Sheets, and buildings acquired and disposed of or placed in service after January 1, 2016.2020. On December 31, 2017,2022, we owned 237455 industrial buildings consisting of approximately 46.491.9 million square feet, which represents approximately 66.1%82.2% of our total portfolio, that are considered our same store portfolio in the analysis below. Same store occupancy decreasedincreased approximately 0.4%1.3% to 95.6%99.1% as of December 31, 20172022 compared to 96.0%97.8% as of December 31, 2016.2021.
Discussions of selected operating information for our same store portfolio and our total portfolio for the comparison of the years ended December 31, 2021 and 2020 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on February 16, 2022.
Comparison of the year ended December 31, 2022 to the year ended December 31, 2021
The following table summarizes selected operating information for our same store portfolio and our total portfolio for the years ended December 31, 20172022 and 20162021 (dollars in thousands). This table includes a reconciliation from our same store portfolio to our total portfolio by also providing information for the years ended December 31, 20172022 and 20162021 with respect to the buildings acquired and disposed of orand Operating Portfolio buildings with expansions placed into service or transferred from the Value
Add Portfolio to the Operating Portfolio after January 1, 2016December 31, 2020 and our flex/office buildings, redevelopment buildings,Value Add Portfolio, and buildings classified as held for sale.
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Same Store Portfolio | | Acquisitions/Dispositions | | Other (1) | | Total Portfolio |
| | Year ended December 31, | | Change | | Year ended December 31, | | Year ended December 31, | | Year ended December 31, | | Change |
| | 2017 | | 2016 | | $ | | % | | 2017 | | 2016 | | 2017 | | 2016 | | 2017 | | 2016 | | $ | | % |
| Revenue | | | | | | | | | | | | | | | | | | | | | | | |
| Operating revenue | |
| | |
| | |
| | |
| | |
| | |
| | | | | | |
| | |
| | | | |
|
| Rental income | $ | 177,231 |
| | $ | 175,366 |
| | $ | 1,865 |
| | 1.1 | % | | $ | 66,350 |
| | $ | 25,639 |
| | $ | 12,250 |
| | $ | 11,736 |
| | $ | 255,831 |
| | $ | 212,741 |
| | $ | 43,090 |
| | 20.3 | % |
| Tenant recoveries | 31,078 |
| | 29,049 |
| | 2,029 |
| | 7.0 | % | | 11,160 |
| | 5,147 |
| | 2,767 |
| | 2,911 |
| | 45,005 |
| | 37,107 |
| | 7,898 |
| | 21.3 | % |
| Other income | 98 |
| | 106 |
| | (8 | ) | | (7.5 | )% | | 96 |
| | 66 |
| | 57 |
| | 223 |
| | 251 |
| | $ | 395 |
| | (144 | ) | | (36.5 | )% |
| Total operating revenue | 208,407 |
| | 204,521 |
| | 3,886 |
| | 1.9 | % | | 77,606 |
| | 30,852 |
| | 15,074 |
| | 14,870 |
| | 301,087 |
| | 250,243 |
| | 50,844 |
| | 20.3 | % |
| Expenses | | | | | | | | | | | | | | | | | | | | | |
| | |
| Property | 39,269 |
| | 36,630 |
| | 2,639 |
| | 7.2 | % | | 13,154 |
| | 6,798 |
| | 5,278 |
| | 5,476 |
| | 57,701 |
| | 48,904 |
| | 8,797 |
| | 18.0 | % |
Net operating income (2) | $ | 169,138 |
| | $ | 167,891 |
| | $ | 1,247 |
| | 0.7 | % | | $ | 64,452 |
| | $ | 24,054 |
| | $ | 9,796 |
| | $ | 9,394 |
| | $ | 243,386 |
| | $ | 201,339 |
| | $ | 42,047 |
| | 20.9 | % |
| Other expenses | |
| | |
| | |
| | |
| | |
| | |
| | | | | | | | | | |
| | |
| General and administrative | | |
| | |
| | |
| | |
| | |
| | | | | | 33,349 |
| | 33,395 |
| | (46 | ) | | (0.1 | )% |
| Property acquisition costs | | |
| | |
| | |
| | |
| | |
| | | | | | 5,386 |
| | 4,567 |
| | 819 |
| | 17.9 | % |
| Depreciation and amortization | | |
| | |
| | |
| | |
| | |
| | | | | | 150,881 |
| | 125,444 |
| | 25,437 |
| | 20.3 | % |
| Loss on impairments | | |
| | |
| | |
| | |
| | |
| | | | | | 1,879 |
| | 16,845 |
| | (14,966 | ) | | (88.8 | )% |
| Gain on involuntary conversion | | |
| | |
| | |
| | |
| | |
| | | | | | (325 | ) | | — |
| | (325 | ) | | 100.0 | % |
| Other expenses | | |
| | |
| | |
| | |
| | |
| | | | | | 1,786 |
| | 1,149 |
| | 637 |
| | 55.4 | % |
| Total other expenses | | |
| | |
| | |
| | |
| | |
| | | | | | 192,956 |
| | 181,400 |
| | 11,556 |
| | 6.4 | % |
| Total expenses | | |
| | |
| | |
| | |
| | |
| | | | | | 250,657 |
| | 230,304 |
| | 20,353 |
| | 8.8 | % |
| Other income (expense) | | |
| | |
| | |
| | |
| | |
| | | | | | | | | | | | |
| Interest income | | |
| | |
| | |
| | |
| | |
| | | | | | 12 |
| | 10 |
| | 2 |
| | 20.0 | % |
| Interest expense | | |
| | |
| | |
| | |
| | |
| | | | | | (42,469 | ) | | (42,923 | ) | | 454 |
| | (1.1 | )% |
| Loss on extinguishment of debt | | |
| | |
| | |
| | |
| | |
| | | | | | (15 | ) | | (3,261 | ) | | 3,246 |
| | (99.5 | )% |
| Gain on the sales of rental property, net | | |
| | |
| | |
| | |
| | |
| | | | | | 24,242 |
| | 61,823 |
| | (37,581 | ) | | (60.8 | )% |
| Total other income (expense) | | |
| | |
| | |
| | |
| | |
| | | | | | $ | (18,230 | ) | | $ | 15,649 |
| | $ | (33,879 | ) | | (216.5 | )% |
| Net income | | |
| | |
| | |
| | |
| | |
| | | | | | $ | 32,200 |
| | $ | 35,588 |
| | $ | (3,388 | ) | | (9.5 | )% |
| |
(1) | Includes flex/office buildings, redevelopment buildings, buildings classified as held for sale, and buildings placed in service after January 1, 2016, which are excluded from the same store portfolio. Also includes asset management fee income, which is separated for purposes of calculating NOI. |
| |
(2) | Excluding asset management fee income, NOI for the total portfolio for the years ended December 31, 2017 and 2016 was $243.3 million and $201.1 million, respectively. Asset management fee income is included in other income in the table above. For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see “Non-GAAP Financial Measures” below. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Same Store Portfolio | | Acquisitions/Dispositions | | Other | | Total Portfolio |
| | Year ended December 31, | | Change | | Year ended December 31, | | Year ended December 31, | | Year ended December 31, | | Change |
| | 2022 | | 2021 | | $ | | % | | 2022 | | 2021 | | 2022 | | 2021 | | 2022 | | 2021 | | $ | | % |
| Revenue | | | | | | | | | | | | | | | | | | | | | | | |
| Operating revenue | | | | | | | | | | | | | | | | | | | | | | | |
| Rental income | $ | 526,819 | | | $ | 508,810 | | | $ | 18,009 | | | 3.5 | % | | $ | 102,758 | | | $ | 38,162 | | | $ | 24,800 | | | $ | 12,460 | | | $ | 654,377 | | | $ | 559,432 | | | $ | 94,945 | | | 17.0 | % |
| Other income | 370 | | | 517 | | | (147) | | | (28.4) | % | | 236 | | | 70 | | | 2,362 | | | 2,140 | | | 2,968 | | | 2,727 | | | 241 | | | 8.8 | % |
| Total operating revenue | 527,189 | | | 509,327 | | | 17,862 | | | 3.5 | % | | 102,994 | | | 38,232 | | | 27,162 | | | 14,600 | | | 657,345 | | | 562,159 | | | 95,186 | | | 16.9 | % |
| Expenses | | | | | | | | | | | | | | | | | | | | | | | |
| Property | 100,674 | | | 97,501 | | | 3,173 | | | 3.3 | % | | 19,732 | | | 8,419 | | | 5,295 | | | 2,066 | | | 125,701 | | | 107,986 | | | 17,715 | | | 16.4 | % |
Net operating income(1) | $ | 426,515 | | | $ | 411,826 | | | $ | 14,689 | | | 3.6 | % | | $ | 83,262 | | | $ | 29,813 | | | $ | 21,867 | | | $ | 12,534 | | | 531,644 | | | 454,173 | | | 77,471 | | | 17.1 | % |
| Other expenses | | | | | | | | | | | | | | | | | | | | | | | |
| General and administrative | | | | | | | | | | | | | | | | 46,958 | | | 48,629 | | | (1,671) | | | (3.4) | % |
| Depreciation and amortization | | | | | | | | | | | | | | | | 275,040 | | | 238,699 | | | 36,341 | | | 15.2 | % |
| Loss on impairments | | | | | | | | | | | | | | | | 1,783 | | | — | | | 1,783 | | | 100.0 | % |
| Other expenses | | | | | | | | | | | | | | | | 4,363 | | | 2,878 | | | 1,485 | | | 51.6 | % |
| Total other expenses | | | | | | | | | | | | | | | | 328,144 | | | 290,206 | | | 37,938 | | | 13.1 | % |
| Total expenses | | | | | | | | | | | | | | | | 453,845 | | | 398,192 | | | 55,653 | | | 14.0 | % |
| Other income (expense) | | | | | | | | | | | | | | | | | | | | | | |
| Interest and other income | | | | | | | | | | | | | | | | 103 | | | 121 | | | (18) | | | (14.9) | % |
| Interest expense | | | | | | | | | | | | | | | | (78,018) | | | (63,484) | | | (14,534) | | | 22.9 | % |
| Debt extinguishment and modification expenses | | | | | | | | | | | (838) | | | (2,152) | | | 1,314 | | | (61.1) | % |
| | | | | | | | | | | | | | | | | | | | | | |
| Gain on the sales of rental property, net | | | | | | | | | | | | | | | | 57,487 | | | 97,980 | | | (40,493) | | | (41.3) | % |
| Total other income (expense) | | | | | | | | | | | | | | | | (21,266) | | | 32,465 | | | (53,731) | | | (165.5) | % |
| Net income | | | | | | | | | | | | | | | | $ | 182,234 | | | $ | 196,432 | | | $ | (14,198) | | | (7.2) | % |
(1)For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see “Non-GAAP Financial Measures” below.
Net Income
Net income for our total portfolio decreased by $3.4approximately $14.2 million or 9.5%7.2% to $32.2approximately $182.2 million for the year ended December 31, 20172022 compared to $35.6approximately $196.4 million for the year ended December 31, 2016.2021.
Same Store Total Operating Revenue
Same store total operating revenue consists primarily of (i) rental income consisting of base rent, termination(i) fixed lease payments, variable lease payments, straight-line rental income, straight-line rent and above and below market lease amortization from our properties (“lease income”), and (ii) other tenant reimbursementsbillings for insurance, real estate taxes and certain other expenses (“tenant recoveries”other billings”).
For a detailed reconciliation of our same store total operating revenue to net income, see the table above.
Same store rental income, which is comprised of lease income and other billings as discussed below, increased by $1.9approximately $18.0 million or 1.1%3.5% to $177.2approximately $526.8 million for the year ended December 31, 20172022 compared to $175.4approximately $508.8 million for the year ended December 31, 2016.2021.
Same store lease income increased approximately $13.8 million or 3.3% to approximately $434.8 million for the year ended December 31, 2022 compared to approximately $421.0 million for the year ended December 31, 2021. Approximately $4.8$16.2 million of the increase was attributable to rental increases due to the execution of new leases and lease renewals ofwith existing tenants. Same store rental income also increased approximately $0.6 million due totenants and a net decrease in the amortization of net above market leases of approximately $0.4 million. The increase was also attributable to an increase in rental income of approximately $0.8 million at one property in which, during the year ended December 31, 2021, we determined that the future collectability of rental payments was not reasonably assured, and approximately $1.2 million dueaccordingly, we converted to the recognitioncash basis of straight-lineaccounting and reversed any accounts receivable and accrued rent balances into rental income and did not recognize revenue for payments that were not received from termination fees at certain buildings, including our Buena Vista, VA, Belvidere, IL,the tenant. The lease was subsequently terminated and Golden, CO buildings, as discussedreplaced with a new tenant in Note 2September 2021, and during the year ended December 31, 2022, the former tenant repaid the rental amounts past due, both of which contributed to the accompanying Notesincrease in rental income during the year ended December 31, 2022 compared to Consolidated Financial Statements.the year ended December 31, 2021. These increases were partially offset by an approximately $4.8 million decrease due to athe reduction of base rent of approximately $3.6 million due to tenants downsizing their spaces and vacancies.tenant vacancy.
Same store tenant recoveriesother billings increased by $2.0approximately $4.2 million or 7.0%4.8% to $31.1approximately $92.0 million for the year ended December 31, 20172022 compared to $29.0approximately $87.8 million for the year ended December 31, 2016. Approximately $2.82021. The increase was attributable to an increase of approximately $4.7 million of the increaserelated to other expense reimbursements which was primarily due to increases in occupancy and real estate taxes levied by the taxing authority, as well as changes to lease terms where we began paying the real estate taxes and operating expenses on behalf of tenants that had previously paid its taxes and operating expenses directly to respective vendors. The increase was also attributable to one of our properties where it was determined that the tenant will not be able to meet its requirements set forth by the taxing authority to be entitled to an abatement of real estate taxes. The abatement was applicable to prior periods, and as such the expense and related recovery recorded for the year ended December 31, 2017 includes an additional 36 months of real estate taxes, which attributed to approximately $0.6 million of the increase in same store tenant recoveries.corresponding expenses. This increase was partially offset by a decrease of approximately $1.4 million related to vacancy of previously occupied buildings, as well as decreases in real estate taxes levied by the taxing authorityauthorities of approximately $0.5 million.
Same Store Operating Expenses
Same store operating expenses consist primarily of property operating expenses and real estate taxes and insurance.
For a detailed reconciliation of our same store portfolio operating expenses to net income, see the table above.
Total same store operating expenses increased by $2.6approximately $3.2 million or 7.2%3.3% to $39.3approximately $100.7 million for the year ended December 31, 20172022 compared to $36.6approximately $97.5 million for the year ended December 31, 2016.2021. This increase was primarily relateddue to net increases in real estate taxes levied by the related taxing authority of approximately $1.4 million, as well as an increase of approximately $0.7 million in generalinsurance, utility, repairs and maintenance, snow removal, and utilities expenses. The remaining increase was attributable to oneother expenses of our properties where it was determined that the tenant will not be able to meet its requirements set forth by the taxing authority to be entitled to an abatement of real estate taxes. The abatement was applicable to prior periods, and as such the expense and related recovery recorded for the year ended December 31, 2017 includes an additional 36 months of real estate taxes, which attributed to approximately $0.6 million, of the increase in same store operating expenses.$1.0 million, $0.8 million, $0.7 million, and $0.7 million, respectively. These increases were partially offset by a decrease in real estate tax expense of approximately $0.1$0.6 million due to a decrease in snow removal expenses.real estate taxes levied by taxing authorities.
Acquisitionsand DispositionsNet Operating Income
For a detailed reconciliation of our acquisitions and dispositions net operating incomeNOI to net income, see the table above.
Subsequent to January 1, 2016,December 31, 2020, we acquired 9990 buildings consisting of approximately 21.315.4 million square feet (excluding one buildingten buildings that was classified as held for salewere included in the Value Add Portfolio at December 31, 2017)2022 or transferred from the Value Add Portfolio to the Operating Portfolio after December 31, 2020), and sold 3530 buildings consisting of approximately 6.14.4 million square feet.feet and one land parcel. For the years ended December 31, 20172022 and 2016,December 31, 2021, the buildings acquired after January 1, 2016December 31, 2020 contributed approximately $61.7$80.9 million and $11.0$18.8 million to NOI, respectively. For the years ended
December 31, 20172022 and 2016,December 31, 2021, the buildings sold after January 1, 2016December 31, 2020 contributed approximately $2.8$2.4 million and $13.1 million to net operating income, respectively. Refer
to Note 3 in the accompanying Notes to Consolidated Financial Statements for additional discussion regarding buildings acquired or sold.
Other Net Operating Income
Our other assets include our flex/office buildings, redevelopment buildings, buildings classified as held for sale, and buildings placed in service after January 1, 2016. It also includes asset management fee income, which is separated for purposes of calculating NOI for the total portfolio.
For a detailed reconciliation of our other net operating income to net income, see the table above.
At December 31, 2017 we owned 14 flex/office buildings consisting of approximately 0.9 million square feet, three buildings consisting of approximately 0.6 million square feet that were placed into service after January 1, 2016, and three buildings consisting of approximately 0.9 million square feet that were in redevelopment or classified as held for sale. These buildings contributed approximately $9.7 million and $9.2 million to NOI for the years ended December 31, 2017 and 2016, respectively. Additionally, we earned $0.1 million and $0.2 million in asset management fee income for the years ended December 31, 2017 and 2016, respectively.
Total Other Expenses
Total other expenses consist of general and administrative expense, property acquisition costs, depreciation and amortization, loss on impairments, gain on involuntary conversion, and other expenses.
Total other expenses increased $11.6 million or 6.4% for the year ended December 31, 2017 to $193.0 million compared to $181.4 million for the year ended December 31, 2016. The increase was primarily related to an increase of approximately $25.4 million in depreciation and amortization as a result of buildings acquired which increased the depreciable asset base. This increase was also attributable to an increase in property acquisition costs of approximately $0.8 million which was due to increased acquisition volume during the year ended December 31, 2017 as compared to the year ended December 31, 2016. Other expenses also increased approximately $0.6 million which was primarily attributable to a loss on incentive fee due to the finalization of a one-time incentive fee payable to Columbus Nova Real Estate Acquisition Group, LLC as discussed in Note 11 of the accompanying Notes to Consolidated Financial Statements. These increases were partially offset by a decrease of approximately $15.0 million in loss on impairments as there was one building that was impaired during the year ended December 31, 2017, whereas there were 12 buildings impaired for the year ended December 31, 2016. There was also a gain on involuntary conversion of approximately $0.3 million, as discussed in Note 3 of the accompanying Notes to Consolidated Financial Statements. General and administrative expense remained relatively flat for the year ended December 31, 2017 compared to the year ended December 31, 2016. This was primarily attributable to a decrease of approximately $3.1 million related to the severance of a former executive officer during the year ended December 31, 2016, which did not recur in 2017, but which was offset by an increase in non-cash compensation expense related to the 2017 equity grants for employees and independent directors, salary and other payroll costs, and other general and administrative expenses.
Total Other Income (Expense)
Total other income (expense) consists of interest income, interest expense, loss on extinguishment of debt, and gain on the sales of rental property. Interest expense includes interest incurred during the period as well as adjustments related to amortization of financing fees and debt issuance costs, amortization of fair market value adjustments associated with the assumption of debt, and gains or losses on hedge ineffectiveness.
Total net other expense decreased $33.9 million or 216.5% to a net other expense position of $18.2 million for the year ended December 31, 2017 compared to a net other income position of $15.6 million for the year ended December 31, 2016. This decrease was primarily the result of a decrease in the gain on the sales of rental property of approximately $37.6 million. This was partially offset by a decrease in loss on extinguishment of debt of approximately $3.2 million which was primarily attributable to the payment of prepayment fees for loans repaid during the year ended December 31, 2016 which did not recur in 2017. Additionally, interest expense decreased approximately $0.5 million which was primarily related to a decrease in the weighted average interest rate, as well as an increase in gain on hedge ineffectiveness of approximately $0.1 million for the year ended December 31, 2017 compared to the year ended December 31, 2016.
Comparison of year ended December 31, 2016 to the year ended December 31, 2015
Our same store portfolio excludes flex/office buildings, redevelopment buildings, buildings classified as held for sale on the accompanying Consolidated Balance Sheets, and buildings acquired and disposed of or placed in service after January 1, 2015. On December 31, 2016 we owned 204 industrial buildings consisting of 41.0 million square feet, which represented approximately 67.3% of our total portfolio, that are considered our same store portfolio in the analysis below. Same store occupancy decreased approximately 1.1% to 95.3% as of December 31, 2016 compared to 96.4% as of December 31, 2015.
The following table summarizes selected operating information for our same store portfolio and our total portfolio for the years ended December 31, 2016 and 2015 (dollars in thousands). This table includes a reconciliation from our same store portfolio to our total portfolio by also providing information for the years ended December 31, 2016 and 2015 with respect to the buildings acquired and disposed of or placed into service after January 1, 2015 and our flex/office buildings, redevelopment buildings, and those classified as held for sale.
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Same Store Portfolio | | Acquisitions/Dispositions | | Other (1) | | Total Portfolio |
| | Year ended December 31, | | Change | | Year ended December 31, | | Year ended December 31, | | Year ended December 31, | | Change |
| | 2016 | | 2015 | | $ | | % | | 2016 | | 2015 | | 2016 | | 2015 | | 2016 | | 2015 | | $ | | % |
| Revenue | | | | | | | | | | | | | | | | | | | | | | | |
| Operating revenue | | | | | | | | | | | | | | | | | | | | | | | |
| Rental income | $ | 148,670 |
| | $ | 147,322 |
| | $ | 1,348 |
| | 0.9 | % | | $ | 56,743 |
| | $ | 29,746 |
| | $ | 7,328 |
| | $ | 9,395 |
| | $ | 212,741 |
| | $ | 186,463 |
| | $ | 26,278 |
| | 14.1 | % |
| Tenant recoveries | 24,317 |
| | 23,317 |
| | 1,000 |
| | 4.3 | % | | 10,282 |
| | 5,754 |
| | 2,508 |
| | 2,595 |
| | 37,107 |
| | 31,666 |
| | 5,441 |
| | 17.2 | % |
| Other income | 102 |
| | 84 |
| | 18 |
| | 21.4 | % | | 71 |
| | 25 |
| | 222 |
| | 395 |
| | 395 |
| | 504 |
| | (109 | ) | | (21.6 | )% |
| Total operating revenue | 173,089 |
| | 170,723 |
| | 2,366 |
| | 1.4 | % | | 67,096 |
| | 35,525 |
| | 10,058 |
| | 12,385 |
| | 250,243 |
| | 218,633 |
| | 31,610 |
| | 14.5 | % |
| Expenses | | | | | | | | | | | | | | | | | | | | | |
| | |
| Property | 30,036 |
| | 30,280 |
| | (244 | ) | | (0.8 | )% | | 13,920 |
| | 8,235 |
| | 4,948 |
| | 4,112 |
| | 48,904 |
| | 42,627 |
| | 6,277 |
| | 14.7 | % |
Net operating income (2) | $ | 143,053 |
| | $ | 140,443 |
| | $ | 2,610 |
| | 1.9 | % | | $ | 53,176 |
| | $ | 27,290 |
| | $ | 5,110 |
| | $ | 8,273 |
| | 201,339 |
| | 176,006 |
| | 25,333 |
| | 14.4 | % |
| Other expenses | | | | | | | | | | | | | | | | | | | | | | | |
| General and administrative | | | | | | | | | | | | | | | | 33,395 |
| | 28,750 |
| | 4,645 |
| | 16.2 | % |
| Property acquisition costs | | | | | | | | | | | | | | | | 4,567 |
| | 4,757 |
| | (190 | ) | | (4.0 | )% |
| Depreciation and amortization | | | | | | | | | | | | | | | | 125,444 |
| | 110,421 |
| | 15,023 |
| | 13.6 | % |
| Loss on impairments | | | | | | | | | | | | | | | | 16,845 |
| | 29,272 |
| | (12,427 | ) | | (42.5 | )% |
| Other expenses | | | | | | | | | | | | | | | | 1,149 |
| | 1,048 |
| | 101 |
| | 9.6 | % |
| Total other expenses | | | | | | | | | | | | | | | | 181,400 |
| | 174,248 |
| | 7,152 |
| | 4.1 | % |
| Total expenses | | | | | | | | | | | | | | | | 230,304 |
| | 216,875 |
| | 13,429 |
| | 6.2 | % |
| Other income (expense) | | | | | | | | | | | | | | | | | | | | | | | |
| Interest income | | | | | | | | | | | | | | | | | 10 |
| | 9 |
| | 1 |
| | 11.1 | % |
| Interest expense | | | | | | | | | | | | | | | | | (42,923 | ) | | (36,098 | ) | | (6,825 | ) | | 18.9 | % |
| Loss on extinguishment of debt | | | | | | | | | | | | | | | | (3,261 | ) | | — |
| | (3,261 | ) | | 100.0 | % |
| Gain on the sales of rental property, net | | | | | | | | | | | | | | | | 61,823 |
| | 4,986 |
| | 56,837 |
| | 1,139.9 | % |
| Total other income (expense) | | | | | | | | | | | | | | | | 15,649 |
| | (31,103 | ) | | 46,752 |
| | 150.3 | % |
| Net income (loss) | | | | | | | | | | | | | | | | | $ | 35,588 |
| | $ | (29,345 | ) | | $ | 64,933 |
| | 221.3 | % |
| |
(1) | Includes flex/office buildings, redevelopment buildings, and buildings classified as held for sale, which are excluded from the same store portfolio. Also includes corporate sublease rental income and asset management fee income, which are separated for purposes of calculating NOI. |
| |
(2) | Excluding corporate sublease rental income and asset management fee income, NOI for the total portfolio for the years ended December 31, 2016 and 2015 was $201.1 million and $175.4 million, respectively. Corporate sublease rental income and asset management fee income is included in other income in the table above. For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see “Non-GAAP Financial Measures” below. |
Net Income (loss)
Net income (loss) for our total portfolio increased by $64.9 million or 221.3% to a net income position of $35.6 million for the year ended December 31, 2016, compared to a net loss position of $29.3 million for the year ended December 31, 2015.
Same Store Total Operating Revenue
Same store total operating revenue consists primarily of (i) rental income consisting of base rent, termination income, straight-line rent and above and below market lease amortization from our properties, and (ii) tenant reimbursements for insurance, real estate taxes and certain other expenses (“tenant recoveries”).
For a detailed reconciliation of our same store total operating revenue to net income (loss), see the table above.
Same store rental income increased by $1.3 million or 0.9% to $148.7 million for the year ended December 31, 2016, compared to $147.3 million for the year ended December 31, 2015. Approximately $3.7 million of the increase was attributable to rental increases due to new leases and renewals of existing tenants. Same store rental income also increased approximately $0.4 million due to a net decrease in the amortization of net above market leases and approximately $0.1 million due to the recognition of a straight-line termination fee at our Golden, CO property, as discussed in Note 2 of the accompanying Notes to Consolidated Financial Statements. These increases were partially offset by an approximately $3.0 million decrease due to a reduction of base rent due to tenants downsizing their spaces and vacancies.
Same store tenant recoveries increased by $1.0 million or 4.3% to $24.3 million for the year ended December 31, 2016, compared to $23.3 million for the year ended December 31, 2015. This increase is primarily related to an increase of approximately $2.1 million related to increases of real estate taxes levied by the related taxing authority, occupancy in previously vacant buildings, as well as changes to lease terms where we began paying the real estate taxes and operating expenses on behalf of tenants that had previously paid its taxes and operating expenses directly to respective vendors. These increases were partially offset by a decrease of approximately $1.1 million related to decreases of real estate taxes levied by the related taxing authority and vacancies.
Same Store Operating Expenses
Same store operating expenses consist primarily of property operating expenses and real estate taxes and insurance.
For a detailed reconciliation of our same store portfolio operating expenses to net income (loss), see the table above.
Total same store expenses decreased by $0.2 million or 0.8% to $30.0 million for the year ended December 31, 2016, compared to $30.3 million for the year ended December 31, 2015. This decrease is primarily related to a decrease of approximately $0.1 million in snow removal expenses attributable to a more mild winter in 2016 as compared to 2015, as well as a decrease of approximately $0.3 million in general repairs and maintenance expenses. These decreases were partially offset by an increase of approximately $0.2 million related to increases of real estate taxes levied by the related taxing authority and changes to lease terms where we began paying the real estate taxes on behalf of tenants that had previously paid its taxes directly to the taxing authority.
Acquisitionsand DispositionsNet Operating Income
For a detailed reconciliation of our acquisitions and dispositions net operating income to net income (loss), see the table above.
Subsequent to January 1, 2015, we acquired 96 buildings consisting of approximately 19.0 million square feet, and sold 30 buildings consisting of approximately 5.0 million square feet. For the years ended December 31, 2016 and 2015, the buildings acquired after January 1, 2015 contributed approximately $46.4 million and $14.6 million to NOI, respectively. For the years ended December 31, 2016 and 2015, the buildings sold after January 1, 2015 contributed approximately $6.8 million and $12.7$11.0 million to NOI, respectively. Refer to Note 3 in the accompanying Notes to Consolidatedconsolidated Financial Statements for additional discussion regarding buildings acquired or sold.
Other Net Operating Income
Our other assets include our flex/office buildings, redevelopment buildings, andValue Add Portfolio, buildings classified as held for sale. Itsale, and Operating Portfolio buildings with expansions placed in service or transferred from the Value Add Portfolio to the Operating Portfolio after December 31, 2020. Other NOI also includes corporate sublease rentaltermination, solar, and other income and asset management fee income, which are separated for purposes of calculating NOI for the totaladjustments from buildings in our same store portfolio.
For a detailed reconciliation of our other net operating incomeNOI to net income, (loss), see the table above.
At December 31, 2016 we owned 15 flex/officeThese buildings consisting of approximately 0.9 million square feet and one redevelopment building consisting of approximately 0.3 million square feet that are not included in our same store or acquisitions and dispositions portfolios. These building contributed approximately $4.9$16.2 million and $7.7$9.1 million to NOI for the years ended December 31, 20162022 and 2015,December 31, 2021, respectively. Additionally, we earned $0, $0.2 million, $0.2there was approximately $5.7 million and $0.4$3.4 million of termination, solar, and other income adjustments from certain buildings in corporate sublease rental income and asset management fee incomeour same store portfolio for the years ended December 31, 20162022 and 2015,December 31, 2021, respectively.
Total Other Expenses
Total other expenses consist of general and administrative expense, property acquisition costs,expenses, depreciation and amortization, loss on impairments, and other expenses.
Total other expenses increased $7.2approximately $37.9 million or 4.1%13.1% for the year ended December 31, 20162022 to $181.4approximately $328.1 million compared to $174.2approximately $290.2 million for the year ended December 31, 2015. The increase was2021. This is primarily related toa result of an increase of $15.0 million in depreciation and amortization of approximately $36.3 million as a result of buildings acquired, net of buildings disposed, whichacquisitions that increased the depreciable asset base. Approximately $4.6Additionally, a loss on impairment of approximately $1.8 million was recognized for the year ended December 31, 2022, as discussed in Note 3 of the increase relatesaccompanying Notes to Consolidated Financial Statements, that did not occur during the year ended December 31, 2021. Other expenses also increased approximately $1.5 million, which was primarily attributed to the relinquishment of an increaseacquisition deposit of approximately $2.1 million related to a terminated acquisition contract during the year ended December 31, 2022. These increases were partially offset by a decrease in general and administrative expenses primarily related to compensation expense of approximately $3.1$1.7 million relatedwhich was primarily due to the severance costs of a former executive officer of approximately $2.1 million during the year ended December 31, 2016, as well as the 2016 equity grants for employees and independent directors. These increases are partially offset by a decrease of approximately $12.4 million in loss on impairments recorded due to the impairment of 12 buildings for2021 that did not recur during the year ended December 31, 2016 compared2022, as well as due to the impairmentadoption of 14 buildingsthe Vesting Program on January 7, 2021 and related acceleration of equity-based compensation expense for certain eligible employees that did not recur during the year ended December 31, 2015.2022. These decreases in general and administrative expenses were offset by an increase in payroll costs.
Total Other Income (Expense)
Total other income (expense) consists of interest and other income, interest expense, loss ondebt extinguishment of debt,and modification expenses, and gain on the sales of rental property.property, net. Interest expense includes interest incurred during the period as well as adjustments related to amortization of financing fees and debt issuance costs, and amortization of fair market value adjustments associated with the assumption of debt, and gains or losses on hedge ineffectiveness.debt.
Total other income (expense) increased $46.8 million or 150.3% to a net other income of $15.6decreased approximately $53.7 million or 165.5% to approximately $21.3 million total other expense for the year ended December 31, 20162022 compared to a netapproximately $32.5 million total other expense of $31.1 millionincome for the year ended December 31, 2015.2021. This increasedecrease is primarily the result of an increasea decrease in the gain on the sales of rental property, net of approximately $56.8 million due to the sales of 24 buildings, whereas there were six buildings sold during the year ended December 31, 2015. This$40.5 million. There was partially offset by a loss on extinguishment of debt of approximately $3.3 million for the year ended December 31, 2016, whereas there was no loss on extinguishment of debt during the year ended December 31, 2015. This was also partially offset by an increase in interest expense of approximately $6.8$14.5 million relatedwhich is primarily attributable to the increase in total average debt outstanding forissuance of $325.0 million and $400.0 million of unsecured notes on September 28, 2021 and June 28, 2022, respectively. Debt extinguishment and modification expenses also decreased approximately $1.3 million during the year ended December 31, 2016 compared to2022. The debt extinguishment and modification expenses during the year ended December 31, 2015.2022 were related to the refinance of our unsecured term loans on July 26, 2022, as discussed in Note 4 of the accompanying Notes to Consolidated Financial Statements. The debt extinguishment and modification expenses during the year ended December 31, 2021 were primarily related to the refinance of our unsecured term loans on October 26, 2021, as discussed in Note 4 of the accompanying Notes to Consolidated Financial Statements.
Non-GAAP Financial Measures
In this report, we disclose and discuss funds from operations (“FFO”) and NOI, which meet the definition of “non-GAAP financial measures” as set forth in Item 10(e) of Regulation S-K promulgated by the SEC. As a result, we are required to include in this report a statement of why management believes that presentation of these measures provides useful information to investors.
Funds From Operations
FFO should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance, and we believe that to understand our performance further, FFO should be compared with our reported net income or net loss(loss) in accordance with GAAP, as presented in our consolidated financial statements included in this report.
We calculate FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (“NAREIT”Nareit”). FFO represents GAAP net income (loss), excluding gains (or losses) from sales of depreciable operating buildings, impairment write-downs of depreciable real estate, real estate related depreciation and amortization (excluding amortization of deferred financing costs and fair market value of debt adjustment) and after adjustments for unconsolidated partnerships and joint ventures.
Management uses FFO as a supplemental performance measure because it is a widely recognized measure of the performance of REITs. FFO may be used by investors as a basis to compare our operating performance with that of other REITs.
However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our buildings that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our buildings, all of which have real economic effects and could materially impact our results from operations, the utility of FFO as a measure of our performance is limited. In addition, other REITs may not calculate FFO in accordance with the NAREITNareit definition, as we do, and, accordingly, our FFO may not be comparable to such other REITs’ FFO. FFO should not be used as a measure of our liquidity, and is not indicative of funds available for our cash needs, including our ability to pay dividends.
The following table sets forthsummarizes a reconciliation of our FFO attributable to common stockholders and unit holders for the periods presented to net income, (loss), the nearest GAAP equivalent.
| | | | | | | | | | | | | | | | | | | | |
| | Year ended December 31, |
| Reconciliation of Net Income to FFO (in thousands) | | 2022 | | 2021 | | 2020 |
| Net income | | $ | 182,234 | | | $ | 196,432 | | | $ | 206,795 | |
| Rental property depreciation and amortization | | 274,823 | | | 238,487 | | | 214,464 | |
| Loss on impairments | | 1,783 | | | — | | | 5,577 | |
| Gain on the sales of rental property, net | | (57,487) | | | (97,980) | | | (135,733) | |
| FFO | | $ | 401,353 | | | $ | 336,939 | | | $ | 291,103 | |
| Preferred stock dividends | | — | | | (1,289) | | | (5,156) | |
| Redemption of preferred stock | | — | | | (2,582) | | | — | |
| Amount allocated to restricted shares of common stock and unvested units | | (558) | | | (838) | | | (756) | |
| FFO attributable to common stockholders and unit holders | | $ | 400,795 | | | $ | 332,230 | | | $ | 285,191 | |
|
| | | | | | | | | | | | |
| | | Year ended December 31, |
| Reconciliation of Net Income (Loss) to FFO (in thousands) | | 2017 | | 2016 | | 2015 |
| Net income (loss) | | $ | 32,200 |
| | $ | 35,588 |
| | $ | (29,345 | ) |
| Rental property depreciation and amortization | | 150,591 |
| | 125,182 |
| | 110,241 |
|
| Loss on impairments | | 1,879 |
| | 16,845 |
| | 29,272 |
|
| Gain on the sales of rental property, net | | (24,242 | ) | | (61,823 | ) | | (4,986 | ) |
| FFO | | $ | 160,428 |
| | $ | 115,792 |
| | $ | 105,182 |
|
| Preferred stock dividends | | (9,794 | ) | | (13,897 | ) | | (10,848 | ) |
| Other expenses | | — |
| | (384 | ) | | (385 | ) |
| FFO attributable to common stockholders and unit holders | | $ | 150,634 |
| | $ | 101,511 |
| | $ | 93,949 |
|
Net Operating Income
We consider NOI to be an appropriate supplemental performance measure to net income (loss) because we believe it helps investors and management understand the core operations of our buildings. NOI is defined as rental revenue, including reimbursements, less property expenses andincome, which includes billings for common area maintenance, real estate taxes and insurance.insurance, less property expenses, real estate tax expense and insurance expense. NOI should not be viewed as an alternative measure of our financial performance since it excludes expenses which could materially impact our results of operations. Further, our NOI may not be comparable to that of other real estate companies, as they may use different methodologies for calculating NOI.
The following table sets forthsummarizes a reconciliation of our NOI for the periods presented to net income, (loss), the nearest GAAP equivalent.
| | | | | | | | | | | | | | | | | | | | |
| | Year ended December 31, |
| Reconciliation of Net Income to NOI (in thousands) | | 2022 | | 2021 | | 2020 |
| Net income | | $ | 182,234 | | | $ | 196,432 | | | $ | 206,795 | |
| General and administrative | | 46,958 | | | 48,629 | | | 40,072 | |
| Depreciation and amortization | | 275,040 | | | 238,699 | | | 214,738 | |
| Interest and other income | | (103) | | | (121) | | | (446) | |
| Interest expense | | 78,018 | | | 63,484 | | | 62,343 | |
| Loss on impairments | | 1,783 | | | — | | | 5,577 | |
| Gain on involuntary conversion | | — | | | — | | | (2,157) | |
| Debt extinguishment and modification expenses | | 838 | | | 2,152 | | | 834 | |
| Other expenses | | 4,363 | | | 2,878 | | | 2,029 | |
| Gain on the sales of rental property, net | | (57,487) | | | (97,980) | | | (135,733) | |
| Net operating income | | $ | 531,644 | | | $ | 454,173 | | | $ | 394,052 | |
|
| | | | | | | | | | | | |
| | | Year ended December 31, |
| Reconciliation of Net Income (Loss) to NOI (in thousands) | | 2017 | | 2016 | | 2015 |
| Net income (loss) | | $ | 32,200 |
| | $ | 35,588 |
| | $ | (29,345 | ) |
| Asset management fee income | | (52 | ) | | (210 | ) | | (379 | ) |
| General and administrative | | 33,349 |
| | 33,395 |
| | 28,750 |
|
| Property acquisition costs | | 5,386 |
| | 4,567 |
| | 4,757 |
|
| Depreciation and amortization | | 150,881 |
| | 125,444 |
| | 110,421 |
|
| Interest income | | (12 | ) | | (10 | ) | | (9 | ) |
| Interest expense | | 42,469 |
| | 42,923 |
| | 36,098 |
|
| Loss on impairments | | 1,879 |
| | 16,845 |
| | 29,272 |
|
| Gain on involuntary conversion | | (325 | ) | | — |
| | — |
|
| Loss on extinguishment of debt | | 15 |
| | 3,261 |
| | — |
|
| Other expenses | | 1,097 |
| | 1,149 |
| | 1,048 |
|
| Loss on incentive fee | | 689 |
| | — |
| | — |
|
| Gain on the sales of rental property, net | | (24,242 | ) | | (61,823 | ) | | (4,986 | ) |
| Corporate sublease rental income | | — |
| | — |
| | (187 | ) |
| Net operating income | | $ | 243,334 |
| | $ | 201,129 |
| | $ | 175,440 |
|
Cash Flows
Comparison of the year ended December 31, 20172022 to the year ended December 31, 20162021
The following table summarizes our cash flows for the year ended December 31, 20172022 compared to the year ended December 31, 2016.2021.
| | | | | Year ended December 31, | | Change | | | Year ended December 31, | | Change |
| Cash Flows (dollars in thousands) | | 2017 | | 2016 | | $ | | % | Cash Flows (dollars in thousands) | | 2022 | | 2021 | | $ | | % |
| Net cash provided by operating activities | | $ | 162,562 |
| | $ | 135,423 |
| | $ | 27,139 |
| | 20.0 | % | Net cash provided by operating activities | | $ | 387,931 | | | $ | 336,154 | | | $ | 51,777 | | | 15.4 | % |
| Net cash used in investing activities | | $ | 566,053 |
| | $ | 347,112 |
| | $ | 218,941 |
| | 63.1 | % | Net cash used in investing activities | | $ | 447,524 | | | $ | 1,220,420 | | | $ | (772,896) | | | (63.3) | % |
| Net cash provided by financing activities | | $ | 415,861 |
| | $ | 211,870 |
| | $ | 203,991 |
| | 96.3 | % | Net cash provided by financing activities | | $ | 63,186 | | | $ | 887,123 | | | $ | (823,937) | | | (92.9) | % |
Net cash provided by operating activities increased $27.1approximately $51.8 million to $162.6approximately $387.9 million for the year ended December 31, 2017,2022, compared to $135.4approximately $336.2 million for the year ended December 31, 2016.2021. The increase was primarily attributable to incremental operating cash flows from property acquisitions completed after December 31, 2016,2021, and operating performance at existing properties. These increases were partially offset by the loss of cash flows from property dispositions completed after December 31, 20162021 and fluctuations in working capital due to timing of payments and rental receipts.
Net cash used in investing activities increased by $218.9decreased approximately $772.9 million to $566.1approximately $447.5 million for the year ended December 31, 2017,2022, compared to $347.1approximately $1,220.4 million for the year ended December 31, 2016.2021. The increasedecrease was primarily attributable to an increase in cash paid for the acquisition of 5326 buildings during the year ended December 31, 20172022 of approximately $593.0$472.6 million, compared to the acquisition of 4774 buildings during the year ended December 31, 20162021 of approximately $467.3$1,365.8 million. The increase isThis decrease was also attributable to a decrease in net proceeds from the sales of rental property, net of approximately $87.0 million. Additionally, we had$52.6 million during the year ended December 31, 2022 compared to the year ended December 31, 2021. This decrease in net cash used in investing activities was partially offset by an increase in cash paid for additions of land and building and improvements of approximately $15.3$72.2 million primarily dueduring the year ended December 31, 2022 compared to tenant improvement projects and the expansion of buildings. These increases were partially offset by proceeds received from insurance on involuntary conversion, as well as fluctuations in restricted cash and acquisition deposits.year ended December 31, 2021.
Net cash provided by financing activities increased $204.0decreased approximately $823.9 million to $415.9approximately $63.2 million for the year ended December 31, 2017,2022, compared to $211.9approximately $887.1 million for the year ended December 31, 2016. The increase2021. This decrease was primarily dueattributable to an increasedecrease in net proceeds received from the sale of common stock of approximately $652.2 million during the year ended December 31, 2022 compared to the year ended December 31, 2021. The decrease was also attributable to a net cash inflowoutflow of $271.0approximately $310.0 million from our unsecured credit facility and an increase of approximately $21.1 million in proceeds from salesdividends paid during the year ended December 31, 2022 compared to the year ended December 31, 2021. Additionally, we paid in full a mortgage note in the amount of common stock of $144.9approximately $46.6 million during the year ended December 31, 20172022 that did not occur during the year ended December 31, 2021, as discussed in Note 4 of the accompanying Notes to Consolidated Financial Statements. These decreases were partially offset by increases in the funding of unsecured term loans and unsecured notes in the amount of $50.0 million and $75.0 million, respectively, during the year ended December 31, 2022 compared to the year ended December 31, 2016.2021. Additionally, we redeemed the 9.0% Series A Cumulative Redeemable Preferred Stock, pardecrease was also partially offset by the redemption of preferred stock with an aggregate liquidation value $0.01 per share (the “Series A Preferred Stock”) on November 2, 2016 for $69.0of $75.0 million whichduring the year ended December 31, 2021 that did not recur during the year ended December 31, 2017. These increases were partially offset by a decrease in cash inflow from the issuance2022.
Comparison of the year ended December 31, 2016 to the year ended December 31, 2015
The following table summarizes our cash flows for the year ended December 31, 2016 compared to the year ended December 31, 2015.
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| | | | | | | | | | | | | | | |
| | | Year ended December 31, | | Change |
| Cash Flows (dollars in thousands) | | 2016 | | 2015 | | $ | | % |
| Net cash provided by operating activities | | $ | 135,423 |
| | $ | 121,707 |
| | $ | 13,716 |
| | 11.3 | % |
| Net cash used in investing activities | | $ | 347,112 |
| | $ | 372,038 |
| | $ | (24,926 | ) | | (6.7 | )% |
| Net cash provided by financing activities | | $ | 211,870 |
| | $ | 238,464 |
| | $ | (26,594 | ) | | (11.2 | )% |
Net cash provided by operating activities increased $13.7 million to $135.4 million for the year ended December 31, 2016, compared to $121.7 million for the year ended December 31, 2015. The increase was primarily attributable to incremental operating cash flows from property acquisitions completed after December 31, 2015, and operating performance at existing properties. These increases were partially offset by the loss of cash flows from property dispositions that occurred during the years ended December 31, 2016 and December 31, 2015, fluctuations in working capital due to timing of payments and rental receipts, and a higher cash interest paid due to an increase in our total average indebtedness outstanding.
Net cash used in investing activities decreased by $24.9 million to $347.1 million for the year ended December 31, 2016, compared to $372.0 million for the year ended December 31, 2015. The change was primarily related to the sale of 24 buildings during the year ended December 31, 2016 for net proceeds of approximately $152.1 million, compared to the year ended December 31, 2015 where we sold six buildings for net proceeds of approximately $22.2 million. This was partially offset by an increase in cash paid for the acquisition of 47 buildings during the year ended December 31, 2016 of approximately $467.3 million, compared to the acquisition of 49 buildings during the year ended December 31, 2015 of approximately $377.8 million. Additionally, we had an increase in cash paid for additions of land and building improvements of approximately $14.2 million, primarily due to a tenant improvements project and the expansion of a building.
Net cash provided by financing activities decreased $26.6 million to $211.9 million for the year ended December 31, 2016, compared to $238.5 million for the year ended December 31, 2015. The change is primarily due to a decrease in cash inflow from our unsecured notes of $220.0 million from the issuance of unsecured notes on February 20, 2015 and December 15, 2015. The change is also attributable to an increase of repayment of mortgage notes of $49.9 million, an increase of $5.7 million in offering costs related to the issuance of the Series C Preferred Stock on March 17, 2016 and new at-the-market common stock offering programs on May 13, 2016 and November 8, 2016, the redemption of the Series A Preferred Stock on November 2, 2016 of $69.0 million, and an increase in dividends and distributions paid of $11.5 million as a result of the increased number of shares and units outstanding as well as a $0.029163 increase in the dividend paid per share during the year ended December 31, 2016 compared to the year ended December 31, 2015. These decreases were offset by the issuance of the Series C Preferred Stock for proceeds of $75.0 million, an increase of net cash inflow of $47.0 million from our unsecured credit facility, and an increase in proceeds from sales of common stock of $207.8 million during the year ended December 31, 2016 compared to the year ended December 31, 2015.
Liquidity and Capital Resources
We believe that our liquidity needs will be satisfied through cash flows generated by operations, disposition proceeds, and financing activities. Operating cash flow is primarilyfrom rental income, expense recoveries from tenants, and other income from operations and is our principal source of funds that we use to pay operating expenses, debt service, recurring capital expenditures, and the distributions required to maintain our REIT qualification. We look toprimarily rely on the capital markets (common equity,and preferred equity and debt)debt securities) to primarily fund our acquisition activity. We seek to increase cash flows from our properties by maintaining quality building standards for our buildings that promote high occupancy rates and permit increases in rental rates, while reducing tenant turnover and controlling operating expenses. We believe that our revenue, together with proceeds from building sales and debtequity and equitydebt financings, will continue to provide funds for our short-term and medium-term liquidity needs.
Our short-term liquidity requirements consist primarily of funds necessary to pay for operating expenses and other expenditures directly associated with our buildings, including interest expense, interest rate swap payments, scheduled principal payments on outstanding indebtedness, funding of property acquisitions under contract, general and administrative expenses, and capital expenditures forincluding development projects, tenant improvements and leasing commissions.
Our long-term liquidity needs, in addition to recurring short-term liquidity needs as discussed above, consist primarily of funds necessary to pay for property acquisitions non-recurring capital expenditures, and scheduled debt maturities. We intend to satisfy our long-term liquidity needs through cash flow from operations, the issuance of equity or debt securities, other borrowings, property dispositions, or, in connection with acquisitions of certain additional buildings, the issuance of common units in theour Operating Partnership.
As of December 31, 2017,2022, we had total immediate liquidity of approximately $347.7$847.3 million, comprised of $24.6$25.9 million of cash and cash equivalents and $323.1$821.4 million of immediate availability on our unsecured credit facility and unsecured term loans.facility.
In addition, we require funds for futureto pay dividends to be paid toholders of our common and preferred stockholdersstock and common unit holdersunits in our Operating Partnership. The table below sets forth theAny future dividends attributable to our common stock that were declared or paid during the year ended December 31, 2017. These distributions on our common stock are voluntary (atdeclared in the sole discretion of our board of directors),directors, subject to the extent in excess of distribution requirements in order to maintain our REIT status for federal income tax purposes, and the excess portion may be reduced or stopped if neededfor any reason, including to funduse funds for other liquidity requirements or for other reasons.requirements.
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| | | | | | | | | | |
| Month Ended 2017 | | Declaration Date | | Record Date | | Per Share | | Payment Date |
| December 31 | | July 31, 2017 | | December 29, 2017 | | $ | 0.117500 |
| | January 16, 2018 |
| November 30 | | July 31, 2017 | | November 30, 2017 | | 0.117500 |
| | December 15, 2017 |
| October 31 | | July 31, 2017 | | October 31, 2017 | | 0.117500 |
| | November 15, 2017 |
| September 30 | | May 1, 2017 | | September 29, 2017 | | 0.117500 |
| | October 16, 2017 |
| August 31 | | May 1, 2017 | | August 31, 2017 | | 0.117500 |
| | September 15, 2017 |
| July 31 | | May 1, 2017 | | July 31, 2017 | | 0.117500 |
| | August 15, 2017 |
| June 30 | | February 15, 2017 | | June 30, 2017 | | 0.116667 |
| | July 17, 2017 |
| May 31 | | February 15, 2017 | | May 31, 2017 | | 0.116667 |
| | June 15, 2017 |
| April 30 | | February 15, 2017 | | April 28, 2017 | | 0.116667 |
| | May 15, 2017 |
| March 31 | | November 2, 2016 | | March 31, 2017 | | 0.116667 |
| | April 17, 2017 |
| February 28 | | November 2, 2016 | | February 28, 2017 | | 0.116667 |
| | March 15, 2017 |
| January 31 | | November 2, 2016 | | January 31, 2017 | | 0.116667 |
| | February 15, 2017 |
| Total | | | | | | $ | 1.405002 |
| | |
On November 2, 2017, our board of directors declared the common stock dividend for the months ending January 31, 2018, February 28, 2018 and March 31, 2018 at a monthly rate2021, we redeemed all 3,000,000 issued and outstanding shares of $0.1183336.875% Series C Cumulative Redeemable Preferred Stock, par value $0.01 per share of common stock.
We pay quarterly cumulative dividends on the Series B Preferred Stock and the (“Series C Preferred Stock (collectively, the “Preferred Stock Issuances”Stock”), at a rate equivalent to the fixed annual ratecash redemption price of $1.65625 and $1.71875$25.00 per share, respectively. The table below sets forthplus accrued and unpaid dividends to, but excluding, the dividends on the Preferred Stock Issuances during the year ended December 31, 2017.redemption date.
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| | | | | | | | | | | | |
| Quarter Ended 2017 | | Declaration Date | | Series B
Preferred Stock Per Share | | Series C
Preferred Stock Per Share | | Payment Date |
| December 31 | | November 2, 2017 | | $ | 0.4140625 |
| | $ | 0.4296875 |
| | December 29, 2017 |
| September 30 | | July 31, 2017 | | 0.4140625 |
| | 0.4296875 |
| | September 29, 2017 |
| June 30 | | May 1, 2017 | | 0.4140625 |
| | 0.4296875 |
| | June 30, 2017 |
| March 31 | | February 15, 2017 | | 0.4140625 |
| | 0.4296875 |
| | March 31, 2017 |
| Total | | | | $ | 1.6562500 |
| | $ | 1.7187500 |
| | |
On February 14, 2018, our board of directors declared the Series B Preferred Stock and Series C Preferred Stock dividend for the quarter ending March 31, 2018 at a quarterly rate of $0.4140625 per share and $0.4296875 per share, respectively.
Indebtedness Outstanding
The following table sets forthsummarizes certain information with respect to theour indebtedness outstanding as of December 31, 2017.2022.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Loan | | Principal Outstanding as of December 31, 2022 (in thousands) | | | | Interest
Rate(1)(2) | | Maturity Date | | Prepayment Terms(3) |
| Unsecured credit facility: | | | | | | | | | | |
Unsecured Credit Facility(4) | | $ | 175,000 | | | | | Term SOFR + 0.855% | | October 23, 2026 | | i |
| Total unsecured credit facility | | 175,000 | | | | | | | | | |
| | | | | | | | | | |
| Unsecured term loans: | | | | | | | | | | |
| Unsecured Term Loan F | | 200,000 | | | | | 2.94 | % | | January 12, 2025 | | i |
| Unsecured Term Loan G | | 300,000 | | | | | 1.09 | % | | February 5, 2026 | | i |
| Unsecured Term Loan A | | 150,000 | | | | | 2.14 | % | | March 15, 2027 | | i |
| Unsecured Term Loan H | | 187,500 | | | | | 3.75 | % | | January 25, 2028 | | i |
| Unsecured Term Loan I | | 187,500 | | | | | 2.89 | % | | January 25, 2028 | | i |
| Total unsecured term loans | | 1,025,000 | | | | | | | | | |
| Total unamortized deferred financing fees and debt issuance costs | | (4,560) | | | | | | | | | |
| Total carrying value unsecured term loans, net | | 1,020,440 | | | | | | | | | |
| | | | | | | | | | |
| Unsecured notes: | | | | | | | | | | |
Series F Unsecured Notes(5) | | 100,000 | | | | | 3.98 | % | | January 5, 2023 | | ii |
| Series A Unsecured Notes | | 50,000 | | | | | 4.98 | % | | October 1, 2024 | | ii |
| Series D Unsecured Notes | | 100,000 | | | | | 4.32 | % | | February 20, 2025 | | ii |
| Series G Unsecured Notes | | 75,000 | | | | | 4.10 | % | | June 13, 2025 | | ii |
| Series B Unsecured Notes | | 50,000 | | | | | 4.98 | % | | July 1, 2026 | | ii |
| Series C Unsecured Notes | | 80,000 | | | | | 4.42 | % | | December 30, 2026 | | ii |
| Series E Unsecured Notes | | 20,000 | | | | | 4.42 | % | | February 20, 2027 | | ii |
| Series H Unsecured Notes | | 100,000 | | | | | 4.27 | % | | June 13, 2028 | | ii |
| Series I Unsecured Notes | | 275,000 | | | | | 2.80 | % | | September 29, 2031 | | ii |
| Series K Unsecured Notes | | 400,000 | | | | | 4.12 | % | | June 28, 2032 | | ii |
| Series J Unsecured Notes | | 50,000 | | | | | 2.95 | % | | September 28, 2033 | | ii |
| Total unsecured notes | | 1,300,000 | | | | | | | | | |
| Total unamortized deferred financing fees and debt issuance costs | | (4,558) | | | | | | | | | |
| Total carrying value unsecured notes, net | | 1,295,442 | | | | | | | | | |
| | | | | | | | | | |
| Mortgage notes (secured debt): | | | | | | | | | | |
| Thrivent Financial for Lutherans | | 3,296 | | | | | 4.78 | % | | December 15, 2023 | | iii |
| United of Omaha Life Insurance Company | | 4,744 | | | | | 3.71 | % | | October 1, 2039 | | ii |
| Total mortgage notes | | 8,040 | | | | | | | | | |
| Net unamortized fair market value discount | | (137) | | | | | | | | | |
| Total unamortized deferred financing fees and debt issuance costs | | (5) | | | | | | | | | |
| Total carrying value mortgage notes, net | | 7,898 | | | | | | | | | |
Total / weighted average interest rate(6) | | $ | 2,498,780 | | | | | 3.39 | % | | | | |
(1)Interest rate as of December 31, 2022. At December 31, 2022, the one-month Term Term SOFR was 4.35806%. The current interest rate is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums or discounts. The spread over the applicable rate for our unsecured credit facility and unsecured term loans is based on our debt rating and leverage ratio, as defined in the respective loan agreements.
(2)Our unsecured credit facility has a stated rate of one-month Term SOFR plus a 0.10% adjustment and a spread of 0.775%, less a sustainability-related interest rate adjustment of 0.02%. The unsecured term loans A, F, and G have a stated interest rate of one-month Term SOFR plus a 0.10% adjustment and a spread of 0.85%, less a sustainability-related interest rate adjustment of 0.02%. The unsecured term loans H and I have a stated interest rate of one-month Term SOFR plus a 0.10% adjustment and a spread of 0.85%. As of December 31, 2022, one-month Term SOFR for the Unsecured Term Loans A, F, G, H, and I was swapped to a fixed rate of 1.31%, 2.11%, 0.26%, 2.90%, and 2.04%, respectively (which includes the 0.10% adjustment). One-month Term SOFR for the Unsecured Term Loan G will be swapped to a fixed rate of 0.95% effective April 18, 2023. One-month Term SOFR for the Unsecured Term Loan I will be swapped to a fixed rate of 2.66% effective January 4, 2023. One-month Term SOFR for the Unsecured Term Loan H will be swapped to a fixed rate of 2.50% effective January 12, 2024.
(3)Prepayment terms consist of (i) pre-payable with no penalty; (ii) pre-payable with penalty; (iii) pre-payable without penalty three months prior to the maturity date.
(4)The capacity of our unsecured credit facility is $1.0 billion. The initial maturity date is October 24, 2025, or such later date which may be extended pursuant to two six-month extension options exercisable by us in our discretion upon advance written notice. Exercise of each six-month option is subject to the following conditions: (i) absence of a default immediately before the extension and immediately after giving effect to the extension, (ii) accuracy of representations and warranties as of the extension date (both immediately before and after the extension), as if made on the extension date, and (iii) payment of a fee. Neither extension option is subject to lender consent, assuming proper notice and satisfaction of the conditions. We are required to pay a
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| | | | | | | | | | | |
| Loan | | Principal Outstanding as of December 31, 2017 (in thousands) | | Interest
Rate (1) | | Maturity Date | | Prepayment Terms (2) |
| Unsecured credit facility: | | | | | | | | |
Unsecured Credit Facility (3) | | $ | 271,000 |
| | L + 1.15% |
| | Dec-18-2019 | | i |
| Total unsecured credit facility | | 271,000 |
| | |
| | | | |
| | | | | | | | | |
| Unsecured term loans: | | |
| | |
| | | | |
| Unsecured Term Loan C | | 150,000 |
| | L + 1.30% |
| | Sep-29-2020 | | i |
| Unsecured Term Loan B | | 150,000 |
| | L + 1.30% |
| | Mar-21-2021 | | i |
| Unsecured Term Loan A | | 150,000 |
| | L + 1.30% |
| | Mar-31-2022 | | i |
Unsecured Term Loan D (4) | | — |
| | L + 1.30% |
| | Jan-04-2023 | | i |
| Total unsecured term loans | | 450,000 |
| | | | | | |
| Less: Total unamortized deferred financing fees and debt issuance costs | | (3,735 | ) | | | | | | |
| Total carrying value unsecured term loans, net | | 446,265 |
| | |
| | | | |
| | | | | | | | | |
| Unsecured notes: | | |
| | |
| | | | |
| Series F Unsecured Notes | | 100,000 |
| | 3.98 | % | | Jan-05-2023 | | ii |
| Series A Unsecured Notes | | 50,000 |
| | 4.98 | % | | Oct-1-2024 | | ii |
| Series D Unsecured Notes | | 100,000 |
| | 4.32 | % | | Feb-20-2025 | | ii |
| Series B Unsecured Notes | | 50,000 |
| | 4.98 | % | | Jul-1-2026 | | ii |
| Series C Unsecured Notes | | 80,000 |
| | 4.42 | % | | Dec-30-2026 | | ii |
| Series E Unsecured Notes | | 20,000 |
| | 4.42 | % | | Feb-20-2027 | | ii |
| Total unsecured notes | | 400,000 |
| | | | | | |
| Less: Total unamortized deferred financing fees and debt issuance costs | | (1,766 | ) | | | | | | |
| Total carrying value unsecured notes, net | | 398,234 |
| | |
| | | | |
| | | | | | | | | |
| Mortgage notes (secured debt): | | |
| | |
| | | | |
| Wells Fargo Bank, National Association CMBS Loan | | 54,949 |
| | 4.31 | % | | Dec-1-2022 | | iii |
| Thrivent Financial for Lutherans | | 3,906 |
| | 4.78 | % | | Dec-15-2023 | | iv |
| Total mortgage notes | | 58,855 |
| | |
| | | | |
| Total unamortized fair market value premiums | | 61 |
| | |
| | | | |
Less: Total unamortized deferred financing fees and debt issuance costs | | (634 | ) | | | | | | |
| Total carrying value mortgage notes, net | | 58,282 |
| | |
| | | | |
Total / weighted average interest rate (5) | | $ | 1,173,781 |
| | 3.53 | % | | | | |
(5)Subsequent to December 31, 2022, on January 5, 2023, the Series F Unsecured Notes were repaid in full. See below for additional details.
(6)The weighted average interest rate was calculated using the fixed interest rate swapped on the notional amount of $1,025.0 million of debt, and is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums or discounts.
On October 3, 2022, we achieved a 2022 public disclosure assessment score of “A” from the Global Real Estate Sustainability Benchmark (GRESB). The improved score triggered a sustainability-related interest rate adjustment for our unsecured credit facility and the Unsecured Term Loan A, the Unsecured Term Loan F, and the Unsecured Term Loan G. The 0.02% interest rate reduction for each instrument became effective on October 17, 2022 and will end on June 29, 2024, in accordance with the respective loan agreements.
The following table summarizes our debt capital structure as of December 31, 2022.
| | | | | | | | | | |
(1)Debt Capital Structure | Interest rate as of | December 31, 2017. At December 31, 2017, the one-month LIBOR (“L”) was 1.56425%. The interest rate is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums. The spread over the applicable rate for our unsecured credit facility and unsecured term loans is based on our consolidated leverage ratio, as defined in the respective loan agreements.2022 |
| |
(2)Total principal outstanding (in thousands) | Prepayment terms consist of (i) pre-payable with no penalty; (ii) pre-payable with penalty; (iii) pre-payable without penalty three months prior to the maturity date, however can be defeased beginning January 1, 2016; and (iv) pre-payable without penalty three months prior to the maturity date. |
| $ | 2,508,040 | | | |
(3)Weighted average duration (years) | The capacity of the unsecured credit facility is $450.0 million. |
| 5.2 | | | |
(4) | Capacity of $150.0 million, which we have until July 27, 2018 to draw. |
| | |
(5)% Secured debt | The weighted average interest rate was calculated using the fixed interest rate swapped on the current notional amount of $600.0 million of debt, and is not adjusted | 0.3 | % | | |
| % Debt maturing next 12 months | | 4.1 | % | | |
Net Debt to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums.Real Estate Cost Basis(1) | | 36.0 | % | | |
(1)“Net Debt” means amounts outstanding under our unsecured credit facility, unsecured term loans, unsecured notes, and mortgage notes, less cash and cash equivalents. “Real Estate Cost Basis” means the book value of rental property and deferred leasing intangibles, exclusive of the related accumulated depreciation and amortization.
We regularly pursue new financing opportunities to ensure an appropriate balance sheet position. As a result of these dedicated efforts, we are confident in our ability to meet future debt maturities and fund acquisitions. We believe that our current balance sheet is in an adequate position at the date of this filing, despite possible volatility in the credit markets.
Our interest rate exposure on our floating rate debt is managed through the use of interest rate swaps, which fix the rate of our long term floating rate debt. For a detailed discussion on our use of interest rate swaps, see “Interest Rate Risk” below.
Unsecured Credit Facility
On July 26, 2022, we entered into an amended and restated credit agreement for our unsecured credit facility (the “July 2022 Credit Agreement”), which provided for an increase in the aggregate commitments available for borrowing under our unsecured credit facility from $750.0 million to up to $1.0 billion. The July 2022 Credit Agreement also provided for the replacement of one-month LIBOR for one-month Term SOFR, plus a 0.10% adjustment. Other than the increase in the borrowing commitments and the interest rate provisions described above, the material terms of our unsecured credit facility remain unchanged.
The aggregate undrawn nominal commitments on theour unsecured credit facility and unsecured term loans as of December 31, 20172022 was approximately $323.1$821.4 million, including issued letters of credit. Our actual borrowing capacity at any given point in time may be less and is restricted to a maximum amount based on our debt covenant compliance.
TheUnsecured Term Loans
On September 1, 2022, we entered into separate amended and restated term loan agreements for the Unsecured Term Loan A, the Unsecured Term Loan F, and the Unsecured Term Loan G (the “Amended and Restated Unsecured Term Loans”), to provide that borrowings under the Amended and Restated Unsecured Term Loans bear a current annual interest rate of one-month Term SOFR, plus an adjustment of 0.10% and a spread of 0.85%, based on our debt rating and leverage ratio (as defined in the applicable loan agreement). Other than the interest rate provisions described above, the material terms of the Amended and Restated Unsecured Term Loans, including the maturity dates, remain unchanged.
On July 26, 2022, we entered into (i) a term loan agreement with Wells Fargo Bank, National Association and the other lenders party thereto, providing for a new senior unsecured term loan in the original principal amount of $187.5 million (“Unsecured Term Loan H”), and (ii) a term loan agreement with Bank of America, N.A. and the other lenders party thereto, providing for a new senior unsecured term loan in the original principal amount of $187.5 million (“Unsecured Term Loan I”). Each of the Unsecured Term Loan H and the Unsecured Term Loan I bears a current annual interest rate of one-month Term SOFR, plus a 0.10% adjustment and a spread of 0.85% based on our debt rating and leverage ratio (as defined in the applicable loan
agreement), and matures on January 25, 2028. We used a portion of the borrowings under the new unsecured term loans to repay in full the $150.0 million Unsecured Term Loan D and the $175.0 million Unsecured Term Loan E.
Unsecured Notes
Subsequent to December 31, 2022, on January 5, 2023, we redeemed in full at maturity the $100.0 million in aggregate principal amount of the Series F Unsecured Notes with a fixed interest rate of 3.98%.
On April 28, 2022, we entered into a note purchase agreement (the “April 2022 NPA”) for the private placement by our Operating Partnership of $400.0 million senior unsecured notes (the “Series K Unsecured Notes”) maturing June 28, 2032, with a fixed annual interest rate of 4.12%. The April 2022 NPA contains a number of financial covenants substantially similar to the financial covenants contained in our unsecured credit facility and other unsecured notes, plus a financial covenant that requires us to maintain a minimum interest coverage ratio of not less than 1.50:1.00. Our Operating Partnership issued the Series K Unsecured Notes on June 28, 2022. The Company and certain wholly owned subsidiaries of our Operating Partnership are guarantors of the Series K Unsecured Notes.
Mortgage Notes
On September 1, 2022, we repaid in full the mortgage note associated with the Wells Fargo Bank, National Association CMBS loan agreement is a commercial mortgage backed security that provides for a secured loan. There are 24 properties that are collateral for the CMBS loan. Wells Fargo, National Association had the right to securitize any portion or the entire CMBS loan in a single asset securitization or a pooled loan securitization, which it completed on December 19, 2012. The Operating Partnership guarantees the obligations under the CMBS loan.Loan.
The chart below details our debt capital structure as of December 31, 2017.
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| | | | |
| Debt Capital Structure | | December 31, 2017 |
| Total principal outstanding (in thousands) | | $ | 1,179,855 |
|
| Weighted average duration (years) | | 4.4 |
|
| % Secured debt | | 5 | % |
| % Debt maturing next 12 months | | — | % |
Net Debt to Real Estate Cost Basis (1) | | 37 | % |
| |
(1) | We define Net Debt as our amounts outstanding under our unsecured credit facility, unsecured term loans, unsecured notes, and mortgage notes, less cash and cash equivalents. We define Real Estate Cost Basis as the book value of rental property and deferred leasing intangibles, exclusive of the related accumulated depreciation and amortization.
|
We regularly pursue new financing opportunities to ensure an appropriate balance sheet position. As a result of these dedicated efforts, we are confident in our ability to meet future debt maturities and building acquisition funding needs. We believe that our current balance sheet is in an adequate position at the date of this filing, despite possible volatility in the credit markets.
Our interest rate exposure as it relates to interest expense payments on our floating rate debt is managed through our use of interest rate swaps, which fix the rate of our long term floating rate debt. For a detailed discussion on our use of interest rate swaps, see “Interest Rate Risk” below.
Unsecured Credit Facility, Unsecured Term LoansIndebtedness – Financial Covenants and Unsecured NotesOther Terms
The unsecured credit facility provides for a facility fee payable by us to the lenders at a rate per annum of 0.2%0.1% to 0.35%0.3%, depending on our leverage levels,debt rating, as defined in the credit agreement, of the aggregate commitments (currently $450.0 million)$1.0 billion). The facility fee is due and payable quarterly.
Financial Covenants: Our ability to borrow, maintain borrowings and avoid default under theour unsecured credit facility, the unsecured term loans, and unsecured notes is subject to our ongoing compliance with a number of financial covenants, including:
•a maximum consolidated leverage ratio of not greater than 0.60:1.00;
•a maximum secured leverage ratio of not greater than 0.40:1.00;
•a maximum unencumbered leverage ratio of not greater than 0.60:1.00;
a maximum secured recourse debt level of not greater than 0.075:1.00;
•a minimum fixed charge ratio of not less than or equal to 1.50:1.00;
•a minimum unsecured interest coverage ratio of not less than or equal to 1.75:1.00; and
a minimum tangible net worth covenant test.
The respective note purchase agreements additionally contain a financial covenant that requires us•with respect to maintainour unsecured notes, a minimum interest coverage ratio of not less than 1.50:1.00.
As of December 31, 2022, we were in compliance with the applicable financial covenants.
Pursuant to the terms of our unsecured debt agreements, we may not pay distributions that exceed the minimum amount required for us to qualify and maintain our status as a REIT if a default or event of default occurs and is continuing.
Our
Pursuant to the terms of our unsecured credit facility, unsecured term loans, unsecured notes,loan agreements, if a default or event of default occurs and mortgage notes are subjectis continuing, we may not pay distributions that exceed the minimum amount required for us to ongoing compliance withqualify and maintain our status as a number of financial and other covenants. As of December 31, 2017, we were in compliance with the applicable financial covenants.REIT.
Events of Default: Our unsecured credit facility and unsecured term loans contain customary events of default, including, but not limited to, non-payment of principal, interest, fees or other amounts, defaults in the compliance with the financial and other covenants contained in the documents evidencing the unsecured credit facility and the unsecured term loans,applicable loan agreement, cross-defaults to other material debt, and bankruptcy or other insolvency events.
Borrower and Guarantors: The Our Operating Partnership is the borrower under theour unsecured credit facility theand unsecured term loans and is the issuer of the unsecured notes. STAG Industrial, Inc.The Company and certain of its subsidiaries guarantee the obligations under our unsecured loan agreements.
Supplemental Guarantor Information
We have filed a registration statement with the SEC allowing us to offer, from time to time, an indefinite amount of equity and debt agreements.securities on an as-needed basis, including debt securities of our Operating Partnership that are guaranteed by the
Contractual ObligationsCompany. Any such guarantees issued by the Company will be full, irrevocable, unconditional, and absolute joint and several guarantees to the holders of each series of such outstanding guaranteed debt securities. Pursuant to Rule 3-10 of Regulation S-X, subsidiary issuers of obligations guaranteed by the parent are not required to provide separate financial statements, provided that the subsidiary obligor is consolidated into the parent company’s consolidated financial statements, the parent guarantee is “full and unconditional” and, subject to certain exceptions as set forth below, the alternative disclosure required by Rule 13-01 of Regulation S-X is provided, which includes narrative disclosure and summarized financial information. Accordingly, we have not presented separate consolidated financial statements of our Operating Partnership. Furthermore, as permitted under Rule 13-01(a)(4)(vi) of Regulation S-X, we have not presented summarized financial information for our Operating Partnership because the assets, liabilities, and results of operations of our Operating Partnership are not materially different than the corresponding amounts in the Company’s consolidated financial statements, and we believe the inclusion of such summarized financial information would be repetitive and would not provide incremental value to investors.
Equity
Preferred Stock
We are authorized to issue up to 20,000,000 shares of preferred stock, par value $0.01 per share. As of December 31, 2022 and December 31, 2021, there were no shares of preferred stock issued or outstanding.
Common Stock
We are authorized to issue up to 300,000,000 shares of common stock, par value $0.01 per share.
The following table reflectssummarizes our contractual obligationsATM common stock offering program as of December 31, 2017, specifically2022. Pursuant to the equity distribution agreements for our obligationsATM common stock offering program, we may from time to time sell common stock through sales agents and their affiliates, including shares sold on a forward basis under long‑termforward sale agreements. There was no activity under the ATM common stock offering program during the three months ended December 31, 2022.
| | | | | | | | | | | | | | | | | | | | |
| ATM Common Stock Offering Program | | Date | | Maximum Aggregate Offering Price (in thousands) | | Aggregate Common Stock Available as of December 31, 2022 (in thousands) |
| 2022 $750 million ATM | | February 17, 2022 | | $ | 750,000 | | | $ | 750,000 | |
In connection with our underwritten public offering that closed in November 2021, on December 3, 2021, we executed a forward sale agreement for the sale of an additional 1,200,000 shares of common stock on a forward basis at a price of $41.87 per share. We did not initially receive any proceeds from the sale of shares on a forward basis. On March 29, 2022, we physically settled in full the forward sales agreement by issuing 1,200,000 shares of common stock for net proceeds of approximately $49.7 million, or $41.39 per share.
Noncontrolling Interests
We own all of our properties and conduct substantially all of our business through our Operating Partnership. We are the sole member of the sole general partner of our Operating Partnership. As of December 31, 2022, we owned approximately 97.9% of the common units in our Operating Partnership, and our current and former executive officers, directors, senior employees and their affiliates, and third parties that contributed properties to us in exchange for common units owned the remaining 2.1%.
Interest Rate Risk
We use interest rate swaps to fix the rate of our variable rate debt. As of December 31, 2022, all of our outstanding variable rate debt, with the exception of our unsecured credit facility, was fixed with interest rate swaps through maturity.
We recognize all derivatives on the balance sheet at fair value. If the derivative is designated as a hedge, depending on the nature of the hedge, changes in the fair value of derivatives are either offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income (loss), which is a component of equity. Derivatives that are not designated as hedges must be adjusted to fair value and the changes in fair value must be reflected as income or expense.
We have established criteria for suitable counterparties in relation to various specific types of risk. We only use counterparties that have a credit rating of no lower than investment grade at swap inception from Moody’s Investor Services, Standard & Poor’s, Fitch Ratings, or other nationally recognized rating agencies.
The following table summarizes our outstanding interest rate swaps as of December 31, 2022.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest Rate Derivative Counterparty | | Trade Date | | Effective Date | | Notional Amount
(in thousands) | | Fair Value
(in thousands) | | Pay Fixed Interest Rate | | Receive Variable Interest Rate | | Maturity Date |
| The Toronto-Dominion Bank | | Jul-20-2017 | | Jul-28-2022 | | $ | 25,000 | | | $ | 5 | | | 1.8830 | % | | One-month Term SOFR | | Jan-04-2023 |
| Royal Bank of Canada | | Jul-20-2017 | | Jul-28-2022 | | $ | 25,000 | | | $ | 5 | | | 1.8980 | % | | One-month Term SOFR | | Jan-04-2023 |
| Wells Fargo Bank, N.A. | | Jul-20-2017 | | Jul-28-2022 | | $ | 25,000 | | | $ | 5 | | | 1.8750 | % | | One-month Term SOFR | | Jan-04-2023 |
| PNC Bank, N.A. | | Jul-20-2017 | | Jul-28-2022 | | $ | 25,000 | | | $ | 5 | | | 1.8860 | % | | One-month Term SOFR | | Jan-04-2023 |
| PNC Bank, N.A. | | Jul-20-2017 | | Jul-28-2022 | | $ | 50,000 | | | $ | 10 | | | 1.8850 | % | | One-month Term SOFR | | Jan-04-2023 |
| The Toronto-Dominion Bank | | Apr-20-2020 | | Aug-10-2022 | | $ | 75,000 | | | $ | 981 | | | 0.2660 | % | | One-month Term SOFR | | Apr-18-2023 |
| Wells Fargo Bank, N.A. | | Apr-20-2020 | | Aug-10-2022 | | $ | 75,000 | | | $ | 984 | | | 0.2520 | % | | One-month Term SOFR | | Apr-18-2023 |
| The Toronto-Dominion Bank | | Apr-20-2020 | | Aug-10-2022 | | $ | 75,000 | | | $ | 981 | | | 0.2660 | % | | One-month Term SOFR | | Apr-18-2023 |
| Wells Fargo Bank, N.A. | | Apr-20-2020 | | Aug-10-2022 | | $ | 75,000 | | | $ | 984 | | | 0.2520 | % | | One-month Term SOFR | | Apr-18-2023 |
| Bank of Montreal | | Jul-24-2018 | | Jul-26-2022 | | $ | 50,000 | | | $ | 999 | | | 2.9160 | % | | One-month Term SOFR | | Jan-12-2024 |
| The Toronto-Dominion Bank | | Jul-24-2018 | | Jul-26-2022 | | $ | 50,000 | | | $ | 1,003 | | | 2.9080 | % | | One-month Term SOFR | | Jan-12-2024 |
| PNC Bank, N.A. | | Jul-24-2018 | | Jul-26-2022 | | $ | 50,000 | | | $ | 997 | | | 2.9190 | % | | One-month Term SOFR | | Jan-12-2024 |
| U.S. Bank, N.A. | | Jul-24-2018 | | Jul-26-2022 | | $ | 25,000 | | | $ | 500 | | | 2.9120 | % | | One-month Term SOFR | | Jan-12-2024 |
| Wells Fargo Bank, N.A. | | May-02-2019 | | Aug-15-2022 | | $ | 50,000 | | | $ | 2,179 | | | 2.2360 | % | | One-month Term SOFR | | Jan-15-2025 |
| U.S. Bank, N.A. | | May-02-2019 | | Aug-15-2022 | | $ | 50,000 | | | $ | 2,182 | | | 2.2380 | % | | One-month Term SOFR | | Jan-15-2025 |
| Regions Bank | | May-02-2019 | | Aug-15-2022 | | $ | 50,000 | | | $ | 2,177 | | | 2.2389 | % | | One-month Term SOFR | | Jan-15-2025 |
| Bank of Montreal | | Jul-16-2019 | | Aug-15-2022 | | $ | 50,000 | | | $ | 2,700 | | | 1.7100 | % | | One-month Term SOFR | | Jan-15-2025 |
| U.S. Bank, N.A. | | Feb-17-2021 | | Apr-18-2023 | | $ | 150,000 | | | $ | 12,024 | | | 0.9520 | % | | One-month Term SOFR | | Feb-5-2026 |
| Wells Fargo Bank, N.A. | | Feb-17-2021 | | Apr-18-2023 | | $ | 75,000 | | | $ | 6,003 | | | 0.9460 | % | | One-month Term SOFR | | Feb-5-2026 |
| The Toronto-Dominion Bank | | Feb-17-2021 | | Apr-18-2023 | | $ | 75,000 | | | $ | 6,050 | | | 0.9355 | % | | One-month Term SOFR | | Feb-5-2026 |
| Regions Bank | | Oct-26-2021 | | Aug-01-2022 | | $ | 50,000 | | | $ | 4,953 | | | 1.3090 | % | | One-month Term SOFR | | Mar-15-2027 |
| Bank of Montreal | | Oct-26-2021 | | Aug-01-2022 | | $ | 50,000 | | | $ | 4,976 | | | 1.3090 | % | | One-month Term SOFR | | Mar-15-2027 |
| PNC Bank, N.A. | | Oct-26-2021 | | Aug-01-2022 | | $ | 50,000 | | | $ | 4,952 | | | 1.3150 | % | | One-month Term SOFR | | Mar-15-2027 |
| PNC Bank, N.A. | | Jul-27-2022 | | Jan-04-2023 | | $ | 50,000 | | | $ | 2,623 | | | 2.6420 | % | | One-month Term SOFR | | Jan-25-2028 |
| The Toronto-Dominion Bank | | Jul-27-2022 | | Jan-04-2023 | | $ | 50,000 | | | $ | 2,614 | | | 2.6530 | % | | One-month Term SOFR | | Jan-25-2028 |
| Regions Bank | | Jul-27-2022 | | Jan-04-2023 | | $ | 50,000 | | | $ | 2,583 | | | 2.6550 | % | | One-month Term SOFR | | Jan-25-2028 |
| U.S. Bank, N.A. | | Jul-27-2022 | | Jan-12-2024 | | $ | 75,000 | | | $ | 2,668 | | | 2.4865 | % | | One-month Term SOFR | | Jan-25-2028 |
| The Toronto-Dominion Bank | | Jul-27-2022 | | Jan-12-2024 | | $ | 50,000 | | | $ | 1,778 | | | 2.4910 | % | | One-month Term SOFR | | Jan-25-2028 |
| Wells Fargo Bank, N.A. | | Jul-27-2022 | | Jan-12-2024 | | $ | 50,000 | | | $ | 1,756 | | | 2.4930 | % | | One-month Term SOFR | | Jan-25-2028 |
| PNC Bank, N.A. | | Jul-27-2022 | | Jul-27-2022 | | $ | 50,000 | | | $ | 2,546 | | | 2.6790 | % | | One-month Term SOFR | | Jan-25-2028 |
The swaps outlined in the above table were all designated as cash flow hedges of interest rate risk, and all are valued as Level 2 financial instruments. Level 2 financial instruments are defined as significant other observable inputs. As of December 31, 2022, the fair value of all 30 of our interest rate swaps were in an asset position of approximately $72.2 million, including any adjustment for nonperformance risk related to these agreements.
As of December 31, 2022, we had $1.2 billion of variable rate debt. As of December 31, 2022, all of our outstanding variable rate debt, with the exception of our unsecured credit facility, was fixed with interest rate swaps through maturity. To the extent interest rates increase, interest costs on our floating rate debt not fixed with interest rate swaps will increase, which could adversely affect our cash flow and our ability to pay principal and interest on our debt and our ability to make distributions to our security holders. From time to time, we may enter into interest rate swap agreements and ground lease agreements.other interest rate hedging contracts, including swaps, caps and floors. In addition, an increase in interest rates could decrease the amounts third parties are willing to pay for our assets, thereby limiting our ability to change our portfolio promptly in response to changes in economic or other conditions.
Off-balance Sheet Arrangements
As of December 31, 2022, we had letters of credit related to development projects and certain other agreements of approximately $3.6 million. As of December 31, 2022, we had no other material off-balance sheet arrangements.
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| | | | | | | | | | | | | | | | | | | | |
| | | Payments by Period |
Contractual Obligations (in thousands)(1)(2) | | Total | | 2018 | | 2019-2020 | | 2021-2022 | | Thereafter |
Principal payments(3) | | $ | 1,179,855 |
| | $ | 1,844 |
| | $ | 424,932 |
| | $ | 349,784 |
| | $ | 403,295 |
|
Interest payments—Fixed rate debt(4) | | 140,517 |
| | 20,251 |
| | 40,256 |
| | 39,720 |
| | 40,290 |
|
Interest payments —Variable rate debt(4)(5) | | 65,175 |
| | 21,351 |
| | 34,947 |
| | 8,873 |
| | 4 |
|
Property lease(4) | | 3,881 |
| | 1,165 |
| | 2,413 |
| | 303 |
| | — |
|
Ground leases(4) | | 35,521 |
| | 797 |
| | 1,602 |
| | 1,634 |
| | 31,488 |
|
| Total | | $ | 1,424,949 |
| | $ | 45,408 |
| | $ | 504,150 |
| | $ | 400,314 |
| | $ | 475,077 |
|
Item 7A. Quantitativeand Qualitative Disclosures about Market Risk
Our future income, cash flows and fair values relevant to financial instruments are dependent upon prevailing market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. The primary market risk we are exposed to is interest rate risk. We have used derivative financial instruments to manage, or hedge, interest rate risks related to our borrowings, primarily through interest rate swaps.
As of December 31, 2022, we had $1.2 billion of variable rate debt outstanding. As of December 31, 2022, all of our outstanding variable rate debt, with the exception of our unsecured credit facility which had a balance of $175.0 million, was fixed with interest rate swaps through maturity. To the extent we undertake additional variable rate indebtedness, if interest rates increase, then so will the interest costs on our unhedged variable rate debt, which could adversely affect our cash flow and our ability to pay principal and interest on our debt and our ability to make distributions to our security holders. Further, rising interest rates could limit our ability to refinance existing debt when it matures or significantly increase our future interest expense. From time to time, we enter into interest rate swap agreements and other interest rate hedging contracts, including swaps, caps and floors. While these agreements are intended to lessen the impact of rising interest rates on us, they also expose us to the risk that the other parties to the agreements will not perform, we could incur significant costs associated with the settlement of the agreements, the agreements will be unenforceable and the underlying transactions will fail to qualify as highly-effective cash flow hedges under GAAP. In addition, an increase in interest rates could decrease the amounts third parties are willing to pay for our assets, thereby limiting our ability to change our portfolio promptly in response to changes in economic or other conditions. In addition, an increase in interest rates could decrease the amounts third parties are willing to pay for our assets, thereby limiting our ability to change our portfolio promptly in response to changes in economic or other conditions. If interest rates increased by 100 basispoints and assuming we had an outstanding balance of $175.0 million on our unsecured credit facility for the year ended December 31, 2022, our interest expense would have increased by approximately $1.8 million for the year ended December 31, 2022.
Item 8. Financial Statementsand Supplementary Data
The required response under this Item 8, “Financial Statements and Supplementary Data” is submitted in a separate section of this report. See Index to Consolidated Financial Statements on page F-1.
Item 9. Changes in and Disagreementswith Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As required by SEC Rule 13a-15(b), we have evaluated, under the supervision of and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of December 31, 2022. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures for the periods covered by this report were effective to provide reasonable assurance that information required to be disclosed by the Company in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control—Integrated Framework (2013), our management concluded that our internal control over financial reporting was effective as of December 31, 2022.
The effectiveness of our internal control over financial reporting as of December 31, 2022 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which appears on page F-2 of this report.
Changes in Internal Controls
There was no change to our internal control over financial reporting during the fourth quarter ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
As of the quarter ended December 31, 2022, all items required to be disclosed in a Current Report on Form 8-K were reported under Form 8-K.
Entry Into a Material Definitive Agreement
Second Amended and Restated Agreement of Limited Partnership
On February 15, 2023, we entered into the Second Amended and Restated Agreement of Limited Partnership of our Operating Partnership, dated as of February 15, 2023 (the “Amended Operating Partnership Agreement”), which, among other things, (i) clarifies certain provisions related to the LTIP units in our Operating Partnership, and (ii) added partnership representative provisions. The foregoing description of the Amended Operating Partnership Agreement does not purport to be complete and is qualified in its entirety by reference to the Amended Operating Partnership Agreement, a copy of which has been filed as Exhibit 10.1 to this report and is incorporated in this Item 9B, “Other Information” by reference.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not Applicable.
PART III.
Item 10. Directors, Executive Officers and Corporate Governance
The information required by Item 10 will be included in the Proxy Statement to be filed relating to our 2023 Annual Meeting of Stockholders and is incorporated herein by reference.
Item 11. Executive Compensation
The information required by Item 11 will be included in the Proxy Statement to be filed relating to our 2023 Annual Meeting of Stockholders and is incorporated herein by reference.
Item 12. Security Ownershipof Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by Item 12 will be included in the Proxy Statement to be filed relating to our 2023 Annual Meeting of Stockholders and is incorporated herein by reference.
Item 13. Certain Relationshipsand Related Transactions, and Director Independence
The information required by Item 13 will be included in the Proxy Statement to be filed relating to our 2023 Annual Meeting of Stockholders and is incorporated herein by reference.
Item 14. Principal AccountantFees and Services
The information required by Item 14 will be included in the Proxy Statement to be filed relating to our 2023 Annual Meeting of Stockholders and is incorporated herein by reference.
PART IV.
Item 15. Exhibits and Financial Statement Schedules
1.Consolidated Financial Statements
The financial statements listed in the accompanying Index to Consolidated Financial Statements on page F-1 are filed as a part of this report.
2.Financial Statement Schedules
The financial statement schedules required by this Item are filed with this report and listed in the accompanying Index to Consolidated Financial Statements on page F-1. All other financial statement schedules are not applicable.
3.Exhibits
The following exhibits are filed as part of this report:
| | | | | | | | |
| Exhibit Number | | Description of Document |
| 3.1 | | | |
| 3.2 | | | |
| 4.1 | | | |
| 4.2 | | | |
| 10.1 | | | |
| 10.2 | | | |
| 10.3 | | | |
| 10.4 | | | |
| 10.5 | | | |
| 10.6 | | | |
| 10.7 | | | |
| 10.8 | | | |
| 10.9 | | | |
| 10.10 | | | |
| 10.11 | | | |
| 10.12 | | | |
| 10.13 | | | |
| 10.14 | | | |
| | | | | | | | |
| Exhibit Number | | Description of Document |
| 10.15 | | | |
| 10.16 | | | |
| 10.17 | | | |
| 10.18 | | | |
| 10.19 | | | |
| 10.20 | | | |
| 10.21 | | | |
| 10.22 | | | |
| 10.23 | | | |
| 10.24 | | | |
| 10.25 | | | |
| 10.26 | | | |
| 10.27 | | | |
| 10.28 | | | |
| 10.29 | | | |
| 10.30 | | | |
| 10.31 | | | |
| 10.32 | | | |
| 10.33 | | | |
| 21.1 | | | |
| 23.1 | | | |
| 24.1 | | | |
| 31.1 | | | |
| 31.2 | | | |
| 32.1 | | | |
| | | | | | | | |
| Exhibit Number | | Description of Document |
| 101 | | | The following materials from STAG Industrial, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2022 formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (vi) the Consolidated Statements of Equity, (v) the Consolidated Statements of Cash Flows, and (vi) related notes to these consolidated financial statements. |
| 104 | | | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). |
* Represents management contract or compensatory plan or arrangement.
Item 16. Form 10-K Summary
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | | | | | | | | | |
| STAG INDUSTRIAL, INC. |
| Dated: February 15, 2023 | | |
| | /s/ William R. Crooker | |
| By: | William R. Crooker President and Chief Executive Officer |
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and directors of STAG Industrial, Inc., hereby severally constitute William R. Crooker and Matts S. Pinard, and each of them singly, our true and lawful attorneys with full power to them, and each of them singly, to sign for us and in our names in the capacities indicated below, the Form 10-K filed herewith and any and all amendments to said Form 10-K, and generally to do all such things in our names and in our capacities as officers and directors to enable STAG Industrial, Inc. to comply with the provisions of the Securities Exchange Act of 1934, as amended, and all requirements of the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorneys, or any of them, to said Form 10-K and any and all amendments thereto.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and dates indicated.
| | | | | | | | |
| Date | Signature | Title |
| | |
| February 15, 2023 | /s/ William R. Crooker | President and Chief Executive Officer
(principal executive officer) |
| William R. Crooker |
| | |
| February 15, 2023 | /s/ Benjamin S. Butcher | Executive Chair |
| Benjamin S. Butcher |
| | |
| February 15, 2023 | /s/ Jit Kee Chin | Director |
| Jit Kee Chin |
| | |
| February 15, 2023 | /s/ Virgis W. Colbert | Director |
| Virgis W. Colbert |
| | |
| February 15, 2023 | /s/ Michelle S. Dilley | Director |
| Michelle S. Dilley |
| | |
| February 15, 2023 | /s/ Jeffrey D. Furber | Director |
| Jeffrey D. Furber |
| | |
| February 15, 2023 | /s/ Larry T. Guillemette | Director |
| Larry T. Guillemette |
| | |
| February 15, 2023 | /s/ Francis X. Jacoby III | Director |
| Francis X. Jacoby III |
| | |
| February 15, 2023 | /s/ Christopher P. Marr | Director |
| Christopher P. Marr |
| | |
| February 15, 2023 | /s/ Hans S. Weger | Director |
| Hans S. Weger |
| | |
| February 15, 2023 | /s/ Matts S. Pinard | Chief Financial Officer, Executive Vice President and Treasurer (principal financial officer) |
| Matts S. Pinard |
| | |
| February 15, 2023 | /s/ Jaclyn M. Paul | Chief Accounting Officer (principal accounting officer) |
| Jaclyn M. Paul |
STAG INDUSTRIAL, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
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(1) | From time to time in the normal course of our business, we enter into various contracts with third parties that may obligate us to make payments, such as maintenance agreements at our buildings. Such contracts, in the aggregate, do not represent material obligations, are typically short-term and cancellable within 90 days and are not included in the table above. |
| |
(3) | The total payments do not include unamortized deferred financing fees, debt issuance costs, or fair market value premiums associated with certain loans. |
| |
(4) | This is not included in our Consolidated Balance Sheets included in this report. |
| |
(5) | Amounts include interest rate payments on the $600.0 million current notional amount |
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| |
| |
Preferred Stock
Report of Independent Registered Public Accounting Firm
The table below sets forth our outstanding preferred stock issuances
To the Board of Directors and Stockholders of STAG Industrial, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of STAG Industrial, Inc. and its subsidiaries (the “Company”) as of December 31, 2017.2022 and 2021, and the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2022, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
|
| | | | | | | | | | | | |
| Preferred Stock Issuances | | Issuance Date | | Number of Shares | | Liquidation Value Per Share | | Interest Rate |
| 6.625% Series B Cumulative Redeemable Preferred Stock | | April 16, 2013 | | 2,800,000 |
| | $ | 25.00 |
| | 6.625 | % |
| 6.875% Series C Cumulative Redeemable Preferred Stock | | March 17, 2016 | | 3,000,000 |
| | $ | 25.00 |
| | 6.875 | % |
Basis for Opinions
The Preferred Stock Issuances rankCompany's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on parityInternal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with each otherthe Public Company Accounting Oversight Board (United States) (PCAOB) and rank seniorare required to our common stockbe independent with respect to dividend rightsthe Company in accordance with the U.S. federal securities laws and rights upon the liquidation, dissolution or winding upapplicable rules and regulations of the Company. The Preferred Stock IssuancesSecurities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have no stated maturity date anda material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are not subject to mandatory redemptionthe risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any sinking fund. Generally,way our opinion on the consolidated financial statements, taken as a whole, and we are not, permittedby communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to redeemwhich it relates.
Purchase Price Accounting
As described in Notes 2 and 3 to the consolidated financial statements, during 2022, the Company completed 26 property acquisitions for consideration of approximately $472.6 million, of which approximately $39.3 million of land, $382.4 million of buildings and improvements, $49.2 million of net leasing intangibles, and $1.7 million of net other assets and liabilities were recorded. Management allocates the purchase price of properties based upon the fair value of the assets acquired and liabilities assumed, which generally consist of land, buildings, tenant improvements, mortgage debt assumed, and deferred leasing intangibles, which includes in-place leases, above market and below market leases, and tenant relationships. The process for determining the allocation to these components requires estimates and assumptions, including rental rates, discount rates, exit capitalization rates, and land value per square foot.
The principal considerations for our determination that performing procedures relating to purchase price accounting is a critical audit matter are (i) there was significant judgment by management when developing the fair value measurement of the tangible and intangible assets acquired and liabilities assumed, which resulted in a high degree of auditor judgment and subjectivity in performing procedures relating to these estimates, (ii) significant audit effort was necessary in evaluating the significant assumptions, including rental rates, discount rates, exit capitalization rates, and land value per square foot, (iii) significant auditor judgment was necessary in evaluating audit evidence, and (iv) the audit effort included the involvement of professionals with specialized skill and knowledge to assist in evaluating the audit evidence obtained.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to purchase price accounting, including controls over the allocation of the purchase price to the assets acquired and liabilities assumed. These procedures also included, among others, testing management’s process for estimating the fair value of assets acquired and liabilities assumed by (i) reading the purchase agreements and (ii) evaluating the appropriateness of methods and, for a sample of acquisitions, the reasonableness of significant assumptions used by management in developing the fair value measurement including rental rates, discount rates, exit capitalization rates, and land value per square foot. Evaluating these assumptions involved evaluating whether the assumptions used were reasonable considering past performance of the tangible and intangible assets acquired and liabilities assumed, consistency with external market and industry data, and considering whether the assumptions were consistent with evidence obtained in other areas of the audit. Procedures were also performed to test the completeness and accuracy of data provided by management. For certain acquisitions, professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of management’s methods and evaluating the reasonableness of the assumptions related to the rental rates, discount rates, exit capitalization rates, and land value per square foot.
/s/PricewaterhouseCoopers LLP
Boston, Massachusetts
February 15, 2023
We have served as the Company’s or its predecessor’s auditor since 2009.
STAG Industrial, Inc.
Consolidated Balance Sheets
(in thousands, except share data)
| | | | | | | | | | | |
| | December 31, 2022 | | December 31, 2021 |
| Assets | | | |
| Rental Property: | | | |
| Land | $ | 647,098 | | | $ | 617,297 | |
| Buildings and improvements, net of accumulated depreciation of $763,128 and $611,867, respectively | 4,706,745 | | | 4,435,743 | |
| Deferred leasing intangibles, net of accumulated amortization of $328,848 and $282,038, respectively | 508,935 | | | 567,658 | |
| Total rental property, net | 5,862,778 | | | 5,620,698 | |
| Cash and cash equivalents | 25,884 | | | 18,981 | |
| Restricted cash | 905 | | | 4,215 | |
| Tenant accounts receivable | 115,509 | | | 93,600 | |
| Prepaid expenses and other assets | 71,733 | | | 60,953 | |
| Interest rate swaps | 72,223 | | | 5,220 | |
| Operating lease right-of-use assets | 31,313 | | | 29,582 | |
| Assets held for sale, net | 4,643 | | | — | |
| Total assets | $ | 6,184,988 | | | $ | 5,833,249 | |
| Liabilities and Equity | | | |
| Liabilities: | | | |
| Unsecured credit facility | $ | 175,000 | | | $ | 296,000 | |
| Unsecured term loans, net | 1,020,440 | | | 970,577 | |
| Unsecured notes, net | 1,295,442 | | | 896,941 | |
| Mortgage notes, net | 7,898 | | | 54,744 | |
| Accounts payable, accrued expenses and other liabilities | 97,371 | | | 76,475 | |
| Interest rate swaps | — | | | 17,052 | |
| Tenant prepaid rent and security deposits | 40,847 | | | 37,138 | |
| Dividends and distributions payable | 22,282 | | | 21,906 | |
| Deferred leasing intangibles, net of accumulated amortization of $24,593 and $21,136, respectively | 32,427 | | | 35,721 | |
| Operating lease liabilities | 35,100 | | | 33,108 | |
| Total liabilities | 2,726,807 | | | 2,439,662 | |
| Commitments and contingencies (Note 11) | | | |
| Equity: | | | |
| Preferred stock, par value $0.01 per share, 20,000,000 shares authorized at December 31, 2022 and December 31, 2021; none issued or outstanding | — | | | — | |
| Common stock, par value $0.01 per share, 300,000,000 shares authorized at December 31, 2022 and December 31, 2021, 179,248,980 and 177,769,342 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively | 1,792 | | | 1,777 | |
| Additional paid-in capital | 4,188,677 | | | 4,130,038 | |
| Cumulative dividends in excess of earnings | (876,145) | | | (792,332) | |
| Accumulated other comprehensive income (loss) | 70,500 | | | (11,783) | |
| Total stockholders’ equity | 3,384,824 | | | 3,327,700 | |
| Noncontrolling interest | 73,357 | | | 65,887 | |
| Total equity | 3,458,181 | | | 3,393,587 | |
| Total liabilities and equity | $ | 6,184,988 | | | $ | 5,833,249 | |
The accompanying notes are an integral part of these consolidated financial statements.
STAG Industrial, Inc.
Consolidated Statements of Operations
(in thousands, except share data)
| | | | | | | | | | | | | | | | | |
| | Year ended December 31, |
| | 2022 | | 2021 | | 2020 |
| Revenue | | | | | |
| Rental income | $ | 654,377 | | | $ | 559,432 | | | $ | 482,825 | |
| Other income | 2,968 | | | 2,727 | | | 586 | |
| Total revenue | 657,345 | | | 562,159 | | | 483,411 | |
| Expenses | | | | | |
| Property | 125,701 | | | 107,986 | | | 89,359 | |
| General and administrative | 46,958 | | | 48,629 | | | 40,072 | |
| | | | | |
| Depreciation and amortization | 275,040 | | | 238,699 | | | 214,738 | |
| Loss on impairments | 1,783 | | | — | | | 5,577 | |
| Other expenses | 4,363 | | | 2,878 | | | 2,029 | |
| Total expenses | 453,845 | | | 398,192 | | | 351,775 | |
| Other income (expense) | | | | | |
| Interest and other income | 103 | | | 121 | | | 446 | |
| Interest expense | (78,018) | | | (63,484) | | | (62,343) | |
| Debt extinguishment and modification expenses | (838) | | | (2,152) | | | (834) | |
| Gain on involuntary conversion | — | | | — | | | 2,157 | |
| Gain on the sales of rental property, net | 57,487 | | | 97,980 | | | 135,733 | |
| Total other income (expense) | (21,266) | | | 32,465 | | | 75,159 | |
| Net income | $ | 182,234 | | | $ | 196,432 | | | $ | 206,795 | |
| Less: income attributable to noncontrolling interest after preferred stock dividends | 3,908 | | | 4,098 | | | 4,648 | |
| Net income attributable to STAG Industrial, Inc. | $ | 178,326 | | | $ | 192,334 | | | $ | 202,147 | |
| Less: preferred stock dividends | — | | | 1,289 | | | 5,156 | |
| Less: redemption of preferred stock | — | | | 2,582 | | | — | |
| Less: amount allocated to participating securities | 237 | | | 288 | | | 271 | |
| Net income attributable to common stockholders | $ | 178,089 | | | $ | 188,175 | | | $ | 196,720 | |
| Weighted average common shares outstanding — basic | 178,753 | | | 163,442 | | | 148,791 | |
| Weighted average common shares outstanding — diluted | 178,940 | | | 164,090 | | | 149,215 | |
| Net income per share — basic and diluted | | | | | |
| Net income per share attributable to common stockholders — basic | $ | 1.00 | | | $ | 1.15 | | | $ | 1.32 | |
| Net income per share attributable to common stockholders — diluted | $ | 1.00 | | | $ | 1.15 | | | $ | 1.32 | |
The accompanying notes are an integral part of these consolidated financial statements.
STAG Industrial, Inc.
Consolidated Statements of Comprehensive Income
(in thousands)
| | | | | | | | | | | | | | | | | |
| | Year ended December 31, |
| | 2022 | | 2021 | | 2020 |
| Net income | $ | 182,234 | | | $ | 196,432 | | | $ | 206,795 | |
| Other comprehensive income (loss): | | | | | |
| Income (loss) on interest rate swaps | 84,086 | | | 28,856 | | | (22,109) | |
| Other comprehensive income (loss) | 84,086 | | | 28,856 | | | (22,109) | |
| Comprehensive income | 266,320 | | | 225,288 | | | 184,686 | |
| Income attributable to noncontrolling interest after preferred stock dividends | (3,908) | | | (4,098) | | | (4,648) | |
| Other comprehensive (income) loss attributable to noncontrolling interest | (1,803) | | | (614) | | | 510 | |
| Comprehensive income attributable to STAG Industrial, Inc. | $ | 260,609 | | | $ | 220,576 | | | $ | 180,548 | |
The accompanying notes are an integral part of these consolidated financial statements.
STAG Industrial, Inc.
ConsolidatedStatements of Equity
(in thousands, except share data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Preferred Stock | | Common Stock | | Additional Paid-in Capital | | Cumulative Dividends in Excess of Earnings | | Accumulated Other Comprehensive Income (Loss) | | Total Stockholders’ Equity | | Noncontrolling Interest - Unit Holders in Operating Partnership | | Total Equity |
| | | Shares | | Par Amount | | | | | | |
| Balance, December 31, 2019 | $ | 75,000 | | | 142,815,593 | | | $ | 1,428 | | | $ | 2,970,553 | | | $ | (723,027) | | | $ | (18,426) | | | $ | 2,305,528 | | | $ | 58,363 | | | $ | 2,363,891 | |
| | | | | | | | | | | | | | | | | |
| Proceeds from sales of common stock, net | — | | | 14,580,577 | | | 146 | | | 438,338 | | | — | | | — | | | 438,484 | | | — | | | 438,484 | |
| | | | | | | | | | | | | | | | | |
| Dividends and distributions, net ($1.44 per share/unit) | — | | | — | | | — | | | — | | | (220,801) | | | — | | | (220,801) | | | (5,395) | | | (226,196) | |
| Non-cash compensation activity, net | — | | | 83,233 | | | 1 | | | 5,019 | | | (390) | | | — | | | 4,630 | | | 5,557 | | | 10,187 | |
| Redemption of common units to common stock | — | | | 730,420 | | | 7 | | | 11,540 | | | — | | | — | | | 11,547 | | | (11,547) | | | — | |
| Rebalancing of noncontrolling interest | — | | | — | | | — | | | (3,729) | | | — | | | — | | | (3,729) | | | 3,729 | | | — | |
| Other comprehensive loss | — | | | — | | | — | | | — | | | — | | | (21,599) | | | (21,599) | | | (510) | | | (22,109) | |
| Net income | — | | | — | | | — | | | — | | | 202,147 | | | — | | | 202,147 | | | 4,648 | | | 206,795 | |
| Balance, December 31, 2020 | $ | 75,000 | | | 158,209,823 | | | $ | 1,582 | | | $ | 3,421,721 | | | $ | (742,071) | | | $ | (40,025) | | | $ | 2,716,207 | | | $ | 54,845 | | | $ | 2,771,052 | |
| | | | | | | | | | | | | | | | | |
| Proceeds from sales of common stock, net | — | | | 19,238,685 | | | 192 | | | 706,680 | | | — | | | — | | | 706,872 | | | — | | | 706,872 | |
| Redemption of preferred stock | (75,000) | | | — | | | — | | | 2,573 | | | (2,582) | | | — | | | (75,009) | | | — | | | (75,009) | |
| Dividends and distributions, net ($1.45 per share/unit) | — | | | — | | | — | | | — | | | (239,859) | | | — | | | (239,859) | | | (8,293) | | | (248,152) | |
| Non-cash compensation activity, net | — | | | 149,516 | | | 1 | | | 3,024 | | | (154) | | | — | | | 2,871 | | | 10,665 | | | 13,536 | |
| Redemption of common units to common stock | — | | | 171,318 | | | 2 | | | 2,852 | | | — | | | — | | | 2,854 | | | (2,854) | | | — | |
| Rebalancing of noncontrolling interest | — | | | — | | | — | | | (6,812) | | | — | | | — | | | (6,812) | | | 6,812 | | | — | |
| Other comprehensive income | — | | | — | | | — | | | — | | | — | | | 28,242 | | | 28,242 | | | 614 | | | 28,856 | |
| Net income | — | | | — | | | — | | | — | | | 192,334 | | | — | | | 192,334 | | | 4,098 | | | 196,432 | |
| Balance, December 31, 2021 | $ | — | | | 177,769,342 | | | $ | 1,777 | | | $ | 4,130,038 | | | $ | (792,332) | | | $ | (11,783) | | | $ | 3,327,700 | | | $ | 65,887 | | | $ | 3,393,587 | |
| | | | | | | | | | | | | | | | | |
| Proceeds from sales of common stock, net | — | | | 1,328,335 | | | 13 | | | 54,931 | | | — | | | — | | | 54,944 | | | — | | | 54,944 | |
| | | | | | | | | | | | | | | | | |
| Dividends and distributions, net ($1.46 per share/unit) | — | | | — | | | — | | | — | | | (261,359) | | | — | | | (261,359) | | | (5,832) | | | (267,191) | |
| Non-cash compensation activity, net | — | | | 52,809 | | | 1 | | | 2,832 | | | (780) | | | — | | | 2,053 | | | 8,468 | | | 10,521 | |
| Redemption of common units to common stock | — | | | 98,494 | | | 1 | | | 1,856 | | | — | | | — | | | 1,857 | | | (1,857) | | | — | |
| Rebalancing of noncontrolling interest | — | | | — | | | — | | | (980) | | | — | | | — | | | (980) | | | 980 | | | — | |
| Other comprehensive income | — | | | — | | | — | | | — | | | — | | | 82,283 | | | 82,283 | | | 1,803 | | | 84,086 | |
| Net income | — | | | — | | | — | | | — | | | 178,326 | | | — | | | 178,326 | | | 3,908 | | | 182,234 | |
| Balance, December 31, 2022 | $ | — | | | 179,248,980 | | | $ | 1,792 | | | $ | 4,188,677 | | | $ | (876,145) | | | $ | 70,500 | | | $ | 3,384,824 | | | $ | 73,357 | | | $ | 3,458,181 | |
The accompanying notes are an integral part of these consolidated financial statements.
STAG Industrial, Inc.
Consolidated Statements of Cash Flows
(in thousands)
| | | | | | | | | | | | | | | | | |
| | Year ended December 31, |
| | 2022 | | 2021 | | 2020 |
| Cash flows from operating activities: | | | | | |
| Net income | $ | 182,234 | | | $ | 196,432 | | | $ | 206,795 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | |
| Depreciation and amortization | 275,040 | | | 238,699 | | | 214,738 | |
| Loss on impairments | 1,783 | | | — | | | 5,577 | |
| Gain on involuntary conversion | — | | | — | | | (2,157) | |
| Non-cash portion of interest expense | 3,747 | | | 2,931 | | | 2,922 | |
| Amortization of above and below market leases, net | (352) | | | 2,051 | | | 4,341 | |
| Straight-line rent adjustments, net | (17,610) | | | (17,516) | | | (12,074) | |
| | | | | |
| Debt extinguishment and modification expenses | 21 | | | 249 | | | 834 | |
| Gain on the sales of rental property, net | (57,487) | | | (97,980) | | | (135,733) | |
| Non-cash compensation expense | 12,068 | | | 14,955 | | | 11,681 | |
| Change in assets and liabilities: | | | | | |
| Tenant accounts receivable | (6,438) | | | (36) | | | (4,482) | |
| Prepaid expenses and other assets | (21,870) | | | (18,664) | | | (11,528) | |
| Accounts payable, accrued expenses and other liabilities | 13,531 | | | 6,763 | | | 7,157 | |
| Tenant prepaid rent and security deposits | 3,264 | | | 8,270 | | | 5,851 | |
| Total adjustments | 205,697 | | | 139,722 | | | 87,127 | |
| Net cash provided by operating activities | 387,931 | | | 336,154 | | | 293,922 | |
| Cash flows from investing activities: | | | | | |
| Acquisitions of land and buildings and improvements | (421,784) | | | (1,211,023) | | | (661,961) | |
| Additions of land and buildings and improvements | (111,653) | | | (39,503) | | | (55,741) | |
| Acquisitions of other assets | (2,134) | | | (1,004) | | | (450) | |
| Acquisitions of operating lease right-of-use assets | (3,541) | | | (5,627) | | | (3,984) | |
| Proceeds from sales of rental property, net | 135,348 | | | 187,972 | | | 273,560 | |
| Proceeds from involuntary conversion | — | | | — | | | 782 | |
| Acquisitions of tenant prepaid rent | 445 | | | 1,024 | | | — | |
| Acquisition deposits, net | 1,428 | | | (3,131) | | | 27 | |
| Acquisitions of deferred leasing intangibles | (49,174) | | | (154,755) | | | (110,840) | |
| Acquisitions of operating lease liabilities | 3,541 | | | 5,627 | | | 3,984 | |
| Net cash used in investing activities | (447,524) | | | (1,220,420) | | | (554,623) | |
| Cash flows from financing activities: | | | | | |
| Proceeds from unsecured credit facility | 1,288,000 | | | 2,665,000 | | | 914,000 | |
| Repayment of unsecured credit facility | (1,409,000) | | | (2,476,000) | | | (953,000) | |
| Proceeds from unsecured term loans | 375,000 | | | 1,125,000 | | | 400,000 | |
| Repayment of unsecured term loans | (325,000) | | | (1,125,000) | | | (300,000) | |
| Proceeds from unsecured notes | 400,000 | | | 325,000 | | | — | |
| Repayment of mortgage notes | (46,943) | | | (2,225) | | | (2,983) | |
| Redemption of preferred stock | — | | | (75,000) | | | — | |
| Payment of loan fees and costs | (5,211) | | | (9,579) | | | (1,129) | |
| Payment of defeasance fees and other costs | — | | | — | | | (425) | |
| Dividends and distributions | (266,817) | | | (245,722) | | | (224,283) | |
| Proceeds from sales of common stock, net | 54,753 | | | 706,991 | | | 438,499 | |
| Repurchase and retirement of share-based compensation | (1,596) | | | (1,342) | | | (1,503) | |
| Net cash provided by financing activities | 63,186 | | | 887,123 | | | 269,176 | |
| Increase in cash and cash equivalents and restricted cash | 3,593 | | | 2,857 | | | 8,475 | |
| Cash and cash equivalents and restricted cash—beginning of period | 23,196 | | | 20,339 | | | 11,864 | |
| Cash and cash equivalents and restricted cash—end of period | $ | 26,789 | | | $ | 23,196 | | | $ | 20,339 | |
| Supplemental disclosure: | | | | | |
| Cash paid for interest, net of capitalized interest | $ | 72,740 | | | $ | 58,392 | | | $ | 58,704 | |
| Supplemental schedule of non-cash investing and financing activities | | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Additions of land and buildings and improvements | $ | (2,674) | | | $ | (465) | | | $ | (674) | |
| Transfer of other assets to building and other capital improvements | $ | 2,674 | | | $ | 465 | | | $ | 674 | |
| Acquisitions of land and buildings and improvements | $ | — | | | $ | (5,990) | | | $ | (2,202) | |
| Acquisitions of deferred leasing intangibles | $ | — | | | $ | (948) | | | $ | (362) | |
| | | | | |
| | | | | |
| Change in additions of land, building, and improvements included in accounts payable, accrued expenses and other liabilities | $ | (7,897) | | | $ | (1,285) | | | $ | (3,714) | |
| Additions to building and other capital improvements from non-cash compensation | $ | (62) | | | $ | (9) | | | $ | (25) | |
| Assumption of mortgage notes | $ | — | | | $ | 5,103 | | | $ | — | |
| Fair market value adjustment to mortgage notes acquired | $ | — | | | $ | (161) | | | $ | — | |
| Change in loan fees, costs, and offering costs included in accounts payable, accrued expenses and other liabilities | $ | 192 | | | $ | 930 | | | $ | (1,065) | |
| | | | | |
| | | | | |
| Dividends and distributions accrued | $ | 22,282 | | | $ | 21,906 | | | $ | 19,379 | |
The accompanying notes are an integral part of these consolidated financial statements.
STAG Industrial, Inc.
Notes to Consolidated Financial Statements
1. OrganizationandDescription of Business
STAG Industrial, Inc. (the “Company”) is an industrial real estate operating company focused on the acquisition and operation of single-tenant, industrial properties throughout the United States. The Company was formed as a Maryland corporation and has elected to be treated and intends to continue to qualify as a real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”). The Company is structured as an umbrella partnership REIT, commonly called an UPREIT, and owns all of its properties and conducts substantially all of its business through its operating partnership, STAG Industrial Operating Partnership, L.P., a Delaware limited partnership (the “Operating Partnership”). As of December 31, 2022 and 2021, the Company owned a 97.9% and 98.1%, respectively, of the common units of the limited partnership interests in the Operating Partnership. The Company is the sole member of the general partner of the Operating Partnership. As used herein, the “Company” refers to STAG Industrial, Inc. and its consolidated subsidiaries, including the Operating Partnership, except where context otherwise requires.
As of December 31, 2022, the Company owned 562 industrial buildings in 41 states with approximately 111.7 million rentable square feet (square feet unaudited herein and throughout the Notes), consisting of 487 warehouse/distribution buildings, 74 light manufacturing buildings, and 1 flex/office building.
2. Summary of Significant Accounting Policies
Basis of Presentation
The Company’s consolidated financial statements include the accounts of the Company, the Operating Partnership, and their consolidated subsidiaries. Interests in the Operating Partnership not owned by the Company are referred to as “Noncontrolling Common Units.” These Noncontrolling Common Units are held by other limited partners in the form of common units (“Other Common Units”) and long-term incentive plan units (“LTIP units”) issued pursuant to the STAG Industrial, Inc. 2011 Equity Incentive Plan, as amended and restated (the “2011 Plan”). All significant intercompany balances and transactions have been eliminated in the consolidation of entities. The financial statements of the Company are presented on a consolidated basis for all periods presented.
New Accounting Standards
New Accounting Standards Adopted
In December 2022, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2022-06, Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”) which defers the sunset date of Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform to December 31, 2024. ASU 2022-06 is effective immediately for all companies. ASU 2022-06 had no impact on the Company’s consolidated financial statements for the year ended December 31, 2022.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Rental Property and Deferred Leasing Intangibles
Rental property is carried at cost less accumulated depreciation and amortization. Expenditures for maintenance and repairs are expensed as incurred. Significant renovations and betterments that extend the economic useful lives of assets are capitalized.
The Company capitalizes costs directly and indirectly related to the development, pre-development, redevelopment, or improvement of rental property. Real estate taxes, compensation costs of development personnel, insurance, interest, and other directly related costs during construction periods are capitalized as incurred, with depreciation commencing on the date the property is substantially completed. Such costs begin to be capitalized to the development projects from the point the Company
is undergoing the necessary activities to get the development project ready for its intended use and cease when the development projects are substantially completed and held available for occupancy. Interest is capitalized based on actual capital expenditures from the period when development or redevelopment commences until the asset is ready for its intended use, at the weighted average borrowing rate of the Company’s unsecured indebtedness during the period.
For properties classified as held for sale, the Company ceases depreciating and amortizing the rental property and values the rental property at the lower of depreciated and amortized cost or fair value less costs to dispose. The Company presents those properties classified as held for sale with any qualifying assets and liabilities associated with those properties as held for sale in the accompanying Consolidated Balance Sheets.
Using information available at the time of acquisition, the Company allocates the purchase price of properties acquired based upon the fair value of the assets acquired and liabilities assumed, which generally consist of land, buildings, tenant improvements, mortgage debt assumed, and deferred leasing intangibles, which includes in-place leases, above market and below market leases, and tenant relationships. The process for determining the allocation to these components requires estimates and assumptions, including rental rates, discount rates and exit capitalization rates, and land value per square foot, as well as available market information, and is therefore subject to subjective analysis and uncertainty. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant. The portion of the purchase price that is allocated to above and below market leases is valued based on the present value of the difference between prevailing market rates and the in-place rates measured over a period equal to the remaining term of the lease term plus the term of any bargain renewal options. The purchase price is further allocated to in-place lease values and tenant relationships based on the Company’s evaluation of the specific characteristics of each tenant’s lease and its overall relationship with the respective tenant.
The above and below market lease values are amortized into rental income over the remaining lease term. The value of in-place lease intangibles and tenant relationships are amortized over the remaining lease term (and expected renewal period of the respective lease for tenant relationships) as increases to depreciation and amortization expense. The remaining lease terms are adjusted for bargain renewal options or assumed exercises of early termination options, as applicable. If a tenant subsequently terminates its lease, any unamortized portion of above and below market leases is accelerated into rental income and the in-place lease value and tenant relationships are accelerated into depreciation and amortization expense over the shortened lease term.
The purchase price allocated to deferred leasing intangible assets are included in rental property, net on the accompanying Consolidated Balance Sheets, and the purchase price allocated to deferred leasing intangible liabilities are included in deferred leasing intangibles, net on the accompanying Consolidated Balance Sheets under the liabilities section.
In determining the fair value of the debt assumed, the Company discounts the spread between the future contractual interest payments and hypothetical future interest payments on mortgage debt based on a current market rate. The associated fair market value debt adjustment is amortized through interest expense over the life of the debt on a basis which approximates the effective interest method.
The Company evaluates the carrying value of all tangible and intangible rental property assets and deferred leasing intangible liabilities (collectively, the “property”) held for use for possible impairment when an event or change in circumstance has occurred that indicates their carrying value may not be recoverable. The evaluation includes estimating and reviewing anticipated future undiscounted cash flows to be derived from the property. If such cash flows are less than the property’s carrying value, an impairment charge is recognized to the extent by which the property’s carrying value exceeds the estimated fair value. Estimating future cash flows is highly subjective and is based in part on assumptions regarding anticipated hold period, future occupancy, rental rates, capital requirements, and exit capitalization rates that could differ from actual results. The discount rate used to present value the cash flows for determining fair value is also subjective.
Depreciation expense is computed using the straight-line method based on the following estimated useful lives.
| | | | | | | | |
| Description | | Estimated Useful Life |
| Building | | 40 Years |
| Building and land improvements (maximum) | | 20 Years |
| Tenant improvements | | Shorter of useful life or terms of related lease |
| | |
| | |
| | |
Fully depreciated or amortized tenant improvements, deferred leasing intangible assets, or deferred leasing intangible liabilities and the associated accumulated depreciation or amortization are written-off. The Company wrote-off fully depreciated or
amortized tenant improvements, deferred leasing intangible assets, and deferred leasing intangible liabilities of approximately $3.4 million, $53.8 million, $4.9 million, respectively, for the year ended December 31, 2022 and approximately $7.5 million, $72.9 million, $2.4 million, respectively, for the year ended December 31, 2021.
Leases
For leases in which the Company is the lessee, the Company recognizes a right-of-use asset and corresponding lease liability on the accompanying Consolidated Balance Sheets equal to the present value of the fixed lease payments. In determining the operating right-of-use asset and lease liability for the Company’s operating leases, the Company estimates an appropriate incremental borrowing rate on a fully-collateralized basis for the terms of the leases. The Company utilizes a market-based approach to estimate the incremental borrowing rate for each individual lease. Additionally, since the terms of the Company’s ground leases are significantly longer than the terms of borrowings available to the Company on a fully-collateralized basis, the estimate of this rate requires significant judgment, and considers factors such as yields on outstanding public debt and other market based pricing on longer duration financing instruments.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and highly liquid short-term investments with original maturities of three months or less. The Company maintains cash and cash equivalents in United States banking institutions that may exceed amounts insured by the Federal Deposit Insurance Corporation. While the Company monitors the cash balances in its operating accounts, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. To date, the Company has experienced no loss or lack of access to cash in its operating accounts, and mitigates this risk by using nationally recognized banking institutions.
Restricted Cash
Restricted cash may include tenant security deposits, cash held in escrow for real estate taxes and capital improvements as required in various mortgage note agreements, and cash held by the Company’s transfer agent for preferred stock dividends, if any, that are distributed subsequent to period end. Restricted cash may also include cash held by qualified intermediaries to facilitate a like-kind exchange of real estate under Section 1031 of the Code.
The following table presents a reconciliation of cash and cash equivalents and restricted cash reported on the accompanying Consolidated Balance Sheets to amounts reported on the accompanying Consolidated Statements of Cash Flows.
| | | | | | | | | | | | | | |
| Reconciliation of cash and cash equivalents and restricted cash (in thousands) | | December 31, 2022 | | December 31, 2021 |
| Cash and cash equivalents | | $ | 25,884 | | | $ | 18,981 | |
| Restricted cash | | 905 | | | 4,215 | |
| Total cash and cash equivalents and restricted cash | | $ | 26,789 | | | $ | 23,196 | |
Deferred Costs
Deferred financing fees and debt issuance costs include costs incurred in obtaining debt that are capitalized and are presented as a direct deduction from the carrying amount of the associated debt liability that is not a line-of-credit arrangement on the accompanying Consolidated Balance Sheets. Deferred financing fees and debt issuance costs related to line-of-credit arrangements are presented as an asset in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets. The deferred financing fees and debt issuance costs are amortized through interest expense over the life of the respective loans on a basis which approximates the effective interest method. Any unamortized amounts upon early repayment of debt are written off in the period of repayment as a loss on extinguishment of debt. Fully amortized deferred financing fees and debt issuance costs are written off upon maturity of the underlying debt.
Leasing commissions include commissions and other direct and incremental costs incurred to obtain new tenant leases as well as to renew existing tenant leases, and are presented in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets. Leasing commissions are capitalized and amortized over the terms of the related leases (and bargain renewal terms or assumed exercise of early termination options) using the straight-line method. If a lease terminates prior to the expiration of its initial term, any unamortized costs related to the lease are accelerated into amortization expense. Changes in leasing commissions are presented in the cash flows from operating activities section of the accompanying Consolidated Statements of Cash Flows.
Goodwill
The excess of the cost of an acquired business over the net of the amounts assigned to assets acquired (including identified intangible assets) and liabilities assumed is recorded as goodwill. Goodwill of the Company of approximately $4.9 million represents amounts allocated to the assembled workforce from the acquired management company, and is presented in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets. The Company’s goodwill has an indeterminate life and is not amortized, but is tested for impairment on an annual basis at December 31, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company takes a qualitative approach to consider whether an impairment of goodwill exists prior to quantitatively determining the fair value of the reporting unit in step one of the impairment test. The Company has recorded no impairments to goodwill through December 31, 2022.
Use of Derivative Financial Instruments
The Company records all derivatives on the accompanying Consolidated Balance Sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.
In accordance with fair value measurement guidance, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting arrangements on a net basis by counterparty portfolio. Credit risk is the risk of failure of the counterparty to perform under the terms of the contract. The Company minimizes the credit risk in its derivative financial instruments by entering into transactions with various high-quality counterparties. The Company’s exposure to credit risk at any point is generally limited to amounts recorded as assets on the accompanying Consolidated Balance Sheets.
Fair Value of Financial Instruments
Financial instruments include cash and cash equivalents, restricted cash, tenant accounts receivable, interest rate swaps, accounts payable, accrued expenses, unsecured credit facility, unsecured term loans, unsecured notes, and mortgage notes. See Note 4 for the fair value of the Company’s indebtedness. See Note 5 for the fair value of the Company’s interest rate swaps.
The Company adopted fair value measurement provisions for its financial instruments recorded at fair value. The guidance establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
Offering Costs
Underwriting commissions and direct offering costs have been reflected as a reduction of additional paid-in capital on the accompanying Consolidated Balance Sheets and Consolidated Statements of Equity. Indirect costs associated with equity offerings are expensed as incurred and included in general and administrative expenses on the accompanying Consolidated Statements of Operations.
Dividends
Earnings and profits, which determine the taxability of dividends to stockholders, will differ from income reported for financial reporting purposes due to the differences for federal income tax purposes in the treatment of gains on the sale of real property, revenue and expense recognition, and in the estimated useful lives and basis used to compute depreciation. In addition, the Company’s distributions may include a return of capital. To the extent that the Company makes distributions in excess of its
current and accumulated earnings and profits, such distributions would generally be considered a return of capital for federal income tax purposes to the extent of the holder’s adjusted tax basis in its shares. A return of capital may not be taxable. A return of capital has the effect of reducing the holder’s adjusted tax basis in its investment, which may or may not be taxable to the holder.
The Company paid dividends to holders of the 6.875% Series BC Cumulative Redeemable Preferred Stock, par value $0.01 per share (“Series C Preferred Stock”), of approximately $1.3 million ($0.429688 per share) during the year ended December 31, 2021, of which $0.400294 per share was treated as ordinary income for tax purposes, $0.022149 per share was treated as unrecaptured section 1250 capital gain for tax purposes, and $0.007245 per share was treated as other capital gain for income tax purposes. The Company paid dividends to the holders of the Series C Preferred Stock priorof approximately $5.2 million ($1.71875 per share) during the year ended December 31, 2020, of which $1.349944 per share was treated as ordinary income for tax purposes, $0.100392 per share was treated as unrecaptured section 1250 capital gain for tax purposes, and $0.268414 per share was treated as other capital gain for income tax purposes.
The following table summarizes the tax treatment of dividends per shares of common stock for federal income tax purposes.
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| | | Year ended December 31, |
| | | 2022 | | 2021 | | 2020 |
| Federal Income Tax Treatment of Dividends per Common Share | | Per Share | | % | | Per Share | | % | | Per Share | | % |
| Ordinary income | | $ | 1.172486 | | | 80.4 | % | | $ | 1.119899 | | | 81.3 | % | | $ | 1.186648 | | | 78.5 | % |
| Return of capital | | 0.165158 | | | 11.3 | % | | 0.175355 | | | 12.7 | % | | — | | | — | % |
| Unrecaptured section 1250 capital gain | | 0.014248 | | | 1.0 | % | | 0.061970 | | | 4.5 | % | | 0.088246 | | | 5.9 | % |
| Other capital gain | | 0.107278 | | | 7.3 | % | | 0.020269 | | | 1.5 | % | | 0.235943 | | | 15.6 | % |
| | | | | | | | | | | | |
Total (1) | | $ | 1.459170 | | | 100.0 | % | | $ | 1.377493 | | | 100.0 | % | | $ | 1.510837 | | | 100.0 | % |
(1)The December 2020 monthly common stock dividend of $0.12 per share was partially included in the stockholder's 2020 tax year in the amount of $0.07167 per share, and the remainder was included in the stockholder's 2021 tax year. The December 2021 monthly common stock dividend of $0.120833 per share was included in the stockholder's 2022 tax year. The December 2022 monthly common stock dividend of 0.121667 per share will be included in the stockholder's 2023 tax year.
Revenue Recognition
All current leases are classified as operating leases and rental income is recognized on a straight-line basis over the term of the lease (and expected bargain renewal terms or assumed exercise of early termination options) when collectability is reasonably assured. Differences between rental income earned and amounts due under the lease are charged or credited, as applicable, to April 16, 2018accrued rental income.
The Company determined that for all leases where the Company is the lessor, that the timing and March 17,pattern of transfer of the non-lease components and associated lease components are the same, and that the lease components, if accounted for separately, would be classified as an operating lease. Accordingly, the Company has made an accounting policy election to recognize the combined component in accordance with Accounting Standards Codification Topic 842 as rental income on the accompanying Consolidated Statements of Operations.
Rental income recognition commences when the tenant takes possession of or controls the physical use of the leased space and the leased space is substantially complete and ready for its intended use. In order to determine whether the leased space is substantially complete and ready for its intended use, the Company determines whether the Company or the tenant own the tenant improvements. When it is determined that the Company is the owner of the tenant improvements, rental income recognition begins when the tenant takes possession of or controls the physical use of the finished space, which is generally when the Company owned tenant improvements are completed. In instances when it is determined that the tenant is the owner of tenant improvements, rental income recognition begins when the tenant takes possession of or controls the physical use of the leased space.
The Company evaluates its operating leases to determine if it is probable it will collect substantially all of the lessee’s remaining lease payments under the lease term. For those that are not probable of collection, the Company converts to the cash basis of accounting. If the Company subsequently determines that it is probable it will collect substantially all of the lessee’s remaining lease payments under the lease term, the Company will reinstate the accrued rent balance adjusting for the amount related to the period when the lease was accounted for on a cash basis.
When the Company is the owner of tenant improvements or other capital items, the cost to construct the tenant improvements or other capital items, including costs paid for or reimbursed by the tenants, is recorded as capital assets. For these tenant
improvements or other capital items, the amount funded by or reimbursed by the tenants are recorded as deferred revenue, which is amortized on a straight-line basis as income over the shorter of the useful life of the capital asset or the term of the related lease.
Early lease termination fees are recorded in rental income on a straight-line basis from the notification date of such termination to the then remaining (not the original) lease term, if any, or upon collection if collection is not reasonably assured.
Gain on the Sales of Rental Property, net
The timing of the derecognition of a rental property and the corresponding recognition of gain on the sales of rental property, net is measured by various criteria related to the terms of the sale transaction, and if the Company has lost control of the property and the acquirer has gained control of the property after the transaction. If the derecognition criteria is met, the full gain is recognized.
Incentive and Equity-Based Employee Compensation Plans
The Company grants equity-based compensation awards to its employees and directors in the form of restricted shares of common stock, LTIP units, and performance units. See Notes 6, 7 and 8 for further discussion of restricted shares of common stock, LTIP units, and performance units, respectively. The Company measures equity-based compensation expense based on the fair value of the awards on the grant date and recognizes the expense ratably over the vesting period, and forfeitures are recognized in the period in which they occur.
On January 7, 2021, respectively, except in limited circumstances relatingthe Company adopted the STAG Industrial, Inc. Employee Retirement Vesting Program (the “Vesting Program”) to our abilityprovide supplemental retirement benefits for eligible employees. For those employees who are retirement eligible or will become retirement eligible during the applicable vesting period under the terms of the Vesting Program, the Company accelerates equity-based compensation through the employee’s six-month retirement notification period or retirement eligibility date, respectively.
Related-Party Transactions
The Company did not have any related-party transactions during the years ended December 31, 2022, 2021 and 2020.
Taxes
Federal Income Taxes
The Company elected to be taxed as a REIT under the Code commencing with its taxable year ended December 31, 2011 and intends to continue to qualify as a REIT. As a REIT, the Company is generally not subject to corporate level federal income tax on the earnings distributed currently to its stockholders that it derives from its REIT qualifying activities. As a REIT, the Company is required to distribute at least 90% of its REIT taxable income to its stockholders and meet the various other requirements imposed by the Code relating to such matters as operating results, asset holdings, distribution levels and diversity of stock ownership.
The Company will not be required to make distributions with respect to income derived from the activities conducted through subsidiaries that the Company elects to treat as taxable REIT subsidiaries (“TRS”) for federal income tax purposes, nor will it have to comply with income, assets, or ownership restrictions inside of the TRS. Certain activities that the Company undertakes must or should be conducted by a TRS, such as performing non-customary services for its tenants and holding assets that it cannot hold directly. A TRS is subject to federal and state income taxes. The Company’s TRS recognized a net income (loss) of approximately $0.1 million, $(8,000) and $0, for the years ended December 31, 2022, 2021 and 2020, respectively, which has been included on the accompanying Consolidated Statements of Operations.
State and Local Income, Excise, and Franchise Tax
The Company and certain of its subsidiaries are subject to certain state and local income, excise and franchise taxes. Taxes in certainthe amount of approximately $2.1 million, $1.7 million and $1.7 million have been recorded in other circumstancesexpenses on the accompanying Consolidated Statements of Operations for the years ended December 31, 2022, 2021 and 2020, respectively.
Uncertain Tax Positions
Tax benefits of uncertain tax positions are recognized only if it is more likely than not that the tax position will be sustained based solely on its technical merits, with the taxing authority having full knowledge of all relevant information. The measurement of a tax benefit for an uncertain tax position that meets the “more likely than not” threshold is based on a cumulative probability model under which the largest amount of tax benefit recognized is the amount with a greater than 50% likelihood of being realized upon ultimate settlement with the taxing authority having full knowledge of all the relevant information. As of December 31, 2022, 2021 and 2020, there were no liabilities for uncertain tax positions.
Earnings Per Share
The Company uses the two-class method of computing earnings per common share, which is an earnings allocation formula that determines earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Basic net income per common share is computed by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net income per common share is computed by dividing net income available to common stockholders by the sum of the weighted average number of shares of common stock outstanding and any dilutive securities for the period.
Segment Reporting
The Company manages its operations on an aggregated, single segment basis for purposes of assessing performance and making operating decisions and, accordingly, has only one reporting and operating segment.
Concentrations of Credit Risk
Concentrations of credit risk relevant to the Company may arise when a number of financing arrangements, including revolving credit facilities or derivatives, are entered into with the same lenders or counterparties, and have similar economic features that would cause their inability to meet contractual obligations. The Company mitigates the concentration of credit risk as it relates to financing arrangements by entering into loan syndications with multiple, reputable financial institutions and diversifying its debt counterparties. The Company also reduces exposure by diversifying its derivatives across multiple counterparties who meet established credit and capital guidelines.
Concentrations of credit risk may also arise when the Company enters into leases with multiple tenants concentrated in the same industry, or into a significant lease or multiple leases with a single tenant, or tenants are located in the same geographic region, or have similar economic features that would cause their inability to meet contractual obligations, including those to the Company, to be similarly affected. The Company regularly monitors its tenant base to assess potential concentrations of credit risk through financial statement review, tenant management calls, and press releases. Management believes the current credit risk of the Company’s portfolio is reasonably well diversified and does not contain any unusual concentration of credit risk.
3. Rental Property
The following table summarizes the components of rental property, net as of December 31, 2022 and 2021.
| | | | | | | | | | | | | | |
| Rental Property (in thousands) | | December 31, 2022 | | December 31, 2021 |
| Land | | $ | 647,098 | | | $ | 617,297 | |
| Buildings, net of accumulated depreciation of $513,053 and $406,670, respectively | | 4,232,964 | |
| 4,035,210 | |
| Tenant improvements, net of accumulated depreciation of $31,578 and $26,065, respectively | | 44,526 | | | 43,999 | |
| Building and land improvements, net of accumulated depreciation of $218,497 and $179,132, respectively | | 339,274 | | | 320,041 | |
| Construction in progress | | 89,981 | | | 36,493 | |
| Deferred leasing intangibles, net of accumulated amortization of $328,848 and $282,038, respectively | | 508,935 | | | 567,658 | |
| Total rental property, net | | $ | 5,862,778 | | | $ | 5,620,698 | |
Acquisitions
The following tables summarize the acquisitions of the Company during the years ended December 31, 2022 and 2021. The Company accounted for all of its acquisitions as asset acquisitions.
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| Year ended December 31, 2022 |
Market(1) | | Date Acquired | | Square Feet | | Number of Buildings | | Purchase Price
(in thousands) |
| Kansas City, MO | | January 6, 2022 | | 702,000 | | | 1 | | | $ | 60,428 | |
| Chicago, IL | | January 31, 2022 | | 72,499 | | | 1 | | | 8,128 | |
| Columbus, OH | | February 8, 2022 | | 138,213 | | | 1 | | | 11,492 | |
| Cleveland, OH | | February 8, 2022 | | 136,800 | | | 1 | | | 13,001 | |
| Nashville, TN | | March 10, 2022 | | 109,807 | | | 1 | | | 12,810 | |
| Greenville/Spartanburg, SC | | March 10, 2022 | | 289,103 | | | 1 | | | 28,274 | |
| Memphis, TN | | March 18, 2022 | | 195,622 | | | 1 | | | 15,828 | |
| Greenville/Spartanburg, SC | | March 18, 2022 | | 155,717 | | | 1 | | | 16,390 | |
| Three months ended March 31, 2022 | | | | 1,799,761 | | | 8 | | | 166,351 | |
| Atlanta, GA | | April 1, 2022 | | 210,858 | | | 1 | | | 21,119 | |
| Minneapolis/St. Paul, MN | | April 4, 2022 | | 160,000 | | | 1 | | | 13,472 | |
| West Michigan, MI | | April 14, 2022 | | 211,125 | | | 2 | | | 12,274 | |
| Pittsburgh, PA | | April 19, 2022 | | 400,000 | | | 1 | | | 50,178 | |
Greenville/Spartanburg, SC(2) | | April 22, 2022 | | — | | | — | | | 5,559 | |
| Birmingham, AL | | May 5, 2022 | | 67,168 | | | 1 | | | 7,871 | |
| South Bay/San Jose, CA | | June 7, 2022 | | 175,325 | | | 1 | | | 29,630 | |
| Washington, DC | | June 29, 2022 | | 140,555 | | | 1 | | | 20,257 | |
| Hampton Roads, VA | | June 29, 2022 | | 102,512 | | | 1 | | | 10,561 | |
| Three months ended June 30, 2022 | | | | 1,467,543 | | | 9 | | | 170,921 | |
| Atlanta, GA | | July 15, 2022 | | 159,048 | | | 1 | | | 10,062 | |
| Fresno, CA | | July 25, 2022 | | 232,072 | | | 1 | | | 30,121 | |
| El Paso, TX | | July 26, 2022 | | 326,166 | | | 4 | | | 37,792 | |
| Portland, OR | | September 12, 2022 | | 78,000 | | | 1 | | | 11,281 | |
| Louisville, KY | | September 21, 2022 | | 563,032 | | | 1 | | | 38,064 | |
| Three months ended September 30, 2022 | | | | 1,358,318 | | | 8 | | | 127,320 | |
| Chicago, IL | | December 28, 2022 | | 115,491 | | | 1 | | | 8,055 | |
| Three months ended December 31, 2022 | | | | 115,491 | | | 1 | | | 8,055 | |
| Year ended December 31, 2022 | | | | 4,741,113 | | | 26 | | | $ | 472,647 | |
(1) As defined by CoStar Realty Information Inc. If the building is located outside of a CoStar defined market, the city and state is reflected.
(2) The Company acquired vacant land parcels.
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| Year ended December 31, 2021 |
Market(1) | | Date Acquired | | Square Feet | | Number of Buildings | | Purchase Price
(in thousands) |
| Omaha/Council Bluffs, NE-IA | | January 21, 2021 | | 370,000 | | | 1 | | | $ | 24,922 | |
| Minneapolis/St. Paul, MN | | February 24, 2021 | | 80,655 | | | 1 | | | 10,174 | |
| Long Island, NY | | February 25, 2021 | | 64,224 | | | 1 | | | 8,516 | |
| Sacramento, CA | | February 25, 2021 | | 267,284 | | | 1 | | | 25,917 | |
| Little Rock/N. Little Rock | | March 1, 2021 | | 300,160 | | | 1 | | | 24,317 | |
| Cleveland, OH | | March 18, 2021 | | 170,000 | | | 1 | | | 6,382 | |
| Three months ended March 31, 2021 | | | | 1,252,323 | | | 6 | | | 100,228 | |
| Indianapolis, IN | | May 17, 2021 | | 154,440 | | | 1 | | | 13,655 | |
| Baltimore, MD | | May 17, 2021 | | 46,851 | | | 1 | | | 6,228 | |
| Detroit, MI | | June 1, 2021 | | 248,040 | | | 1 | | | 23,786 | |
| Green Bay, WI | | June 7, 2021 | | 152,000 | | | 1 | | | 7,249 | |
| Phoenix, AZ | | June 14, 2021 | | 41,504 | | | 1 | | | 8,670 | |
| Cleveland, OH | | June 17, 2021 | | 179,577 | | | 1 | | | 19,602 | |
| Reno/Sparks, NV | | June 30, 2021 | | 183,435 | | | 1 | | | 13,892 | |
| Washington, DC | | June 30, 2021 | | 193,420 | | | 1 | | | 17,521 | |
| Stockton/Modesto, CA | | June 30, 2021 | | 150,000 | | | 1 | | | 16,118 | |
| Three months ended June 30, 2021 | | | | 1,349,267 | | | 9 | | | 126,721 | |
| Chicago, IL | | July 19, 2021 | | 109,355 | | | 2 | | | 13,341 | |
| Chicago, IL | | July 20, 2021 | | 207,223 | | | 1 | | | 23,345 | |
| Columbia, SC | | July 27, 2021 | | 194,290 | | | 1 | | | 14,546 | |
| South Bay/San Jose, CA | | August 9, 2021 | | 75,954 | | | 1 | | | 26,820 | |
| Columbus, OH | | August 19, 2021 | | 814,265 | | | 2 | | | 75,422 | |
| Salt Lake City, UT | | August 19, 2021 | | 177,071 | | | 1 | | | 35,141 | |
| Greenville/Spartanburg, SC | | August 23, 2021 | | 209,461 | | | 1 | | | 15,317 | |
| Indianapolis, IN | | August 26, 2021 | | 78,600 | | | 1 | | | 5,707 | |
| Birmingham, AL | | August 26, 2021 | | 595,176 | | | 1 | | | 36,850 | |
| Sacramento, CA | | August 30, 2021 | | 114,597 | | | 1 | | | 15,388 | |
| Chicago, IL | | September 2, 2021 | | 95,482 | | | 1 | | | 11,799 | |
| Chicago, IL | | September 16, 2021 | | 506,096 | | | 4 | | | 50,661 | |
| Milwaukee/Madison, WI | | September 16, 2021 | | 157,438 | | | 1 | | | 13,650 | |
| Denver, CO | | September 24, 2021 | | 195,674 | | | 2 | | | 39,136 | |
| Milwaukee/Madison, WI | | September 28, 2021 | | 156,482 | | | 1 | | | 10,807 | |
| Chicago, IL | | September 29, 2021 | | 110,035 | | | 1 | | | 10,585 | |
| Boston, MA | | September 29, 2021 | | 247,056 | | | 2 | | | 28,704 | |
| Three months ended September 30, 2021 | | | | 4,044,255 | | | 24 | | | 427,219 | |
| Omaha/Council Bluffs, NE-IA | | October 6, 2021 | | 99,616 | | | 2 | | | 8,669 | |
| El Paso, TX | | October 8, 2021 | | 276,360 | | | 1 | | | 27,844 | |
| St. Louis, MO | | October 12, 2021 | | 121,223 | | | 1 | | | 12,991 | |
| South Bay/San Jose, CA | | October 12, 2021 | | 31,172 | | | 1 | | | 11,691 | |
| Chicago, IL | | October 13, 2021 | | 56,676 | | | 1 | | | 5,735 | |
| Dallas/Ft. Worth, TX | | October 13, 2021 | | 202,140 | | | 2 | | | 25,913 | |
| Sacramento, CA | | October 25, 2021 | | 82,174 | | | 1 | | | 10,275 | |
| Detroit, MI | | November 1, 2021 | | 126,720 | | | 1 | | | 18,291 | |
| Philadelphia, PA | | November 3, 2021 | | 385,399 | | | 1 | | | 25,909 | |
| West Michigan, MI | | November 9, 2021 | | 159,900 | | | 1 | | | 19,649 | |
| Philadelphia, PA | | November 9, 2021 | | 109,504 | | | 1 | | | 8,071 | |
| Minneapolis/St. Paul, MN | | November 10, 2021 | | 316,636 | | | 1 | | | 30,583 | |
| Chicago, IL | | November 12, 2021 | | 579,338 | | | 4 | | | 62,948 | |
| Philadelphia, PA | | November 12, 2021 | | 128,959 | | | 1 | | | 26,446 | |
| Sacramento, CA | | December 1, 2021 | | 67,200 | | | 1 | | | 7,721 | |
| Des Moines, IA | | December 9, 2021 | | 200,957 | | | 1 | | | 22,866 | |
| Greenville/Spartanburg, SC | | December 17, 2021 | | 231,626 | | | 1 | | | 31,169 | |
| Milwaukee/Madison, WI | | December 17, 2021 | | 192,800 | | | 1 | | | 23,327 | |
| Sacramento, CA | | December 21, 2021 | | 188,830 | | | 2 | | | 27,616 | |
Sacramento, CA(2) | | December 22, 2021 | | — | | | — | | | 28,930 | |
| Des Moines, IA | | December 23, 2021 | | 179,459 | | | 1 | | | 13,556 | |
| Philadelphia, PA | | December 23, 2021 | | 589,580 | | | 1 | | | 53,790 | |
| Nashville, TN | | December 23, 2021 | | 58,672 | | | 1 | | | 7,271 | |
| Westchester/S. Connecticut, CT/NY | | December 23, 2021 | | 167,700 | | | 1 | | | 16,700 | |
| Washington, DC | | December 28, 2021 | | 1,231,200 | | | 2 | | | 140,668 | |
| Minneapolis/St. Paul, MN | | December 28, 2021 | | 83,000 | | | 1 | | | 11,058 | |
| Chicago, IL | | December 29, 2021 | | 102,000 | | | 1 | | | 9,742 | |
| Omaha/Council Bluffs, NE-IA | | December 30, 2021 | | 178,368 | | | 1 | | | 17,888 | |
| Atlanta, GA | | December 31, 2021 | | 103,720 | | | 1 | | | 11,083 | |
| Three months ended December 31, 2021 | | | | 6,250,929 | | | 35 | | | 718,400 | |
| Year ended December 31, 2021 | | | | 12,896,774 | | | 74 | | | $ | 1,372,568 | |
(1) As defined by CoStar Realty Information Inc. If the building is located outside of a CoStar defined market, the city and state is reflected.
(2) The Company acquired a building under development.
The following table summarizes the allocation of the consideration paid at the date of acquisition during the years ended December 31, 2022 and 2021, for the acquired assets and liabilities in connection with the acquisitions identified in the tables above.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Year ended December 31, 2022 | | Year ended December 31, 2021 |
| Acquired Assets and Liabilities | | Purchase price (in thousands) | | Weighted average amortization period (years) of intangibles at acquisition | | Purchase price (in thousands) | | Weighted average amortization period (years) of intangibles at acquisition |
| Land | | $ | 39,346 | | | N/A | | $ | 137,827 | | | N/A |
| Buildings | | 360,209 | | | N/A | | 988,456 | | | N/A |
| Tenant improvements | | 2,640 | | | N/A | | 7,356 | | | N/A |
| Building and land improvements | | 19,589 | | | N/A | | 58,504 | | | N/A |
| Construction in progress | | — | | | N/A | | 24,581 | | | N/A |
| Other assets | | 2,134 | | | N/A | | 1,004 | | | N/A |
| Operating lease right-of-use assets | | 3,541 | | | N/A | | 5,627 | | | N/A |
| Deferred leasing intangibles - In-place leases | | 34,321 | | | 7.9 | | 103,051 | | | 7.8 |
| Deferred leasing intangibles - Tenant relationships | | 18,418 | | | 11.1 | | 52,579 | | | 10.6 |
| Deferred leasing intangibles - Above market leases | | 2,456 | | | 11.6 | | 10,764 | | | 11.4 |
| Deferred leasing intangibles - Below market leases | | (6,021) | | | 7.5 | | (10,691) | | | 6.1 |
| Operating lease liabilities | | (3,541) | | | N/A | | (5,627) | | | N/A |
| | | | | | | | |
| Below market assumed debt adjustment | | — | | | N/A | | 161 | | | 18.8 |
| | | | | | | | |
| Tenant prepaid rent | | (445) | | | N/A | | (1,024) | | | N/A |
| Total purchase price | | 472,647 | | | | | 1,372,568 | | | |
| Less: Mortgage note assumed | | — | | | | | (5,103) | | | |
| Net assets acquired | | $ | 472,647 | | | | | $ | 1,367,465 | | | |
On February 25, 2021, the Company assumed a mortgage note of approximately $5.1 million in connection with the acquisition of the property located in Long Island, NY. For a discussion of the method used to determine the fair value of the mortgage note, see Note 4.
Dispositions
The following table summarizes the Company’s dispositions for the years ended December 31, 2022, 2021, and 2020.
| | | | | | | | | | | | | | | | | | | | |
| | Year ended December 31, |
| Sales of rental property, net (dollars in thousands) | | 2022 | | 2021 | | 2020 |
| Number of buildings | | 8 | | 22 | | 7 |
| Number of land parcels | | 1 | | — | | | — | |
| Building square feet (in millions) | | 1.8 | | 2.7 | | 3.4 |
2022 dispositions contribution to net income(1) | | $ | 1,008 | | | $ | 4,699 | | | $ | 4,764 | |
2021 dispositions contribution to net income(1) | | $ | — | | | $ | 862 | | | $ | 3,645 | |
2020 dispositions contribution to net income(1) | | $ | — | | | $ | — | | | $ | 1,788 | |
| Proceeds from sales of rental property, net | | $ | 135,348 | | | $ | 187,972 | | | $ | 273,560 | |
| Net book value | | $ | 77,861 | | | $ | 89,992 | | | $ | 137,827 | |
| Gain on the sales of rental property, net | | $ | 57,487 | | | $ | 97,980 | | | $ | 135,733 | |
(1) Exclusive of any loss on impairments, gain on involuntary conversion, and gain on the sales of rental property, net.
All of the dispositions were sold to third parties and were accounted for under the full accrual method.
Assets Held for Sale
As of December 31, 2022, the related land and building and improvements, net of approximately $0.6 million and $4.1 million, respectively, for one building was classified as assets held for sale, net on the accompanying Consolidated Balance Sheets. This building contributed approximately $0.4 million, $0.4 million, and $0.3 million to net income during the years ended December 31, 2022, 2021 and 2020, respectively. Subsequent to December 31, 2022, in January 2023, this building was sold to a third party.
Gain on Involuntary Conversion
The Company recognized a gain on involuntary conversion of approximately $0, $0, and $2.2 million during the years ended December 31, 2022, 2021 and 2020, respectively. The gain on involuntary conversion during the year ended December 31, 2020 related to an eminent domain taking of a changeportion of control.a parcel of land.
Loss on Impairments
The following table summarizes the Company’s loss on impairments for assets held and used during the years ended December 31, 2022 and 2020. The Company did not recognize a loss on impairments during the year ended December 31, 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Market (1) | | Buildings | | Event or Change in Circumstance Leading to Impairment Evaluation(2) | | Valuation technique utilized to estimate fair value | | Fair Value(3) | | Loss on Impairments |
| (in thousands) |
| Hartford, CT | | 1 | | Change in estimated hold period | | Discounted cash flows | (4) | $ | 834 | | | $ | 1,783 | |
| | | | | | |
| Year ended December 31, 2022 | | | | | | $ | 1,783 | |
| Williamsport, PA | | 1 | | Change in estimated hold period | (5) | Discounted cash flows | (6) | $ | 5,019 | | | $ | 3,172 | |
| | | | | | |
| Albion, IN | | 5 | | Change in estimated hold period | (7) | Discounted cash flows | (8) | $ | 1,252 | | | $ | 2,405 | |
| | | | | | |
| Year ended December 31, 2020 | | | | | | $ | 5,577 | |
| | | | | | | | | | |
| | | | | | |
| | | | | | | | | | |
| | | | | | |
| | | | | | |
(1)As defined by CoStar. If the building is located outside of a CoStar defined market, the city and state is reflected.
(2)The Company tested the asset group for impairment utilizing a probability weighted recovery analysis of certain scenarios, and it was determined that the carrying value of the property and intangibles were not recoverable from the estimated future undiscounted cash flows.
(3)The estimated fair value of the property is based on Level 3 inputs and is a non-recurring fair value measurement. Level 3 is defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
(4)Level 3 inputs used to determine fair value for the property impaired: discount rate of 10.0% and exit capitalization rate of 8.5%.
(5)This property was sold during the year ended December 31, 2022.
(6)Level 3 inputs used to determine fair value for the property impaired: discount rate of 10.5% and exit capitalization rate of 10.0%.
(7)Four of the buildings were sold during the year ended December 31, 2021.
(8)Level 3 inputs used to determine fair value for the property impaired: discount rate of 11.0% and exit capitalization rate of 10.0%.
Deferred Leasing Intangibles
The following table summarizes the deferred leasing intangibles, net on the accompanying Consolidated Balance Sheets as of December 31, 2022 and 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2022 | | December 31, 2021 |
| Deferred Leasing Intangibles (in thousands) | | Gross | | Accumulated Amortization | | Net | | Gross | | Accumulated Amortization | | Net |
| Above market leases | | $ | 86,172 | | | $ | (34,954) | | | $ | 51,218 | | | $ | 91,565 | | | $ | (32,110) | | | $ | 59,455 | |
| Other intangible lease assets | | 751,611 | | | (293,894) | | | 457,717 | | | 758,131 | | | (249,928) | | | 508,203 | |
| Total deferred leasing intangible assets | | $ | 837,783 | | | $ | (328,848) | | | $ | 508,935 | | | $ | 849,696 | | | $ | (282,038) | | | $ | 567,658 | |
| | | | | | | | | | | | |
| Below market leases | | $ | 57,020 | | | $ | (24,593) | | | $ | 32,427 | | | $ | 56,857 | | | $ | (21,136) | | | $ | 35,721 | |
| Total deferred leasing intangible liabilities | | $ | 57,020 | | | $ | (24,593) | | | $ | 32,427 | | | $ | 56,857 | | | $ | (21,136) | | | $ | 35,721 | |
The following table summarizes the amortization expense and the net increase (decrease) to rental income for the amortization of deferred leasing intangibles during the years ended December 31, 2022, 2021 and 2020.
| | | | | | | | | | | | | | | | | | | | |
| | | Year ended December 31, |
| Deferred Leasing Intangibles Amortization (in thousands) | | 2022 | | 2021 | | 2020 |
| Net increase (decrease) to rental income related to above and below market lease amortization | | $ | 329 | | | $ | (2,073) | | | $ | (4,363) | |
| Amortization expense related to other intangible lease assets | | $ | 95,901 | | | $ | 88,729 | | | $ | 83,160 | |
The following table summarizes the amortization of deferred leasing intangibles over the next five calendar years as of December 31, 2022.
| | | | | | | | | | | | | | |
| Year | | Amortization Expense Related to Other Intangible Lease Assets (in thousands) | | Net Increase (Decrease) to Rental Income Related to Above and Below Market Lease Amortization (in thousands) |
| 2023 | | $ | 84,098 | | | $ | 249 | |
| 2024 | | $ | 72,640 | | | $ | (418) | |
| 2025 | | $ | 63,443 | | | $ | (252) | |
| 2026 | | $ | 54,351 | | | $ | (968) | |
| 2027 | | $ | 42,957 | | | $ | (1,778) | |
4. Debt
The following table summarizes the Company’s outstanding indebtedness, including borrowings under the Company’s unsecured credit facility, unsecured term loans, unsecured notes, and mortgage notes as of December 31, 2022 and 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Loan | | Principal Outstanding as of December 31, 2022 (in thousands) | | Principal Outstanding as of December 31, 2021 (in thousands) | | Interest
Rate(1)(2) | | Maturity Date | | Prepayment Terms(3) |
| Unsecured credit facility: | | | | | | | | | | |
Unsecured Credit Facility(4) | | $ | 175,000 | | | $ | 296,000 | | | Term SOFR + 0.855% | | October 23, 2026 | | i |
| Total unsecured credit facility | | 175,000 | | | 296,000 | | | | | | | |
| | | | | | | | | | |
| Unsecured term loans: | | | | | | | | | | |
Unsecured Term Loan D(5) | | — | | | 150,000 | | | 2.85 | % | | January 4, 2023 | | i |
Unsecured Term Loan E(5) | | — | | | 175,000 | | | 3.77 | % | | January 15, 2024 | | i |
| Unsecured Term Loan F | | 200,000 | | | 200,000 | | | 2.94 | % | | January 12, 2025 | | i |
| Unsecured Term Loan G | | 300,000 | | | 300,000 | | | 1.09 | % | | February 5, 2026 | | i |
| Unsecured Term Loan A | | 150,000 | | | 150,000 | | | 2.14 | % | | March 15, 2027 | | i |
| Unsecured Term Loan H | | 187,500 | | | — | | | 3.75 | % | | January 25, 2028 | | i |
| Unsecured Term Loan I | | 187,500 | | | — | | | 2.89 | % | | January 25, 2028 | | i |
| Total unsecured term loans | | 1,025,000 | | | 975,000 | | | | | | | |
| Total unamortized deferred financing fees and debt issuance costs | | (4,560) | | | (4,423) | | | | | | | |
| Total carrying value unsecured term loans, net | | 1,020,440 | | | 970,577 | | | | | | | |
| | | | | | | | | | |
| Unsecured notes: | | | | | | | | | | |
Series F Unsecured Notes(6) | | 100,000 | | | 100,000 | | | 3.98 | % | | January 5, 2023 | | ii |
| Series A Unsecured Notes | | 50,000 | | | 50,000 | | | 4.98 | % | | October 1, 2024 | | ii |
| Series D Unsecured Notes | | 100,000 | | | 100,000 | | | 4.32 | % | | February 20, 2025 | | ii |
| Series G Unsecured Notes | | 75,000 | | | 75,000 | | | 4.10 | % | | June 13, 2025 | | ii |
| Series B Unsecured Notes | | 50,000 | | | 50,000 | | | 4.98 | % | | July 1, 2026 | | ii |
| Series C Unsecured Notes | | 80,000 | | | 80,000 | | | 4.42 | % | | December 30, 2026 | | ii |
| Series E Unsecured Notes | | 20,000 | | | 20,000 | | | 4.42 | % | | February 20, 2027 | | ii |
| Series H Unsecured Notes | | 100,000 | | | 100,000 | | | 4.27 | % | | June 13, 2028 | | ii |
| Series I Unsecured Notes | | 275,000 | | | 275,000 | | | 2.80 | % | | September 29, 2031 | | ii |
| Series K Unsecured Notes | | 400,000 | | | — | | | 4.12 | % | | June 28, 2032 | | ii |
| Series J Unsecured Notes | | 50,000 | | | 50,000 | | | 2.95 | % | | September 28, 2033 | | ii |
| Total unsecured notes | | 1,300,000 | | | 900,000 | | | | | | | |
| Total unamortized deferred financing fees and debt issuance costs | | (4,558) | | | (3,059) | | | | | | | |
| Total carrying value unsecured notes, net | | 1,295,442 | | | 896,941 | | | | | | | |
| | | | | | | | | | |
| Mortgage notes (secured debt): | | | | | | | | | | |
| Wells Fargo Bank, National Association CMBS Loan | | — | | | 46,610 | | | 4.31 | % | | December 1, 2022 | | iii |
| Thrivent Financial for Lutherans | | 3,296 | | | 3,430 | | | 4.78 | % | | December 15, 2023 | | iv |
| United of Omaha Life Insurance Company | | 4,744 | | | 4,943 | | | 3.71 | % | | October 1, 2039 | | ii |
| Total mortgage notes | | 8,040 | | | 54,983 | | | | | | | |
| Net unamortized fair market value discount | | (137) | | | (136) | | | | | | | |
| Total unamortized deferred financing fees and debt issuance costs | | (5) | | | (103) | | | | | | | |
| Total carrying value mortgage notes, net | | 7,898 | | | 54,744 | | | | | | | |
Total / weighted average interest rate(6) | | $ | 2,498,780 | | | 2,218,262 | | | 3.39 | % | | | | |
(1)Interest rate as of December 31, 2022. At December 31, 2022, the one-month Term Secured Overnight Financing Rate (“Term SOFR”) was 4.35806%. The current interest rate is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums or discounts. The spread over the applicable rate for the Company’s unsecured credit facility and unsecured term loans is based on the Company’s debt rating and leverage ratio, as defined in the respective loan agreements.
(2)The unsecured credit facility has a stated rate of one-month Term SOFR plus a 0.10% adjustment and a spread of 0.775%, less a sustainability-related interest rate adjustment of 0.02%. The unsecured term loans A, F, and G have a stated interest rate of one-month Term SOFR plus a 0.10% adjustment and a spread of 0.85%, less a sustainability-related interest rate adjustment of 0.02%. The unsecured term loans H and I have a stated interest rate of one-month Term SOFR plus a 0.10% adjustment and a spread of 0.85%. As of December 31, 2022, one-month Term SOFR for the Unsecured Term Loans A, F, G, H, and I was swapped to a fixed rate of 1.31%, 2.11%, 0.26%, 2.90%, and 2.04%, respectively (which includes the 0.10% adjustment). One-month Term SOFR for the Unsecured Term Loan G will be swapped to a fixed rate of 0.95% effective April 18, 2023. One-month Term SOFR for the Unsecured Term Loan I will be swapped to a fixed rate of 2.66% effective January 4, 2023. One-month Term SOFR for the Unsecured Term Loan H will be swapped to a fixed rate of 2.50% effective January 12, 2024.
(3)Prepayment terms consist of (i) pre-payable with no penalty; (ii) pre-payable with penalty; (iii) pre-payable without penalty three months prior to the maturity date, subject to defeasance; and (iv) pre-payable without penalty three months prior to the maturity date.
(4)The capacity of the unsecured credit facility is $1.0 billion. Deferred financing fees and debt issuance costs, net of accumulated amortization related to the unsecured credit facility of approximately $5.2 million and $5.2 million are included in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets as of December 31, 2022 and December 31, 2021, respectively. The initial maturity date is October 24, 2025, or such later date which may be extended pursuant to two six-month extension options exercisable by the Company in its discretion upon advance written notice. Exercise of each six-month option is subject to the following conditions: (i) absence of a default immediately before the extension and immediately after giving effect to the extension; (ii) accuracy of representations and warranties as of the extension date (both immediately before and after the extension), as if made on the extension date; and (iii) payment of a fee. Neither extension option is subject to lender consent, assuming proper notice and satisfaction of the conditions. We are required to pay a facility fee on the aggregate commitment amount (currently $1.0 billion) at a rate per annum of 0.1% to 0.3%, depending on our debt rating, as defined in the credit agreement. The facility fee is due and payable quarterly.
(5)The Unsecured Term Loan D and the Unsecured Term Loan E were repaid in full on July 26, 2022 in connection with the execution of the Unsecured Term Loan H and the Unsecured Term Loan I.
(6)Subsequent to December 31, 2022, on January 5, 2023, the Series F Unsecured Notes were repaid in full. Refer to Note 13 for additional details.
(7)The weighted average interest rate was calculated using the fixed interest rate swapped on the notional amount of $1,025.0 million of debt, and is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums or discounts.
The aggregate undrawn nominal commitment on the unsecured credit facility as of December 31, 2022 was approximately $821.4 million, including issued letters of credit. The Company’s actual borrowing capacity at any given point in time may be less or restricted to a maximum amount based on the Company’s debt covenant compliance. Total accrued interest for the Company’s indebtedness was approximately $13.1 million and $8.6 million as of December 31, 2022 and 2021, respectively, and is included in accounts payable, accrued expenses and other liabilities on the accompanying Consolidated Balance Sheets.
The following table summarizes the costs included in interest expense related to the Company’s debt arrangements on the accompanying Consolidated Statement of Operations for the years ended December 31, 2022, 2021 and 2020.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Year ended December 31, |
| Costs Included in Interest Expense (in thousands) | | | | | | 2022 | | 2021 | | 2020 |
| Amortization of deferred financing fees and debt issuance costs and fair market value premiums/discounts | | | | | | $ | 3,747 | | | $ | 2,931 | | | $ | 2,922 | |
| Facility, unused, and other fees | | | | | | $ | 1,548 | | | $ | 1,642 | | | $ | 1,311 | |
2022 Debt Activity
On October 3, 2022, the Company achieved a 2022 public disclosure assessment score of “A” from the Global Real Estate Sustainability Benchmark (GRESB). The improved score triggered a sustainability-related interest rate adjustment for the Unsecured Term Loan A, Unsecured Term Loan F, Unsecured Term Loan G, and Unsecured Credit Facility. The interest rate adjustment, a 0.02% interest rate reduction for each instrument, went into effect on October 17, 2022 and will end on June 29, 2024, in accordance with the respective loan agreements.
On September 1, 2022, the mortgage note associated with the Wells Fargo Bank, National Association CMBS Loan was repaid in full.
On September 1, 2022, the Company entered into separate amended and restated loan agreements for the Unsecured Term Loan A, the Unsecured Term Loan F, and the Unsecured Term Loan G (“Amended and Restated Unsecured Term Loans”), to provide that borrowings under the Amended and Restated Unsecured Term Loans bear a current annual interest rate of one-month Term SOFR, plus an adjustment of 0.10% and a spread of 0.85%, based on the Company’s debt rating and leverage ratio (as defined in the applicable loan agreement). Other than the interest rate provisions described above, the material terms of the Amended and Restated Unsecured Term Loans, including the maturity dates, remain unchanged.
On July 26, 2022, the Company entered into an amended and restated credit agreement for the unsecured credit facility (the “July 2022 Credit Agreement”), which provided for an increase in the aggregate commitments available for borrowing under the unsecured credit facility from $750.0 million to up to $1.0 billion. The July 2022 Credit Agreement also provided for the replacement of one-month LIBOR for one-month Term SOFR, plus a 0.10% adjustment. In connection with the July 2022 Credit Agreement, the Company incurred approximately $1.4 million in costs which are being deferred and amortized through the maturity date of the unsecured credit facility. The unamortized fees will continue to be deferred and amortized through the maturity date. Other than the increase in the borrowing commitments and the interest rate provisions described above, the material terms of the unsecured credit facility remain unchanged.
On July 26, 2022, the Company entered into (i) an unsecured term loan agreement with Wells Fargo Bank, National Association and the other lenders party thereto, providing for a new senior unsecured term loan in the original principal amount of $187.5 million (“Unsecured Term Loan H”) and (ii) an unsecured term loan agreement with Bank of America, N.A., and the
other lenders party thereto, providing for a new senior unsecured term loan in the original principal amount of $187.5 million (“Unsecured Term Loan I”). In connection with the new unsecured term loans, the $150.0 million Unsecured Term Loan D and the $175.0 million Unsecured Term Loan E were repaid in full. Each of the Unsecured Term Loan H and the Unsecured Term Loan I bears a current annual interest rate of one-month Term SOFR, plus a 0.10% adjustment and a spread of 0.85% based on the Company’s debt rating and leverage ratio (as defined in the applicable loan agreement), and matures on January 25, 2028. In connection with the new unsecured term loans, the Company incurred approximately $1.2 million in costs which are being deferred and amortized through the maturity dates on the unsecured term loans. The Company also recognized debt extinguishment and modification expenses of approximately $0.8 million related to unamortized deferred financing fees and debt issuance costs related to the Unsecured Term Loan D and the Unsecured Term Loan E and other third-party costs.
On April 28, 2022, the Company entered into a note purchase agreement (the “April 2022 NPA”) for the private placement by the Operating Partnership of $400.0 million senior unsecured notes (the “Series K Unsecured Notes”) maturing June 28, 2032, with a fixed annual interest rate of 4.12%. The April 2022 NPA contains a number of financial covenants substantially similar to the financial covenants contained in the Company’s unsecured credit facility and other unsecured notes, plus a financial covenant that requires the Company to maintain a minimum interest coverage ratio of not less than 1.50:1.00. The Operating Partnership issued the Series K Unsecured Notes on June 28, 2022. The Company and certain wholly owned subsidiaries of the Operating Partnership are guarantors of the Series K Unsecured Notes.
2021 Debt Activity
On October 26, 2021, the Company entered into an amendment to the unsecured credit facility (the “October 2021 Credit Facility Amendment”). The October 2021 Credit Facility Amendment provides for an extension of the maturity date to October 24, 2025, with two six-month extension options, subject to certain conditions, and a reduced current interest rate of LIBOR plus a spread of 0.775% and facility fee of 0.15%, each based on the Company’s current debt rating (as defined in the credit agreement) and leverage level. In connection with the October 2021 Credit Facility Amendment, the Company incurred approximately $3.7 million in costs which are being deferred and amortized through the maturity date of the unsecured credit facility. The Company also incurred approximately $0.1 million of modification expenses which were recognized in debt extinguishment and modification expenses in the accompanying Consolidated Statements of Operations. Other than the maturity and interest rate provisions described above, the material terms of the unsecured credit facility remained unchanged.
On October 26, 2021, the Company entered into an amendment to the Unsecured Term Loan A (the “Amendment to Unsecured Term Loan A”). The Amendment to Unsecured Term Loan A provides for an extension of the maturity date to March 15, 2027 and a reduced current interest rate of LIBOR plus a spread of 0.85% based on the Company’s current debt rating (as defined in the loan agreement) and leverage level. In connection with the Amendment to Unsecured Term Loan A, the Company incurred approximately $0.6 million in costs which are being deferred and amortized through the new maturity date. The Company also incurred approximately $0.2 million of modification expenses which were recognized in debt extinguishment and modification expenses in the accompanying Consolidated Statements of Operations. Other than the maturity and interest rate provisions described above, the material terms of the Unsecured Term Loan A remain unchanged.
On October 26, 2021, the Company entered into amendments to the Unsecured Term Loan E, the Unsecured Term Loan F, and the Unsecured Term Loan G (“Term Loan Amendments”) that provide for reduced current interest rates on each of the loans of LIBOR plus a spread of 0.85% based on the Company’s current debt rating (as defined in each loan agreement) and leverage level. In connection with the Term Loan Amendments, the Company incurred approximately $0.6 million in costs which are being deferred and amortized through the respective maturity dates. The Company also incurred approximately $1.2 million of modification expenses which were recognized in debt extinguishment and modification expenses in the accompanying Consolidated Statements of Operations. Other than the interest rate provisions described above, the material terms of the Unsecured Term Loan E, the Unsecured Term Loan F, and the Unsecured Term Loan G remain unchanged.
On October 26, 2021, the Company entered into an amendment to the Unsecured Term Loan D to conform certain provisions of such loan agreement to the unsecured credit facility.
On July 8, 2021, the Company entered into a note purchase agreement (the “July 2021 NPA”) for the private placement by the Operating Partnership of $275.0 million senior unsecured notes (the “Series I Unsecured Notes”) maturing September 29, 2031, with a fixed annual interest rate of 2.80%, and $50.0 million senior unsecured notes (the “Series J Unsecured Notes”) maturing September 28, 2033, with a fixed annual interest rate of 2.95%. The July 2021 NPA contains a number of financial covenants substantially similar to the financial covenants contained in the Company’s unsecured credit facility and other unsecured notes, plus a financial covenant that requires the Company to maintain a minimum interest coverage ratio of not less than 1.50:1.00.
The Operating Partnership issued the Series I Unsecured Notes and Series J Unsecured Notes on September 28, 2021. The Company and certain wholly owned subsidiaries of the Operating Partnership are guarantors of the unsecured notes.
On February 25, 2021, the Company assumed a mortgage note with United of Omaha Life Insurance Company of approximately $5.1 million in connection with the acquisition of the property located in Long Island, NY, which serves as collateral for the debt. The debt matures on October 1, 2039 and bears interest at 3.71% per annum. The assumed debt was recorded at fair value and a fair value discount of approximately $0.2 million was recorded. The fair value of debt was determined by discounting the future cash flows using the current rate of approximately 4.10% at which loans would be made to borrowers with similar credit ratings for loans with similar maturities, terms, and loan-to-value ratios. The fair value of the debt is based on Level 3 inputs and is a nonrecurring fair value measurement.
On February 5, 2021, the Company entered into an amendment to the unsecured credit facility (the “Credit Facility Amendment”). The Credit Facility Amendment provided for an increase in the aggregate commitments available for borrowing under the unsecured credit facility from $500 million to up to $750 million. In connection with the Credit Facility Amendment, the Company incurred approximately $1.2 million in costs which are being deferred and amortized through the maturity date of the unsecured credit facility. Other than the increase in the borrowing commitments, the material terms of the unsecured credit facility remain unchanged.
On February 5, 2021, the Company entered into an amendment to the Unsecured Term Loan G (the “Amendment to Unsecured Term Loan G”). The Amendment to Unsecured Term Loan G provided for an extension of the maturity date to February 5, 2026 and a reduced stated interest rate of one-month LIBOR plus a spread that ranges from 0.85% to 1.65% for LIBOR borrowings based on the Company’s debt ratings. The Amendment to Unsecured Term Loan G also amended the provision for a minimum interest rate, or floor, for LIBOR borrowings to 0.00% and for Base Rate borrowings to 1.00%. In connection with the Amendment to Unsecured Term Loan G, the Company incurred approximately $1.6 million in costs which are being deferred and amortized through the new maturity date of February 5, 2026. The Company also incurred approximately $0.7 million of modification expenses which were recognized in debt extinguishment and modification expenses in the accompanying Consolidated Statements of Operations. Additionally, the Company reversed the previously accrued extension fees of approximately $1.1 million from the amendment to the Unsecured Term Loan G that was entered into on April 17, 2020, which resulted in a decrease to interest expense of approximately $0.3 million. Other than the maturity and interest rate provisions described above, the material terms of the Unsecured Term Loan G remain unchanged.
Financial Covenant Considerations
The Company’s ability to borrow under the unsecured credit facility, unsecured term loans, and unsecured notes are subject to its ongoing compliance with a number of customary financial covenants, including:
•a maximum consolidated leverage ratio of not greater than 0.60:1.00;
•a maximum secured leverage ratio of not greater than 0.40:1.00;
•a maximum unencumbered leverage ratio of not greater than 0.60:1.00;
•a minimum fixed charge ratio of not less than or equal to 1.50:1.00;
•a minimum unsecured interest coverage ratio of not less than or equal to 1.75:1.00; and
•with respect to the unsecured notes, a minimum interest coverage ratio of not less than 1.50:1.00.
The Company was in compliance with all such applicable restrictions and financial and other covenants as of December 31, 2022 and 2021 related to its unsecured credit facility, unsecured term loans, and unsecured notes. In the event of a default under the unsecured credit facility or the unsecured term loans, the Company’s dividend distributions are limited to the minimum amount necessary for the Company to maintain its status as a REIT.
Each of the Company’s mortgage notes has specific properties and assignments of rents and leases that are collateral for these loans. The Wells Fargo Bank, National Association CMBS debt facility contained certain financial and other covenants and was repaid in full in 2022. The Company was in compliance with all such applicable restrictions and financial and other covenants as of December 31, 2021, related to the Wells Fargo Bank, National Association CMBS loan. The real estate net book value of the properties that are collateral for the Company’s debt arrangements was approximately $14.8 million and $88.5 million at December 31, 2022 and 2021, respectively, and is limited to senior, property-level secured debt financing arrangements.
Fair Value of Debt
The following table summarizes the aggregate principal amount outstanding under the Company’s debt arrangements and the corresponding estimate of fair value as of December 31, 2022 and 2021. The fair value of the Company’s debt is based on Level 3 inputs.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | December 31, 2022 | | December 31, 2021 |
| Indebtedness (in thousands) | | Principal Outstanding | | Fair Value | | Principal Outstanding | | Fair Value |
| Unsecured credit facility | | $ | 175,000 | | | $ | 175,000 | | | $ | 296,000 | | | $ | 296,000 | |
| Unsecured term loans | | 1,025,000 | | | 1,025,000 | | | 975,000 | | | 975,224 | |
| Unsecured notes | | 1,300,000 | | | 1,150,283 | | | 900,000 | | | 937,183 | |
| Mortgage notes | | 8,040 | | | 6,855 | | | 54,983 | | | 56,323 | |
| Total principal amount | | 2,508,040 | | | $ | 2,357,138 | | | 2,225,983 | | | $ | 2,264,730 | |
| Net unamortized fair market value discount | | (137) | | | | | (136) | | | |
| Total unamortized deferred financing fees and debt issuance costs | | (9,123) | | | | | (7,585) | | | |
| Total carrying value | | $ | 2,498,780 | | | | | $ | 2,218,262 | | | |
Future Principal Payments of Debt
The following table summarizes the Company’s aggregate future principal payments of the Company’s debt at December 31, 2022.
| | | | | | | | |
| Year | | Future Principal Payments of Debt
(in thousands) |
| 2023 | | $ | 103,502 | |
| 2024 | | 50,215 | |
| 2025 | | 550,223 | |
| 2026 | | 430,231 | |
| 2027 | | 170,240 | |
| Thereafter | | 1,203,629 | |
| Total aggregate principal payments | | $ | 2,508,040 | |
| | |
| | |
| | |
5. Derivative Financial Instruments
Risk Management Objective of Using Derivatives
The Company’s use of derivative instruments is limited to the utilization of interest rate swaps to manage interest rate risk exposure on existing and future liabilities and not for speculative purposes. The principal objective of such arrangements is to minimize the risks and related costs associated with the Company’s operating and financial structure.
The following table summarizes the Company’s outstanding interest rate swaps as of December 31, 2022. All of the Company’s interest rate swaps are designated as qualifying cash flow hedges.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest Rate Derivative Counterparty | | Trade Date | | Effective Date | | Notional Amount
(in thousands) | | Fair Value
(in thousands) | | Pay Fixed Interest Rate | | Receive Variable Interest Rate | | Maturity Date |
| The Toronto-Dominion Bank | | Jul-20-2017 | | Jul-28-2022 | | $ | 25,000 | | | $ | 5 | | | 1.8830 | % | | One-month Term SOFR | | Jan-04-2023 |
| Royal Bank of Canada | | Jul-20-2017 | | Jul-28-2022 | | $ | 25,000 | | | $ | 5 | | | 1.8980 | % | | One-month Term SOFR | | Jan-04-2023 |
| Wells Fargo Bank, N.A. | | Jul-20-2017 | | Jul-28-2022 | | $ | 25,000 | | | $ | 5 | | | 1.8750 | % | | One-month Term SOFR | | Jan-04-2023 |
| PNC Bank, N.A. | | Jul-20-2017 | | Jul-28-2022 | | $ | 25,000 | | | $ | 5 | | | 1.8860 | % | | One-month Term SOFR | | Jan-04-2023 |
| PNC Bank, N.A. | | Jul-20-2017 | | Jul-28-2022 | | $ | 50,000 | | | $ | 10 | | | 1.8850 | % | | One-month Term SOFR | | Jan-04-2023 |
| The Toronto-Dominion Bank | | Apr-20-2020 | | Aug-10-2022 | | $ | 75,000 | | | $ | 981 | | | 0.2660 | % | | One-month Term SOFR | | Apr-18-2023 |
| Wells Fargo Bank, N.A. | | Apr-20-2020 | | Aug-10-2022 | | $ | 75,000 | | | $ | 984 | | | 0.2520 | % | | One-month Term SOFR | | Apr-18-2023 |
| The Toronto-Dominion Bank | | Apr-20-2020 | | Aug-10-2022 | | $ | 75,000 | | | $ | 981 | | | 0.2660 | % | | One-month Term SOFR | | Apr-18-2023 |
| Wells Fargo Bank, N.A. | | Apr-20-2020 | | Aug-10-2022 | | $ | 75,000 | | | $ | 984 | | | 0.2520 | % | | One-month Term SOFR | | Apr-18-2023 |
| Bank of Montreal | | Jul-24-2018 | | Jul-26-2022 | | $ | 50,000 | | | $ | 999 | | | 2.9160 | % | | One-month Term SOFR | | Jan-12-2024 |
| The Toronto-Dominion Bank | | Jul-24-2018 | | Jul-26-2022 | | $ | 50,000 | | | $ | 1,003 | | | 2.9080 | % | | One-month Term SOFR | | Jan-12-2024 |
| PNC Bank, N.A. | | Jul-24-2018 | | Jul-26-2022 | | $ | 50,000 | | | $ | 997 | | | 2.9190 | % | | One-month Term SOFR | | Jan-12-2024 |
| U.S. Bank, N.A. | | Jul-24-2018 | | Jul-26-2022 | | $ | 25,000 | | | $ | 500 | | | 2.9120 | % | | One-month Term SOFR | | Jan-12-2024 |
| Wells Fargo Bank, N.A. | | May-02-2019 | | Aug-15-2022 | | $ | 50,000 | | | $ | 2,179 | | | 2.2360 | % | | One-month Term SOFR | | Jan-15-2025 |
| U.S. Bank, N.A. | | May-02-2019 | | Aug-15-2022 | | $ | 50,000 | | | $ | 2,182 | | | 2.2380 | % | | One-month Term SOFR | | Jan-15-2025 |
| Regions Bank | | May-02-2019 | | Aug-15-2022 | | $ | 50,000 | | | $ | 2,177 | | | 2.2389 | % | | One-month Term SOFR | | Jan-15-2025 |
| Bank of Montreal | | Jul-16-2019 | | Aug-15-2022 | | $ | 50,000 | | | $ | 2,700 | | | 1.7100 | % | | One-month Term SOFR | | Jan-15-2025 |
| U.S. Bank, N.A. | | Feb-17-2021 | | Apr-18-2023 | | $ | 150,000 | | | $ | 12,024 | | | 0.9520 | % | | One-month Term SOFR | | Feb-5-2026 |
| Wells Fargo Bank, N.A. | | Feb-17-2021 | | Apr-18-2023 | | $ | 75,000 | | | $ | 6,003 | | | 0.9460 | % | | One-month Term SOFR | | Feb-5-2026 |
| The Toronto-Dominion Bank | | Feb-17-2021 | | Apr-18-2023 | | $ | 75,000 | | | $ | 6,050 | | | 0.9355 | % | | One-month Term SOFR | | Feb-5-2026 |
| Regions Bank | | Oct-26-2021 | | Aug-01-2022 | | $ | 50,000 | | | $ | 4,953 | | | 1.3090 | % | | One-month Term SOFR | | Mar-15-2027 |
| Bank of Montreal | | Oct-26-2021 | | Aug-01-2022 | | $ | 50,000 | | | $ | 4,976 | | | 1.3090 | % | | One-month Term SOFR | | Mar-15-2027 |
| PNC Bank, N.A. | | Oct-26-2021 | | Aug-01-2022 | | $ | 50,000 | | | $ | 4,952 | | | 1.3150 | % | | One-month Term SOFR | | Mar-15-2027 |
| PNC Bank, N.A. | | Jul-27-2022 | | Jan-04-2023 | | $ | 50,000 | | | $ | 2,623 | | | 2.6420 | % | | One-month Term SOFR | | Jan-25-2028 |
| The Toronto-Dominion Bank | | Jul-27-2022 | | Jan-04-2023 | | $ | 50,000 | | | $ | 2,614 | | | 2.6530 | % | | One-month Term SOFR | | Jan-25-2028 |
| Regions Bank | | Jul-27-2022 | | Jan-04-2023 | | $ | 50,000 | | | $ | 2,583 | | | 2.6550 | % | | One-month Term SOFR | | Jan-25-2028 |
| U.S. Bank, N.A. | | Jul-27-2022 | | Jan-12-2024 | | $ | 75,000 | | | $ | 2,668 | | | 2.4865 | % | | One-month Term SOFR | | Jan-25-2028 |
| The Toronto-Dominion Bank | | Jul-27-2022 | | Jan-12-2024 | | $ | 50,000 | | | $ | 1,778 | | | 2.4910 | % | | One-month Term SOFR | | Jan-25-2028 |
| Wells Fargo Bank, N.A. | | Jul-27-2022 | | Jan-12-2024 | | $ | 50,000 | | | $ | 1,756 | | | 2.4930 | % | | One-month Term SOFR | | Jan-25-2028 |
| PNC Bank, N.A. | | Jul-27-2022 | | Jul-27-2022 | | $ | 50,000 | | | $ | 2,546 | | | 2.6790 | % | | One-month Term SOFR | | Jan-25-2028 |
In connection with the Amended and Restated Unsecured Term Loans that were entered into on September 1, 2022, as discussed in Note 4, the Company transitioned all of its outstanding interest rate swaps to one-month Term SOFR. The Company made various Accounting Standards Codification Topic 848 elections related to changes in critical terms of the hedging relationships due to reference rate reform to not result in a dedesignation of these hedging relationships. As of December 31, 2022, all of the Company's interest rate swap agreements were indexed to one-month Term SOFR.
The following table summarizes the fair value of the interest rate swaps outstanding as of December 31, 2022 and 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance Sheet Line Item (in thousands) | | Notional Amount December 31, 2022 | | Fair Value December 31, 2022 | | Notional Amount December 31, 2021 | | Fair Value December 31, 2021 |
| Interest rate swaps-Asset | | $ | 1,650,000 | | | $ | 72,223 | | | $ | 600,000 | | | $ | 5,220 | |
| Interest rate swaps-Liability | | $ | — | | | $ | — | | | $ | 825,000 | | | $ | (17,052) | |
Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate swaps are to add stability to interest expense and to manage its exposure to interest rate movements. The Company uses interest rate swaps to fix the rate of its long term variable rate debt. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income (loss) and subsequently reclassified to interest expense in the same periods during which the hedged transaction affects earnings.
Amounts reported in accumulated other comprehensive income (loss) related to derivatives designated as qualifying cash flow hedges will be reclassified to interest expense as interest payments are made on the Company’s variable rate debt. The Company estimates that approximately $39.8 million will be reclassified from accumulated other comprehensive income (loss) as a decrease to interest expense over the next 12 months.
The following table summarizes the effect of cash flow hedge accounting and the location of the amounts related to the Company’s derivatives in the consolidated financial statements for the years ended December 31, 2022, 2021 and 2020.
| | | | | | | | | | | | | | | | | | | | |
| | | Year ended December 31, |
| Effect of Cash Flow Hedge Accounting (in thousands) | | 2022 | | 2021 | | 2020 |
| Income (loss) recognized in accumulated other comprehensive income (loss) on interest rate swaps | | $ | 85,726 | | | $ | 12,520 | | | $ | (35,548) | |
| Income (loss) reclassified from accumulated other comprehensive income (loss) into income as interest expense | | $ | 1,640 | | | $ | (16,336) | | | $ | (13,439) | |
| Total interest expense presented in the Consolidated Statements of Operations in which the effects of cash flow hedges are recorded | | $ | 78,018 | | | $ | 63,484 | | | $ | 62,343 | |
Credit-risk-related Contingent Features
The Company has agreements with each of its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness.
As of December 31, 2022, the Company had not breached the provisions of these agreements and had not posted any collateral related to these agreements.
Fair Value of Interest Rate Swaps
The Company’s valuation of the interest rate swaps is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs including interest rate curves. The fair values of interest rate swaps are determined by using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.
The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.
Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company or its counterparties. However, as of December 31, 2022 and 2021, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.
The following table summarizes the Company’s financial instruments that were recorded at fair value on a recurring basis as of December 31, 2022 and 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Fair Value Measurements as of December 31, 2022 Using |
| Balance Sheet Line Item (in thousands) | | Fair Value December 31, 2022 | | Level 1 | | Level 2 | | Level 3 |
| Interest rate swaps-Asset | | $ | 72,223 | | | $ | — | | | $ | 72,223 | | | $ | — | |
| Interest rate swaps-Liability | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Fair Value Measurements as of December 31, 2021 Using |
| Balance Sheet Line Item (in thousands) | | Fair Value December 31, 2021 | | Level 1 | | Level 2 | | Level 3 |
| Interest rate swaps-Asset | | $ | 5,220 | | | $ | — | | | $ | 5,220 | | | $ | — | |
| Interest rate swaps-Liability | | $ | (17,052) | | | $ | — | | | $ | (17,052) | | | $ | — | |
6. Equity
Preferred Stock
The Company is authorized to issue up to 20,000,000 shares of preferred stock, par value $0.01 per share. As of December 31, 2022 and December 31, 2021, there were no shares of preferred stock issued or outstanding.
On March 1, 2021, the Company gave notice to redeem all 3,000,000 issued and outstanding shares of the Series C Preferred Stock on March 31, 2021. The Company redeemed the Series C Preferred Stock on March 31, 2021 at a cash redemption price of $25.00 per share, plus accrued and unpaid dividends to, but excluding, the redemption date. The Company recognized a deemed dividend to the holders of the Series C Preferred Stock of approximately $2.6 million on the accompanying Consolidated Statements of Operations for the year ended December 31, 2021 related to redemption costs and the original issuance costs of the Series C Preferred Stock.
Common StockOff-balance Sheet Arrangements
The following sets forth our ATM common stock offering program as of December 31, 2017. We may from time to time sell common stock through sales agents under the program.
|
| | | | | | | | | | |
| ATM Common Stock Offering Program | | Date | | Maximum Aggregate Offering Price (in thousands) | | Aggregate Common Stock Available as of
December 31, 2017 (in thousands) |
| 2017 $500 million ATM | | November 13, 2017 | | $ | 500,000 |
| | $ | 489,674 |
|
The tables below set forth the activity for the ATM common stock offering programs during the three months and year ended December 31, 2017 (in thousands, except share data).
|
| | | | | | | | | | | | | | | | | | | |
| | | Three months ended December 31, 2017 |
| ATM Common Stock Offering Program | | Shares
Sold | | Weighted Average Price Per Share | | Gross
Proceeds | | Sales
Agents’ Fee | | Net
Proceeds |
| 2017 $500 million ATM | | 363,843 |
| | $ | 28.38 |
| | $ | 10,326 |
| | $ | 129 |
| | $ | 10,197 |
|
2017 $300 million ATM(1) | | 2,732,536 |
| | $ | 28.40 |
| | 77,592 |
| | 970 |
| | 76,622 |
|
| Total/weighted average | | 3,096,379 |
| | $ | 28.39 |
| | $ | 87,918 |
| | $ | 1,099 |
| | $ | 86,819 |
|
| |
(1) | This program ended before December 31, 2017. |
|
| | | | | | | | | | | | | | | | | | | |
| | | Year ended December 31, 2017 |
| ATM Common Stock Offering Program | | Shares
Sold | | Weighted Average Price Per Share | | Gross
Proceeds | | Sales
Agents’ Fee | | Net
Proceeds |
| 2017 $500 million ATM | | 363,843 |
| | $ | 28.38 |
| | $ | 10,326 |
| | $ | 129 |
| | $ | 10,197 |
|
2017 $300 million ATM(1) | | 11,098,748 |
| | $ | 27.03 |
| | $ | 300,000 |
| | $ | 3,637 |
| | $ | 296,363 |
|
2016 $228 million ATM(1) | | 4,799,784 |
| | $ | 24.42 |
| | $ | 117,216 |
| | $ | 1,604 |
| | $ | 115,612 |
|
| Total/weighted average | | 16,262,375 |
| | $ | 26.29 |
| | $ | 427,542 |
| | $ | 5,370 |
| | $ | 422,172 |
|
| |
(1) | These programs ended before December 31, 2017. |
Noncontrolling Interest
We own our interests in all of our properties and conduct substantially all of our business through our Operating Partnership. We are the sole member of the sole general partner of the Operating Partnership. As of December 31, 2017,2022, we ownedhad letters of credit related to development projects and certain other agreements of approximately 95.9% of the common units of our Operating Partnership, and our current and former executive officers, directors, senior employees and their affiliates, and third parties who contributed properties to us in exchange for common units in our Operating Partnership, owned the remaining 4.1%.
Interest Rate Risk
We use interest rate swaps to fix the rate of our variable rate debt.$3.6 million. As of December 31, 2017,2022, we had no other material off-balance sheet arrangements.
Item 7A. Quantitativeand Qualitative Disclosures about Market Risk
Our future income, cash flows and fair values relevant to financial instruments are dependent upon prevailing market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. The primary market risk we are exposed to is interest rate risk. We have used derivative financial instruments to manage, or hedge, interest rate risks related to our borrowings, primarily through interest rate swaps.
As of December 31, 2022, we had $1.2 billion of variable rate debt outstanding. As of December 31, 2022, all of our outstanding variable rate debt, with the exception of $121.0 million under our unsecured credit facility which had a balance of $175.0 million, was fixed with interest rate swaps.
We recognize all derivatives on the balance sheet at fair value. If the derivative is designated as a hedge, depending on the nature of the hedge, changes in the fair value of derivatives are either offset against the change in fair value of the hedged assets, liabilities, or firm commitmentsswaps through earnings or recognized in other comprehensive income (loss), which is a component of equity. The ineffective portion of a derivative’s change in fair value is immediately recognized in earnings. Derivatives that are not designated as hedges must be adjusted to fair value and the changes in fair value must be reflected as income or expense.
We have established criteria for suitable counterparties in relation to various specific types of risk. We only use counterparties that have a credit rating of no lower than investment grade at swap inception from Moody’s Investor Services, Standard & Poor’s, or Fitch Ratings or other nationally recognized rating agencies.
The following table details our outstanding interest rate swaps as of December 31, 2017.
|
| | | | | | | | | | | | | | | | | | | |
Interest Rate
Derivative Counterparty | | Trade Date | | Effective Date | | Notional Amount
(in thousands) | | Fair Value
(in thousands) | | Pay Fixed Interest Rate | | Receive Variable Interest Rate | | Maturity Date |
| Regions Bank | | Mar-01-2013 | | Mar-01-2013 | | $ | 25,000 |
| | $ | 331 |
| | 1.3300 | % | | One-month L | | Feb-14-2020 |
| Capital One, N.A. | | Jun-13-2013 | | Jul-01-2013 | | $ | 50,000 |
| | $ | 293 |
| | 1.6810 | % | | One-month L | | Feb-14-2020 |
| Capital One, N.A. | | Jun-13-2013 | | Aug-01-2013 | | $ | 25,000 |
| | $ | 135 |
| | 1.7030 | % | | One-month L | | Feb-14-2020 |
| Regions Bank | | Sep-30-2013 | | Feb-03-2014 | | $ | 25,000 |
| | $ | (18 | ) | | 1.9925 | % | | One-month L | | Feb-14-2020 |
| The Toronto-Dominion Bank | | Oct-14-2015 | | Sep-29-2016 | | $ | 25,000 |
| | $ | 427 |
| | 1.3830 | % | | One-month L | | Sep-29-2020 |
| PNC Bank, N.A. | | Oct-14-2015 | | Sep-29-2016 | | $ | 50,000 |
| | $ | 845 |
| | 1.3906 | % | | One-month L | | Sep-29-2020 |
| Regions Bank | | Oct-14-2015 | | Sep-29-2016 | | $ | 35,000 |
| | $ | 596 |
| | 1.3858 | % | | One-month L | | Sep-29-2020 |
| U.S. Bank, N.A. | | Oct-14-2015 | | Sep-29-2016 | | $ | 25,000 |
| | $ | 421 |
| | 1.3950 | % | | One-month L | | Sep-29-2020 |
| Capital One, N.A. | | Oct-14-2015 | | Sep-29-2016 | | $ | 15,000 |
| | $ | 252 |
| | 1.3950 | % | | One-month L | | Sep-29-2020 |
| Royal Bank of Canada | | Jan-08-2015 | | Mar-20-2015 | | $ | 25,000 |
| | $ | 266 |
| | 1.7090 | % | | One-month L | | Mar-21-2021 |
| The Toronto-Dominion Bank | | Jan-08-2015 | | Mar-20-2015 | | $ | 25,000 |
| | $ | 263 |
| | 1.7105 | % | | One-month L | | Mar-21-2021 |
| The Toronto-Dominion Bank | | Jan-08-2015 | | Sep-10-2017 | | $ | 100,000 |
| | $ | (566 | ) | | 2.2255 | % | | One-month L | | Mar-21-2021 |
| Wells Fargo, N.A. | | Jan-08-2015 | | Mar-20-2015 | | $ | 25,000 |
| | $ | 276 |
| | 1.8280 | % | | One-month L | | Mar-31-2022 |
| The Toronto-Dominion Bank | | Jan-08-2015 | | Feb-14-2020 | | $ | 25,000 |
| | $ | (107 | ) | | 2.4535 | % | | One-month L | | Mar-31-2022 |
| Regions Bank | | Jan-08-2015 | | Feb-14-2020 | | $ | 50,000 |
| | $ | (236 | ) | | 2.4750 | % | | One-month L | | Mar-31-2022 |
| Capital One, N.A. | | Jan-08-2015 | | Feb-14-2020 | | $ | 50,000 |
| | $ | (290 | ) | | 2.5300 | % | | One-month L | | Mar-31-2022 |
| The Toronto-Dominion Bank | | Jul-20-2017 | | Oct-30-2017 | | $ | 25,000 |
| | $ | 327 |
| | 1.8485 | % | | One-month L | | Jan-04-2023 |
| Royal Bank of Canada | | Jul-20-2017 | | Oct-30-2017 | | $ | 25,000 |
| | $ | 329 |
| | 1.8505 | % | | One-month L | | Jan-04-2023 |
| Wells Fargo, N.A. | | Jul-20-2017 | | Oct-30-2017 | | $ | 25,000 |
| | $ | 329 |
| | 1.8505 | % | | One-month L | | Jan-04-2023 |
| PNC Bank, N.A. | | Jul-20-2017 | | Oct-30-2017 | | $ | 25,000 |
| | $ | 329 |
| | 1.8485 | % | | One-month L | | Jan-04-2023 |
| PNC Bank, N.A. | | Jul-20-2017 | | Oct-30-2017 | | $ | 50,000 |
| | $ | 660 |
| | 1.8475 | % | | One-month L | | Jan-04-2023 |
The swaps outlined in the above table were all designated as cash flow hedges of interest rate risk, and all are valued as Level 2 financial instruments. As of December 31, 2017, the fair values of 16 of the 21 of our interest rate swaps were in an asset position of approximately $6.1 million and five interest rate swaps were in a liability position of approximately $1.2 million, including any adjustment for nonperformance risk related to these agreements.
As of December 31, 2017, we had $721.0 million of variable rate debt. As of December 31, 2017, all of our outstanding variable rate debt, with exception of $121.0 million under our unsecured credit facility, was fixed with interest rate swaps.maturity. To the extent we undertake additional variable rate indebtedness, if interest rates increase, then so will the interest costs on our floatingunhedged variable rate debt, not fixed with interest rate swaps (including, any unhedged future variable rate debt) also will increase, which could adversely affect our cash flow and our ability to pay principal and interest on our debt and our ability to make distributions to our security holders. Further, rising interest rates could limit our ability to refinance existing debt when it matures or significantly increase our future interest expense. From time to time, we may enter into interest rate swap agreements and other interest rate hedging contracts, including swaps, caps and floors. While these agreements are intended to lessen the impact of rising interest rates on us, they also expose us to the risk that the other parties to the agreements will not perform, we could incur significant costs associated with the settlement of the agreements, the agreements will be unenforceable and the underlying transactions will fail to qualify as highly-effective cash flow hedges under GAAP. In addition, an increase in interest rates could decrease the amounts third parties are willing to pay for our assets, thereby limiting our ability to change our portfolio promptly in response to changes in economic or other conditions.
Inflation
Our business could be impacted in multiple ways due to inflation. We believe, however, that we are well positioned to be able to manage our business in an inflationary environment. Specifically, as of December 31, 2017 our weighted average in place remaining lease term was approximately 4.8 years and, on average, approximately 10-20% of our leases will roll annually over the next few years. We expect that this lease roll will allows us to capture inflationary increases in rent on a relatively efficient basis. In addition, asan increase in interest rates could decrease the amounts third parties are willing to pay for our assets, thereby limiting our ability to change our portfolio promptly in response to changes in economic or other conditions. If interest rates increased by 100 basispoints and assuming we had an outstanding balance of December 31, 2017 we have long term liabilities averaging approximately 5.2 years when excluding our unsecured credit facility. Our variable rate debt as of December 31, 2017 has been fully swapped to fixed rates through maturity with the exception of $121.0$175.0 million on our unsecured credit facility. Therefore,facility for the year ended December 31, 2022, our interest expense would have increased by approximately $1.8 million for the year ended December 31, 2022.
Item 8. Financial Statementsand Supplementary Data
The required response under this Item 8, “Financial Statements and Supplementary Data” is submitted in a separate section of this report. See Index to Consolidated Financial Statements on page F-1.
Item 9. Changes in and Disagreementswith Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As required by SEC Rule 13a-15(b), we have evaluated, under the supervision of and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures, as rents risedefined in Rules 13a-15(e) and increase15d-15(e) of the Exchange Act, as of December 31, 2022. Based on the foregoing, our operating cash flow,Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures for the periods covered by this positive impact will flow more directlyreport were effective to provide reasonable assurance that information required to be disclosed by the Company in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control—Integrated Framework (2013), our management concluded that our internal control over financial reporting was effective as of December 31, 2022.
The effectiveness of our internal control over financial reporting as of December 31, 2022 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which appears on page F-2 of this report.
Changes in Internal Controls
There was no change to our internal control over financial reporting during the fourth quarter ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
As of the quarter ended December 31, 2022, all items required to be disclosed in a Current Report on Form 8-K were reported under Form 8-K.
Entry Into a Material Definitive Agreement
Second Amended and Restated Agreement of Limited Partnership
On February 15, 2023, we entered into the Second Amended and Restated Agreement of Limited Partnership of our Operating Partnership, dated as of February 15, 2023 (the “Amended Operating Partnership Agreement”), which, among other things, (i) clarifies certain provisions related to the bottom line withoutLTIP units in our Operating Partnership, and (ii) added partnership representative provisions. The foregoing description of the offsetAmended Operating Partnership Agreement does not purport to be complete and is qualified in its entirety by reference to the Amended Operating Partnership Agreement, a copy of higherwhich has been filed as Exhibit 10.1 to this report and is incorporated in place debt costs. Lastly, while inflationthis Item 9B, “Other Information” by reference.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not Applicable.
PART III.
Item 10. Directors, Executive Officers and Corporate Governance
The information required by Item 10 will likely lead to increasesbe included in the Proxy Statement to be filed relating to our 2023 Annual Meeting of Stockholders and is incorporated herein by reference.
Item 11. Executive Compensation
The information required by Item 11 will be included in the Proxy Statement to be filed relating to our 2023 Annual Meeting of Stockholders and is incorporated herein by reference.
Item 12. Security Ownershipof Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by Item 12 will be included in the Proxy Statement to be filed relating to our 2023 Annual Meeting of Stockholders and is incorporated herein by reference.
Item 13. Certain Relationshipsand Related Transactions, and Director Independence
The information required by Item 13 will be included in the Proxy Statement to be filed relating to our 2023 Annual Meeting of Stockholders and is incorporated herein by reference.
Item 14. Principal AccountantFees and Services
The information required by Item 14 will be included in the Proxy Statement to be filed relating to our 2023 Annual Meeting of Stockholders and is incorporated herein by reference.
PART IV.
Item 15. Exhibits and Financial Statement Schedules
1.Consolidated Financial Statements
The financial statements listed in the accompanying Index to Consolidated Financial Statements on page F-1 are filed as a part of this report.
2.Financial Statement Schedules
The financial statement schedules required by this Item are filed with this report and listed in the accompanying Index to Consolidated Financial Statements on page F-1. All other financial statement schedules are not applicable.
3.Exhibits
The following exhibits are filed as part of this report:
| | | | | | | | |
| Exhibit Number | | Description of Document |
| 3.1 | | | |
| 3.2 | | | |
| 4.1 | | | |
| 4.2 | | | |
| 10.1 | | | |
| 10.2 | | | |
| 10.3 | | | |
| 10.4 | | | |
| 10.5 | | | |
| 10.6 | | | |
| 10.7 | | | |
| 10.8 | | | |
| 10.9 | | | |
| 10.10 | | | |
| 10.11 | | | |
| 10.12 | | | |
| 10.13 | | | |
| 10.14 | | | |
| | | | | | | | |
| Exhibit Number | | Description of Document |
| 10.15 | | | |
| 10.16 | | | |
| 10.17 | | | |
| 10.18 | | | |
| 10.19 | | | |
| 10.20 | | | |
| 10.21 | | | |
| 10.22 | | | |
| 10.23 | | | |
| 10.24 | | | |
| 10.25 | | | |
| 10.26 | | | |
| 10.27 | | | |
| 10.28 | | | |
| 10.29 | | | |
| 10.30 | | | |
| 10.31 | | | |
| 10.32 | | | |
| 10.33 | | | |
| 21.1 | | | |
| 23.1 | | | |
| 24.1 | | | |
| 31.1 | | | |
| 31.2 | | | |
| 32.1 | | | |
| | | | | | | | |
| Exhibit Number | | Description of Document |
| 101 | | | The following materials from STAG Industrial, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2022 formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (vi) the Consolidated Statements of Equity, (v) the Consolidated Statements of Cash Flows, and (vi) related notes to these consolidated financial statements. |
| 104 | | | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). |
* Represents management contract or compensatory plan or arrangement.
Item 16. Form 10-K Summary
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | | | | | | | | | |
| STAG INDUSTRIAL, INC. |
| Dated: February 15, 2023 | | |
| | /s/ William R. Crooker | |
| By: | William R. Crooker President and Chief Executive Officer |
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and directors of STAG Industrial, Inc., hereby severally constitute William R. Crooker and Matts S. Pinard, and each of them singly, our true and lawful attorneys with full power to them, and each of them singly, to sign for us and in our names in the capacities indicated below, the Form 10-K filed herewith and any and all amendments to said Form 10-K, and generally to do all such things in our names and in our capacities as officers and directors to enable STAG Industrial, Inc. to comply with the provisions of the Securities Exchange Act of 1934, as amended, and all requirements of the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorneys, or any of them, to said Form 10-K and any and all amendments thereto.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and dates indicated.
| | | | | | | | |
| Date | Signature | Title |
| | |
| February 15, 2023 | /s/ William R. Crooker | President and Chief Executive Officer
(principal executive officer) |
| William R. Crooker |
| | |
| February 15, 2023 | /s/ Benjamin S. Butcher | Executive Chair |
| Benjamin S. Butcher |
| | |
| February 15, 2023 | /s/ Jit Kee Chin | Director |
| Jit Kee Chin |
| | |
| February 15, 2023 | /s/ Virgis W. Colbert | Director |
| Virgis W. Colbert |
| | |
| February 15, 2023 | /s/ Michelle S. Dilley | Director |
| Michelle S. Dilley |
| | |
| February 15, 2023 | /s/ Jeffrey D. Furber | Director |
| Jeffrey D. Furber |
| | |
| February 15, 2023 | /s/ Larry T. Guillemette | Director |
| Larry T. Guillemette |
| | |
| February 15, 2023 | /s/ Francis X. Jacoby III | Director |
| Francis X. Jacoby III |
| | |
| February 15, 2023 | /s/ Christopher P. Marr | Director |
| Christopher P. Marr |
| | |
| February 15, 2023 | /s/ Hans S. Weger | Director |
| Hans S. Weger |
| | |
| February 15, 2023 | /s/ Matts S. Pinard | Chief Financial Officer, Executive Vice President and Treasurer (principal financial officer) |
| Matts S. Pinard |
| | |
| February 15, 2023 | /s/ Jaclyn M. Paul | Chief Accounting Officer (principal accounting officer) |
| Jaclyn M. Paul |
STAG INDUSTRIAL, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of STAG Industrial, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of STAG Industrial, Inc. and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2022, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework(2013)issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Purchase Price Accounting
As described in Notes 2 and 3 to the consolidated financial statements, during 2022, the Company completed 26 property acquisitions for consideration of approximately $472.6 million, of which approximately $39.3 million of land, $382.4 million of buildings and improvements, $49.2 million of net leasing intangibles, and $1.7 million of net other assets and liabilities were recorded. Management allocates the purchase price of properties based upon the fair value of the assets acquired and liabilities assumed, which generally consist of land, buildings, tenant improvements, mortgage debt assumed, and deferred leasing intangibles, which includes in-place leases, above market and below market leases, and tenant relationships. The process for determining the allocation to these components requires estimates and assumptions, including rental rates, discount rates, exit capitalization rates, and land value per square foot.
The principal considerations for our determination that performing procedures relating to purchase price accounting is a critical audit matter are (i) there was significant judgment by management when developing the fair value measurement of the tangible and intangible assets acquired and liabilities assumed, which resulted in a high degree of auditor judgment and subjectivity in performing procedures relating to these estimates, (ii) significant audit effort was necessary in evaluating the significant assumptions, including rental rates, discount rates, exit capitalization rates, and land value per square foot, (iii) significant auditor judgment was necessary in evaluating audit evidence, and (iv) the audit effort included the involvement of professionals with specialized skill and knowledge to assist in evaluating the audit evidence obtained.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to purchase price accounting, including controls over the allocation of the purchase price to the assets acquired and liabilities assumed. These procedures also included, among others, testing management’s process for estimating the fair value of assets acquired and liabilities assumed by (i) reading the purchase agreements and (ii) evaluating the appropriateness of methods and, for a sample of acquisitions, the reasonableness of significant assumptions used by management in developing the fair value measurement including rental rates, discount rates, exit capitalization rates, and land value per square foot. Evaluating these assumptions involved evaluating whether the assumptions used were reasonable considering past performance of the tangible and intangible assets acquired and liabilities assumed, consistency with external market and industry data, and considering whether the assumptions were consistent with evidence obtained in other areas of the audit. Procedures were also performed to test the completeness and accuracy of data provided by management. For certain acquisitions, professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of management’s methods and evaluating the reasonableness of the assumptions related to the rental rates, discount rates, exit capitalization rates, and land value per square foot.
/s/PricewaterhouseCoopers LLP
Boston, Massachusetts
February 15, 2023
We have served as the Company’s or its predecessor’s auditor since 2009.
STAG Industrial, Inc.
Consolidated Balance Sheets
(in thousands, except share data)
| | | | | | | | | | | |
| | December 31, 2022 | | December 31, 2021 |
| Assets | | | |
| Rental Property: | | | |
| Land | $ | 647,098 | | | $ | 617,297 | |
| Buildings and improvements, net of accumulated depreciation of $763,128 and $611,867, respectively | 4,706,745 | | | 4,435,743 | |
| Deferred leasing intangibles, net of accumulated amortization of $328,848 and $282,038, respectively | 508,935 | | | 567,658 | |
| Total rental property, net | 5,862,778 | | | 5,620,698 | |
| Cash and cash equivalents | 25,884 | | | 18,981 | |
| Restricted cash | 905 | | | 4,215 | |
| Tenant accounts receivable | 115,509 | | | 93,600 | |
| Prepaid expenses and other assets | 71,733 | | | 60,953 | |
| Interest rate swaps | 72,223 | | | 5,220 | |
| Operating lease right-of-use assets | 31,313 | | | 29,582 | |
| Assets held for sale, net | 4,643 | | | — | |
| Total assets | $ | 6,184,988 | | | $ | 5,833,249 | |
| Liabilities and Equity | | | |
| Liabilities: | | | |
| Unsecured credit facility | $ | 175,000 | | | $ | 296,000 | |
| Unsecured term loans, net | 1,020,440 | | | 970,577 | |
| Unsecured notes, net | 1,295,442 | | | 896,941 | |
| Mortgage notes, net | 7,898 | | | 54,744 | |
| Accounts payable, accrued expenses and other liabilities | 97,371 | | | 76,475 | |
| Interest rate swaps | — | | | 17,052 | |
| Tenant prepaid rent and security deposits | 40,847 | | | 37,138 | |
| Dividends and distributions payable | 22,282 | | | 21,906 | |
| Deferred leasing intangibles, net of accumulated amortization of $24,593 and $21,136, respectively | 32,427 | | | 35,721 | |
| Operating lease liabilities | 35,100 | | | 33,108 | |
| Total liabilities | 2,726,807 | | | 2,439,662 | |
| Commitments and contingencies (Note 11) | | | |
| Equity: | | | |
| Preferred stock, par value $0.01 per share, 20,000,000 shares authorized at December 31, 2022 and December 31, 2021; none issued or outstanding | — | | | — | |
| Common stock, par value $0.01 per share, 300,000,000 shares authorized at December 31, 2022 and December 31, 2021, 179,248,980 and 177,769,342 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively | 1,792 | | | 1,777 | |
| Additional paid-in capital | 4,188,677 | | | 4,130,038 | |
| Cumulative dividends in excess of earnings | (876,145) | | | (792,332) | |
| Accumulated other comprehensive income (loss) | 70,500 | | | (11,783) | |
| Total stockholders’ equity | 3,384,824 | | | 3,327,700 | |
| Noncontrolling interest | 73,357 | | | 65,887 | |
| Total equity | 3,458,181 | | | 3,393,587 | |
| Total liabilities and equity | $ | 6,184,988 | | | $ | 5,833,249 | |
The accompanying notes are an integral part of these consolidated financial statements.
STAG Industrial, Inc.
Consolidated Statements of Operations
(in thousands, except share data)
| | | | | | | | | | | | | | | | | |
| | Year ended December 31, |
| | 2022 | | 2021 | | 2020 |
| Revenue | | | | | |
| Rental income | $ | 654,377 | | | $ | 559,432 | | | $ | 482,825 | |
| Other income | 2,968 | | | 2,727 | | | 586 | |
| Total revenue | 657,345 | | | 562,159 | | | 483,411 | |
| Expenses | | | | | |
| Property | 125,701 | | | 107,986 | | | 89,359 | |
| General and administrative | 46,958 | | | 48,629 | | | 40,072 | |
| | | | | |
| Depreciation and amortization | 275,040 | | | 238,699 | | | 214,738 | |
| Loss on impairments | 1,783 | | | — | | | 5,577 | |
| Other expenses | 4,363 | | | 2,878 | | | 2,029 | |
| Total expenses | 453,845 | | | 398,192 | | | 351,775 | |
| Other income (expense) | | | | | |
| Interest and other income | 103 | | | 121 | | | 446 | |
| Interest expense | (78,018) | | | (63,484) | | | (62,343) | |
| Debt extinguishment and modification expenses | (838) | | | (2,152) | | | (834) | |
| Gain on involuntary conversion | — | | | — | | | 2,157 | |
| Gain on the sales of rental property, net | 57,487 | | | 97,980 | | | 135,733 | |
| Total other income (expense) | (21,266) | | | 32,465 | | | 75,159 | |
| Net income | $ | 182,234 | | | $ | 196,432 | | | $ | 206,795 | |
| Less: income attributable to noncontrolling interest after preferred stock dividends | 3,908 | | | 4,098 | | | 4,648 | |
| Net income attributable to STAG Industrial, Inc. | $ | 178,326 | | | $ | 192,334 | | | $ | 202,147 | |
| Less: preferred stock dividends | — | | | 1,289 | | | 5,156 | |
| Less: redemption of preferred stock | — | | | 2,582 | | | — | |
| Less: amount allocated to participating securities | 237 | | | 288 | | | 271 | |
| Net income attributable to common stockholders | $ | 178,089 | | | $ | 188,175 | | | $ | 196,720 | |
| Weighted average common shares outstanding — basic | 178,753 | | | 163,442 | | | 148,791 | |
| Weighted average common shares outstanding — diluted | 178,940 | | | 164,090 | | | 149,215 | |
| Net income per share — basic and diluted | | | | | |
| Net income per share attributable to common stockholders — basic | $ | 1.00 | | | $ | 1.15 | | | $ | 1.32 | |
| Net income per share attributable to common stockholders — diluted | $ | 1.00 | | | $ | 1.15 | | | $ | 1.32 | |
The accompanying notes are an integral part of these consolidated financial statements.
STAG Industrial, Inc.
Consolidated Statements of Comprehensive Income
(in thousands)
| | | | | | | | | | | | | | | | | |
| | Year ended December 31, |
| | 2022 | | 2021 | | 2020 |
| Net income | $ | 182,234 | | | $ | 196,432 | | | $ | 206,795 | |
| Other comprehensive income (loss): | | | | | |
| Income (loss) on interest rate swaps | 84,086 | | | 28,856 | | | (22,109) | |
| Other comprehensive income (loss) | 84,086 | | | 28,856 | | | (22,109) | |
| Comprehensive income | 266,320 | | | 225,288 | | | 184,686 | |
| Income attributable to noncontrolling interest after preferred stock dividends | (3,908) | | | (4,098) | | | (4,648) | |
| Other comprehensive (income) loss attributable to noncontrolling interest | (1,803) | | | (614) | | | 510 | |
| Comprehensive income attributable to STAG Industrial, Inc. | $ | 260,609 | | | $ | 220,576 | | | $ | 180,548 | |
The accompanying notes are an integral part of these consolidated financial statements.
STAG Industrial, Inc.
ConsolidatedStatements of Equity
(in thousands, except share data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Preferred Stock | | Common Stock | | Additional Paid-in Capital | | Cumulative Dividends in Excess of Earnings | | Accumulated Other Comprehensive Income (Loss) | | Total Stockholders’ Equity | | Noncontrolling Interest - Unit Holders in Operating Partnership | | Total Equity |
| | | Shares | | Par Amount | | | | | | |
| Balance, December 31, 2019 | $ | 75,000 | | | 142,815,593 | | | $ | 1,428 | | | $ | 2,970,553 | | | $ | (723,027) | | | $ | (18,426) | | | $ | 2,305,528 | | | $ | 58,363 | | | $ | 2,363,891 | |
| | | | | | | | | | | | | | | | | |
| Proceeds from sales of common stock, net | — | | | 14,580,577 | | | 146 | | | 438,338 | | | — | | | — | | | 438,484 | | | — | | | 438,484 | |
| | | | | | | | | | | | | | | | | |
| Dividends and distributions, net ($1.44 per share/unit) | — | | | — | | | — | | | — | | | (220,801) | | | — | | | (220,801) | | | (5,395) | | | (226,196) | |
| Non-cash compensation activity, net | — | | | 83,233 | | | 1 | | | 5,019 | | | (390) | | | — | | | 4,630 | | | 5,557 | | | 10,187 | |
| Redemption of common units to common stock | — | | | 730,420 | | | 7 | | | 11,540 | | | — | | | — | | | 11,547 | | | (11,547) | | | — | |
| Rebalancing of noncontrolling interest | — | | | — | | | — | | | (3,729) | | | — | | | — | | | (3,729) | | | 3,729 | | | — | |
| Other comprehensive loss | — | | | — | | | — | | | — | | | — | | | (21,599) | | | (21,599) | | | (510) | | | (22,109) | |
| Net income | — | | | — | | | — | | | — | | | 202,147 | | | — | | | 202,147 | | | 4,648 | | | 206,795 | |
| Balance, December 31, 2020 | $ | 75,000 | | | 158,209,823 | | | $ | 1,582 | | | $ | 3,421,721 | | | $ | (742,071) | | | $ | (40,025) | | | $ | 2,716,207 | | | $ | 54,845 | | | $ | 2,771,052 | |
| | | | | | | | | | | | | | | | | |
| Proceeds from sales of common stock, net | — | | | 19,238,685 | | | 192 | | | 706,680 | | | — | | | — | | | 706,872 | | | — | | | 706,872 | |
| Redemption of preferred stock | (75,000) | | | — | | | — | | | 2,573 | | | (2,582) | | | — | | | (75,009) | | | — | | | (75,009) | |
| Dividends and distributions, net ($1.45 per share/unit) | — | | | — | | | — | | | — | | | (239,859) | | | — | | | (239,859) | | | (8,293) | | | (248,152) | |
| Non-cash compensation activity, net | — | | | 149,516 | | | 1 | | | 3,024 | | | (154) | | | — | | | 2,871 | | | 10,665 | | | 13,536 | |
| Redemption of common units to common stock | — | | | 171,318 | | | 2 | | | 2,852 | | | — | | | — | | | 2,854 | | | (2,854) | | | — | |
| Rebalancing of noncontrolling interest | — | | | — | | | — | | | (6,812) | | | — | | | — | | | (6,812) | | | 6,812 | | | — | |
| Other comprehensive income | — | | | — | | | — | | | — | | | — | | | 28,242 | | | 28,242 | | | 614 | | | 28,856 | |
| Net income | — | | | — | | | — | | | — | | | 192,334 | | | — | | | 192,334 | | | 4,098 | | | 196,432 | |
| Balance, December 31, 2021 | $ | — | | | 177,769,342 | | | $ | 1,777 | | | $ | 4,130,038 | | | $ | (792,332) | | | $ | (11,783) | | | $ | 3,327,700 | | | $ | 65,887 | | | $ | 3,393,587 | |
| | | | | | | | | | | | | | | | | |
| Proceeds from sales of common stock, net | — | | | 1,328,335 | | | 13 | | | 54,931 | | | — | | | — | | | 54,944 | | | — | | | 54,944 | |
| | | | | | | | | | | | | | | | | |
| Dividends and distributions, net ($1.46 per share/unit) | — | | | — | | | — | | | — | | | (261,359) | | | — | | | (261,359) | | | (5,832) | | | (267,191) | |
| Non-cash compensation activity, net | — | | | 52,809 | | | 1 | | | 2,832 | | | (780) | | | — | | | 2,053 | | | 8,468 | | | 10,521 | |
| Redemption of common units to common stock | — | | | 98,494 | | | 1 | | | 1,856 | | | — | | | — | | | 1,857 | | | (1,857) | | | — | |
| Rebalancing of noncontrolling interest | — | | | — | | | — | | | (980) | | | — | | | — | | | (980) | | | 980 | | | — | |
| Other comprehensive income | — | | | — | | | — | | | — | | | — | | | 82,283 | | | 82,283 | | | 1,803 | | | 84,086 | |
| Net income | — | | | — | | | — | | | — | | | 178,326 | | | — | | | 178,326 | | | 3,908 | | | 182,234 | |
| Balance, December 31, 2022 | $ | — | | | 179,248,980 | | | $ | 1,792 | | | $ | 4,188,677 | | | $ | (876,145) | | | $ | 70,500 | | | $ | 3,384,824 | | | $ | 73,357 | | | $ | 3,458,181 | |
The accompanying notes are an integral part of these consolidated financial statements.
STAG Industrial, Inc.
Consolidated Statements of Cash Flows
(in thousands)
| | | | | | | | | | | | | | | | | |
| | Year ended December 31, |
| | 2022 | | 2021 | | 2020 |
| Cash flows from operating activities: | | | | | |
| Net income | $ | 182,234 | | | $ | 196,432 | | | $ | 206,795 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | |
| Depreciation and amortization | 275,040 | | | 238,699 | | | 214,738 | |
| Loss on impairments | 1,783 | | | — | | | 5,577 | |
| Gain on involuntary conversion | — | | | — | | | (2,157) | |
| Non-cash portion of interest expense | 3,747 | | | 2,931 | | | 2,922 | |
| Amortization of above and below market leases, net | (352) | | | 2,051 | | | 4,341 | |
| Straight-line rent adjustments, net | (17,610) | | | (17,516) | | | (12,074) | |
| | | | | |
| Debt extinguishment and modification expenses | 21 | | | 249 | | | 834 | |
| Gain on the sales of rental property, net | (57,487) | | | (97,980) | | | (135,733) | |
| Non-cash compensation expense | 12,068 | | | 14,955 | | | 11,681 | |
| Change in assets and liabilities: | | | | | |
| Tenant accounts receivable | (6,438) | | | (36) | | | (4,482) | |
| Prepaid expenses and other assets | (21,870) | | | (18,664) | | | (11,528) | |
| Accounts payable, accrued expenses and other liabilities | 13,531 | | | 6,763 | | | 7,157 | |
| Tenant prepaid rent and security deposits | 3,264 | | | 8,270 | | | 5,851 | |
| Total adjustments | 205,697 | | | 139,722 | | | 87,127 | |
| Net cash provided by operating activities | 387,931 | | | 336,154 | | | 293,922 | |
| Cash flows from investing activities: | | | | | |
| Acquisitions of land and buildings and improvements | (421,784) | | | (1,211,023) | | | (661,961) | |
| Additions of land and buildings and improvements | (111,653) | | | (39,503) | | | (55,741) | |
| Acquisitions of other assets | (2,134) | | | (1,004) | | | (450) | |
| Acquisitions of operating lease right-of-use assets | (3,541) | | | (5,627) | | | (3,984) | |
| Proceeds from sales of rental property, net | 135,348 | | | 187,972 | | | 273,560 | |
| Proceeds from involuntary conversion | — | | | — | | | 782 | |
| Acquisitions of tenant prepaid rent | 445 | | | 1,024 | | | — | |
| Acquisition deposits, net | 1,428 | | | (3,131) | | | 27 | |
| Acquisitions of deferred leasing intangibles | (49,174) | | | (154,755) | | | (110,840) | |
| Acquisitions of operating lease liabilities | 3,541 | | | 5,627 | | | 3,984 | |
| Net cash used in investing activities | (447,524) | | | (1,220,420) | | | (554,623) | |
| Cash flows from financing activities: | | | | | |
| Proceeds from unsecured credit facility | 1,288,000 | | | 2,665,000 | | | 914,000 | |
| Repayment of unsecured credit facility | (1,409,000) | | | (2,476,000) | | | (953,000) | |
| Proceeds from unsecured term loans | 375,000 | | | 1,125,000 | | | 400,000 | |
| Repayment of unsecured term loans | (325,000) | | | (1,125,000) | | | (300,000) | |
| Proceeds from unsecured notes | 400,000 | | | 325,000 | | | — | |
| Repayment of mortgage notes | (46,943) | | | (2,225) | | | (2,983) | |
| Redemption of preferred stock | — | | | (75,000) | | | — | |
| Payment of loan fees and costs | (5,211) | | | (9,579) | | | (1,129) | |
| Payment of defeasance fees and other costs | — | | | — | | | (425) | |
| Dividends and distributions | (266,817) | | | (245,722) | | | (224,283) | |
| Proceeds from sales of common stock, net | 54,753 | | | 706,991 | | | 438,499 | |
| Repurchase and retirement of share-based compensation | (1,596) | | | (1,342) | | | (1,503) | |
| Net cash provided by financing activities | 63,186 | | | 887,123 | | | 269,176 | |
| Increase in cash and cash equivalents and restricted cash | 3,593 | | | 2,857 | | | 8,475 | |
| Cash and cash equivalents and restricted cash—beginning of period | 23,196 | | | 20,339 | | | 11,864 | |
| Cash and cash equivalents and restricted cash—end of period | $ | 26,789 | | | $ | 23,196 | | | $ | 20,339 | |
| Supplemental disclosure: | | | | | |
| Cash paid for interest, net of capitalized interest | $ | 72,740 | | | $ | 58,392 | | | $ | 58,704 | |
| Supplemental schedule of non-cash investing and financing activities | | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Additions of land and buildings and improvements | $ | (2,674) | | | $ | (465) | | | $ | (674) | |
| Transfer of other assets to building and other capital improvements | $ | 2,674 | | | $ | 465 | | | $ | 674 | |
| Acquisitions of land and buildings and improvements | $ | — | | | $ | (5,990) | | | $ | (2,202) | |
| Acquisitions of deferred leasing intangibles | $ | — | | | $ | (948) | | | $ | (362) | |
| | | | | |
| | | | | |
| Change in additions of land, building, and improvements included in accounts payable, accrued expenses and other liabilities | $ | (7,897) | | | $ | (1,285) | | | $ | (3,714) | |
| Additions to building and other capital improvements from non-cash compensation | $ | (62) | | | $ | (9) | | | $ | (25) | |
| Assumption of mortgage notes | $ | — | | | $ | 5,103 | | | $ | — | |
| Fair market value adjustment to mortgage notes acquired | $ | — | | | $ | (161) | | | $ | — | |
| Change in loan fees, costs, and offering costs included in accounts payable, accrued expenses and other liabilities | $ | 192 | | | $ | 930 | | | $ | (1,065) | |
| | | | | |
| | | | | |
| Dividends and distributions accrued | $ | 22,282 | | | $ | 21,906 | | | $ | 19,379 | |
The accompanying notes are an integral part of these consolidated financial statements.
STAG Industrial, Inc.
Notes to Consolidated Financial Statements
1. OrganizationandDescription of Business
STAG Industrial, Inc. (the “Company”) is an industrial real estate operating company focused on the acquisition and operation of single-tenant, industrial properties throughout the United States. The Company was formed as a Maryland corporation and has elected to be treated and intends to continue to qualify as a real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”). The Company is structured as an umbrella partnership REIT, commonly called an UPREIT, and owns all of its properties and conducts substantially all of its business through its operating partnership, STAG Industrial Operating Partnership, L.P., a Delaware limited partnership (the “Operating Partnership”). As of December 31, 2022 and 2021, the Company owned a 97.9% and 98.1%, respectively, of the common units of the limited partnership interests in the Operating Partnership. The Company is the sole member of the general partner of the Operating Partnership. As used herein, the “Company” refers to STAG Industrial, Inc. and its consolidated subsidiaries, including the Operating Partnership, except where context otherwise requires.
As of December 31, 2022, the Company owned 562 industrial buildings in 41 states with approximately 111.7 million rentable square feet (square feet unaudited herein and throughout the Notes), consisting of 487 warehouse/distribution buildings, 74 light manufacturing buildings, and 1 flex/office building.
2. Summary of Significant Accounting Policies
Basis of Presentation
The Company’s consolidated financial statements include the accounts of the Company, the Operating Partnership, and their consolidated subsidiaries. Interests in the Operating Partnership not owned by the Company are referred to as “Noncontrolling Common Units.” These Noncontrolling Common Units are held by other limited partners in the form of common units (“Other Common Units”) and long-term incentive plan units (“LTIP units”) issued pursuant to the STAG Industrial, Inc. 2011 Equity Incentive Plan, as amended and restated (the “2011 Plan”). All significant intercompany balances and transactions have been eliminated in the consolidation of entities. The financial statements of the Company are presented on a consolidated basis for all periods presented.
New Accounting Standards
New Accounting Standards Adopted
In December 2022, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2022-06, Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”) which defers the sunset date of Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform to December 31, 2024. ASU 2022-06 is effective immediately for all companies. ASU 2022-06 had no impact on the Company’s consolidated financial statements for the year ended December 31, 2022.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Rental Property and Deferred Leasing Intangibles
Rental property is carried at cost less accumulated depreciation and amortization. Expenditures for maintenance and repairs are expensed as incurred. Significant renovations and betterments that extend the economic useful lives of assets are capitalized.
The Company capitalizes costs directly and indirectly related to the development, pre-development, redevelopment, or improvement of rental property. Real estate taxes, compensation costs of our portfolio,development personnel, insurance, interest, and other directly related costs during construction periods are capitalized as incurred, with depreciation commencing on the date the property is substantially completed. Such costs begin to be capitalized to the development projects from the point the Company
is undergoing the necessary activities to get the development project ready for its intended use and cease when the development projects are substantially completed and held available for occupancy. Interest is capitalized based on actual capital expenditures from the period when development or redevelopment commences until the asset is ready for its intended use, at the weighted average borrowing rate of the Company’s unsecured indebtedness during the period.
For properties classified as held for sale, the Company ceases depreciating and amortizing the rental property and values the rental property at the lower of depreciated and amortized cost or fair value less costs to dispose. The Company presents those properties classified as held for sale with any qualifying assets and liabilities associated with those properties as held for sale in the accompanying Consolidated Balance Sheets.
Using information available at the time of acquisition, the Company allocates the purchase price of properties acquired based upon the fair value of the assets acquired and liabilities assumed, which generally consist of land, buildings, tenant improvements, mortgage debt assumed, and deferred leasing intangibles, which includes in-place leases, above market and below market leases, and tenant relationships. The process for determining the allocation to these components requires estimates and assumptions, including rental rates, discount rates and exit capitalization rates, and land value per square foot, as well as available market information, and is therefore subject to subjective analysis and uncertainty. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant. The portion of the purchase price that is allocated to above and below market leases is valued based on the present value of the difference between prevailing market rates and the in-place rates measured over a period equal to the remaining term of the lease term plus the term of any bargain renewal options. The purchase price is further allocated to in-place lease values and tenant relationships based on the Company’s evaluation of the specific characteristics of each tenant’s lease and its overall relationship with the respective tenant.
The above and below market lease values are amortized into rental income over the remaining lease term. The value of in-place lease intangibles and tenant relationships are amortized over the remaining lease term (and expected renewal period of the respective lease for tenant relationships) as increases to depreciation and amortization expense. The remaining lease terms are adjusted for bargain renewal options or assumed exercises of early termination options, as applicable. If a tenant subsequently terminates its lease, any unamortized portion of above and below market leases is accelerated into rental income and the in-place lease value and tenant relationships are accelerated into depreciation and amortization expense over the shortened lease term.
The purchase price allocated to deferred leasing intangible assets are included in rental property, net on the accompanying Consolidated Balance Sheets, and the purchase price allocated to deferred leasing intangible liabilities are included in deferred leasing intangibles, net on the accompanying Consolidated Balance Sheets under the liabilities section.
In determining the fair value of the debt assumed, the Company discounts the spread between the future contractual interest payments and hypothetical future interest payments on mortgage debt based on a current market rate. The associated fair market value debt adjustment is amortized through interest expense over the life of the debt on a basis which approximates the effective interest method.
The Company evaluates the carrying value of all tangible and intangible rental property assets and deferred leasing intangible liabilities (collectively, the “property”) held for use for possible impairment when an event or change in circumstance has occurred that indicates their carrying value may not be recoverable. The evaluation includes estimating and reviewing anticipated future undiscounted cash flows to be derived from the property. If such cash flows are less than the property’s carrying value, an impairment charge is recognized to the extent by which the property’s carrying value exceeds the estimated fair value. Estimating future cash flows is highly subjective and is based in part on assumptions regarding anticipated hold period, future occupancy, rental rates, capital requirements, and exit capitalization rates that could differ from actual results. The discount rate used to present value the cash flows for determining fair value is also subjective.
Depreciation expense is computed using the straight-line method based on the following estimated useful lives.
| | | | | | | | |
| Description | | Estimated Useful Life |
| Building | | 40 Years |
| Building and land improvements (maximum) | | 20 Years |
| Tenant improvements | | Shorter of useful life or terms of related lease |
| | |
| | |
| | |
Fully depreciated or amortized tenant improvements, deferred leasing intangible assets, or deferred leasing intangible liabilities and the associated accumulated depreciation or amortization are written-off. The Company wrote-off fully depreciated or
amortized tenant improvements, deferred leasing intangible assets, and deferred leasing intangible liabilities of approximately $3.4 million, $53.8 million, $4.9 million, respectively, for the year ended December 31, 2022 and approximately $7.5 million, $72.9 million, $2.4 million, respectively, for the year ended December 31, 2021.
Leases
For leases in which the Company is the lessee, the Company recognizes a right-of-use asset and corresponding lease liability on the accompanying Consolidated Balance Sheets equal to the present value of the fixed lease payments. In determining the operating right-of-use asset and lease liability for the Company’s operating leases, the Company estimates an appropriate incremental borrowing rate on a fully-collateralized basis for the terms of the leases. The Company utilizes a market-based approach to estimate the incremental borrowing rate for each individual lease. Additionally, since the terms of the Company’s ground leases are significantly longer than the terms of borrowings available to the Company on a fully-collateralized basis, the estimate of this rate requires significant judgment, and considers factors such as yields on outstanding public debt and other market based pricing on longer duration financing instruments.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and highly liquid short-term investments with original maturities of three months or less. The Company maintains cash and cash equivalents in United States banking institutions that may exceed amounts insured by the Federal Deposit Insurance Corporation. While the Company monitors the cash balances in its operating accounts, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. To date, the Company has experienced no loss or lack of access to cash in its operating accounts, and mitigates this risk by using nationally recognized banking institutions.
Restricted Cash
Restricted cash may include tenant security deposits, cash held in escrow for real estate taxes utilityand capital improvements as required in various mortgage note agreements, and cash held by the Company’s transfer agent for preferred stock dividends, if any, that are distributed subsequent to period end. Restricted cash may also include cash held by qualified intermediaries to facilitate a like-kind exchange of real estate under Section 1031 of the Code.
The following table presents a reconciliation of cash and cash equivalents and restricted cash reported on the accompanying Consolidated Balance Sheets to amounts reported on the accompanying Consolidated Statements of Cash Flows.
| | | | | | | | | | | | | | |
| Reconciliation of cash and cash equivalents and restricted cash (in thousands) | | December 31, 2022 | | December 31, 2021 |
| Cash and cash equivalents | | $ | 25,884 | | | $ | 18,981 | |
| Restricted cash | | 905 | | | 4,215 | |
| Total cash and cash equivalents and restricted cash | | $ | 26,789 | | | $ | 23,196 | |
Deferred Costs
Deferred financing fees and debt issuance costs include costs incurred in obtaining debt that are capitalized and are presented as a direct deduction from the carrying amount of the associated debt liability that is not a line-of-credit arrangement on the accompanying Consolidated Balance Sheets. Deferred financing fees and debt issuance costs related to line-of-credit arrangements are presented as an asset in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets. The deferred financing fees and debt issuance costs are amortized through interest expense over the life of the respective loans on a basis which approximates the effective interest method. Any unamortized amounts upon early repayment of debt are written off in the period of repayment as a loss on extinguishment of debt. Fully amortized deferred financing fees and debt issuance costs are written off upon maturity of the underlying debt.
Leasing commissions include commissions and other direct and incremental costs incurred to obtain new tenant leases as well as to renew existing tenant leases, and are presented in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets. Leasing commissions are capitalized and amortized over the terms of the related leases (and bargain renewal terms or assumed exercise of early termination options) using the straight-line method. If a lease terminates prior to the expiration of its initial term, any unamortized costs related to the lease are accelerated into amortization expense. Changes in leasing commissions are presented in the cash flows from operating activities section of the accompanying Consolidated Statements of Cash Flows.
Goodwill
The excess of the cost of an acquired business over the net of the amounts assigned to assets acquired (including identified intangible assets) and liabilities assumed is recorded as goodwill. Goodwill of the Company of approximately $4.9 million represents amounts allocated to the assembled workforce from the acquired management company, and is presented in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets. The Company’s goodwill has an indeterminate life and is not amortized, but is tested for impairment on an annual basis at December 31, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company takes a qualitative approach to consider whether an impairment of goodwill exists prior to quantitatively determining the fair value of the reporting unit in step one of the impairment test. The Company has recorded no impairments to goodwill through December 31, 2022.
Use of Derivative Financial Instruments
The Company records all derivatives on the accompanying Consolidated Balance Sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.
In accordance with fair value measurement guidance, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting arrangements on a net basis by counterparty portfolio. Credit risk is the risk of failure of the counterparty to perform under the terms of the contract. The Company minimizes the credit risk in its derivative financial instruments by entering into transactions with various high-quality counterparties. The Company’s exposure to credit risk at any point is generally limited to amounts recorded as assets on the accompanying Consolidated Balance Sheets.
Fair Value of Financial Instruments
Financial instruments include cash and cash equivalents, restricted cash, tenant accounts receivable, interest rate swaps, accounts payable, accrued expenses, unsecured credit facility, unsecured term loans, unsecured notes, and mortgage notes. See Note 4 for the fair value of the Company’s indebtedness. See Note 5 for the fair value of the Company’s interest rate swaps.
The Company adopted fair value measurement provisions for its financial instruments recorded at fair value. The guidance establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
Offering Costs
Underwriting commissions and direct offering costs have been reflected as a reduction of additional paid-in capital on the accompanying Consolidated Balance Sheets and Consolidated Statements of Equity. Indirect costs associated with equity offerings are expensed as incurred and included in general and administrative expenses on the accompanying Consolidated Statements of Operations.
Dividends
Earnings and profits, which determine the taxability of dividends to stockholders, will differ from income reported for financial reporting purposes due to the differences for federal income tax purposes in the treatment of gains on the sale of real property, revenue and expense recognition, and in the estimated useful lives and basis used to compute depreciation. In addition, the Company’s distributions may include a return of capital. To the extent that the Company makes distributions in excess of its
current and accumulated earnings and profits, such distributions would generally be considered a return of capital for federal income tax purposes to the extent of the holder’s adjusted tax basis in its shares. A return of capital may not be taxable. A return of capital has the effect of reducing the holder’s adjusted tax basis in its investment, which may or may not be taxable to the holder.
The Company paid dividends to holders of the 6.875% Series C Cumulative Redeemable Preferred Stock, par value $0.01 per share (“Series C Preferred Stock”), of approximately $1.3 million ($0.429688 per share) during the year ended December 31, 2021, of which $0.400294 per share was treated as ordinary income for tax purposes, $0.022149 per share was treated as unrecaptured section 1250 capital gain for tax purposes, and $0.007245 per share was treated as other capital gain for income tax purposes. The Company paid dividends to the holders of the Series C Preferred Stock of approximately $5.2 million ($1.71875 per share) during the year ended December 31, 2020, of which $1.349944 per share was treated as ordinary income for tax purposes, $0.100392 per share was treated as unrecaptured section 1250 capital gain for tax purposes, and $0.268414 per share was treated as other capital gain for income tax purposes.
The following table summarizes the tax treatment of dividends per shares of common stock for federal income tax purposes.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year ended December 31, |
| | | 2022 | | 2021 | | 2020 |
| Federal Income Tax Treatment of Dividends per Common Share | | Per Share | | % | | Per Share | | % | | Per Share | | % |
| Ordinary income | | $ | 1.172486 | | | 80.4 | % | | $ | 1.119899 | | | 81.3 | % | | $ | 1.186648 | | | 78.5 | % |
| Return of capital | | 0.165158 | | | 11.3 | % | | 0.175355 | | | 12.7 | % | | — | | | — | % |
| Unrecaptured section 1250 capital gain | | 0.014248 | | | 1.0 | % | | 0.061970 | | | 4.5 | % | | 0.088246 | | | 5.9 | % |
| Other capital gain | | 0.107278 | | | 7.3 | % | | 0.020269 | | | 1.5 | % | | 0.235943 | | | 15.6 | % |
| | | | | | | | | | | | |
Total (1) | | $ | 1.459170 | | | 100.0 | % | | $ | 1.377493 | | | 100.0 | % | | $ | 1.510837 | | | 100.0 | % |
(1)The December 2020 monthly common stock dividend of $0.12 per share was partially included in the stockholder's 2020 tax year in the amount of $0.07167 per share, and the remainder was included in the stockholder's 2021 tax year. The December 2021 monthly common stock dividend of $0.120833 per share was included in the stockholder's 2022 tax year. The December 2022 monthly common stock dividend of 0.121667 per share will be included in the stockholder's 2023 tax year.
Revenue Recognition
All current leases are classified as operating leases and rental income is recognized on a straight-line basis over the term of the lease (and expected bargain renewal terms or assumed exercise of early termination options) when collectability is reasonably assured. Differences between rental income earned and amounts due under the lease are charged or credited, as applicable, to accrued rental income.
The Company determined that for all leases where the Company is the lessor, that the timing and pattern of transfer of the non-lease components and associated lease components are the same, and that the lease components, if accounted for separately, would be classified as an operating lease. Accordingly, the Company has made an accounting policy election to recognize the combined component in accordance with Accounting Standards Codification Topic 842 as rental income on the accompanying Consolidated Statements of Operations.
Rental income recognition commences when the tenant takes possession of or controls the physical use of the leased space and the leased space is substantially complete and ready for its intended use. In order to determine whether the leased space is substantially complete and ready for its intended use, the Company determines whether the Company or the tenant own the tenant improvements. When it is determined that the Company is the owner of the tenant improvements, rental income recognition begins when the tenant takes possession of or controls the physical use of the finished space, which is generally when the Company owned tenant improvements are completed. In instances when it is determined that the tenant is the owner of tenant improvements, rental income recognition begins when the tenant takes possession of or controls the physical use of the leased space.
The Company evaluates its operating leases to determine if it is probable it will collect substantially all of the lessee’s remaining lease payments under the lease term. For those that are not probable of collection, the Company converts to the cash basis of accounting. If the Company subsequently determines that it is probable it will collect substantially all of the lessee’s remaining lease payments under the lease term, the Company will reinstate the accrued rent balance adjusting for the amount related to the period when the lease was accounted for on a cash basis.
When the Company is the owner of tenant improvements or other capital items, the cost to construct the tenant improvements or other capital items, including costs paid for or reimbursed by the tenants, is recorded as capital assets. For these tenant
improvements or other capital items, the amount funded by or reimbursed by the tenants are recorded as deferred revenue, which is amortized on a straight-line basis as income over the shorter of the useful life of the capital asset or the term of the related lease.
Early lease termination fees are recorded in rental income on a straight-line basis from the notification date of such termination to the then remaining (not the original) lease term, if any, or upon collection if collection is not reasonably assured.
Gain on the Sales of Rental Property, net
The timing of the derecognition of a rental property and the corresponding recognition of gain on the sales of rental property, net is measured by various criteria related to the terms of the sale transaction, and if the Company has lost control of the property and the acquirer has gained control of the property after the transaction. If the derecognition criteria is met, the full gain is recognized.
Incentive and Equity-Based Employee Compensation Plans
The Company grants equity-based compensation awards to its employees and directors in the form of restricted shares of common stock, LTIP units, and performance units. See Notes 6, 7 and 8 for further discussion of restricted shares of common stock, LTIP units, and performance units, respectively. The Company measures equity-based compensation expense based on the fair value of the awards on the grant date and recognizes the expense ratably over the vesting period, and forfeitures are recognized in the period in which they occur.
On January 7, 2021, the Company adopted the STAG Industrial, Inc. Employee Retirement Vesting Program (the “Vesting Program”) to provide supplemental retirement benefits for eligible employees. For those employees who are retirement eligible or will become retirement eligible during the applicable vesting period under the terms of the Vesting Program, the Company accelerates equity-based compensation through the employee’s six-month retirement notification period or retirement eligibility date, respectively.
Related-Party Transactions
The Company did not have any related-party transactions during the years ended December 31, 2022, 2021 and 2020.
Taxes
Federal Income Taxes
The Company elected to be taxed as a REIT under the Code commencing with its taxable year ended December 31, 2011 and intends to continue to qualify as a REIT. As a REIT, the Company is generally not subject to corporate level federal income tax on the earnings distributed currently to its stockholders that it derives from its REIT qualifying activities. As a REIT, the Company is required to distribute at least 90% of its REIT taxable income to its stockholders and meet the various other requirements imposed by the Code relating to such matters as operating results, asset holdings, distribution levels and diversity of stock ownership.
The Company will not be required to make distributions with respect to income derived from the activities conducted through subsidiaries that the Company elects to treat as taxable REIT subsidiaries (“TRS”) for federal income tax purposes, nor will it have to comply with income, assets, or ownership restrictions inside of the TRS. Certain activities that the Company undertakes must or should be conducted by a TRS, such as performing non-customary services for its tenants and holding assets that it cannot hold directly. A TRS is subject to federal and state income taxes. The Company’s TRS recognized a net income (loss) of approximately $0.1 million, $(8,000) and $0, for the years ended December 31, 2022, 2021 and 2020, respectively, which has been included on the accompanying Consolidated Statements of Operations.
State and Local Income, Excise, and Franchise Tax
The Company and certain of its subsidiaries are subject to certain state and local income, excise and franchise taxes. Taxes in the amount of approximately $2.1 million, $1.7 million and $1.7 million have been recorded in other expenses on the accompanying Consolidated Statements of Operations for the years ended December 31, 2022, 2021 and 2020, respectively.
Uncertain Tax Positions
Tax benefits of uncertain tax positions are recognized only if it is more likely than not that the tax position will be sustained based solely on its technical merits, with the taxing authority having full knowledge of all relevant information. The measurement of a tax benefit for an uncertain tax position that meets the “more likely than not” threshold is based on a cumulative probability model under which the largest amount of tax benefit recognized is the amount with a greater than 50% likelihood of being realized upon ultimate settlement with the taxing authority having full knowledge of all the relevant information. As of December 31, 2022, 2021 and 2020, there were no liabilities for uncertain tax positions.
Earnings Per Share
The Company uses the two-class method of computing earnings per common share, which is an earnings allocation formula that determines earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Basic net income per common share is computed by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net income per common share is computed by dividing net income available to common stockholders by the sum of the weighted average number of shares of common stock outstanding and any dilutive securities for the period.
Segment Reporting
The Company manages its operations on an aggregated, single segment basis for purposes of assessing performance and making operating decisions and, accordingly, has only one reporting and operating segment.
Concentrations of Credit Risk
Concentrations of credit risk relevant to the Company may arise when a number of financing arrangements, including revolving credit facilities or derivatives, are entered into with the same lenders or counterparties, and have similar economic features that would cause their inability to meet contractual obligations. The Company mitigates the concentration of credit risk as it relates to financing arrangements by entering into loan syndications with multiple, reputable financial institutions and diversifying its debt counterparties. The Company also reduces exposure by diversifying its derivatives across multiple counterparties who meet established credit and capital guidelines.
Concentrations of credit risk may also arise when the Company enters into leases with multiple tenants concentrated in the same industry, or into a significant lease or multiple leases with a single tenant, or tenants are located in the same geographic region, or have similar economic features that would cause their inability to meet contractual obligations, including those to the Company, to be similarly affected. The Company regularly monitors its tenant base to assess potential concentrations of credit risk through financial statement review, tenant management calls, and press releases. Management believes the current credit risk of the Company’s portfolio is reasonably well diversified and does not contain any unusual concentration of credit risk.
3. Rental Property
The following table summarizes the components of rental property, net as of December 31, 2022 and 2021.
| | | | | | | | | | | | | | |
| Rental Property (in thousands) | | December 31, 2022 | | December 31, 2021 |
| Land | | $ | 647,098 | | | $ | 617,297 | |
| Buildings, net of accumulated depreciation of $513,053 and $406,670, respectively | | 4,232,964 | |
| 4,035,210 | |
| Tenant improvements, net of accumulated depreciation of $31,578 and $26,065, respectively | | 44,526 | | | 43,999 | |
| Building and land improvements, net of accumulated depreciation of $218,497 and $179,132, respectively | | 339,274 | | | 320,041 | |
| Construction in progress | | 89,981 | | | 36,493 | |
| Deferred leasing intangibles, net of accumulated amortization of $328,848 and $282,038, respectively | | 508,935 | | | 567,658 | |
| Total rental property, net | | $ | 5,862,778 | | | $ | 5,620,698 | |
Acquisitions
The following tables summarize the acquisitions of the Company during the years ended December 31, 2022 and 2021. The Company accounted for all of its acquisitions as asset acquisitions.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year ended December 31, 2022 |
Market(1) | | Date Acquired | | Square Feet | | Number of Buildings | | Purchase Price
(in thousands) |
| Kansas City, MO | | January 6, 2022 | | 702,000 | | | 1 | | | $ | 60,428 | |
| Chicago, IL | | January 31, 2022 | | 72,499 | | | 1 | | | 8,128 | |
| Columbus, OH | | February 8, 2022 | | 138,213 | | | 1 | | | 11,492 | |
| Cleveland, OH | | February 8, 2022 | | 136,800 | | | 1 | | | 13,001 | |
| Nashville, TN | | March 10, 2022 | | 109,807 | | | 1 | | | 12,810 | |
| Greenville/Spartanburg, SC | | March 10, 2022 | | 289,103 | | | 1 | | | 28,274 | |
| Memphis, TN | | March 18, 2022 | | 195,622 | | | 1 | | | 15,828 | |
| Greenville/Spartanburg, SC | | March 18, 2022 | | 155,717 | | | 1 | | | 16,390 | |
| Three months ended March 31, 2022 | | | | 1,799,761 | | | 8 | | | 166,351 | |
| Atlanta, GA | | April 1, 2022 | | 210,858 | | | 1 | | | 21,119 | |
| Minneapolis/St. Paul, MN | | April 4, 2022 | | 160,000 | | | 1 | | | 13,472 | |
| West Michigan, MI | | April 14, 2022 | | 211,125 | | | 2 | | | 12,274 | |
| Pittsburgh, PA | | April 19, 2022 | | 400,000 | | | 1 | | | 50,178 | |
Greenville/Spartanburg, SC(2) | | April 22, 2022 | | — | | | — | | | 5,559 | |
| Birmingham, AL | | May 5, 2022 | | 67,168 | | | 1 | | | 7,871 | |
| South Bay/San Jose, CA | | June 7, 2022 | | 175,325 | | | 1 | | | 29,630 | |
| Washington, DC | | June 29, 2022 | | 140,555 | | | 1 | | | 20,257 | |
| Hampton Roads, VA | | June 29, 2022 | | 102,512 | | | 1 | | | 10,561 | |
| Three months ended June 30, 2022 | | | | 1,467,543 | | | 9 | | | 170,921 | |
| Atlanta, GA | | July 15, 2022 | | 159,048 | | | 1 | | | 10,062 | |
| Fresno, CA | | July 25, 2022 | | 232,072 | | | 1 | | | 30,121 | |
| El Paso, TX | | July 26, 2022 | | 326,166 | | | 4 | | | 37,792 | |
| Portland, OR | | September 12, 2022 | | 78,000 | | | 1 | | | 11,281 | |
| Louisville, KY | | September 21, 2022 | | 563,032 | | | 1 | | | 38,064 | |
| Three months ended September 30, 2022 | | | | 1,358,318 | | | 8 | | | 127,320 | |
| Chicago, IL | | December 28, 2022 | | 115,491 | | | 1 | | | 8,055 | |
| Three months ended December 31, 2022 | | | | 115,491 | | | 1 | | | 8,055 | |
| Year ended December 31, 2022 | | | | 4,741,113 | | | 26 | | | $ | 472,647 | |
(1) As defined by CoStar Realty Information Inc. If the building is located outside of a CoStar defined market, the city and state is reflected.
(2) The Company acquired vacant land parcels.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year ended December 31, 2021 |
Market(1) | | Date Acquired | | Square Feet | | Number of Buildings | | Purchase Price
(in thousands) |
| Omaha/Council Bluffs, NE-IA | | January 21, 2021 | | 370,000 | | | 1 | | | $ | 24,922 | |
| Minneapolis/St. Paul, MN | | February 24, 2021 | | 80,655 | | | 1 | | | 10,174 | |
| Long Island, NY | | February 25, 2021 | | 64,224 | | | 1 | | | 8,516 | |
| Sacramento, CA | | February 25, 2021 | | 267,284 | | | 1 | | | 25,917 | |
| Little Rock/N. Little Rock | | March 1, 2021 | | 300,160 | | | 1 | | | 24,317 | |
| Cleveland, OH | | March 18, 2021 | | 170,000 | | | 1 | | | 6,382 | |
| Three months ended March 31, 2021 | | | | 1,252,323 | | | 6 | | | 100,228 | |
| Indianapolis, IN | | May 17, 2021 | | 154,440 | | | 1 | | | 13,655 | |
| Baltimore, MD | | May 17, 2021 | | 46,851 | | | 1 | | | 6,228 | |
| Detroit, MI | | June 1, 2021 | | 248,040 | | | 1 | | | 23,786 | |
| Green Bay, WI | | June 7, 2021 | | 152,000 | | | 1 | | | 7,249 | |
| Phoenix, AZ | | June 14, 2021 | | 41,504 | | | 1 | | | 8,670 | |
| Cleveland, OH | | June 17, 2021 | | 179,577 | | | 1 | | | 19,602 | |
| Reno/Sparks, NV | | June 30, 2021 | | 183,435 | | | 1 | | | 13,892 | |
| Washington, DC | | June 30, 2021 | | 193,420 | | | 1 | | | 17,521 | |
| Stockton/Modesto, CA | | June 30, 2021 | | 150,000 | | | 1 | | | 16,118 | |
| Three months ended June 30, 2021 | | | | 1,349,267 | | | 9 | | | 126,721 | |
| Chicago, IL | | July 19, 2021 | | 109,355 | | | 2 | | | 13,341 | |
| Chicago, IL | | July 20, 2021 | | 207,223 | | | 1 | | | 23,345 | |
| Columbia, SC | | July 27, 2021 | | 194,290 | | | 1 | | | 14,546 | |
| South Bay/San Jose, CA | | August 9, 2021 | | 75,954 | | | 1 | | | 26,820 | |
| Columbus, OH | | August 19, 2021 | | 814,265 | | | 2 | | | 75,422 | |
| Salt Lake City, UT | | August 19, 2021 | | 177,071 | | | 1 | | | 35,141 | |
| Greenville/Spartanburg, SC | | August 23, 2021 | | 209,461 | | | 1 | | | 15,317 | |
| Indianapolis, IN | | August 26, 2021 | | 78,600 | | | 1 | | | 5,707 | |
| Birmingham, AL | | August 26, 2021 | | 595,176 | | | 1 | | | 36,850 | |
| Sacramento, CA | | August 30, 2021 | | 114,597 | | | 1 | | | 15,388 | |
| Chicago, IL | | September 2, 2021 | | 95,482 | | | 1 | | | 11,799 | |
| Chicago, IL | | September 16, 2021 | | 506,096 | | | 4 | | | 50,661 | |
| Milwaukee/Madison, WI | | September 16, 2021 | | 157,438 | | | 1 | | | 13,650 | |
| Denver, CO | | September 24, 2021 | | 195,674 | | | 2 | | | 39,136 | |
| Milwaukee/Madison, WI | | September 28, 2021 | | 156,482 | | | 1 | | | 10,807 | |
| Chicago, IL | | September 29, 2021 | | 110,035 | | | 1 | | | 10,585 | |
| Boston, MA | | September 29, 2021 | | 247,056 | | | 2 | | | 28,704 | |
| Three months ended September 30, 2021 | | | | 4,044,255 | | | 24 | | | 427,219 | |
| Omaha/Council Bluffs, NE-IA | | October 6, 2021 | | 99,616 | | | 2 | | | 8,669 | |
| El Paso, TX | | October 8, 2021 | | 276,360 | | | 1 | | | 27,844 | |
| St. Louis, MO | | October 12, 2021 | | 121,223 | | | 1 | | | 12,991 | |
| South Bay/San Jose, CA | | October 12, 2021 | | 31,172 | | | 1 | | | 11,691 | |
| Chicago, IL | | October 13, 2021 | | 56,676 | | | 1 | | | 5,735 | |
| Dallas/Ft. Worth, TX | | October 13, 2021 | | 202,140 | | | 2 | | | 25,913 | |
| Sacramento, CA | | October 25, 2021 | | 82,174 | | | 1 | | | 10,275 | |
| Detroit, MI | | November 1, 2021 | | 126,720 | | | 1 | | | 18,291 | |
| Philadelphia, PA | | November 3, 2021 | | 385,399 | | | 1 | | | 25,909 | |
| West Michigan, MI | | November 9, 2021 | | 159,900 | | | 1 | | | 19,649 | |
| Philadelphia, PA | | November 9, 2021 | | 109,504 | | | 1 | | | 8,071 | |
| Minneapolis/St. Paul, MN | | November 10, 2021 | | 316,636 | | | 1 | | | 30,583 | |
| Chicago, IL | | November 12, 2021 | | 579,338 | | | 4 | | | 62,948 | |
| Philadelphia, PA | | November 12, 2021 | | 128,959 | | | 1 | | | 26,446 | |
| Sacramento, CA | | December 1, 2021 | | 67,200 | | | 1 | | | 7,721 | |
| Des Moines, IA | | December 9, 2021 | | 200,957 | | | 1 | | | 22,866 | |
| Greenville/Spartanburg, SC | | December 17, 2021 | | 231,626 | | | 1 | | | 31,169 | |
| Milwaukee/Madison, WI | | December 17, 2021 | | 192,800 | | | 1 | | | 23,327 | |
| Sacramento, CA | | December 21, 2021 | | 188,830 | | | 2 | | | 27,616 | |
Sacramento, CA(2) | | December 22, 2021 | | — | | | — | | | 28,930 | |
| Des Moines, IA | | December 23, 2021 | | 179,459 | | | 1 | | | 13,556 | |
| Philadelphia, PA | | December 23, 2021 | | 589,580 | | | 1 | | | 53,790 | |
| Nashville, TN | | December 23, 2021 | | 58,672 | | | 1 | | | 7,271 | |
| Westchester/S. Connecticut, CT/NY | | December 23, 2021 | | 167,700 | | | 1 | | | 16,700 | |
| Washington, DC | | December 28, 2021 | | 1,231,200 | | | 2 | | | 140,668 | |
| Minneapolis/St. Paul, MN | | December 28, 2021 | | 83,000 | | | 1 | | | 11,058 | |
| Chicago, IL | | December 29, 2021 | | 102,000 | | | 1 | | | 9,742 | |
| Omaha/Council Bluffs, NE-IA | | December 30, 2021 | | 178,368 | | | 1 | | | 17,888 | |
| Atlanta, GA | | December 31, 2021 | | 103,720 | | | 1 | | | 11,083 | |
| Three months ended December 31, 2021 | | | | 6,250,929 | | | 35 | | | 718,400 | |
| Year ended December 31, 2021 | | | | 12,896,774 | | | 74 | | | $ | 1,372,568 | |
(1) As defined by CoStar Realty Information Inc. If the building is located outside of a CoStar defined market, the city and state is reflected.
(2) The Company acquired a building under development.
The following table summarizes the allocation of the consideration paid at the date of acquisition during the years ended December 31, 2022 and 2021, for the acquired assets and liabilities in connection with the acquisitions identified in the tables above.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Year ended December 31, 2022 | | Year ended December 31, 2021 |
| Acquired Assets and Liabilities | | Purchase price (in thousands) | | Weighted average amortization period (years) of intangibles at acquisition | | Purchase price (in thousands) | | Weighted average amortization period (years) of intangibles at acquisition |
| Land | | $ | 39,346 | | | N/A | | $ | 137,827 | | | N/A |
| Buildings | | 360,209 | | | N/A | | 988,456 | | | N/A |
| Tenant improvements | | 2,640 | | | N/A | | 7,356 | | | N/A |
| Building and land improvements | | 19,589 | | | N/A | | 58,504 | | | N/A |
| Construction in progress | | — | | | N/A | | 24,581 | | | N/A |
| Other assets | | 2,134 | | | N/A | | 1,004 | | | N/A |
| Operating lease right-of-use assets | | 3,541 | | | N/A | | 5,627 | | | N/A |
| Deferred leasing intangibles - In-place leases | | 34,321 | | | 7.9 | | 103,051 | | | 7.8 |
| Deferred leasing intangibles - Tenant relationships | | 18,418 | | | 11.1 | | 52,579 | | | 10.6 |
| Deferred leasing intangibles - Above market leases | | 2,456 | | | 11.6 | | 10,764 | | | 11.4 |
| Deferred leasing intangibles - Below market leases | | (6,021) | | | 7.5 | | (10,691) | | | 6.1 |
| Operating lease liabilities | | (3,541) | | | N/A | | (5,627) | | | N/A |
| | | | | | | | |
| Below market assumed debt adjustment | | — | | | N/A | | 161 | | | 18.8 |
| | | | | | | | |
| Tenant prepaid rent | | (445) | | | N/A | | (1,024) | | | N/A |
| Total purchase price | | 472,647 | | | | | 1,372,568 | | | |
| Less: Mortgage note assumed | | — | | | | | (5,103) | | | |
| Net assets acquired | | $ | 472,647 | | | | | $ | 1,367,465 | | | |
On February 25, 2021, the Company assumed a mortgage note of approximately $5.1 million in connection with the acquisition of the property located in Long Island, NY. For a discussion of the method used to determine the fair value of the mortgage note, see Note 4.
Dispositions
The following table summarizes the Company’s dispositions for the years ended December 31, 2022, 2021, and 2020.
| | | | | | | | | | | | | | | | | | | | |
| | Year ended December 31, |
| Sales of rental property, net (dollars in thousands) | | 2022 | | 2021 | | 2020 |
| Number of buildings | | 8 | | 22 | | 7 |
| Number of land parcels | | 1 | | — | | | — | |
| Building square feet (in millions) | | 1.8 | | 2.7 | | 3.4 |
2022 dispositions contribution to net income(1) | | $ | 1,008 | | | $ | 4,699 | | | $ | 4,764 | |
2021 dispositions contribution to net income(1) | | $ | — | | | $ | 862 | | | $ | 3,645 | |
2020 dispositions contribution to net income(1) | | $ | — | | | $ | — | | | $ | 1,788 | |
| Proceeds from sales of rental property, net | | $ | 135,348 | | | $ | 187,972 | | | $ | 273,560 | |
| Net book value | | $ | 77,861 | | | $ | 89,992 | | | $ | 137,827 | |
| Gain on the sales of rental property, net | | $ | 57,487 | | | $ | 97,980 | | | $ | 135,733 | |
(1) Exclusive of any loss on impairments, gain on involuntary conversion, and gain on the sales of rental property, net.
All of the dispositions were sold to third parties and were accounted for under the full accrual method.
Assets Held for Sale
As of December 31, 2022, the related land and building and improvements, net of approximately $0.6 million and $4.1 million, respectively, for one building was classified as assets held for sale, net on the accompanying Consolidated Balance Sheets. This building contributed approximately $0.4 million, $0.4 million, and $0.3 million to net income during the years ended December 31, 2022, 2021 and 2020, respectively. Subsequent to December 31, 2022, in January 2023, this building was sold to a third party.
Gain on Involuntary Conversion
The Company recognized a gain on involuntary conversion of approximately $0, $0, and $2.2 million during the years ended December 31, 2022, 2021 and 2020, respectively. The gain on involuntary conversion during the year ended December 31, 2020 related to an eminent domain taking of a portion of a parcel of land.
Loss on Impairments
The following table summarizes the Company’s loss on impairments for assets held and used during the years ended December 31, 2022 and 2020. The Company did not recognize a loss on impairments during the year ended December 31, 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Market (1) | | Buildings | | Event or Change in Circumstance Leading to Impairment Evaluation(2) | | Valuation technique utilized to estimate fair value | | Fair Value(3) | | Loss on Impairments |
| (in thousands) |
| Hartford, CT | | 1 | | Change in estimated hold period | | Discounted cash flows | (4) | $ | 834 | | | $ | 1,783 | |
| | | | | | |
| Year ended December 31, 2022 | | | | | | $ | 1,783 | |
| Williamsport, PA | | 1 | | Change in estimated hold period | (5) | Discounted cash flows | (6) | $ | 5,019 | | | $ | 3,172 | |
| | | | | | |
| Albion, IN | | 5 | | Change in estimated hold period | (7) | Discounted cash flows | (8) | $ | 1,252 | | | $ | 2,405 | |
| | | | | | |
| Year ended December 31, 2020 | | | | | | $ | 5,577 | |
| | | | | | | | | | |
| | | | | | |
| | | | | | | | | | |
| | | | | | |
| | | | | | |
(1)As defined by CoStar. If the building is located outside of a CoStar defined market, the city and state is reflected.
(2)The Company tested the asset group for impairment utilizing a probability weighted recovery analysis of certain scenarios, and it was determined that the carrying value of the property and intangibles were not recoverable from the estimated future undiscounted cash flows.
(3)The estimated fair value of the property is based on Level 3 inputs and is a non-recurring fair value measurement. Level 3 is defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
(4)Level 3 inputs used to determine fair value for the property impaired: discount rate of 10.0% and exit capitalization rate of 8.5%.
(5)This property was sold during the year ended December 31, 2022.
(6)Level 3 inputs used to determine fair value for the property impaired: discount rate of 10.5% and exit capitalization rate of 10.0%.
(7)Four of the buildings were sold during the year ended December 31, 2021.
(8)Level 3 inputs used to determine fair value for the property impaired: discount rate of 11.0% and exit capitalization rate of 10.0%.
Deferred Leasing Intangibles
The following table summarizes the deferred leasing intangibles, net on the accompanying Consolidated Balance Sheets as of December 31, 2022 and 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2022 | | December 31, 2021 |
| Deferred Leasing Intangibles (in thousands) | | Gross | | Accumulated Amortization | | Net | | Gross | | Accumulated Amortization | | Net |
| Above market leases | | $ | 86,172 | | | $ | (34,954) | | | $ | 51,218 | | | $ | 91,565 | | | $ | (32,110) | | | $ | 59,455 | |
| Other intangible lease assets | | 751,611 | | | (293,894) | | | 457,717 | | | 758,131 | | | (249,928) | | | 508,203 | |
| Total deferred leasing intangible assets | | $ | 837,783 | | | $ | (328,848) | | | $ | 508,935 | | | $ | 849,696 | | | $ | (282,038) | | | $ | 567,658 | |
| | | | | | | | | | | | |
| Below market leases | | $ | 57,020 | | | $ | (24,593) | | | $ | 32,427 | | | $ | 56,857 | | | $ | (21,136) | | | $ | 35,721 | |
| Total deferred leasing intangible liabilities | | $ | 57,020 | | | $ | (24,593) | | | $ | 32,427 | | | $ | 56,857 | | | $ | (21,136) | | | $ | 35,721 | |
The following table summarizes the amortization expense and the net increase (decrease) to rental income for the amortization of deferred leasing intangibles during the years ended December 31, 2022, 2021 and 2020.
| | | | | | | | | | | | | | | | | | | | |
| | | Year ended December 31, |
| Deferred Leasing Intangibles Amortization (in thousands) | | 2022 | | 2021 | | 2020 |
| Net increase (decrease) to rental income related to above and below market lease amortization | | $ | 329 | | | $ | (2,073) | | | $ | (4,363) | |
| Amortization expense related to other intangible lease assets | | $ | 95,901 | | | $ | 88,729 | | | $ | 83,160 | |
The following table summarizes the amortization of deferred leasing intangibles over the next five calendar years as of December 31, 2022.
| | | | | | | | | | | | | | |
| Year | | Amortization Expense Related to Other Intangible Lease Assets (in thousands) | | Net Increase (Decrease) to Rental Income Related to Above and Below Market Lease Amortization (in thousands) |
| 2023 | | $ | 84,098 | | | $ | 249 | |
| 2024 | | $ | 72,640 | | | $ | (418) | |
| 2025 | | $ | 63,443 | | | $ | (252) | |
| 2026 | | $ | 54,351 | | | $ | (968) | |
| 2027 | | $ | 42,957 | | | $ | (1,778) | |
4. Debt
The following table summarizes the Company’s outstanding indebtedness, including borrowings under the Company’s unsecured credit facility, unsecured term loans, unsecured notes, and mortgage notes as of December 31, 2022 and 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Loan | | Principal Outstanding as of December 31, 2022 (in thousands) | | Principal Outstanding as of December 31, 2021 (in thousands) | | Interest
Rate(1)(2) | | Maturity Date | | Prepayment Terms(3) |
| Unsecured credit facility: | | | | | | | | | | |
Unsecured Credit Facility(4) | | $ | 175,000 | | | $ | 296,000 | | | Term SOFR + 0.855% | | October 23, 2026 | | i |
| Total unsecured credit facility | | 175,000 | | | 296,000 | | | | | | | |
| | | | | | | | | | |
| Unsecured term loans: | | | | | | | | | | |
Unsecured Term Loan D(5) | | — | | | 150,000 | | | 2.85 | % | | January 4, 2023 | | i |
Unsecured Term Loan E(5) | | — | | | 175,000 | | | 3.77 | % | | January 15, 2024 | | i |
| Unsecured Term Loan F | | 200,000 | | | 200,000 | | | 2.94 | % | | January 12, 2025 | | i |
| Unsecured Term Loan G | | 300,000 | | | 300,000 | | | 1.09 | % | | February 5, 2026 | | i |
| Unsecured Term Loan A | | 150,000 | | | 150,000 | | | 2.14 | % | | March 15, 2027 | | i |
| Unsecured Term Loan H | | 187,500 | | | — | | | 3.75 | % | | January 25, 2028 | | i |
| Unsecured Term Loan I | | 187,500 | | | — | | | 2.89 | % | | January 25, 2028 | | i |
| Total unsecured term loans | | 1,025,000 | | | 975,000 | | | | | | | |
| Total unamortized deferred financing fees and debt issuance costs | | (4,560) | | | (4,423) | | | | | | | |
| Total carrying value unsecured term loans, net | | 1,020,440 | | | 970,577 | | | | | | | |
| | | | | | | | | | |
| Unsecured notes: | | | | | | | | | | |
Series F Unsecured Notes(6) | | 100,000 | | | 100,000 | | | 3.98 | % | | January 5, 2023 | | ii |
| Series A Unsecured Notes | | 50,000 | | | 50,000 | | | 4.98 | % | | October 1, 2024 | | ii |
| Series D Unsecured Notes | | 100,000 | | | 100,000 | | | 4.32 | % | | February 20, 2025 | | ii |
| Series G Unsecured Notes | | 75,000 | | | 75,000 | | | 4.10 | % | | June 13, 2025 | | ii |
| Series B Unsecured Notes | | 50,000 | | | 50,000 | | | 4.98 | % | | July 1, 2026 | | ii |
| Series C Unsecured Notes | | 80,000 | | | 80,000 | | | 4.42 | % | | December 30, 2026 | | ii |
| Series E Unsecured Notes | | 20,000 | | | 20,000 | | | 4.42 | % | | February 20, 2027 | | ii |
| Series H Unsecured Notes | | 100,000 | | | 100,000 | | | 4.27 | % | | June 13, 2028 | | ii |
| Series I Unsecured Notes | | 275,000 | | | 275,000 | | | 2.80 | % | | September 29, 2031 | | ii |
| Series K Unsecured Notes | | 400,000 | | | — | | | 4.12 | % | | June 28, 2032 | | ii |
| Series J Unsecured Notes | | 50,000 | | | 50,000 | | | 2.95 | % | | September 28, 2033 | | ii |
| Total unsecured notes | | 1,300,000 | | | 900,000 | | | | | | | |
| Total unamortized deferred financing fees and debt issuance costs | | (4,558) | | | (3,059) | | | | | | | |
| Total carrying value unsecured notes, net | | 1,295,442 | | | 896,941 | | | | | | | |
| | | | | | | | | | |
| Mortgage notes (secured debt): | | | | | | | | | | |
| Wells Fargo Bank, National Association CMBS Loan | | — | | | 46,610 | | | 4.31 | % | | December 1, 2022 | | iii |
| Thrivent Financial for Lutherans | | 3,296 | | | 3,430 | | | 4.78 | % | | December 15, 2023 | | iv |
| United of Omaha Life Insurance Company | | 4,744 | | | 4,943 | | | 3.71 | % | | October 1, 2039 | | ii |
| Total mortgage notes | | 8,040 | | | 54,983 | | | | | | | |
| Net unamortized fair market value discount | | (137) | | | (136) | | | | | | | |
| Total unamortized deferred financing fees and debt issuance costs | | (5) | | | (103) | | | | | | | |
| Total carrying value mortgage notes, net | | 7,898 | | | 54,744 | | | | | | | |
Total / weighted average interest rate(6) | | $ | 2,498,780 | | | 2,218,262 | | | 3.39 | % | | | | |
(1)Interest rate as of December 31, 2022. At December 31, 2022, the one-month Term Secured Overnight Financing Rate (“Term SOFR”) was 4.35806%. The current interest rate is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums or discounts. The spread over the applicable rate for the Company’s unsecured credit facility and unsecured term loans is based on the Company’s debt rating and leverage ratio, as defined in the respective loan agreements.
(2)The unsecured credit facility has a stated rate of one-month Term SOFR plus a 0.10% adjustment and a spread of 0.775%, less a sustainability-related interest rate adjustment of 0.02%. The unsecured term loans A, F, and G have a stated interest rate of one-month Term SOFR plus a 0.10% adjustment and a spread of 0.85%, less a sustainability-related interest rate adjustment of 0.02%. The unsecured term loans H and I have a stated interest rate of one-month Term SOFR plus a 0.10% adjustment and a spread of 0.85%. As of December 31, 2022, one-month Term SOFR for the Unsecured Term Loans A, F, G, H, and I was swapped to a fixed rate of 1.31%, 2.11%, 0.26%, 2.90%, and 2.04%, respectively (which includes the 0.10% adjustment). One-month Term SOFR for the Unsecured Term Loan G will be swapped to a fixed rate of 0.95% effective April 18, 2023. One-month Term SOFR for the Unsecured Term Loan I will be swapped to a fixed rate of 2.66% effective January 4, 2023. One-month Term SOFR for the Unsecured Term Loan H will be swapped to a fixed rate of 2.50% effective January 12, 2024.
(3)Prepayment terms consist of (i) pre-payable with no penalty; (ii) pre-payable with penalty; (iii) pre-payable without penalty three months prior to the maturity date, subject to defeasance; and (iv) pre-payable without penalty three months prior to the maturity date.
(4)The capacity of the unsecured credit facility is $1.0 billion. Deferred financing fees and debt issuance costs, net of accumulated amortization related to the unsecured credit facility of approximately $5.2 million and $5.2 million are included in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets as of December 31, 2022 and December 31, 2021, respectively. The initial maturity date is October 24, 2025, or such later date which may be extended pursuant to two six-month extension options exercisable by the Company in its discretion upon advance written notice. Exercise of each six-month option is subject to the following conditions: (i) absence of a default immediately before the extension and immediately after giving effect to the extension; (ii) accuracy of representations and warranties as of the extension date (both immediately before and after the extension), as if made on the extension date; and (iii) payment of a fee. Neither extension option is subject to lender consent, assuming proper notice and satisfaction of the conditions. We are required to pay a facility fee on the aggregate commitment amount (currently $1.0 billion) at a rate per annum of 0.1% to 0.3%, depending on our debt rating, as defined in the credit agreement. The facility fee is due and payable quarterly.
(5)The Unsecured Term Loan D and the Unsecured Term Loan E were repaid in full on July 26, 2022 in connection with the execution of the Unsecured Term Loan H and the Unsecured Term Loan I.
(6)Subsequent to December 31, 2022, on January 5, 2023, the Series F Unsecured Notes were repaid in full. Refer to Note 13 for additional details.
(7)The weighted average interest rate was calculated using the fixed interest rate swapped on the notional amount of $1,025.0 million of debt, and is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums or discounts.
The aggregate undrawn nominal commitment on the unsecured credit facility as of December 31, 2022 was approximately $821.4 million, including issued letters of credit. The Company’s actual borrowing capacity at any given point in time may be less or restricted to a maximum amount based on the Company’s debt covenant compliance. Total accrued interest for the Company’s indebtedness was approximately $13.1 million and $8.6 million as of December 31, 2022 and 2021, respectively, and is included in accounts payable, accrued expenses and other liabilities on the accompanying Consolidated Balance Sheets.
The following table summarizes the costs included in interest expense related to the Company’s debt arrangements on the accompanying Consolidated Statement of Operations for the years ended December 31, 2022, 2021 and 2020.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Year ended December 31, |
| Costs Included in Interest Expense (in thousands) | | | | | | 2022 | | 2021 | | 2020 |
| Amortization of deferred financing fees and debt issuance costs and fair market value premiums/discounts | | | | | | $ | 3,747 | | | $ | 2,931 | | | $ | 2,922 | |
| Facility, unused, and other fees | | | | | | $ | 1,548 | | | $ | 1,642 | | | $ | 1,311 | |
2022 Debt Activity
On October 3, 2022, the Company achieved a 2022 public disclosure assessment score of “A” from the Global Real Estate Sustainability Benchmark (GRESB). The improved score triggered a sustainability-related interest rate adjustment for the Unsecured Term Loan A, Unsecured Term Loan F, Unsecured Term Loan G, and Unsecured Credit Facility. The interest rate adjustment, a 0.02% interest rate reduction for each instrument, went into effect on October 17, 2022 and will end on June 29, 2024, in accordance with the respective loan agreements.
On September 1, 2022, the mortgage note associated with the Wells Fargo Bank, National Association CMBS Loan was repaid in full.
On September 1, 2022, the Company entered into separate amended and restated loan agreements for the Unsecured Term Loan A, the Unsecured Term Loan F, and the Unsecured Term Loan G (“Amended and Restated Unsecured Term Loans”), to provide that borrowings under the Amended and Restated Unsecured Term Loans bear a current annual interest rate of one-month Term SOFR, plus an adjustment of 0.10% and a spread of 0.85%, based on the Company’s debt rating and leverage ratio (as defined in the applicable loan agreement). Other than the interest rate provisions described above, the material terms of the Amended and Restated Unsecured Term Loans, including the maturity dates, remain unchanged.
On July 26, 2022, the Company entered into an amended and restated credit agreement for the unsecured credit facility (the “July 2022 Credit Agreement”), which provided for an increase in the aggregate commitments available for borrowing under the unsecured credit facility from $750.0 million to up to $1.0 billion. The July 2022 Credit Agreement also provided for the replacement of one-month LIBOR for one-month Term SOFR, plus a 0.10% adjustment. In connection with the July 2022 Credit Agreement, the Company incurred approximately $1.4 million in costs which are being deferred and amortized through the maturity date of the unsecured credit facility. The unamortized fees will continue to be deferred and amortized through the maturity date. Other than the increase in the borrowing commitments and the interest rate provisions described above, the material terms of the unsecured credit facility remain unchanged.
On July 26, 2022, the Company entered into (i) an unsecured term loan agreement with Wells Fargo Bank, National Association and the other lenders party thereto, providing for a new senior unsecured term loan in the original principal amount of $187.5 million (“Unsecured Term Loan H”) and (ii) an unsecured term loan agreement with Bank of America, N.A., and the
other lenders party thereto, providing for a new senior unsecured term loan in the original principal amount of $187.5 million (“Unsecured Term Loan I”). In connection with the new unsecured term loans, the $150.0 million Unsecured Term Loan D and the $175.0 million Unsecured Term Loan E were repaid in full. Each of the Unsecured Term Loan H and the Unsecured Term Loan I bears a current annual interest rate of one-month Term SOFR, plus a 0.10% adjustment and a spread of 0.85% based on the Company’s debt rating and leverage ratio (as defined in the applicable loan agreement), and matures on January 25, 2028. In connection with the new unsecured term loans, the Company incurred approximately $1.2 million in costs which are being deferred and amortized through the maturity dates on the unsecured term loans. The Company also recognized debt extinguishment and modification expenses of approximately $0.8 million related to unamortized deferred financing fees and debt issuance costs related to the Unsecured Term Loan D and the Unsecured Term Loan E and other third-party costs.
On April 28, 2022, the Company entered into a note purchase agreement (the “April 2022 NPA”) for the private placement by the Operating Partnership of $400.0 million senior unsecured notes (the “Series K Unsecured Notes”) maturing June 28, 2032, with a fixed annual interest rate of 4.12%. The April 2022 NPA contains a number of financial covenants substantially similar to the financial covenants contained in the Company’s unsecured credit facility and other unsecured notes, plus a financial covenant that requires the Company to maintain a minimum interest coverage ratio of not less than 1.50:1.00. The Operating Partnership issued the Series K Unsecured Notes on June 28, 2022. The Company and certain wholly owned subsidiaries of the Operating Partnership are guarantors of the Series K Unsecured Notes.
2021 Debt Activity
On October 26, 2021, the Company entered into an amendment to the unsecured credit facility (the “October 2021 Credit Facility Amendment”). The October 2021 Credit Facility Amendment provides for an extension of the maturity date to October 24, 2025, with two six-month extension options, subject to certain conditions, and a reduced current interest rate of LIBOR plus a spread of 0.775% and facility fee of 0.15%, each based on the Company’s current debt rating (as defined in the credit agreement) and leverage level. In connection with the October 2021 Credit Facility Amendment, the Company incurred approximately $3.7 million in costs which are being deferred and amortized through the maturity date of the unsecured credit facility. The Company also incurred approximately $0.1 million of modification expenses which were recognized in debt extinguishment and modification expenses in the accompanying Consolidated Statements of Operations. Other than the maturity and interest rate provisions described above, the material terms of the unsecured credit facility remained unchanged.
On October 26, 2021, the Company entered into an amendment to the Unsecured Term Loan A (the “Amendment to Unsecured Term Loan A”). The Amendment to Unsecured Term Loan A provides for an extension of the maturity date to March 15, 2027 and a reduced current interest rate of LIBOR plus a spread of 0.85% based on the Company’s current debt rating (as defined in the loan agreement) and leverage level. In connection with the Amendment to Unsecured Term Loan A, the Company incurred approximately $0.6 million in costs which are being deferred and amortized through the new maturity date. The Company also incurred approximately $0.2 million of modification expenses which were recognized in debt extinguishment and modification expenses in the accompanying Consolidated Statements of Operations. Other than the maturity and interest rate provisions described above, the material terms of the Unsecured Term Loan A remain unchanged.
On October 26, 2021, the Company entered into amendments to the Unsecured Term Loan E, the Unsecured Term Loan F, and the Unsecured Term Loan G (“Term Loan Amendments”) that provide for reduced current interest rates on each of the loans of LIBOR plus a spread of 0.85% based on the Company’s current debt rating (as defined in each loan agreement) and leverage level. In connection with the Term Loan Amendments, the Company incurred approximately $0.6 million in costs which are being deferred and amortized through the respective maturity dates. The Company also incurred approximately $1.2 million of modification expenses which were recognized in debt extinguishment and modification expenses in the accompanying Consolidated Statements of Operations. Other than the interest rate provisions described above, the material terms of the Unsecured Term Loan E, the Unsecured Term Loan F, and the Unsecured Term Loan G remain unchanged.
On October 26, 2021, the Company entered into an amendment to the Unsecured Term Loan D to conform certain provisions of such loan agreement to the unsecured credit facility.
On July 8, 2021, the Company entered into a note purchase agreement (the “July 2021 NPA”) for the private placement by the Operating Partnership of $275.0 million senior unsecured notes (the “Series I Unsecured Notes”) maturing September 29, 2031, with a fixed annual interest rate of 2.80%, and $50.0 million senior unsecured notes (the “Series J Unsecured Notes”) maturing September 28, 2033, with a fixed annual interest rate of 2.95%. The July 2021 NPA contains a number of financial covenants substantially similar to the financial covenants contained in the Company’s unsecured credit facility and other unsecured notes, plus a financial covenant that requires the Company to maintain a minimum interest coverage ratio of not less than 1.50:1.00.
The Operating Partnership issued the Series I Unsecured Notes and Series J Unsecured Notes on September 28, 2021. The Company and certain wholly owned subsidiaries of the Operating Partnership are guarantors of the unsecured notes.
On February 25, 2021, the Company assumed a mortgage note with United of Omaha Life Insurance Company of approximately $5.1 million in connection with the acquisition of the property located in Long Island, NY, which serves as collateral for the debt. The debt matures on October 1, 2039 and bears interest at 3.71% per annum. The assumed debt was recorded at fair value and a fair value discount of approximately $0.2 million was recorded. The fair value of debt was determined by discounting the future cash flows using the current rate of approximately 4.10% at which loans would be made to borrowers with similar credit ratings for loans with similar maturities, terms, and loan-to-value ratios. The fair value of the debt is based on Level 3 inputs and is a nonrecurring fair value measurement.
On February 5, 2021, the Company entered into an amendment to the unsecured credit facility (the “Credit Facility Amendment”). The Credit Facility Amendment provided for an increase in the aggregate commitments available for borrowing under the unsecured credit facility from $500 million to up to $750 million. In connection with the Credit Facility Amendment, the Company incurred approximately $1.2 million in costs which are being deferred and amortized through the maturity date of the unsecured credit facility. Other than the increase in the borrowing commitments, the material terms of the unsecured credit facility remain unchanged.
On February 5, 2021, the Company entered into an amendment to the Unsecured Term Loan G (the “Amendment to Unsecured Term Loan G”). The Amendment to Unsecured Term Loan G provided for an extension of the maturity date to February 5, 2026 and a reduced stated interest rate of one-month LIBOR plus a spread that ranges from 0.85% to 1.65% for LIBOR borrowings based on the Company’s debt ratings. The Amendment to Unsecured Term Loan G also amended the provision for a minimum interest rate, or floor, for LIBOR borrowings to 0.00% and for Base Rate borrowings to 1.00%. In connection with the Amendment to Unsecured Term Loan G, the Company incurred approximately $1.6 million in costs which are being deferred and amortized through the new maturity date of February 5, 2026. The Company also incurred approximately $0.7 million of modification expenses which were recognized in debt extinguishment and modification expenses in the accompanying Consolidated Statements of Operations. Additionally, the Company reversed the previously accrued extension fees of approximately $1.1 million from the amendment to the Unsecured Term Loan G that was entered into on April 17, 2020, which resulted in a decrease to interest expense of approximately $0.3 million. Other than the maturity and interest rate provisions described above, the material terms of the Unsecured Term Loan G remain unchanged.
Financial Covenant Considerations
The Company’s ability to borrow under the unsecured credit facility, unsecured term loans, and unsecured notes are subject to its ongoing compliance with a number of customary financial covenants, including:
•a maximum consolidated leverage ratio of not greater than 0.60:1.00;
•a maximum secured leverage ratio of not greater than 0.40:1.00;
•a maximum unencumbered leverage ratio of not greater than 0.60:1.00;
•a minimum fixed charge ratio of not less than or equal to 1.50:1.00;
•a minimum unsecured interest coverage ratio of not less than or equal to 1.75:1.00; and
•with respect to the unsecured notes, a minimum interest coverage ratio of not less than 1.50:1.00.
The Company was in compliance with all such applicable restrictions and financial and other covenants as of December 31, 2022 and 2021 related to its unsecured credit facility, unsecured term loans, and unsecured notes. In the event of a default under the unsecured credit facility or the unsecured term loans, the Company’s dividend distributions are limited to the minimum amount necessary for the Company to maintain its status as a REIT.
Each of the Company’s mortgage notes has specific properties and assignments of rents and leases that are collateral for these loans. The Wells Fargo Bank, National Association CMBS debt facility contained certain financial and other covenants and was repaid in full in 2022. The Company was in compliance with all such applicable restrictions and financial and other covenants as of December 31, 2021, related to the Wells Fargo Bank, National Association CMBS loan. The real estate net book value of the properties that are collateral for the Company’s debt arrangements was approximately $14.8 million and $88.5 million at December 31, 2022 and 2021, respectively, and is limited to senior, property-level secured debt financing arrangements.
Fair Value of Debt
The following table summarizes the aggregate principal amount outstanding under the Company’s debt arrangements and the corresponding estimate of fair value as of December 31, 2022 and 2021. The fair value of the Company’s debt is based on Level 3 inputs.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | December 31, 2022 | | December 31, 2021 |
| Indebtedness (in thousands) | | Principal Outstanding | | Fair Value | | Principal Outstanding | | Fair Value |
| Unsecured credit facility | | $ | 175,000 | | | $ | 175,000 | | | $ | 296,000 | | | $ | 296,000 | |
| Unsecured term loans | | 1,025,000 | | | 1,025,000 | | | 975,000 | | | 975,224 | |
| Unsecured notes | | 1,300,000 | | | 1,150,283 | | | 900,000 | | | 937,183 | |
| Mortgage notes | | 8,040 | | | 6,855 | | | 54,983 | | | 56,323 | |
| Total principal amount | | 2,508,040 | | | $ | 2,357,138 | | | 2,225,983 | | | $ | 2,264,730 | |
| Net unamortized fair market value discount | | (137) | | | | | (136) | | | |
| Total unamortized deferred financing fees and debt issuance costs | | (9,123) | | | | | (7,585) | | | |
| Total carrying value | | $ | 2,498,780 | | | | | $ | 2,218,262 | | | |
Future Principal Payments of Debt
The following table summarizes the Company’s aggregate future principal payments of the Company’s debt at December 31, 2022.
| | | | | | | | |
| Year | | Future Principal Payments of Debt
(in thousands) |
| 2023 | | $ | 103,502 | |
| 2024 | | 50,215 | |
| 2025 | | 550,223 | |
| 2026 | | 430,231 | |
| 2027 | | 170,240 | |
| Thereafter | | 1,203,629 | |
| Total aggregate principal payments | | $ | 2,508,040 | |
| | |
| | |
| | |
5. Derivative Financial Instruments
Risk Management Objective of Using Derivatives
The Company’s use of derivative instruments is limited to the utilization of interest rate swaps to manage interest rate risk exposure on existing and future liabilities and not for speculative purposes. The principal objective of such arrangements is to minimize the risks and related costs associated with the Company’s operating and financial structure.
The following table summarizes the Company’s outstanding interest rate swaps as of December 31, 2022. All of the Company’s interest rate swaps are designated as qualifying cash flow hedges.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest Rate Derivative Counterparty | | Trade Date | | Effective Date | | Notional Amount
(in thousands) | | Fair Value
(in thousands) | | Pay Fixed Interest Rate | | Receive Variable Interest Rate | | Maturity Date |
| The Toronto-Dominion Bank | | Jul-20-2017 | | Jul-28-2022 | | $ | 25,000 | | | $ | 5 | | | 1.8830 | % | | One-month Term SOFR | | Jan-04-2023 |
| Royal Bank of Canada | | Jul-20-2017 | | Jul-28-2022 | | $ | 25,000 | | | $ | 5 | | | 1.8980 | % | | One-month Term SOFR | | Jan-04-2023 |
| Wells Fargo Bank, N.A. | | Jul-20-2017 | | Jul-28-2022 | | $ | 25,000 | | | $ | 5 | | | 1.8750 | % | | One-month Term SOFR | | Jan-04-2023 |
| PNC Bank, N.A. | | Jul-20-2017 | | Jul-28-2022 | | $ | 25,000 | | | $ | 5 | | | 1.8860 | % | | One-month Term SOFR | | Jan-04-2023 |
| PNC Bank, N.A. | | Jul-20-2017 | | Jul-28-2022 | | $ | 50,000 | | | $ | 10 | | | 1.8850 | % | | One-month Term SOFR | | Jan-04-2023 |
| The Toronto-Dominion Bank | | Apr-20-2020 | | Aug-10-2022 | | $ | 75,000 | | | $ | 981 | | | 0.2660 | % | | One-month Term SOFR | | Apr-18-2023 |
| Wells Fargo Bank, N.A. | | Apr-20-2020 | | Aug-10-2022 | | $ | 75,000 | | | $ | 984 | | | 0.2520 | % | | One-month Term SOFR | | Apr-18-2023 |
| The Toronto-Dominion Bank | | Apr-20-2020 | | Aug-10-2022 | | $ | 75,000 | | | $ | 981 | | | 0.2660 | % | | One-month Term SOFR | | Apr-18-2023 |
| Wells Fargo Bank, N.A. | | Apr-20-2020 | | Aug-10-2022 | | $ | 75,000 | | | $ | 984 | | | 0.2520 | % | | One-month Term SOFR | | Apr-18-2023 |
| Bank of Montreal | | Jul-24-2018 | | Jul-26-2022 | | $ | 50,000 | | | $ | 999 | | | 2.9160 | % | | One-month Term SOFR | | Jan-12-2024 |
| The Toronto-Dominion Bank | | Jul-24-2018 | | Jul-26-2022 | | $ | 50,000 | | | $ | 1,003 | | | 2.9080 | % | | One-month Term SOFR | | Jan-12-2024 |
| PNC Bank, N.A. | | Jul-24-2018 | | Jul-26-2022 | | $ | 50,000 | | | $ | 997 | | | 2.9190 | % | | One-month Term SOFR | | Jan-12-2024 |
| U.S. Bank, N.A. | | Jul-24-2018 | | Jul-26-2022 | | $ | 25,000 | | | $ | 500 | | | 2.9120 | % | | One-month Term SOFR | | Jan-12-2024 |
| Wells Fargo Bank, N.A. | | May-02-2019 | | Aug-15-2022 | | $ | 50,000 | | | $ | 2,179 | | | 2.2360 | % | | One-month Term SOFR | | Jan-15-2025 |
| U.S. Bank, N.A. | | May-02-2019 | | Aug-15-2022 | | $ | 50,000 | | | $ | 2,182 | | | 2.2380 | % | | One-month Term SOFR | | Jan-15-2025 |
| Regions Bank | | May-02-2019 | | Aug-15-2022 | | $ | 50,000 | | | $ | 2,177 | | | 2.2389 | % | | One-month Term SOFR | | Jan-15-2025 |
| Bank of Montreal | | Jul-16-2019 | | Aug-15-2022 | | $ | 50,000 | | | $ | 2,700 | | | 1.7100 | % | | One-month Term SOFR | | Jan-15-2025 |
| U.S. Bank, N.A. | | Feb-17-2021 | | Apr-18-2023 | | $ | 150,000 | | | $ | 12,024 | | | 0.9520 | % | | One-month Term SOFR | | Feb-5-2026 |
| Wells Fargo Bank, N.A. | | Feb-17-2021 | | Apr-18-2023 | | $ | 75,000 | | | $ | 6,003 | | | 0.9460 | % | | One-month Term SOFR | | Feb-5-2026 |
| The Toronto-Dominion Bank | | Feb-17-2021 | | Apr-18-2023 | | $ | 75,000 | | | $ | 6,050 | | | 0.9355 | % | | One-month Term SOFR | | Feb-5-2026 |
| Regions Bank | | Oct-26-2021 | | Aug-01-2022 | | $ | 50,000 | | | $ | 4,953 | | | 1.3090 | % | | One-month Term SOFR | | Mar-15-2027 |
| Bank of Montreal | | Oct-26-2021 | | Aug-01-2022 | | $ | 50,000 | | | $ | 4,976 | | | 1.3090 | % | | One-month Term SOFR | | Mar-15-2027 |
| PNC Bank, N.A. | | Oct-26-2021 | | Aug-01-2022 | | $ | 50,000 | | | $ | 4,952 | | | 1.3150 | % | | One-month Term SOFR | | Mar-15-2027 |
| PNC Bank, N.A. | | Jul-27-2022 | | Jan-04-2023 | | $ | 50,000 | | | $ | 2,623 | | | 2.6420 | % | | One-month Term SOFR | | Jan-25-2028 |
| The Toronto-Dominion Bank | | Jul-27-2022 | | Jan-04-2023 | | $ | 50,000 | | | $ | 2,614 | | | 2.6530 | % | | One-month Term SOFR | | Jan-25-2028 |
| Regions Bank | | Jul-27-2022 | | Jan-04-2023 | | $ | 50,000 | | | $ | 2,583 | | | 2.6550 | % | | One-month Term SOFR | | Jan-25-2028 |
| U.S. Bank, N.A. | | Jul-27-2022 | | Jan-12-2024 | | $ | 75,000 | | | $ | 2,668 | | | 2.4865 | % | | One-month Term SOFR | | Jan-25-2028 |
| The Toronto-Dominion Bank | | Jul-27-2022 | | Jan-12-2024 | | $ | 50,000 | | | $ | 1,778 | | | 2.4910 | % | | One-month Term SOFR | | Jan-25-2028 |
| Wells Fargo Bank, N.A. | | Jul-27-2022 | | Jan-12-2024 | | $ | 50,000 | | | $ | 1,756 | | | 2.4930 | % | | One-month Term SOFR | | Jan-25-2028 |
| PNC Bank, N.A. | | Jul-27-2022 | | Jul-27-2022 | | $ | 50,000 | | | $ | 2,546 | | | 2.6790 | % | | One-month Term SOFR | | Jan-25-2028 |
In connection with the Amended and Restated Unsecured Term Loans that were entered into on September 1, 2022, as discussed in Note 4, the Company transitioned all of its outstanding interest rate swaps to one-month Term SOFR. The Company made various Accounting Standards Codification Topic 848 elections related to changes in critical terms of the hedging relationships due to reference rate reform to not result in a dedesignation of these hedging relationships. As of December 31, 2022, all of the Company's interest rate swap agreements were indexed to one-month Term SOFR.
The following table summarizes the fair value of the interest rate swaps outstanding as of December 31, 2022 and 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance Sheet Line Item (in thousands) | | Notional Amount December 31, 2022 | | Fair Value December 31, 2022 | | Notional Amount December 31, 2021 | | Fair Value December 31, 2021 |
| Interest rate swaps-Asset | | $ | 1,650,000 | | | $ | 72,223 | | | $ | 600,000 | | | $ | 5,220 | |
| Interest rate swaps-Liability | | $ | — | | | $ | — | | | $ | 825,000 | | | $ | (17,052) | |
Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate swaps are to add stability to interest expense and to manage its exposure to interest rate movements. The Company uses interest rate swaps to fix the rate of its long term variable rate debt. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income (loss) and subsequently reclassified to interest expense in the same periods during which the hedged transaction affects earnings.
Amounts reported in accumulated other comprehensive income (loss) related to derivatives designated as qualifying cash flow hedges will be reclassified to interest expense as interest payments are made on the Company’s variable rate debt. The Company estimates that approximately $39.8 million will be reclassified from accumulated other comprehensive income (loss) as a decrease to interest expense over the next 12 months.
The following table summarizes the effect of cash flow hedge accounting and the location of the amounts related to the Company’s derivatives in the consolidated financial statements for the years ended December 31, 2022, 2021 and 2020.
| | | | | | | | | | | | | | | | | | | | |
| | | Year ended December 31, |
| Effect of Cash Flow Hedge Accounting (in thousands) | | 2022 | | 2021 | | 2020 |
| Income (loss) recognized in accumulated other comprehensive income (loss) on interest rate swaps | | $ | 85,726 | | | $ | 12,520 | | | $ | (35,548) | |
| Income (loss) reclassified from accumulated other comprehensive income (loss) into income as interest expense | | $ | 1,640 | | | $ | (16,336) | | | $ | (13,439) | |
| Total interest expense presented in the Consolidated Statements of Operations in which the effects of cash flow hedges are recorded | | $ | 78,018 | | | $ | 63,484 | | | $ | 62,343 | |
Credit-risk-related Contingent Features
The Company has agreements with each of its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness.
As of December 31, 2022, the Company had not breached the provisions of these agreements and had not posted any collateral related to these agreements.
Fair Value of Interest Rate Swaps
The Company’s valuation of the interest rate swaps is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs including interest rate curves. The fair values of interest rate swaps are determined by using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.
The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.
Although the Company has determined that the majority of our leasesthe inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company or its counterparties. However, as of December 31, 2022 and 2021, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are either triple net leasesnot significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.
The following table summarizes the Company’s financial instruments that were recorded at fair value on a recurring basis as of December 31, 2022 and 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Fair Value Measurements as of December 31, 2022 Using |
| Balance Sheet Line Item (in thousands) | | Fair Value December 31, 2022 | | Level 1 | | Level 2 | | Level 3 |
| Interest rate swaps-Asset | | $ | 72,223 | | | $ | — | | | $ | 72,223 | | | $ | — | |
| Interest rate swaps-Liability | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Fair Value Measurements as of December 31, 2021 Using |
| Balance Sheet Line Item (in thousands) | | Fair Value December 31, 2021 | | Level 1 | | Level 2 | | Level 3 |
| Interest rate swaps-Asset | | $ | 5,220 | | | $ | — | | | $ | 5,220 | | | $ | — | |
| Interest rate swaps-Liability | | $ | (17,052) | | | $ | — | | | $ | (17,052) | | | $ | — | |
6. Equity
Preferred Stock
The Company is authorized to issue up to 20,000,000 shares of preferred stock, par value $0.01 per share. As of December 31, 2022 and December 31, 2021, there were no shares of preferred stock issued or otherwise provideoutstanding.
On March 1, 2021, the Company gave notice to redeem all 3,000,000 issued and outstanding shares of the Series C Preferred Stock on March 31, 2021. The Company redeemed the Series C Preferred Stock on March 31, 2021 at a cash redemption price of $25.00 per share, plus accrued and unpaid dividends to, but excluding, the redemption date. The Company recognized a deemed dividend to the holders of the Series C Preferred Stock of approximately $2.6 million on the accompanying Consolidated Statements of Operations for tenant reimbursement for coststhe year ended December 31, 2021 related to these expenses. Therefore,redemption costs and the increasedoriginal issuance costs in an inflationary environment would generally be passed through to our tenant. of the Series C Preferred Stock.
Off-balance Sheet Arrangements
As of December 31, 2017,2022, we had letters of credit related to development projects and certain other agreements of approximately $5.9$3.6 million. As of December 31, 2017,2022, we had no other material off-balance sheet arrangements. See the table under “Liquidity and Capital Resources—Contractual Obligations” above for information regarding certain off-balance sheet arrangements.
Item 7A. Quantitativeand Qualitative Disclosures about Market Risk
Our future income, cash flows and fair values relevant to financial instruments are dependent upon prevailing market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. The primary market risk we are exposed to is interest rate risk. We have used derivative financial instruments to manage, or hedge, interest rate risks related to our borrowings, primarily through interest rate swaps.
As of December 31, 2017,2022, we had $721.0 million$1.2 billion of variable rate debt outstanding. As of December 31, 2022, all of our outstanding variable rate debt, all of which, with the exception of $121.0 million under our unsecured credit facility which had a balance of $175.0 million, was fixed with interest rate swaps.swaps through maturity. To the extent we undertake additional variable rate indebtedness, if interest rates increase, then so will the interest costs on our unhedged variable rate debt, which could adversely affect our cash flow and our ability to pay principal and interest on our debt and our ability to make distributions to our security holders. Further, rising interest rates could limit our ability to refinance existing debt when it matures or significantly increase our future interest expense. From time to time, we enter into interest rate swap agreements and other interest rate hedging contracts, including swaps, caps and floors. While these agreements are intended to lessen the impact of rising interest rates on us, they also expose us to the risk that the other parties to the agreements will not perform, we could incur significant costs associated with the settlement of the agreements, the agreements will be unenforceable and the underlying transactions will fail to qualify as highly-effective cash flow hedges under GAAP. In addition, an increase in interest rates could decrease the amounts third parties are willing to pay for our assets, thereby limiting our ability to change our portfolio promptly in response to changes in economic or other conditions. In addition, an increase in interest rates could decrease the amounts third parties are willing to pay for our assets, thereby limiting our ability to change our portfolio promptly in response to changes in economic or other conditions. If interest rates increased by 100 basispoints and assuming we had an outstanding balance of $121.0$175.0 million on theour unsecured credit facility (the portion outstanding at December 31, 2017 not fixed by interest rate swaps) for the year ended December 31, 2017,2022, our interest expense would have increased by approximately $1.2$1.8 million for the year ended December 31, 2017.2022.
Item 8. Financial Statementsand Supplementary Data
The required response under this Item 8, “Financial Statements and Supplementary Data” is submitted in a separate section of this report. See Index to Consolidated Financial Statements on page F-1.
The tables below reflect the Company’s selected quarterly information for the quarters ended December 31, 2017 and 2016, September 30, 2017 and 2016, June 30, 2017 and 2016, and March 31, 2017 and 2016 (in thousands, except for per share data).
|
| | | | | | | | | | | | | | | |
| | | Three months ended, |
| Selected Interim Financial Information | | December 31, 2017 | | September 30, 2017 | | June 30, 2017 | | March 31, 2017 |
| Total revenue | | $ | 81,270 |
| | 78,144 |
| | $ | 72,193 |
| | $ | 69,480 |
|
| Net income | | $ | 8,924 |
| | 21,839 |
| | $ | 1,368 |
| | $ | 69 |
|
| Net income (loss) attributable to common stockholders | | $ | 6,124 |
| | 18,478 |
| | $ | (1,119 | ) | | $ | (2,359 | ) |
| Net income (loss) per share attributable to common stockholders — basic and diluted | | $ | 0.06 |
| | 0.20 |
| | $ | (0.01 | ) | | $ | (0.03 | ) |
|
| | | | | | | | | | | | | | | | |
| | | Three months ended, |
| Selected Interim Financial Information | | December 31, 2016 | | September 30, 2016 | | June 30, 2016 | | March 31, 2016 |
| Total revenue | | $ | 66,534 |
| | $ | 62,595 |
| | $ | 60,242 |
| | $ | 60,872 |
|
| Net income (loss) | | $ | 33,067 |
| | $ | 130 |
| | $ | (9,941 | ) | | $ | 12,332 |
|
| Net income (loss) attributable to common stockholders | | $ | 28,608 |
| | $ | (3,776 | ) | | $ | (13,319 | ) | | $ | 8,838 |
|
| Net income (loss) per share attributable to common stockholders — basic and diluted | | $ | 0.38 |
| | $ | (0.05 | ) | | $ | (0.20 | ) | | $ | 0.13 |
|
Item 9. Changes in and Disagreementswith Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As required by SEC Rule 13a-15(b), we have evaluated, under the supervision of and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of December 31, 2017.2022. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures for the periods covered by this report were effective to provide reasonable assurance that information required to be disclosed by ourthe Company in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control—Integrated Framework (2013), our management concluded that our internal control over financial reporting was effective as of December 31, 2017.2022.
The effectiveness of our internal control over financial reporting as of December 31, 20172022 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which appears on page F-2 of this Annual Report on Form 10‑K.report.
Changes in Internal Controls
There was no change to our internal control over financial reporting during the fourth quarter ended December 31, 20172022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
As of the quarter ended December 31, 2017,2022, all items required to be disclosed in a Current Report on Form 8-K were reported under Form 8-K.
AdditionalEntry Into a Material Federal Income Tax ConsiderationsDefinitive Agreement
The following is a summarySecond Amended and Restated Agreement of Limited Partnership
On February 15, 2023, we entered into the Second Amended and Restated Agreement of Limited Partnership of our Operating Partnership, dated as of February 15, 2023 (the “Amended Operating Partnership Agreement”), which, among other things, (i) clarifies certain additional material federal income tax considerations with respectprovisions related to the ownershipLTIP units in our Operating Partnership, and (ii) added partnership representative provisions. The foregoing description of our securities. This summary supplementsthe Amended Operating Partnership Agreement does not purport to be complete and should be read together with “Material Federal Income Tax Considerations”is qualified in its entirety by reference to the prospectus dated April 7, 2017 andAmended Operating Partnership Agreement, a copy of which has been filed as part of our registration statement on Form S-3 (No. 333-209722).
Recent Legislation
The recently passed Tax Cuts and Jobs Act (“TCJA”) made many significant changes to the U.S. federal income tax laws applicable to businesses and their owners, including REITs and their stockholders, and may lessen the relative competitive advantage of operating as a REIT rather than as a C corporation. PursuantExhibit 10.1 to this legislation, as of January 1, 2018, (1) the federal income tax rate applicable to corporationsreport and is reduced to 21%, (2) the highest marginal individual income tax rate is reduced to 37% (through taxable years endingincorporated in 2025), (3) the corporate alternative minimum tax is repealed, and (4) the backup withholding rate for U.S. stockholders is reduced to 24%. In addition, individuals, estates and trusts may deduct up to 20% of certain pass-through income, including ordinary REIT dividendsthis Item 9B, “Other Information” by reference.
Item 9C. Disclosure Regarding Foreign Jurisdictions that are not “capital gain dividends” or “qualified dividend income,” subject to certain limitations. For taxpayers qualifying for the full deduction, the effective maximum tax rate on ordinary REIT dividends would be 29.6% (through taxable years ending in 2025). The maximum rate of withholding with respect to our distributions to non-U.S. stockholders that are treated as attributable to gains from the sale or exchange of U.S. real property interests is also reduced from 35% to 21%. The deduction of net interest expense is limited for all businesses; provided that certain businesses, including real estate businesses, may elect not to be subject to such limitations and instead to depreciate their real property related assets over longer depreciable lives. To the extent that STAG TRS or any other TRS we form has interest expense that exceeds its interestPrevent Inspections
income, the net interest expense limitation could potentially apply to such TRS. The reduced corporate tax rate will apply to STAG TRS and any other TRS we form.Not Applicable.
We urge you to consult your tax advisors regarding the impact of this legislation on the purchase, ownership and sale of our stock.
Distribution Requirements
We may satisfy the 90% distribution test with taxable distributions of our stock or debt securities. The IRS has issued a revenue procedure authorizing publicly offered REITs to treat certain distributions that are paid partly in cash and partly in stock as dividends that would satisfy the REIT annual distribution requirement and qualify for the dividends paid deduction for federal income tax purposes. We have no current intention to make a taxable dividend payable in our stock.
Taxation of Non-U.S. Stockholders - Qualified Shareholders and Qualified Foreign Pension Funds
REIT distributions received by a “qualified shareholder” or a “qualified foreign pension fund” that are exempt from FIRPTA withholding may still be subject to regular U.S. withholding tax.
PART III.
Item 10. Directors, Executive Officers and Corporate Governance
The information required by Item 10 will be included in the Proxy Statement to be filed relating to our 20182023 Annual Meeting of Stockholders and is incorporated herein by reference.
Item 11. Executive Compensation
The information required by Item 11 will be included in the Proxy Statement to be filed relating to our 20182023 Annual Meeting of Stockholders and is incorporated herein by reference.
Item 12. Security Ownershipof Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by Item 12 will be included in the Proxy Statement to be filed relating to our 20182023 Annual Meeting of Stockholders and is incorporated herein by reference.
Item 13. Certain Relationshipsand Related Transactions, and Director Independence
The information required by Item 13 will be included in the Proxy Statement to be filed relating to our 20182023 Annual Meeting of Stockholders and is incorporated herein by reference.
Item 14. Principal AccountantFees and Services
The information required by Item 14 will be included in the Proxy Statement to be filed relating to our 20182023 Annual Meeting of Stockholders and is incorporated herein by reference.
PART IV.
Item 15. Exhibits and Financial Statement Schedules
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1. | Consolidated Financial Statements |
1.Consolidated Financial Statements
The financial statements listed in the accompanying Index to Consolidated Financial Statements on page F-1 are filed as a part of this report.
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2. | Financial Statement Schedules |
2.Financial Statement Schedules
The financial statement schedules required by this Item are filed with this report and listed in the accompanying Index to Consolidated Financial Statements on page F-1. All other financial statement schedules are not applicable.
3.Exhibits
The following exhibits are filed as part of this report:
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| Exhibit Number |
| Description of Document |
| 3.1 |
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| 3.2 |
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| 4.1 |
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| 4.2 |
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4.310.1 |
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10.1 |
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| 10.2 |
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10.3 |
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10.4 |
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10.5 |
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10.610.3 |
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10.710.4 |
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10.810.5 |
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| 10.6 | | | |
10.910.7 |
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10.1010.8 |
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| 10.9 | | | |
10.1110.10 |
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10.1210.11 |
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10.1310.12 |
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10.1410.13 |
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10.1510.14 |
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10.16 |
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10.17Exhibit Number |
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Description of Document |
| 10.15 | | | |
10.1810.16 |
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10.19 |
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10.20 |
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10.21 |
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| Second Amendment toRestated Credit Agreement, dated as of July 28, 2017, among STAG Industrial Operating Partnership, L.P., STAG Industrial, Inc., Wells Fargo Bank, National Association, and26, 2022 (incorporated by reference to the other lenders party thereto (19)Current Report on Form 8-K filed with the SEC on July 29, 2022) |
10.2210.17 |
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| Unsecured Term Loan A:SecondThird Amended and Restated Term Loan Agreement, dated as of December 20, 2016,September 1, 2022 (incorporated by and among STAG Industrial Operating Partnership, L.P., STAG Industrial, Inc., Wells Fargo Bank, National Association, andreference to the other lenders party thereto (20)Current Report on Form 8-K filed with the SEC on September 8, 2022) |
10.2310.18 |
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10.24 |
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| F:Amended and Restated Term Loan Agreement, dated as of December 20, 2016,September 1, 2022 (incorporated by and among STAG Industrial Operating Partnership, L.P., STAG Industrial, Inc., Wells Fargo Bank, National Association, andreference to the other lenders party thereto (20)Current Report on Form 8-K filed with the SEC on September 8, 2022) |
10.2510.19 |
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| Unsecured Term Loan G:First Amendment to Amended and Restated Term Loan Agreement, dated as of July 28, 2017,September 1, 2022 (incorporated by and among STAG Industrial Operating Partnership, L.P., STAG Industrial, Inc., Wells Fargo Bank, National Association, andreference to the other lenders party thereto (19)Current Report on Form 8-K filed with the SEC on September 8, 2022) |
10.26 |
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10.27 |
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| 10.20 | | | |
Exhibit Number |
| Description of Document |
10.28 |
|
| Unsecured Term Loan H:Term Loan Agreement, dated as of July 28, 2017,26, 2022 (incorporated by and among STAG Industrial Operating Partnership, L.P., STAG Industrial, Inc., Bank of America, N.A., andreference to the other lenders party thereto (19)Current Report on Form 8-K filed with the SEC on July 29, 2022) |
10.2910.21 |
|
| |
| 10.22 | | | |
10.3010.23 |
|
| |
10.3110.24 |
| | |
10.3210.25 |
| | |
| 10.26 | | | |
10.3310.27 |
| | |
10.3410.28 |
| | |
| 10.29 | | | |
12.110.30 |
|
| |
21.110.31 |
|
| |
| 10.32 | | | |
| 10.33 | | | |
| 21.1 | | | |
| 23.1 |
|
| |
| 24.1 |
|
| |
| 31.1 |
|
| |
| 31.2 |
|
| |
| 32.1 |
|
| |
| | | | | | | | |
101Exhibit Number |
|
Description of Document |
| 101 | | | The following materials from STAG Industrial, Inc.'s’s Annual Report on Form 10-K for the year ended December 31, 20172022 formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (Loss), (vi) the Consolidated Statements of Equity, (v) the Consolidated Statements of Cash Flows, and (vi) related notes to these consolidated financial statements. |
| 104 | | | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). |
| |
* | * Represents management contract or compensatory plan or arrangement. |
| |
(1) | Incorporated by reference to STAG Industrial, Inc.'s Quarterly Report on Form 10-Q filed with the SEC on May 3, 2016. |
| |
(2) | Incorporated by reference to STAG Industrial, Inc.'s Current Report on Form 8-K filed with the SEC on February 14, 2018. |
| |
(3) | Incorporated by reference to STAG Industrial, Inc.'s Registration Statement on Form S-11/A (File No. 333-168368) filed with the SEC on September 24, 2010. |
| |
(4) | Incorporated by reference to STAG Industrial, Inc.'s Registration Statement on Form 8-A filed with the SEC on April 11, 2013. |
| |
(5) | Incorporated by reference to STAG Industrial, Inc.'s Registration Statement on Form 8-A filed with the SEC on March 10, 2016. |
| |
(6) | Incorporated by reference to STAG Industrial, Inc.'s Current Report on Form 8-K filed with the SEC on April 21, 2011. |
| |
(7) | Incorporated by reference to STAG Industrial, Inc.'s Current Report on Form 8-K filed with the SEC on November 2, 2011. |
| |
(8) | Incorporated by reference to STAG Industrial, Inc.'s Current Report on Form 8-K filed with the SEC on April 16, 2013. |
| |
(9) | Incorporated by reference to STAG Industrial, Inc.'s Current Report on Form 8-K filed with the SEC on March 18, 2016. |
| |
(10) | Incorporated by reference to STAG Industrial, Inc.'s Registration Statement on Form S-11/A (File No. 333-168368) filed with the SEC on April 5, 2011. |
| |
(11) | Incorporated by reference to STAG Industrial, Inc.'s Current Report on Form 8-K filed with the SEC on May 6, 2013. |
| |
(12) | Incorporated by reference to STAG Industrial, Inc.'s Annual Report on Form 10-K filed with the SEC on February 23, 2015. |
| |
(13) | Incorporated by reference to STAG Industrial, Inc.'s Quarterly Report on Form 10-Q filed with the SEC on July 23, 2015. |
| |
(14) | Incorporated by reference to STAG Industrial, Inc.'s Quarterly Report on Form 10-Q filed with the SEC on October 31, 2014. |
| |
(15) | Incorporated by reference to STAG Industrial, Inc.'s Registration Statement on Form S-11/A (File No. 333-168368) filed with the SEC on February 16, 2011. |
| |
(16) | Incorporated by reference to STAG Industrial, Inc.'s Annual Report on Form 10-K filed with the SEC on February 26, 2014. |
| |
(17) | Incorporated by reference to STAG Industrial, Inc.'s Current Report on Form 8-K filed with the SEC on December 19, 2014. |
| |
(18) | Incorporated by reference to STAG Industrial, Inc.'s Current Report on Form 8-K filed with the SEC on October 1, 2015. |
| |
(19) | Incorporated by reference to STAG Industrial, Inc.'s Quarterly Report on Form 10-Q filed with the SEC on November 2, 2017. |
| |
(20) | Incorporated by reference to STAG Industrial, Inc.'s Current Report on Form 8-K filed with the SEC on December 27, 2016. |
| |
(21) | Incorporated by reference to STAG Industrial, Inc.'s Current Report on Form 8-K filed with the SEC on April 22, 2014. |
| |
(22) | Incorporated by reference to STAG Industrial, Inc.'s Current Report on Form 8-K filed with the SEC on December 4, 2015. |
Item 16. Form 10-K Summary
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
| | | | | | | | | | |
| STAG INDUSTRIAL, INC. |
Dated: February 15, 20182023 | | |
| | /s/ Benjamin S. ButcherWilliam R. Crooker | |
| By: | Benjamin S. ButcherWilliam R. Crooker
Chairman,President and Chief Executive Officer and President
|
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and directors of STAG Industrial, Inc., hereby severally constitute Benjamin S. Butcher and William R. Crooker and Matts S. Pinard, and each of them singly, our true and lawful attorneys with full power to them, and each of them singly, to sign for us and in our names in the capacities indicated below, the Form 10-K filed herewith and any and all amendments to said Form 10-K, and generally to do all such things in our names and in our capacities as officers and directors to enable STAG Industrial, Inc. to comply with the provisions of the Securities Exchange Act of 1934, as amended, and all requirements of the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorneys, or any of them, to said Form 10-K and any and all amendments thereto.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and dates indicated.
| | | | | | | | |
| Date | Signature | Title |
| | |
| February 15, 2023 | /s/ William R. Crooker | President and Chief Executive Officer
(principal executive officer) |
| William R. Crooker |
| | |
Date | Signature | Title |
| | |
February 15, 20182023 | /s/ Benjamin S. Butcher | Chairman, Chief Executive Officer
(principal executive officer) and President
Chair |
| Benjamin S. Butcher |
| | |
February 15, 20182023 | /s/ Jit Kee Chin | Director |
| Jit Kee Chin |
| | |
| February 15, 2023 | /s/ Virgis W. Colbert | Director |
| Virgis W. Colbert |
| | |
February 15, 20182023 | /s/ Michelle S. Dilley | Director |
| Michelle S. Dilley |
| | |
| February 15, 2023 | /s/ Jeffrey D. Furber | Director |
| Jeffrey D. Furber |
| | |
February 15, 20182023 | /s/ Larry T. Guillemette | Director |
| Larry T. Guillemette |
| | |
February 15, 20182023 | /s/ Francis X. Jacoby III | Director |
| Francis X. Jacoby III |
| | |
February 15, 20182023 | /s/ Christopher P. Marr | Director |
| Christopher P. Marr |
| | |
February 15, 20182023 | /s/ Hans S. Weger | Director |
| Hans S. Weger |
| | |
February 15, 20182023 | /s/ William R. CrookerMatts S. Pinard | Chief Financial Officer, Executive Vice President and Treasurer (principal financial andofficer) |
| Matts S. Pinard |
| | |
| February 15, 2023 | /s/ Jaclyn M. Paul | Chief Accounting Officer (principal accounting officer) |
William R. CrookerJaclyn M. Paul |
STAG INDUSTRIAL, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of STAG Industrial, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of STAG Industrial, Inc. and its subsidiaries (the “Company”) as of December 31, 20172022 and 2016,2021, and the related consolidated statements of operations, comprehensive income, (loss), equity and cash flows for each of the three years in the period ended December 31, 2017,2022, including the related notes and financial statement schedulesschedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2017,2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20172022 and 2016,2021, and the results of theirits operations and theirits cash flows for each of the three years in the period ended December 31, 20172022 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017,2022, based on criteria established in Internal Control - Integrated Framework(2013)issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Purchase Price Accounting
As described in Notes 2 and 3 to the consolidated financial statements, during 2022, the Company completed 26 property acquisitions for consideration of approximately $472.6 million, of which approximately $39.3 million of land, $382.4 million of buildings and improvements, $49.2 million of net leasing intangibles, and $1.7 million of net other assets and liabilities were recorded. Management allocates the purchase price of properties based upon the fair value of the assets acquired and liabilities assumed, which generally consist of land, buildings, tenant improvements, mortgage debt assumed, and deferred leasing intangibles, which includes in-place leases, above market and below market leases, and tenant relationships. The process for determining the allocation to these components requires estimates and assumptions, including rental rates, discount rates, exit capitalization rates, and land value per square foot.
The principal considerations for our determination that performing procedures relating to purchase price accounting is a critical audit matter are (i) there was significant judgment by management when developing the fair value measurement of the tangible and intangible assets acquired and liabilities assumed, which resulted in a high degree of auditor judgment and subjectivity in performing procedures relating to these estimates, (ii) significant audit effort was necessary in evaluating the significant assumptions, including rental rates, discount rates, exit capitalization rates, and land value per square foot, (iii) significant auditor judgment was necessary in evaluating audit evidence, and (iv) the audit effort included the involvement of professionals with specialized skill and knowledge to assist in evaluating the audit evidence obtained.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to purchase price accounting, including controls over the allocation of the purchase price to the assets acquired and liabilities assumed. These procedures also included, among others, testing management’s process for estimating the fair value of assets acquired and liabilities assumed by (i) reading the purchase agreements and (ii) evaluating the appropriateness of methods and, for a sample of acquisitions, the reasonableness of significant assumptions used by management in developing the fair value measurement including rental rates, discount rates, exit capitalization rates, and land value per square foot. Evaluating these assumptions involved evaluating whether the assumptions used were reasonable considering past performance of the tangible and intangible assets acquired and liabilities assumed, consistency with external market and industry data, and considering whether the assumptions were consistent with evidence obtained in other areas of the audit. Procedures were also performed to test the completeness and accuracy of data provided by management. For certain acquisitions, professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of management’s methods and evaluating the reasonableness of the assumptions related to the rental rates, discount rates, exit capitalization rates, and land value per square foot.
/s/PricewaterhouseCoopers LLP
Boston, Massachusetts
February 15, 20182023
We have served as the Company’s or its predecessor’s auditor since 2009.
STAG Industrial, Inc.
Consolidated Balance Sheets
(in thousands, except share data)
| | | | December 31, 2017 |
| December 31, 2016 | | December 31, 2022 | | December 31, 2021 |
| Assets | |
| | Assets | | | |
| Rental Property: | |
| | Rental Property: | | | |
| Land | $ | 321,560 |
|
| $ | 272,162 |
| Land | $ | 647,098 | | | $ | 617,297 | |
| Buildings and improvements, net of accumulated depreciation of $249,057 and $187,413, respectively | 1,932,764 |
|
| 1,550,141 |
| |
| Deferred leasing intangibles, net of accumulated amortization of $280,642 and $237,456, respectively | 313,253 |
|
| 294,533 |
| |
| Buildings and improvements, net of accumulated depreciation of $763,128 and $611,867, respectively | | Buildings and improvements, net of accumulated depreciation of $763,128 and $611,867, respectively | 4,706,745 | | | 4,435,743 | |
| Deferred leasing intangibles, net of accumulated amortization of $328,848 and $282,038, respectively | | Deferred leasing intangibles, net of accumulated amortization of $328,848 and $282,038, respectively | 508,935 | | | 567,658 | |
| Total rental property, net | 2,567,577 |
|
| 2,116,836 |
| Total rental property, net | 5,862,778 | | | 5,620,698 | |
| Cash and cash equivalents | 24,562 |
|
| 12,192 |
| Cash and cash equivalents | 25,884 | | | 18,981 | |
| Restricted cash | 3,567 |
|
| 9,613 |
| Restricted cash | 905 | | | 4,215 | |
| Tenant accounts receivable, net | 33,602 |
|
| 25,223 |
| |
| Tenant accounts receivable | | Tenant accounts receivable | 115,509 | | | 93,600 | |
| Prepaid expenses and other assets | 25,364 |
|
| 20,821 |
| Prepaid expenses and other assets | 71,733 | | | 60,953 | |
| Interest rate swaps | 6,079 |
|
| 1,471 |
| Interest rate swaps | 72,223 | | | 5,220 | |
| Operating lease right-of-use assets | | Operating lease right-of-use assets | 31,313 | | | 29,582 | |
| Assets held for sale, net | 19,916 |
| | — |
| Assets held for sale, net | 4,643 | | | — | |
| Total assets | $ | 2,680,667 |
|
| $ | 2,186,156 |
| Total assets | $ | 6,184,988 | | | $ | 5,833,249 | |
| Liabilities and Equity | | | | Liabilities and Equity | | | |
| Liabilities: | | | | Liabilities: | | | |
| Unsecured credit facility | $ | 271,000 |
|
| $ | 28,000 |
| Unsecured credit facility | $ | 175,000 | | | $ | 296,000 | |
| Unsecured term loans, net | 446,265 |
|
| 446,608 |
| Unsecured term loans, net | 1,020,440 | | | 970,577 | |
| Unsecured notes, net | 398,234 |
|
| 397,966 |
| Unsecured notes, net | 1,295,442 | | | 896,941 | |
| Mortgage notes, net | 58,282 |
|
| 163,565 |
| Mortgage notes, net | 7,898 | | | 54,744 | |
| Accounts payable, accrued expenses and other liabilities | 43,216 |
|
| 35,389 |
| Accounts payable, accrued expenses and other liabilities | 97,371 | | | 76,475 | |
| Interest rate swaps | 1,217 |
|
| 2,438 |
| Interest rate swaps | — | | | 17,052 | |
| Tenant prepaid rent and security deposits | 19,045 |
|
| 15,195 |
| Tenant prepaid rent and security deposits | 40,847 | | | 37,138 | |
| Dividends and distributions payable | 11,880 |
|
| 9,728 |
| Dividends and distributions payable | 22,282 | | | 21,906 | |
| Deferred leasing intangibles, net of accumulated amortization of $13,555 and $10,450, respectively | 21,221 |
|
| 20,341 |
| |
| Deferred leasing intangibles, net of accumulated amortization of $24,593 and $21,136, respectively | | Deferred leasing intangibles, net of accumulated amortization of $24,593 and $21,136, respectively | 32,427 | | | 35,721 | |
| Operating lease liabilities | | Operating lease liabilities | 35,100 | | | 33,108 | |
| Total liabilities | 1,270,360 |
|
| 1,119,230 |
| Total liabilities | 2,726,807 | | | 2,439,662 | |
| Commitments and contingencies (Note 11) |
|
|
| Commitments and contingencies (Note 11) | | | |
| Equity: | |
| | Equity: | | | |
| Preferred stock, par value $0.01 per share, 15,000,000 shares authorized, | |
| | |
| Series B, 2,800,000 shares (liquidation preference of $25.00 per share) issued and outstanding at December 31, 2017 and December 31, 2016 | 70,000 |
|
| 70,000 |
| |
| Series C, 3,000,000 shares (liquidation preference of $25.00 per share) issued and outstanding at December 31, 2017 and December 31, 2016 | 75,000 |
| | 75,000 |
| |
| Common stock, par value $0.01 per share, 150,000,000 shares authorized, 97,012,543 and 80,352,304 shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively | 970 |
| | 804 |
| |
| Preferred stock, par value $0.01 per share, 20,000,000 shares authorized at December 31, 2022 and December 31, 2021; none issued or outstanding | | Preferred stock, par value $0.01 per share, 20,000,000 shares authorized at December 31, 2022 and December 31, 2021; none issued or outstanding | — | | | — | |
| Common stock, par value $0.01 per share, 300,000,000 shares authorized at December 31, 2022 and December 31, 2021, 179,248,980 and 177,769,342 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively | | Common stock, par value $0.01 per share, 300,000,000 shares authorized at December 31, 2022 and December 31, 2021, 179,248,980 and 177,769,342 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively | 1,792 | | | 1,777 | |
| Additional paid-in capital | 1,725,825 |
|
| 1,293,706 |
| Additional paid-in capital | 4,188,677 | | | 4,130,038 | |
| Common stock dividends in excess of earnings | (516,691 | ) |
| (410,978 | ) | |
| Cumulative dividends in excess of earnings | | Cumulative dividends in excess of earnings | (876,145) | | | (792,332) | |
| Accumulated other comprehensive income (loss) | 3,936 |
|
| (1,496 | ) | Accumulated other comprehensive income (loss) | 70,500 | | | (11,783) | |
| Total stockholders’ equity | 1,359,040 |
|
| 1,027,036 |
| Total stockholders’ equity | 3,384,824 | | | 3,327,700 | |
| Noncontrolling interest | 51,267 |
|
| 39,890 |
| Noncontrolling interest | 73,357 | | | 65,887 | |
| Total equity | 1,410,307 |
|
| 1,066,926 |
| Total equity | 3,458,181 | | | 3,393,587 | |
| Total liabilities and equity | $ | 2,680,667 |
|
| $ | 2,186,156 |
| Total liabilities and equity | $ | 6,184,988 | | | $ | 5,833,249 | |
The accompanying notes are an integral part of these consolidated financial statements.
STAG Industrial, Inc.
Consolidated Statements of Operations
(in thousands, except share data)
| | | | Year ended December 31, | | Year ended December 31, |
| | 2017 | | 2016 | | 2015 | | 2022 | | 2021 | | 2020 |
| Revenue | |
| | |
| | |
| Revenue | | | | | |
| Rental income | $ | 255,831 |
| | $ | 212,741 |
| | $ | 186,463 |
| Rental income | $ | 654,377 | | | $ | 559,432 | | | $ | 482,825 | |
| Tenant recoveries | 45,005 |
| | 37,107 |
| | 31,666 |
| |
| Other income | 251 |
| | 395 |
| | 504 |
| Other income | 2,968 | | | 2,727 | | | 586 | |
| Total revenue | 301,087 |
| | 250,243 |
| | 218,633 |
| Total revenue | 657,345 | | | 562,159 | | | 483,411 | |
| Expenses | |
|
| |
| | |
| Expenses | | | | | |
| Property | 57,701 |
| | 48,904 |
| | 42,627 |
| Property | 125,701 | | | 107,986 | | | 89,359 | |
| General and administrative | 33,349 |
| | 33,395 |
| | 28,750 |
| General and administrative | 46,958 | | | 48,629 | | | 40,072 | |
| Property acquisition costs | 5,386 |
| | 4,567 |
| | 4,757 |
| |
| | Depreciation and amortization | 150,881 |
| | 125,444 |
| | 110,421 |
| Depreciation and amortization | 275,040 | | | 238,699 | | | 214,738 | |
| Loss on impairments | 1,879 |
| | 16,845 |
| | 29,272 |
| Loss on impairments | 1,783 | | | — | | | 5,577 | |
| Gain on involuntary conversion | (325 | ) | | — |
| | — |
| |
| Other expenses | 1,786 |
| | 1,149 |
| | 1,048 |
| Other expenses | 4,363 | | | 2,878 | | | 2,029 | |
| Total expenses | 250,657 |
| | 230,304 |
| | 216,875 |
| Total expenses | 453,845 | | | 398,192 | | | 351,775 | |
| Other income (expense) | |
|
| |
| | |
| Other income (expense) | | | | | |
| Interest income | 12 |
| | 10 |
| | 9 |
| |
| Interest and other income | | Interest and other income | 103 | | | 121 | | | 446 | |
| Interest expense | (42,469 | ) | | (42,923 | ) | | (36,098 | ) | Interest expense | (78,018) | | | (63,484) | | | (62,343) | |
| Loss on extinguishment of debt | (15 | ) | | (3,261 | ) | | — |
| |
| Debt extinguishment and modification expenses | | Debt extinguishment and modification expenses | (838) | | | (2,152) | | | (834) | |
| Gain on involuntary conversion | | Gain on involuntary conversion | — | | | — | | | 2,157 | |
| Gain on the sales of rental property, net | 24,242 |
| | 61,823 |
| | 4,986 |
| Gain on the sales of rental property, net | 57,487 | | | 97,980 | | | 135,733 | |
| Total other income (expense) | (18,230 | ) | | 15,649 |
| | (31,103 | ) | Total other income (expense) | (21,266) | | | 32,465 | | | 75,159 | |
| Net income (loss) | $ | 32,200 |
| | $ | 35,588 |
| | $ | (29,345 | ) | |
| Less: income (loss) attributable to noncontrolling interest after preferred stock dividends | 941 |
| | 1,069 |
| | (1,962 | ) | |
| Net income (loss) attributable to STAG Industrial, Inc. | $ | 31,259 |
| | $ | 34,519 |
| | $ | (27,383 | ) | |
| Net income | | Net income | $ | 182,234 | | | $ | 196,432 | | | $ | 206,795 | |
| Less: income attributable to noncontrolling interest after preferred stock dividends | | Less: income attributable to noncontrolling interest after preferred stock dividends | 3,908 | | | 4,098 | | | 4,648 | |
| Net income attributable to STAG Industrial, Inc. | | Net income attributable to STAG Industrial, Inc. | $ | 178,326 | | | $ | 192,334 | | | $ | 202,147 | |
| Less: preferred stock dividends | 9,794 |
| | 13,897 |
| | 10,848 |
| Less: preferred stock dividends | — | | | 1,289 | | | 5,156 | |
| Less: redemption of preferred stock | | Less: redemption of preferred stock | — | | | 2,582 | | | — | |
| Less: amount allocated to participating securities | 334 |
| | 384 |
| | 385 |
| Less: amount allocated to participating securities | 237 | | | 288 | | | 271 | |
| Net income (loss) attributable to common stockholders | $ | 21,131 |
| | $ | 20,238 |
| | $ | (38,616 | ) | |
| Net income attributable to common stockholders | | Net income attributable to common stockholders | $ | 178,089 | | | $ | 188,175 | | | $ | 196,720 | |
| Weighted average common shares outstanding — basic | 89,537,714 |
| | 70,637,185 |
| | 66,307,972 |
| Weighted average common shares outstanding — basic | 178,753 | | | 163,442 | | | 148,791 | |
| Weighted average common shares outstanding — diluted | 90,003,559 |
| | 70,852,548 |
| | 66,307,972 |
| Weighted average common shares outstanding — diluted | 178,940 | | | 164,090 | | | 149,215 | |
| Net income (loss) per share — basic and diluted | |
| | | | | |
| Net income (loss) per share attributable to common stockholders — basic | $ | 0.24 |
| | $ | 0.29 |
| | $ | (0.58 | ) | |
| Net income (loss) per share attributable to common stockholders — diluted | $ | 0.23 |
| | $ | 0.29 |
| | $ | (0.58 | ) | |
| Net income per share — basic and diluted | | Net income per share — basic and diluted | | | | | |
| Net income per share attributable to common stockholders — basic | | Net income per share attributable to common stockholders — basic | $ | 1.00 | | | $ | 1.15 | | | $ | 1.32 | |
| Net income per share attributable to common stockholders — diluted | | Net income per share attributable to common stockholders — diluted | $ | 1.00 | | | $ | 1.15 | | | $ | 1.32 | |
The accompanying notes are an integral part of these consolidated financial statements.
STAG Industrial, Inc.
Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
| | | | | | | | | | Year ended December 31, |
| | Year ended December 31, | | 2022 | | 2021 | | 2020 |
| | 2017 | | 2016 | | 2015 | |
| Net income (loss) | $ | 32,200 |
| | $ | 35,588 |
| | $ | (29,345 | ) | |
| Net income | | Net income | $ | 182,234 | | | $ | 196,432 | | | $ | 206,795 | |
| Other comprehensive income (loss): | | | | | | Other comprehensive income (loss): | | | | |
| Income (loss) on interest rate swaps | 5,670 |
| | 898 |
| | (1,956 | ) | Income (loss) on interest rate swaps | 84,086 | | | 28,856 | | | (22,109) | |
| Other comprehensive income (loss) | 5,670 |
| | 898 |
| | (1,956 | ) | Other comprehensive income (loss) | 84,086 | | | 28,856 | | | (22,109) | |
| Comprehensive income (loss) | 37,870 |
| | 36,486 |
| | (31,301 | ) | |
| (Income) loss attributable to noncontrolling interest after preferred stock dividends | (941 | ) | | (1,069 | ) | | 1,962 |
| |
| Comprehensive income | | Comprehensive income | 266,320 | | | 225,288 | | | 184,686 | |
| Income attributable to noncontrolling interest after preferred stock dividends | | Income attributable to noncontrolling interest after preferred stock dividends | (3,908) | | | (4,098) | | | (4,648) | |
| Other comprehensive (income) loss attributable to noncontrolling interest | (238 | ) | | (44 | ) | | 95 |
| Other comprehensive (income) loss attributable to noncontrolling interest | (1,803) | | | (614) | | | 510 | |
| Comprehensive income (loss) attributable to STAG Industrial, Inc. | $ | 36,691 |
| | $ | 35,373 |
| | $ | (29,244 | ) | |
| Comprehensive income attributable to STAG Industrial, Inc. | | Comprehensive income attributable to STAG Industrial, Inc. | $ | 260,609 | | | $ | 220,576 | | | $ | 180,548 | |
The accompanying notes are an integral part of these consolidated financial statements.
STAG Industrial, Inc.
ConsolidatedStatements of Equity
(in thousands, except share data) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Preferred Stock | | Common Stock | | Additional Paid-in Capital | | Common Stock Dividends in excess of Earnings | | Accumulated Other Comprehensive income (loss) | | Total Stockholders' Equity | | Noncontrolling Interest - Unit holders in Operating Partnership | | Total Equity |
| | | Shares | | Amount | | | | | | |
| Balance, December 31, 2014 | $ | 139,000 |
| | 64,434,852 |
| | $ | 644 |
| | $ | 928,251 |
| | $ | (202,909 | ) | | $ | (489 | ) | | $ | 864,497 |
| | $ | 27,381 |
| | $ | 891,878 |
|
| Proceeds from sales of common stock | — |
| | 3,456,403 |
| | 35 |
| | 74,857 |
| | — |
| | — |
| | 74,892 |
| | — |
| | 74,892 |
|
| Offering costs | — |
| | — |
| | — |
| | (1,229 | ) | | — |
| | — |
| | (1,229 | ) | | — |
| | (1,229 | ) |
| Dividends and distributions, net | (10,848 | ) | | — |
| | — |
| | — |
| | (91,131 | ) | | — |
| | (101,979 | ) | | (4,772 | ) | | (106,751 | ) |
| Non-cash compensation activity | — |
| | 95,254 |
| | 1 |
| | 2,804 |
| | — |
| | — |
| | 2,805 |
| | 4,774 |
| | 7,579 |
|
| Redemption of common units to common stock | — |
| | 90,824 |
| | 1 |
| | 1,002 |
| | — |
| | — |
| | 1,003 |
| | (1,003 | ) | | — |
|
| Redemption of common units for cash | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (64 | ) | | (64 | ) |
| Issuance of units | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 22,853 |
| | 22,853 |
|
| Rebalancing of noncontrolling interest | — |
| | — |
| | — |
| | 11,712 |
| | — |
| | — |
| | 11,712 |
| | (11,712 | ) | | — |
|
| Other comprehensive loss | — |
| | — |
| | — |
| | — |
| | — |
| | (1,861 | ) | | (1,861 | ) | | (95 | ) | | (1,956 | ) |
| Net loss | 10,848 |
| | — |
| | — |
| | — |
| | (38,231 | ) | | — |
| | (27,383 | ) | | (1,962 | ) | | (29,345 | ) |
| Balance, December 31, 2015 | $ | 139,000 |
|
| $ | 68,077,333 |
|
| $ | 681 |
|
| $ | 1,017,397 |
|
| $ | (332,271 | ) |
| $ | (2,350 | ) |
| $ | 822,457 |
|
| $ | 35,400 |
|
| $ | 857,857 |
|
| Proceeds from sales of common stock | — |
| | 12,090,038 |
| | 121 |
| | 282,548 |
| | — |
| | — |
| | 282,669 |
| | — |
| | 282,669 |
|
| Issuance of series C preferred stock | 75,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 75,000 |
| | — |
| | 75,000 |
|
| Offering costs | — |
| | — |
| | — |
| | (6,928 | ) | | — |
| | — |
| | (6,928 | ) | | — |
| | (6,928 | ) |
| Dividends and distributions, net | (13,897 | ) | | — |
| | — |
| | — |
| | (99,329 | ) | | — |
| | (113,226 | ) | | (5,707 | ) | | (118,933 | ) |
| Non-cash compensation activity | — |
| | 116,441 |
| | 1 |
| | 3,690 |
| | — |
| | — |
| | 3,691 |
| | 6,084 |
| | 9,775 |
|
| Redemption of series A preferred stock | (69,000 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | (69,000 | ) | | — |
| | (69,000 | ) |
| Redemption of common units to common stock | — |
| | 68,492 |
| | 1 |
| | 616 |
| | — |
| | — |
| | 617 |
| | (617 | ) | | — |
|
| Rebalancing of noncontrolling interest | — |
| | — |
| | — |
| | (3,617 | ) | | — |
| | — |
| | (3,617 | ) | | 3,617 |
| | — |
|
| Other comprehensive income | — |
| | — |
| | — |
| | — |
| | — |
| | 854 |
| | 854 |
| | 44 |
| | 898 |
|
| Net income | 13,897 |
| | — |
| | — |
| | — |
| | 20,622 |
| | — |
| | 34,519 |
| | 1,069 |
| | 35,588 |
|
| Balance, December 31, 2016 | $ | 145,000 |
| | 80,352,304 |
| | $ | 804 |
| | $ | 1,293,706 |
| | $ | (410,978 | ) | | $ | (1,496 | ) | | $ | 1,027,036 |
| | $ | 39,890 |
| | $ | 1,066,926 |
|
| Proceeds from sales of common stock | — |
| | 16,262,375 |
| | 163 |
| | 427,379 |
| | — |
| | — |
| | 427,542 |
| | — |
| | 427,542 |
|
| Offering costs | — |
| | — |
| | — |
| | (6,053 | ) | | — |
| | — |
| | (6,053 | ) | | — |
| | (6,053 | ) |
| Dividends and distributions, net | (9,794 | ) | | — |
| | — |
| | — |
| | (126,984 | ) | | — |
| | (136,778 | ) | | (6,378 | ) | | (143,156 | ) |
| Non-cash compensation activity | — |
| | 46,604 |
| | — |
| | 4,138 |
| | (194 | ) | | — |
| | 3,944 |
| | 4,676 |
| | 8,620 |
|
| Redemption of common units to common stock | — |
| | 351,260 |
| | 3 |
| | 3,929 |
| | — |
| | — |
| | 3,932 |
| | (3,932 | ) | | — |
|
| Issuance of units | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 18,558 |
| | 18,558 |
|
| Rebalancing of noncontrolling interest | — |
| | — |
| | — |
| | 2,726 |
| | — |
| | — |
| | 2,726 |
| | (2,726 | ) | | — |
|
| Other comprehensive income | — |
| | — |
| | — |
| | — |
| | — |
| | 5,432 |
| | 5,432 |
| | 238 |
| | 5,670 |
|
| Net income | 9,794 |
| | — |
| | — |
| | — |
| | 21,465 |
| | — |
| | 31,259 |
| | 941 |
| | 32,200 |
|
| Balance, December 31, 2017 | $ | 145,000 |
| | 97,012,543 |
| | $ | 970 |
| | $ | 1,725,825 |
| | $ | (516,691 | ) | | $ | 3,936 |
| | $ | 1,359,040 |
| | $ | 51,267 |
| | $ | 1,410,307 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Preferred Stock | | Common Stock | | Additional Paid-in Capital | | Cumulative Dividends in Excess of Earnings | | Accumulated Other Comprehensive Income (Loss) | | Total Stockholders’ Equity | | Noncontrolling Interest - Unit Holders in Operating Partnership | | Total Equity |
| | | Shares | | Par Amount | | | | | | |
| Balance, December 31, 2019 | $ | 75,000 | | | 142,815,593 | | | $ | 1,428 | | | $ | 2,970,553 | | | $ | (723,027) | | | $ | (18,426) | | | $ | 2,305,528 | | | $ | 58,363 | | | $ | 2,363,891 | |
| | | | | | | | | | | | | | | | | |
| Proceeds from sales of common stock, net | — | | | 14,580,577 | | | 146 | | | 438,338 | | | — | | | — | | | 438,484 | | | — | | | 438,484 | |
| | | | | | | | | | | | | | | | | |
| Dividends and distributions, net ($1.44 per share/unit) | — | | | — | | | — | | | — | | | (220,801) | | | — | | | (220,801) | | | (5,395) | | | (226,196) | |
| Non-cash compensation activity, net | — | | | 83,233 | | | 1 | | | 5,019 | | | (390) | | | — | | | 4,630 | | | 5,557 | | | 10,187 | |
| Redemption of common units to common stock | — | | | 730,420 | | | 7 | | | 11,540 | | | — | | | — | | | 11,547 | | | (11,547) | | | — | |
| Rebalancing of noncontrolling interest | — | | | — | | | — | | | (3,729) | | | — | | | — | | | (3,729) | | | 3,729 | | | — | |
| Other comprehensive loss | — | | | — | | | — | | | — | | | — | | | (21,599) | | | (21,599) | | | (510) | | | (22,109) | |
| Net income | — | | | — | | | — | | | — | | | 202,147 | | | — | | | 202,147 | | | 4,648 | | | 206,795 | |
| Balance, December 31, 2020 | $ | 75,000 | | | 158,209,823 | | | $ | 1,582 | | | $ | 3,421,721 | | | $ | (742,071) | | | $ | (40,025) | | | $ | 2,716,207 | | | $ | 54,845 | | | $ | 2,771,052 | |
| | | | | | | | | | | | | | | | | |
| Proceeds from sales of common stock, net | — | | | 19,238,685 | | | 192 | | | 706,680 | | | — | | | — | | | 706,872 | | | — | | | 706,872 | |
| Redemption of preferred stock | (75,000) | | | — | | | — | | | 2,573 | | | (2,582) | | | — | | | (75,009) | | | — | | | (75,009) | |
| Dividends and distributions, net ($1.45 per share/unit) | — | | | — | | | — | | | — | | | (239,859) | | | — | | | (239,859) | | | (8,293) | | | (248,152) | |
| Non-cash compensation activity, net | — | | | 149,516 | | | 1 | | | 3,024 | | | (154) | | | — | | | 2,871 | | | 10,665 | | | 13,536 | |
| Redemption of common units to common stock | — | | | 171,318 | | | 2 | | | 2,852 | | | — | | | — | | | 2,854 | | | (2,854) | | | — | |
| Rebalancing of noncontrolling interest | — | | | — | | | — | | | (6,812) | | | — | | | — | | | (6,812) | | | 6,812 | | | — | |
| Other comprehensive income | — | | | — | | | — | | | — | | | — | | | 28,242 | | | 28,242 | | | 614 | | | 28,856 | |
| Net income | — | | | — | | | — | | | — | | | 192,334 | | | — | | | 192,334 | | | 4,098 | | | 196,432 | |
| Balance, December 31, 2021 | $ | — | | | 177,769,342 | | | $ | 1,777 | | | $ | 4,130,038 | | | $ | (792,332) | | | $ | (11,783) | | | $ | 3,327,700 | | | $ | 65,887 | | | $ | 3,393,587 | |
| | | | | | | | | | | | | | | | | |
| Proceeds from sales of common stock, net | — | | | 1,328,335 | | | 13 | | | 54,931 | | | — | | | — | | | 54,944 | | | — | | | 54,944 | |
| | | | | | | | | | | | | | | | | |
| Dividends and distributions, net ($1.46 per share/unit) | — | | | — | | | — | | | — | | | (261,359) | | | — | | | (261,359) | | | (5,832) | | | (267,191) | |
| Non-cash compensation activity, net | — | | | 52,809 | | | 1 | | | 2,832 | | | (780) | | | — | | | 2,053 | | | 8,468 | | | 10,521 | |
| Redemption of common units to common stock | — | | | 98,494 | | | 1 | | | 1,856 | | | — | | | — | | | 1,857 | | | (1,857) | | | — | |
| Rebalancing of noncontrolling interest | — | | | — | | | — | | | (980) | | | — | | | — | | | (980) | | | 980 | | | — | |
| Other comprehensive income | — | | | — | | | — | | | — | | | — | | | 82,283 | | | 82,283 | | | 1,803 | | | 84,086 | |
| Net income | — | | | — | | | — | | | — | | | 178,326 | | | — | | | 178,326 | | | 3,908 | | | 182,234 | |
| Balance, December 31, 2022 | $ | — | | | 179,248,980 | | | $ | 1,792 | | | $ | 4,188,677 | | | $ | (876,145) | | | $ | 70,500 | | | $ | 3,384,824 | | | $ | 73,357 | | | $ | 3,458,181 | |
The accompanying notes are an integral part of these consolidated financial statements.
STAG Industrial, Inc.
Consolidated Statements of Cash Flows
(in thousands)
| | | | Year ended December 31, | | Year ended December 31, |
| | 2017 | | 2016 | | 2015 | | 2022 | | 2021 | | 2020 |
| Cash flows from operating activities: | | | | | | Cash flows from operating activities: | | | | | |
| Net income (loss) | $ | 32,200 |
| | $ | 35,588 |
| | $ | (29,345 | ) | |
| Adjustment to reconcile net income (loss) to net cash provided by operating activities: | | | | | | |
| Net income | | Net income | $ | 182,234 | | | $ | 196,432 | | | $ | 206,795 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | Adjustments to reconcile net income to net cash provided by operating activities: | | | | | |
| Depreciation and amortization | 150,881 |
| | 125,444 |
| | 110,421 |
| Depreciation and amortization | 275,040 | | | 238,699 | | | 214,738 | |
| Loss on impairments | 1,879 |
| | 16,845 |
| | 29,272 |
| Loss on impairments | 1,783 | | | — | | | 5,577 | |
| Gain on involuntary conversion | (325 | ) | | — |
| | — |
| Gain on involuntary conversion | — | | | — | | | (2,157) | |
| Non-cash portion of interest expense | 1,897 |
| | 1,632 |
| | 1,262 |
| Non-cash portion of interest expense | 3,747 | | | 2,931 | | | 2,922 | |
| Intangible amortization in rental income, net | 4,583 |
| | 6,213 |
| | 8,526 |
| |
| Amortization of above and below market leases, net | | Amortization of above and below market leases, net | (352) | | | 2,051 | | | 4,341 | |
| Straight-line rent adjustments, net | (7,475 | ) | | (1,817 | ) | | (3,134 | ) | Straight-line rent adjustments, net | (17,610) | | | (17,516) | | | (12,074) | |
| Dividends on forfeited equity compensation | 2 |
| | 3 |
| | 25 |
| |
| Loss on extinguishment of debt | 15 |
| | 3,261 |
| | — |
| |
| | Debt extinguishment and modification expenses | | Debt extinguishment and modification expenses | 21 | | | 249 | | | 834 | |
| Gain on the sales of rental property, net | (24,242 | ) | | (61,823 | ) | | (4,986 | ) | Gain on the sales of rental property, net | (57,487) | | | (97,980) | | | (135,733) | |
| Non-cash compensation expense | 9,547 |
| | 9,729 |
| | 7,578 |
| Non-cash compensation expense | 12,068 | | | 14,955 | | | 11,681 | |
| Change in assets and liabilities: | | | | | | Change in assets and liabilities: | | | | | |
| Tenant accounts receivable, net | (2,125 | ) | | (1,435 | ) | | (1,334 | ) | |
| Restricted cash | 464 |
| | (365 | ) | | (40 | ) | |
| Tenant accounts receivable | | Tenant accounts receivable | (6,438) | | | (36) | | | (4,482) | |
| Prepaid expenses and other assets | (9,103 | ) | | (4,580 | ) | | (3,155 | ) | Prepaid expenses and other assets | (21,870) | | | (18,664) | | | (11,528) | |
| Accounts payable, accrued expenses and other liabilities | 514 |
| | 6,161 |
| | 3,469 |
| Accounts payable, accrued expenses and other liabilities | 13,531 | | | 6,763 | | | 7,157 | |
| Tenant prepaid rent and security deposits | 3,850 |
| | 567 |
| | 3,148 |
| Tenant prepaid rent and security deposits | 3,264 | | | 8,270 | | | 5,851 | |
| Total adjustments | 130,362 |
| | 99,835 |
| | 151,052 |
| Total adjustments | 205,697 | | | 139,722 | | | 87,127 | |
| Net cash provided by operating activities | 162,562 |
| | 135,423 |
| | 121,707 |
| Net cash provided by operating activities | 387,931 | | | 336,154 | | | 293,922 | |
| Cash flows from investing activities: | | | | | | Cash flows from investing activities: | | | | | |
| Acquisitions of land and buildings and improvements | (497,264 | ) | | (377,559 | ) | | (291,949 | ) | Acquisitions of land and buildings and improvements | (421,784) | | | (1,211,023) | | | (661,961) | |
| Additions of land and building and improvements | (45,790 | ) | | (30,485 | ) | | (16,329 | ) | |
| Additions of land and buildings and improvements | | Additions of land and buildings and improvements | (111,653) | | | (39,503) | | | (55,741) | |
| Acquisitions of other assets | — |
| | (158 | ) | | (565 | ) | Acquisitions of other assets | (2,134) | | | (1,004) | | | (450) | |
| Acquisitions of operating lease right-of-use assets | | Acquisitions of operating lease right-of-use assets | (3,541) | | | (5,627) | | | (3,984) | |
| Proceeds from sales of rental property, net | 65,075 |
| | 152,079 |
| | 22,163 |
| Proceeds from sales of rental property, net | 135,348 | | | 187,972 | | | 273,560 | |
| Proceeds from insurance on involuntary conversion | 1,796 |
| | — |
| | — |
| |
| Restricted cash | 5,582 |
| | (853 | ) | | (1,449 | ) | |
| Proceeds from involuntary conversion | | Proceeds from involuntary conversion | — | | | — | | | 782 | |
| Acquisitions of tenant prepaid rent | | Acquisitions of tenant prepaid rent | 445 | | | 1,024 | | | — | |
| Acquisition deposits, net | 255 |
| | (560 | ) | | 1,420 |
| Acquisition deposits, net | 1,428 | | | (3,131) | | | 27 | |
| Acquisitions of deferred leasing intangibles | (95,707 | ) | | (89,576 | ) | | (85,329 | ) | Acquisitions of deferred leasing intangibles | (49,174) | | | (154,755) | | | (110,840) | |
| Acquisitions of operating lease liabilities | | Acquisitions of operating lease liabilities | 3,541 | | | 5,627 | | | 3,984 | |
| Net cash used in investing activities | (566,053 | ) | | (347,112 | ) | | (372,038 | ) | Net cash used in investing activities | (447,524) | | | (1,220,420) | | | (554,623) | |
| Cash flows from financing activities: | | | | | | Cash flows from financing activities: | | | | | |
| Proceeds from sale of series C preferred stock | — |
| | 75,000 |
| | — |
| |
| Redemption of series A preferred stock | — |
| | (69,000 | ) | | — |
| |
| Redemption of common units for cash | — |
| | — |
| | (64 | ) | |
| Proceeds from unsecured credit facility | 677,500 |
| | 513,000 |
| | 300,750 |
| Proceeds from unsecured credit facility | 1,288,000 | | | 2,665,000 | | | 914,000 | |
| Repayment of unsecured credit facility | (434,500 | ) | | (541,000 | ) | | (375,750 | ) | Repayment of unsecured credit facility | (1,409,000) | | | (2,476,000) | | | (953,000) | |
| Proceeds from unsecured term loans | — |
| | 150,000 |
| | 150,000 |
| Proceeds from unsecured term loans | 375,000 | | | 1,125,000 | | | 400,000 | |
| Repayment of unsecured term loans | | Repayment of unsecured term loans | (325,000) | | | (1,125,000) | | | (300,000) | |
| Proceeds from unsecured notes | — |
| | — |
| | 220,000 |
| Proceeds from unsecured notes | 400,000 | | | 325,000 | | | — | |
| Repayment of mortgage notes | (105,470 | ) | | (70,444 | ) | | (20,571 | ) | Repayment of mortgage notes | (46,943) | | | (2,225) | | | (2,983) | |
| Redemption of preferred stock | | Redemption of preferred stock | — | | | (75,000) | | | — | |
| Payment of loan fees and costs | (1,209 | ) | | (715 | ) | | (3,672 | ) | Payment of loan fees and costs | (5,211) | | | (9,579) | | | (1,129) | |
| Payment of loan prepayment fees and costs | (15 | ) | | (3,278 | ) | | — |
| |
| Payment of defeasance fees and other costs | | Payment of defeasance fees and other costs | — | | | — | | | (425) | |
| Dividends and distributions | (141,006 | ) | | (117,441 | ) | | (105,892 | ) | Dividends and distributions | (266,817) | | | (245,722) | | | (224,283) | |
| Proceeds from sales of common stock | 427,542 |
| | 282,669 |
| | 74,892 |
| |
| Repurchase and retirement of restricted stock | (969 | ) | | — |
| | — |
| |
| Offering costs | (6,012 | ) | | (6,921 | ) | | (1,229 | ) | |
| Proceeds from sales of common stock, net | | Proceeds from sales of common stock, net | 54,753 | | | 706,991 | | | 438,499 | |
| Repurchase and retirement of share-based compensation | | Repurchase and retirement of share-based compensation | (1,596) | | | (1,342) | | | (1,503) | |
| Net cash provided by financing activities | 415,861 |
| | 211,870 |
| | 238,464 |
| Net cash provided by financing activities | 63,186 | | | 887,123 | | | 269,176 | |
| Increase (decrease) in cash and cash equivalents | 12,370 |
| | 181 |
| | (11,867 | ) | |
| Cash and cash equivalents—beginning of period | 12,192 |
| | 12,011 |
| | 23,878 |
| |
| Cash and cash equivalents—end of period | $ | 24,562 |
|
| $ | 12,192 |
| | $ | 12,011 |
| |
| Increase in cash and cash equivalents and restricted cash | | Increase in cash and cash equivalents and restricted cash | 3,593 | | | 2,857 | | | 8,475 | |
| Cash and cash equivalents and restricted cash—beginning of period | | Cash and cash equivalents and restricted cash—beginning of period | 23,196 | | | 20,339 | | | 11,864 | |
| Cash and cash equivalents and restricted cash—end of period | | Cash and cash equivalents and restricted cash—end of period | $ | 26,789 | | | $ | 23,196 | | | $ | 20,339 | |
| Supplemental disclosure: | | | | | | Supplemental disclosure: | | | | | |
| Cash paid for interest, net of capitalized interest | $ | 40,685 |
| | $ | 39,367 |
| | $ | 32,440 |
| Cash paid for interest, net of capitalized interest | $ | 72,740 | | | $ | 58,392 | | | $ | 58,704 | |
| Supplemental schedule of non-cash investing and financing activities | | | | | | Supplemental schedule of non-cash investing and financing activities | | | | | |
| Issuance of units for acquisitions of land and building and improvements and deferred leasing intangibles | $ | 18,558 |
| | $ | — |
| | $ | 22,853 |
| |
| Contingent consideration for acquisition of land and building and improvements | $ | — |
| | $ | — |
| | $ | (216 | ) | |
| Contingent consideration for acquisition of deferred leasing intangibles | $ | — |
| | $ | — |
| | $ | (84 | ) | |
| Contingent consideration liability acquired | $ | — |
| | $ | — |
| | $ | 300 |
| |
| Additions to building and other capital improvements | $ | (158 | ) | | $ | (1,175 | ) | | $ | (565 | ) | |
| | Additions of land and buildings and improvements | | Additions of land and buildings and improvements | $ | (2,674) | | | $ | (465) | | | $ | (674) | |
| Transfer of other assets to building and other capital improvements | $ | 158 |
| | $ | — |
| | $ | 565 |
| Transfer of other assets to building and other capital improvements | $ | 2,674 | | | $ | 465 | | | $ | 674 | |
| Acquisitions of land and buildings and improvements | $ | (17,461 | ) | | $ | (3,572 | ) | | $ | (38,339 | ) | Acquisitions of land and buildings and improvements | $ | — | | | $ | (5,990) | | | $ | (2,202) | |
| Acquisitions of deferred leasing intangibles | $ | (2,079 | ) | | $ | (1,008 | ) | | $ | (11,199 | ) | Acquisitions of deferred leasing intangibles | $ | — | | | $ | (948) | | | $ | (362) | |
| Partial disposal of building due to involuntary conversion of building | $ | 363 |
| | $ | 779 |
| | $ | — |
| |
| Investing other receivables due to involuntary conversion of building | $ | (363 | ) | | $ | (779 | ) | | $ | — |
| |
| Change in additions of land, building, and improvements included in accounts payable, accrued expenses, and other liabilities | $ | (7,125 | ) | | $ | (1,455 | ) | | $ | (182 | ) | |
| | Change in additions of land, building, and improvements included in accounts payable, accrued expenses and other liabilities | | Change in additions of land, building, and improvements included in accounts payable, accrued expenses and other liabilities | $ | (7,897) | | | $ | (1,285) | | | $ | (3,714) | |
| Additions to building and other capital improvements from non-cash compensation | $ | (26 | ) | | $ | (18 | ) | | $ | — |
| Additions to building and other capital improvements from non-cash compensation | $ | (62) | | | $ | (9) | | | $ | (25) | |
| Assumption of mortgage notes | $ | — |
| | $ | 4,037 |
| | $ | 26,267 |
| Assumption of mortgage notes | $ | — | | | $ | 5,103 | | | $ | — | |
| Fair market value adjustment to mortgage notes acquired | $ | — |
| | $ | 75 |
| | $ | 418 |
| Fair market value adjustment to mortgage notes acquired | $ | — | | | $ | (161) | | | $ | — | |
| Change in loan fees, costs, and offering costs included in accounts payable, accrued expenses, and other liabilities | $ | (15 | ) | | $ | 26 |
| | $ | 24 |
| |
| Change in loan fees, costs, and offering costs included in accounts payable, accrued expenses and other liabilities | | Change in loan fees, costs, and offering costs included in accounts payable, accrued expenses and other liabilities | $ | 192 | | | $ | 930 | | | $ | (1,065) | |
| | Dividends and distributions accrued | $ | 11,880 |
| | $ | 9,728 |
| | $ | 8,234 |
| Dividends and distributions accrued | $ | 22,282 | | | $ | 21,906 | | | $ | 19,379 | |
The accompanying notes are an integral part of these consolidated financial statements.
STAG Industrial, Inc.
Notes to Consolidated Financial Statements
1. OrganizationandDescription of Business
STAG Industrial, Inc. (the “Company”) is an industrial real estate operating company focused on the acquisition ownership, and operation of single-tenant, industrial properties throughout the United States. The Company was formed as a Maryland corporation and has elected to be treated and intends to continue to qualify as a real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”). The Company is structured as an umbrella partnership REIT, commonly called an UPREIT, and owns substantially all of its properties and conducts substantially all of its business through its operating partnership, STAG Industrial Operating Partnership, L.P., a Delaware limited partnership (the “Operating Partnership”). As of December 31, 20172022 and 2016,2021, the Company owned a 95.9%97.9% and 95.7%98.1%, respectively, of the common equity interestunits of the limited partnership interests in the Operating Partnership. The Company through its wholly owned subsidiary, is the sole member of the general partner of the Operating Partnership. As used herein, the “Company” refers to STAG Industrial, Inc. and its consolidated subsidiaries, and partnerships, including the Operating Partnership, except where context otherwise requires.
As of December 31, 2017,2022, the Company owned 356562 industrial buildings in 3741 states with approximately 70.2111.7 million rentable square feet (square feet unaudited herein and throughout the Notes), consisting of 288487 warehouse/distribution buildings, 5274 light manufacturing buildings, 14and 1 flex/office buildings, and two buildings classified as held for sale. The Company’s buildings were approximately 95.3% leased to 312 tenants as of December 31, 2017.building.
2. Summary of Significant Accounting Policies
Basis of Presentation
The Company’s consolidated financial statements include the accounts of the Company, the Operating Partnership, and their consolidated subsidiaries. Interests in the Operating Partnership not owned by the Company are referred to as “Noncontrolling Common Units.” These Noncontrolling Common Units are held by other limited partners in the form of common units ("(“Other Common Units"Units”) and long termlong-term incentive plan units (“LTIP units”) issued pursuant to the STAG Industrial, Inc. 2011 Equity Incentive Plan, as amended and restated (the “2011 Plan”). All significant intercompany balances and transactions have been eliminated in the consolidation of entities. The financial statements of the Company are presented on a consolidated basis for all periods presented.
Reclassifications and New Accounting PronouncementsStandards
Certain prior year amounts have been reclassified to conform to the current year presentation.New Accounting Standards Adopted
In August 2017,December 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-12, Derivatives and Hedging2022-06, Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”) which defers the sunset date of Reference Rate Reform (Topic 815)848):Targeted Improvements Facilitation of the Effects of Reference Rate Reform to Accounting for Hedging Activities. The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. This standardDecember 31, 2024. ASU 2022-06 is effective for fiscal years beginning after December 15, 2018 and interim periods within those years, with early adoption permitted, and should be applied using a modified retrospective transition method to each period presented. This adoption method will require the Company to recognize the cumulative effect of initially applying the ASU as an adjustment to accumulated other comprehensive income (loss) with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year that an entity adopts the update. The adoption of ASU 2017-12 is not expected to materially impact the Company’s consolidated financial statements. The Company plans to adopt this standard effective January 1, 2018.
In May 2017, the FASB issued ASU 2017-09, Stock Compensation (Topic 718): Scope of Modification Accounting, which provides updated guidance about which changes to the terms or conditions of a share-based payment award would require an entity to apply modification accounting under the topic. This standard is effective for fiscal years beginning after December 15, 2017 and interim periods within those years with early adoption permitted, and should be applied prospectively to an award modified on or after the adoption date. The adoption of ASU 2017-09 is not expected to materially impact the Company’s consolidated financial statements. The Company plans to adopt this standard effective January 1, 2018.
In February 2017, the FASB issued ASU 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets, which provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with non-customers. The new standard was issued as part of the new revenue standard (ASU 2014-09, as discussed below), and defines “in substance nonfinancial asset,” unifies guidance related to partial sales of nonfinancial assets, eliminates rules specifically addressing sales of real estate, removes exceptions to the financial asset derecognition model, and clarifies the accounting for contributions of
nonfinancial assets to joint ventures. As a result of the new guidance, the guidance specific to real estate sales in Subtopic 360-20 will be eliminated, and sales and partial sales of real estate assets will now be subject to the same derecognition model as all other nonfinancial assets. This standard is effective at the same time an entity adopts ASU 2014-09, and either the full retrospective approach or the modified retrospective approach may be used. The adoption of ASU 2017-05 is not expected to materially impact the Company’s consolidated financial statements. The Company plans to adopt this standard effective January 1, 2018 using the modified retrospective approach.
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The new standard removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This standard is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted. The Company elected to early adopt this standard effective January 1, 2017. The adoption of this standard did not have a material effect on the Company's consolidated financial statements.
In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The new standard provides a screen to determine when a set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired or disposed of is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This standard is effective for annual periods beginning after December 15, 2017 and interim periods within those periods, with early adoption permitted, and should be applied prospectively on or after the effective date. Upon the adoption of ASU 2017-01, it is expected that the majority of the Company's acquisitions will be accounted for as asset acquisitions, whereas under the current guidance the majority of the Company's acquisitions have been accounted for as business combinations. The most significant difference between the two accounting models that will impact the Company's consolidated financial statements is that in an asset acquisition, property acquisition costs are generally a component of the consideration transferred to acquire a group of assets and are capitalized as a component of the cost of the assets, whereas in a business combination, property acquisition costs are expensed and not included as part of the consideration transferred. The Company plans to adopt this standard effective January 1, 2018.
In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash.The new standard requires that the statement of cash flows explain the changes during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. This standard is effective for fiscal years beginning after December 15, 2017 and interim periods within those years, with early adoption permitted, and should be applied using a retrospective transition method to each period presented. Upon the adoption of ASU 2016-18, the Company will reconcile both cash and cash equivalents and restricted cash in the accompanying Statements of Cash Flows, whereas under the current guidance the Company explains the changes during the period for cash and cash equivalents only. The Company plans to adopt this standard effective January 1, 2018.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). Topic 842 supersedes the previous leases standard, Topic 840, Leases. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liabilityimmediately for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases.companies. ASU 2016-02 is expected to2022-06 had no impact on the Company’s consolidated financial statements as the Company has certain operating and land lease arrangements for which it is the lessee, which will result in the recording of a right of use asset and the related lease liability. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The new standard must be adopted using a modified retrospective transition and will require application of the new guidance at the beginning of the earliest comparative period. The Company is currently in the process of evaluating the impact the adoption of ASU 2016-02 will have on the Company’s financial position or results of operations, and plans to adopt this standard effective January 1, 2019.
In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10). The amendments in ASU 2016-01 address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The standard primarily affects the accounting for equity investments, financial liabilities under
the fair value option, and the presentation and disclosure requirements for financial instruments. ASU 2016-01 is effective for the annual periods beginning afteryear ended December 31, 2017 and for annual periods and interim periods within those years. Early adoption is permitted for all financial statements of fiscal years and interim periods that have not yet been issued. The adoption of ASU 2016-01 is not expected to materially impact the Company’s consolidated financial statements. The Company plans to adopt this standard effective January 1, 2018.2022.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers(Topic 606). ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. While lease contracts with customers, which constitute a vast majority of the Company's revenues, are specifically excluded from the model's scope, certain of the Company's revenue streams may be impacted by the new guidance. Once the new guidance setting forth principles for the recognition, measurement, presentation and disclosure of leases (ASU 2016-02, as discussed above) goes into effect, the new revenue standard may apply to executory costs and other components of revenue due under leases that are deemed to be non-lease components (such as common area maintenance and provision of utilities), even when the revenue for such activities is not separately stipulated in the lease. In that case, revenue from these items previously recognized on a straight-line basis under current lease guidance would be recognized under the new revenue guidance as the related services are delivered. As a result, while the total revenue recognized over time would not differ under the new guidance, the recognition pattern would be different. The Company is in the process of evaluating the significance of the difference in the recognition pattern that would result from this change upon the adoption of ASU 2016-02 on January 1, 2019. In adopting ASU 2014-09, companies may use either a full retrospective or a modified retrospective approach. Additionally, this guidance requires improved disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 is effective for the first interim period within annual reporting periods beginning after December 15, 2017. Early adoption is permitted for the first interim period within annual reporting periods beginning after December 15, 2016. The adoption of ASU 2014-09 is not expected to materially impact the Company’s consolidated financial statements. The Company plans to adopt this standard effective January 1, 2018 using the modified retrospective approach.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Rental Property and Deferred Leasing Intangibles
Rental property is carried at cost less accumulated depreciation and amortization. Expenditures for maintenance and repairs are expensed as incurred. Significant renovations and betterments that extend the economic useful lives of assets are capitalized.
The Company capitalizes costs directly and indirectly related to the development, pre-development, redevelopment, or improvement of rental property. Real estate taxes, compensation costs of development personnel, insurance, interest, and other directly related costs during construction periods are capitalized as incurred, and depreciatedwith depreciation commencing withon the date the property is substantially completed. Such costs begin to be capitalized to the development projects from the point the Company
is undergoing the necessary activities to get the development project ready for its intended use and cease when the development projects are substantially completed and held available for occupancy. Interest is capitalized based on actual capital expenditures from the period when development or redevelopment commences until the asset is ready for its intended use, at the weighted average borrowing rate of the Company'sCompany’s unsecured indebtedness during the period.
For properties classified as held for sale, the Company ceases depreciating and amortizing the rental property and values the rental property at the lower of depreciated and amortized cost or fair value less costs to dispose. The Company presents those properties classified as held for sale with any qualifying assets and liabilities associated with those properties as held for sale in the accompanying Consolidated Balance Sheets.
TheUsing information available at the time of acquisition, the Company allocates the purchase price of business combinations of properties acquired based upon the fair value of the assets acquired and liabilities acquired,assumed, which generally consist of land, buildings, tenant improvements, mortgage debt assumed, and deferred leasing intangibles, which includes in-place leases, above market and below market leases, and tenant relationships. The process for determining the allocation to these components requires estimates and assumptions, including rental rates, discount rates and exit capitalization rates, and land value per square foot, as well as available market information, and is therefore subject to subjective analysis and uncertainty. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant. The portion of the purchase price that is allocated to above and below market leases is valued based on the present value of the difference between
prevailing market rates and the in-place rates measured over a period equal to the remaining term of the lease term plus the term of any bargain renewal options. The purchase price is further allocated to in-place lease values and tenant relationships based on the Company'sCompany’s evaluation of the specific characteristics of each tenant’s lease and its overall relationship with the respective tenant.
The above and below market lease values are amortized into rental income over the remaining lease term. The value of in-place lease intangibles and tenant relationships are amortized over the remaining lease term (and expected renewal period of the respective lease for tenant relationships) as increases to depreciation and amortization expense. The remaining lease terms are adjusted for bargain renewal options or assumed exercises of early termination options, as applicable. If a tenant subsequently terminates its lease, any unamortized portion of above and below market leases is accelerated into rental income and the in-place lease value and tenant relationships are accelerated into depreciation and amortization expense over the shortened lease term.
The purchase price allocated to deferred leasing intangible assets are included in rental property, net on the accompanying Consolidated Balance Sheets, and the purchase price allocated to deferred leasing intangible liabilities are included in deferred leasing intangibles, net on the accompanying Consolidated Balance Sheets under the liabilities section.
In determining the fair value of the debt assumed, the Company discounts the spread between the future contractual interest payments and hypothetical future interest payments on mortgage debt based on a current market rate. The associated fair market value debt adjustment is amortized through interest expense over the life of the debt on a basis which approximates the effective interest method.
Using information available at the time of acquisition, the Company allocates the total consideration to tangible assets and liabilities and identified intangible assets and liabilities. The Company may adjust the preliminary purchase price allocations after obtaining more information about asset valuations and liabilities assumed.
The Company evaluates the carrying value of all tangible and intangible rental property assets and deferred leasing intangible liabilities (collectively, the “property”) held for use for possible impairment when an event or change in circumstance has occurred that indicates their carrying value may not be recoverable. The evaluation includes estimating and reviewing anticipated future undiscounted cash flows to be derived from the asset and the ultimate sale of the asset.property. If such cash flows are less than the asset’sproperty’s carrying value, an impairment charge is recognized to the extent by which the asset’sproperty’s carrying value exceeds the estimated fair value. Estimating future cash flows is highly subjective and such estimatesis based in part on assumptions regarding anticipated hold period, future occupancy, rental rates, capital requirements, and exit capitalization rates that could differ from actual results. The discount rate used to present value the cash flows for determining fair value is also subjective.
Depreciation expense is computed using the straight-line method based on the following estimated useful lives.
|
| | | | | | | |
BuildingDescription | 40 Years | Estimated Useful Life |
| Building | | 40 Years |
| Building and land improvements (maximum) | Up to | 20 yearsYears |
| Tenant improvements | | Shorter of useful life or terms of related lease |
| | |
| | |
| | |
Fully depreciated or amortized tenant improvements, deferred leasing intangible assets, or deferred leasing intangible liabilities and the associated accumulated depreciation or amortization are written-off. The Company wrote-off fully depreciated or
amortized tenant improvements, deferred leasing intangible assets, and deferred leasing intangible liabilities of approximately $2.2$3.4 million, $30.0$53.8 million, $1.5$4.9 million, respectively, for the year ended December 31, 20172022 and approximately $2.6$7.5 million, $17.9$72.9 million, $0,$2.4 million, respectively, for the year ended December 31, 2016.2021.
Leases
For leases in which the Company is the lessee, the Company recognizes a right-of-use asset and corresponding lease liability on the accompanying Consolidated Balance Sheets equal to the present value of the fixed lease payments. In determining the operating right-of-use asset and lease liability for the Company’s operating leases, the Company estimates an appropriate incremental borrowing rate on a fully-collateralized basis for the terms of the leases. The Company utilizes a market-based approach to estimate the incremental borrowing rate for each individual lease. Additionally, since the terms of the Company’s ground leases are significantly longer than the terms of borrowings available to the Company on a fully-collateralized basis, the estimate of this rate requires significant judgment, and considers factors such as yields on outstanding public debt and other market based pricing on longer duration financing instruments.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and highly liquid short-term investments with original maturities of three months or less. The Company maintains cash and cash equivalents in United States banking institutions that may exceed amounts insured by the Federal Deposit Insurance Corporation. While the Company monitors the cash balances in its operating accounts, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. To date, the Company has experienced no loss or lack of access to cash in its operating accounts, and mitigates this risk by using nationally recognized banking institutions.
Restricted Cash
Restricted cash may include tenant security deposits, and cash held in escrow for real estate taxes and capital improvements as required in various mortgage loan agreements.note agreements, and cash held by the Company’s transfer agent for preferred stock dividends, if any, that are distributed subsequent to period end. Restricted cash may also include cash held by qualified intermediaries to facilitate a like-kind exchange of real estate under Section 1031 of the Code.
Tenant Accounts Receivable, net
Tenant accounts receivable, netThe following table presents a reconciliation of cash and cash equivalents and restricted cash reported on the accompanying Consolidated Balance Sheets includes both tenant accounts receivable, net and accrued rental income, net. The Company provides an allowance for doubtful accounts against the portion of tenant accounts receivable that is estimated to be uncollectible. As of December 31, 2017 and 2016, the Company had an allowance for doubtful accounts of approximately $0.1 million and $0.2 million, respectively.
The Company accrues rental income earned, but not yet receivable, in accordance with GAAP. As of December 31, 2017 and 2016, the Company had accrued rental income, net of allowance of approximately $24.7 million and $18.4 million, respectively. The Company maintains an allowance for estimated losses that may result from those revenues, which as of December 31, 2017 and 2016, was approximately $0.2 million and $0, respectively.
As of December 31, 2017 and 2016, the Company had approximately $12.7 million and $9.0 million, respectively, of total lease security deposits available in the form of existing letters of credit, which are not reflectedamounts reported on the accompanying Consolidated Balance Sheets. AsStatements of December 31, 2017 and 2016, the Company had approximately $7.4 million and $5.4 million, respectively, of lease security deposits available in cash, which are included in cash and cash equivalents on the accompanying Consolidated Balance Sheets, and approximately $0.7 million and $0.4 million, respectively, of lease security deposits available in cash, which are included in restricted cash on the accompanying Consolidated Balance Sheets. These funds may be used to settle tenant accounts receivables in the event of a default under the related lease. As of December 31, 2017 and 2016, the Company's total liability associated with these lease security deposits was approximately $8.1 million and $5.8 million, respectively, which is included in tenant prepaid rent and security deposits on the accompanying Consolidated Balance Sheets.Cash Flows.
| | | | | | | | | | | | | | |
| Reconciliation of cash and cash equivalents and restricted cash (in thousands) | | December 31, 2022 | | December 31, 2021 |
| Cash and cash equivalents | | $ | 25,884 | | | $ | 18,981 | |
| Restricted cash | | 905 | | | 4,215 | |
| Total cash and cash equivalents and restricted cash | | $ | 26,789 | | | $ | 23,196 | |
Deferred Costs
Deferred financing fees and debt issuance costs include costs incurred in obtaining debt that are capitalized and are presented as a direct deduction from the carrycarrying amount of the associated debt liability that is not a line-of-credit arrangement on the accompanying Consolidated Balance Sheets. Deferred financing fees and debt issuance costs related to line-of-credit arrangements are presented as an asset in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets. The deferred financing fees and debt issuance costs are amortized through interest expense over the life of the respective loans on a basis which approximates the effective interest method. Any unamortized amounts upon early repayment of debt are written off in the period of repayment as a loss on extinguishment of debt. Fully amortized deferred financing fees and debt issuance costs are removed from the bookswritten off upon maturity of the underlying debt.
Leasing commissions include commissions compensation costs of leasing personnel, and other direct and incremental costs incurred to obtain new tenant leases as well as to renew existing tenant leases, and are presented in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets. Leasing commissioncommissions are capitalized and amortized over the terms of the related leases (and bargain renewal terms or assumed exercise of early termination options) using the straight-line method. If a lease terminates prior to the expiration of its initial term, any unamortized costs related to the lease are accelerated into amortization expense. Changes in leasing commissions are presented in the cash flows from operating activities section of the accompanying Consolidated Statements of Cash Flows.
Goodwill
The excess of the cost of an acquired business over the net of the amounts assigned to assets acquired (including identified intangible assets) and liabilities assumed is recorded as goodwill. Goodwill of the Company of approximately $4.9 million represents amounts allocated to the assembled workforce from the acquired management company, and is presented in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets. The Company’s goodwill has an indeterminate life and is not amortized, but is tested for impairment on an annual basis at December 31, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company takes a qualitative approach to consider whether an impairment of goodwill exists prior to quantitatively determining the fair value of the reporting unit in step one of the impairment test. The Company has recorded no impairments to goodwill through December 31, 2017.2022.
Use of Derivative Financial Instruments
The Company records all derivatives on the accompanying Consolidated Balance Sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a
derivative in a hedging relationship and apply hedge accounting, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.
In accordance with fair value measurement guidance, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting arrangements on a net basis by counterparty portfolio. Credit risk is the risk of failure of the counterparty to perform under the terms of the contract. The Company minimizes the credit risk in its derivative financial instruments by entering into transactions with various high-quality counterparties. The Company’s exposure to credit risk at any point is generally limited to amounts recorded as assets on the accompanying Consolidated Balance Sheets.
Fair Value of Financial Instruments
Financial instruments include cash and cash equivalents, restricted cash, tenant accounts receivable, interest rate swaps, accounts payable, accrued expenses, unsecured credit facility, unsecured term loans, unsecured notes, and mortgage notes. The fair values of the cash and cash equivalents, restricted cash, tenant accounts receivable, and accounts payable and accrued expenses approximate their carrying or contract values because of the short term maturity of these instruments. See Note 4 for the fair valuesvalue of the Company’s debt.indebtedness. See Note 5 for the fair valuesvalue of the Company’s interest rate swaps.
The Company adopted fair value measurement provisions for its financial instruments recorded at fair value. The guidance establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
Offering Costs
Underwriting commissions and direct offering costs have been reflected as a reduction of additional paid-in capital.capital on the accompanying Consolidated Balance Sheets and Consolidated Statements of Equity. Indirect costs associated with equity offerings are expensed as incurred and included in general and administrative expenses on the accompanying Consolidated Statements of Operations.
Dividends
Earnings and profits, which determine the taxability of dividends to stockholders, will differ from income reported for financial reporting purposes due to the differences for federal income tax purposes in the treatment of gains on the sale of real property, revenue and expense recognition, and in the estimated useful lives and basis used to compute depreciation. In addition, the Company'sCompany’s distributions may include a return of capital. To the extent that the Company makes distributions in excess of its
current and accumulated earnings and profits, such distributions would generally be considered a return of capital for federal income tax purposes to the extent of the holder’s adjusted tax basis in its shares. A return of capital ismay not taxable, but itbe taxable. A return of capital has the effect of reducing the holder’s adjusted tax basis in its investment.investment, which may or may not be taxable to the holder.
The Company paid approximately $5.2 million ($1.88125 per share) and $6.2 million ($2.25 per share) of the 9.0% Series A Cumulative Redeemable Preferred Stock ("Series A Preferred Stock") dividends for the years ended December 31, 2016 and 2015, respectively, that were treated as ordinary income for tax purposes.
The Company paid approximately $4.6 million ($1.65625 per share), $4.6 million ($1.65625 per share) and $4.6 million ($1.65625 per share) of the 6.625% Series B Cumulative Redeemable Preferred Stock ("Series B Preferred Stock") dividends for the years ended December 31, 2017, 2016 and 2015, respectively, that were treated as ordinary income for tax purposes.
The Company paid approximately $5.2 million ($1.71875 per share) and $4.1 million ($1.355905 per share)dividends to holders of the 6.875% Series C Cumulative Redeemable Preferred Stock, ("par value $0.01 per share (“Series C Preferred Stock"Stock”) dividends for, of approximately $1.3 million ($0.429688 per share) during the yearsyear ended December 31, 2017 and 2016, respectively, that were2021, of which $0.400294 per share was treated as ordinary income for tax purposes, $0.022149 per share was treated as unrecaptured section 1250 capital gain for tax purposes, and $0.007245 per share was treated as other capital gain for income tax purposes. The Company paid dividends to the holders of the Series C Preferred Stock of approximately $5.2 million ($1.71875 per share) during the year ended December 31, 2020, of which $1.349944 per share was treated as ordinary income for tax purposes, $0.100392 per share was treated as unrecaptured section 1250 capital gain for tax purposes, and $0.268414 per share was treated as other capital gain for income tax purposes.
The following table summarizes the tax treatment of common dividends per shareshares of common stock for federal income tax purposes is as follows.purposes.
| | | | | | | | | | | | | | | | | Year ended December 31, |
| | Year ended December 31, | | | 2022 | | 2021 | | 2020 |
| | 2017 | | 2016 | | 2015 | |
| | Per Share | | % | | Per Share | | % | | Per Share | | % | |
| Federal Income Tax Treatment of Dividends per Common Share | | Federal Income Tax Treatment of Dividends per Common Share | | Per Share | | % | | Per Share | | % | | Per Share | | % |
| Ordinary income | $ | 0.965483 |
| | 68.8 | % | | $ | 0.944038 |
| | 68.0 | % | | $ | 0.777244 |
| | 57.2 | % | Ordinary income | | $ | 1.172486 | | | 80.4 | % | | $ | 1.119899 | | | 81.3 | % | | $ | 1.186648 | | | 78.5 | % |
| Return of capital | 0.437852 |
| | 31.2 | % | | 0.445125 |
| | 32.0 | % | | 0.582756 |
| | 42.8 | % | Return of capital | | 0.165158 | | | 11.3 | % | | 0.175355 | | | 12.7 | % | | — | | | — | % |
| Unrecaptured section 1250 capital gain | | Unrecaptured section 1250 capital gain | | 0.014248 | | | 1.0 | % | | 0.061970 | | | 4.5 | % | | 0.088246 | | | 5.9 | % |
| Other capital gain | | Other capital gain | | 0.107278 | | | 7.3 | % | | 0.020269 | | | 1.5 | % | | 0.235943 | | | 15.6 | % |
| Total (1) | $ | 1.403335 |
| | 100.0 | % | | $ | 1.389163 |
| | 100.0 | % | | $ | 1.360000 |
| | 100.0 | % | Total (1) | | $ | 1.459170 | | | 100.0 | % | | $ | 1.377493 | | | 100.0 | % | | $ | 1.510837 | | | 100.0 | % |
| |
(1) | The December 2015 monthly common stock dividend of $0.115 per share was included in the stockholder’s 2016 tax year. The December 2016 monthly common stock dividend of $0.115833 per share was included in the stockholder’s 2017 tax year. The December 2017 monthly common stock dividend of $0.1175 per share will be included in the stockholder’s 2018 tax year. |
(1)The December 2020 monthly common stock dividend of $0.12 per share was partially included in the stockholder's 2020 tax year in the amount of $0.07167 per share, and the remainder was included in the stockholder's 2021 tax year. The December 2021 monthly common stock dividend of $0.120833 per share was included in the stockholder's 2022 tax year. The December 2022 monthly common stock dividend of 0.121667 per share will be included in the stockholder's 2023 tax year.
Revenue Recognition
All current leases are classified as operating leases and rental income is recognized on a straight-line basis over the term of the lease (and expected bargain renewal terms or assumed exercise of early termination options) when collectability is reasonably assured. Differences between rental income earned and amounts due under the lease are charged or credited, as applicable, to accrued rental income. Additional rents from expense reimbursements
The Company determined that for insurance, real estate taxesall leases where the Company is the lessor, that the timing and certain other expensespattern of transfer of the non-lease components and associated lease components are recognizedthe same, and that the lease components, if accounted for separately, would be classified as an operating lease. Accordingly, the Company has made an accounting policy election to recognize the combined component in accordance with Accounting Standards Codification Topic 842 as rental income on the period in which the related expenses are incurred.accompanying Consolidated Statements of Operations.
Rental income recognition commences when the tenant takes possession of or controls the physical use of the leased space and the leased space is substantially complete and ready for its intended use. In order to determine whether the leased space is substantially complete and ready for its intended use, the Company determines whether the Company or the tenant own the tenant improvements. When it is determined that the Company is the owner of the tenant improvements, rental income recognition begins when the tenant takes possession of or controls the physical use of the finished space, which is generally when the Company owned tenant improvements are completed. In instances when it is determined that the tenant is the owner of tenant improvements, rental income recognition begins when the tenant takes possession of or controls the physical use of the leased space.
The Company evaluates its operating leases to determine if it is probable it will collect substantially all of the lessee’s remaining lease payments under the lease term. For those that are not probable of collection, the Company converts to the cash basis of accounting. If the Company subsequently determines that it is probable it will collect substantially all of the lessee’s remaining lease payments under the lease term, the Company will reinstate the accrued rent balance adjusting for the amount related to the period when the lease was accounted for on a cash basis.
When the Company is the owner of tenant improvements or other capital items, the cost to construct the tenant improvements or other capital items, including costs paid for or reimbursed by the tenants, is recorded as capital assets. For these tenant
improvements or other capital items, the amount funded by or reimbursed by the tenants are recorded as deferred revenue, which is amortized on a straight-line basis as rental income over the shorter of the useful life of the capital asset or the term of the related lease.
The Company earned revenue from asset management fees, which are included on the accompanying Consolidated Statements of Operations in other income. The Company recognized revenue from asset management fees when the related fees were earned and were realized or realizable. As of December 31, 2017, the Company no longer earned revenue from asset management fees.
Tenant Recoveries
By the terms of their leases, certain tenants are obligated to pay directly the costs of their properties’ insurance, real estate taxes, ground lease payments, and certain other expenses, and these costs are not reflected on the Company’s consolidated financial statements. The Company does not recognize recovery revenue related to leases where the tenant has assumed the cost for real estate taxes, insurance, ground lease payments and certain other expenses. To the extent any tenant is responsible for these costs under its respective lease defaults on its lease or it is deemed probable that the tenant will fail to pay for such costs, the Company will record a liability for such obligation. The Company estimates that real estate taxes, which are the responsibility of these certain tenants, were approximately $12.4 million, $10.9 million and $10.2 million for the years ended December 31, 2017, 2016 and 2015, respectively. These amounts would have been the maximum real estate tax expense of the Company, excluding any penalties or interest, had the tenants not met their contractual obligations for these periods.
Termination Income
Early lease termination fees are recorded in rental income on a straight-line basis from the notification date of such termination to the then remaining (not the original) lease term, if any, or upon collection if collection is not reasonably assured.
On March 27, 2017, the tenant at the Buena Vista, VA property exercised its early lease termination option per the terms of the lease agreement. The option provided that the tenant's lease terminate effective March 31, 2018 and required the tenant to pay a termination fee of approximately $0.5 million. The termination fee is being recognized on a straight-line basis from March 27, 2017 through the relinquishment of the space on March 31, 2018. The termination fee income of approximately $0.4 million is included in rental income on the accompanying Consolidated Statements of Operations for the year ended December 31, 2017.
On February 9, 2017, the Company entered into a lease termination agreement with the tenant located at the Belvidere, IL building. The agreement provided that the tenant’s lease terminate effective February 9, 2017 and required the tenant to pay a termination fee of $54,000. The full termination fee was recognized on February 9, 2017 and is included in rental income on the accompanying Consolidated Statements of Operations for the year ended December 31, 2017.
On December 21, 2016, the tenant at the Golden, CO property exercised its early lease termination option per the terms of the lease agreement. The option provided that the tenant's lease terminate effective December 31, 2017 and required the tenant to pay a termination fee of approximately $0.9 million. The termination fee was recognized on a straight-line basis from December 21, 2016 through the relinquishment of the space on December 31, 2017. The termination fee income of approximately $0.8 million and $0.1 million is included in rental income on the accompanying Consolidated Statements of Operations for the years ended December 31, 2017 and 2016, respectively.
On October 20, 2015, the tenant at the Dayton, OH property exercised its early lease termination option per the terms of the lease agreement. The option provided that the tenant's lease terminate effective October 31, 2016 and required the tenant to pay a termination fee of approximately $0.2 million. The termination fee was being recognized on a straight-line basis from October 20, 2015 through the relinquishment of the space on October 31, 2016. On August 29, 2016, the Company sold the Dayton, OH property to an unaffiliated third party and recognized the remaining unamortized termination fee. The termination fee income of approximately $0.2 million and $0.1 million is included in rental income on the accompanying Consolidated Statements of Operations for the years ended December 31, 2016 and 2015, respectively.
On October 19, 2015, the Company entered into a lease termination agreement with the tenant located at the Southfield, MI building. The agreement provided that the tenant’s lease terminated effective October 19, 2015 and required the tenant to pay a termination fee of approximately $0.9 million. The full termination fee is included in rental income on the accompanying Consolidated Statements of Operations for the year ended December 31, 2015.
On December 17, 2014, the Company entered into the first amendment to the lease with the tenant located at the Belfast, ME buildings. The terms of the amendment renewed 90,051 square feet of the premise and early terminated the remaining 228,928 square feet effective November 30, 2015. The tenant was required to pay a termination fee for the returned premise on or before October 31, 2015 in the amount of approximately $2.1 million, and the Company received the termination fee payment in full on September 23, 2015. This termination fee along with the reimbursement of certain miscellaneous costs per the lease amendment was being recorded on a straight-line basis from December 17, 2014 through the relinquishment of the space on November 30, 2015. On May 18, 2015, the Company entered into a second lease amendment with the tenant. The terms of the second lease amendment accelerated the termination of 35,295 square feet of the previously terminated square feet to April 30, 2015. The Company recognized the termination fee associated with the 35,295 square feet through the shortened lease life of April 30, 2015. The Company recognized the remaining termination fee over the shortened lease life of the remaining 193,633 square feet through November 30, 2015. The termination fee of approximately $2.0 million are included in rental income on the accompanying Consolidated Statements of Operations for the year ended December 31, 2015.
Gain on the Sales of Rental Property, net
The timing of the derecognition of a rental property and the corresponding recognition of gain on the sales of rental property, net is measured againstby various criteria related to the terms of the sale transaction, and continuing involvement in the form of management or financial assistance associated with the properties. If the sales criteria for the full accrual method are not met,if the Company defers some or all of the gain recognition and accounts for the continued operationshas lost control of the property by applyingand the finance, leasing, profit sharing, deposit, installment or cost recovery methods, as appropriate, untilacquirer has gained control of the salesproperty after the transaction. If the derecognition criteria are met.is met, the full gain is recognized.
Incentive and Equity-Based Employee Compensation Plans
The Company grants equity-based compensation awards to its employees and directors in the form of restricted shares of common stock, LTIP units, and outperformance programs and performance units (outperformance programs and performance units are collectively, "Performance-based Compensation Plans").units. See Notes 6, 7 and 8 for further discussion of restricted shares of common stock, LTIP units, and Performance-based Compensation Plansperformance units, respectively. The Company measures equity-based compensation expense based on the fair value of the awards on the grant date and recognizes the expense ratably over the vesting period, and forfeitures are recognized in the period in which they occur.
On January 7, 2021, the Company adopted the STAG Industrial, Inc. Employee Retirement Vesting Program (the “Vesting Program”) to provide supplemental retirement benefits for eligible employees. For those employees who are retirement eligible or will become retirement eligible during the applicable vesting period under the terms of the Vesting Program, the Company accelerates equity-based compensation through the employee’s six-month retirement notification period or retirement eligibility date, respectively.
Related-Party Transactions
The Company did not have any related-party transactions during the years ended December 31, 2022, 2021 and 2020.
Taxes
Federal Income Taxes
The Company elected to be taxed as a REIT under the Code commencing with its taxable year ended December 31, 2011 and intends to continue to qualify as a REIT. TheAs a REIT, the Company is generally not subject to corporate level federal income tax on the earnings distributed currently to its stockholders that it derives from its REIT qualifying activities. As a REIT, the Company is required to distribute at least 90% of its REIT taxable income to its stockholders and meet the various other requirements imposed by the Code relating to such matters as operating results, asset holdings, distribution levels and diversity of stock ownership.
The Company will not be required to make distributions with respect to income derived from the activities conducted through subsidiaries that the Company elects to treat as taxable REIT subsidiaries (“TRS”) for federal income tax purposes, nor will it have to comply with income, assets, or ownership restrictions inside of the TRS. Certain activities that the Company undertakes must or should be conducted by a TRS, such as performing non-customary services for its tenants and holding assets that it cannot hold directly. A TRS is subject to federal and state income taxes. The Company'sCompany’s TRS recognized a net lossincome (loss) of approximately $0.4 million, $0.1 million, $(8,000) and $25,000,$0, for the years ended December 31, 2017, 20162022, 2021 and 2015,2020, respectively, which has been included on the accompanying Consolidated Statements of Operations.
The following table reconciles net income (loss) to taxable income for the years ended December 31, 2017, 2016 and 2015.
|
| | | | | | | | | | | |
| | Year ended December 31, |
| Reconciliation of Net Income (Loss) to Taxable Income (in thousands) | 2017 | | 2016 | | 2015 |
| Net income (loss) | $ | 32,200 |
| | $ | 35,588 |
| | $ | (29,345 | ) |
| Book/tax differences from depreciation and amortization | 80,416 |
| | 66,763 |
| | 60,959 |
|
| Above/below market lease amortization | 4,583 |
| | 6,213 |
| | 8,526 |
|
| Loss on impairments | 1,879 |
| | 16,845 |
| | 29,272 |
|
| Book/tax difference on termination income | (786 | ) | | 678 |
| | (1,815 | ) |
| Book/tax difference on property acquisition costs | 5,262 |
| | 4,498 |
| | 4,400 |
|
| Book/tax difference on extinguishment of debt | 15 |
| | (17 | ) | | — |
|
| Book/tax difference on accrued bonus payment | 745 |
| | 1,170 |
| | (337 | ) |
| Book/tax difference on bad debt expense | (91 | ) | | 83 |
| | 2 |
|
| Book/tax difference on non-cash compensation | 6,270 |
| | 7,188 |
| | 4,662 |
|
| Book/tax difference on gain on the sales of rental property, net | (26,134 | ) | | (53,580 | ) | | (10,653 | ) |
| Straight-line rent adjustments, net | (6,689 | ) | | (2,495 | ) | | (3,405 | ) |
| Book/tax difference on non-cash portion of interest expense | 1,897 |
| | 1,631 |
| | 1,266 |
|
| Book/tax difference on prepaid rent of Sec. 467 leases | (122 | ) | | (274 | ) | | 1,887 |
|
| Book/tax difference on gain on involuntary conversion | (325 | ) | | — |
| | — |
|
| Other book/tax differences, net | 465 |
| | 284 |
| | 180 |
|
| Loss attributable to noncontrolling interest | (4,572 | ) | | (4,069 | ) | | (3,011 | ) |
Taxable income subject to distribution requirement(1) | $ | 95,013 |
| | $ | 80,506 |
| | $ | 62,588 |
|
| |
(1) | The Company distributed in excess of 100% of its taxable income to its stockholders during the years ended December 31, 2017, 2016 and 2015, respectively. |
State and Local Income, Excise, and Franchise Tax
The Company and certain of its subsidiaries are subject to certain state and local income, excise and franchise taxes. Taxes in the amount of approximately $1.0$2.1 million, $1.0$1.7 million and $0.9$1.7 million have been recorded in other expenses on the accompanying Consolidated Statements of Operations for the years ended December 31, 2017, 20162022, 2021 and 2015,2020, respectively.
Uncertain Tax Positions
Tax benefits of uncertain tax positions are recognized only if it is more likely than not that the tax position will be sustained based solely on its technical merits, with the taxing authority having full knowledge of all relevant information. The measurement of a tax benefit for an uncertain tax position that meets the “more likely than not” threshold is based on a cumulative probability model under which the largest amount of tax benefit recognized is the amount with a greater than 50% likelihood of being realized upon ultimate settlement with the taxing authority having full knowledge of all the relevant information. As of December 31, 2017, 20162022, 2021 and 2015,2020, there were no liabilities for uncertain tax positions.
Earnings Per Share
The Company uses the two-class method of computing earnings per common share, which is an earnings allocation formula that determines earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Basic net income per common share is computed by dividing net income available to common stockholders by the weighted average number of shares of common sharesstock outstanding for the period. Diluted net income per common share is computed by dividing net income available to common stockholders by the sum of the weighted average number of shares of common sharesstock outstanding and any dilutive securities for the period.
Segment Reporting
The Company manages its operations on an aggregated, single segment basis for purposes of assessing performance and making operating decisions and, accordingly, has only one reporting and operating segment.
Concentrations of Credit Risk
Concentrations of credit risk relevant to the Company may arise when a number of financing arrangements, including revolving credit facilities or derivatives, are entered into with the same lenders or counterparties, and have similar economic features that would cause their inability to meet contractual obligations. The Company mitigates the concentration of credit risk as it relates to financing arrangements by entering into loan syndications with multiple, reputable financial institutions and diversifying its debt counterparties. The Company also reduces exposure by diversifying its derivatives across multiple counterparties who meet established credit and capital guidelines.
ConcentrationConcentrations of credit risk may also arise when the Company enters into leases with multiple tenants concentrated in the same industry, or into a significant lease or multiple leases with a single tenant, or tenants are located in the same geographic region, or have similar economic features that would cause their inability to meet contractual obligations, including those to the Company, to be similarly affected. The Company regularly monitors its tenant base to assess potential concentrations of credit risk through financial statement review, tenant management calls, and press releases. Management believes the current credit risk of the Company’s portfolio is reasonably well diversified and does not contain any unusual concentration of credit risk.
3. Rental Property
The following table summarizes the components of rental property, net as of December 31, 20172022 and 2016.2021.
| | | | | | | | | | | | | | |
| Rental Property (in thousands) | | December 31, 2022 | | December 31, 2021 |
| Land | | $ | 647,098 | | | $ | 617,297 | |
| Buildings, net of accumulated depreciation of $513,053 and $406,670, respectively | | 4,232,964 | |
| 4,035,210 | |
| Tenant improvements, net of accumulated depreciation of $31,578 and $26,065, respectively | | 44,526 | | | 43,999 | |
| Building and land improvements, net of accumulated depreciation of $218,497 and $179,132, respectively | | 339,274 | | | 320,041 | |
| Construction in progress | | 89,981 | | | 36,493 | |
| Deferred leasing intangibles, net of accumulated amortization of $328,848 and $282,038, respectively | | 508,935 | | | 567,658 | |
| Total rental property, net | | $ | 5,862,778 | | | $ | 5,620,698 | |
|
| | | | | | | | | |
| Rental Property, net (in thousands) | | December 31, 2017 | | December 31, 2016 | |
| Land | | $ | 321,560 |
|
| $ | 272,162 |
| |
| Buildings, net of accumulated depreciation of $160,281 and $125,971, respectively | | 1,756,579 |
|
| 1,408,406 |
| (1) |
| Tenant improvements, net of accumulated depreciation of $32,714 and $28,388, respectively | | 30,138 |
|
| 24,974 |
| |
| Building and land improvements, net of accumulated depreciation of $56,062 and $33,054, respectively | | 143,170 |
|
| 107,463 |
| |
| Construction in progress | | 2,877 |
| | 9,298 |
| |
| Deferred leasing intangibles, net of accumulated amortization of $280,642 and $237,456, respectively | | 313,253 |
|
| 294,533 |
| |
| Total rental property, net | | $ | 2,567,577 |
|
| $ | 2,116,836 |
| |
F-15
| |
(1) | Includes one building in redevelopment. |
Acquisitions
The following tables summarize the acquisitions of the Company during the years ended December 31, 20172022 and 2016.2021. The Company accounted for all of its acquisitions as asset acquisitions.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year ended December 31, 2022 |
Market(1) | | Date Acquired | | Square Feet | | Number of Buildings | | Purchase Price
(in thousands) |
| Kansas City, MO | | January 6, 2022 | | 702,000 | | | 1 | | | $ | 60,428 | |
| Chicago, IL | | January 31, 2022 | | 72,499 | | | 1 | | | 8,128 | |
| Columbus, OH | | February 8, 2022 | | 138,213 | | | 1 | | | 11,492 | |
| Cleveland, OH | | February 8, 2022 | | 136,800 | | | 1 | | | 13,001 | |
| Nashville, TN | | March 10, 2022 | | 109,807 | | | 1 | | | 12,810 | |
| Greenville/Spartanburg, SC | | March 10, 2022 | | 289,103 | | | 1 | | | 28,274 | |
| Memphis, TN | | March 18, 2022 | | 195,622 | | | 1 | | | 15,828 | |
| Greenville/Spartanburg, SC | | March 18, 2022 | | 155,717 | | | 1 | | | 16,390 | |
| Three months ended March 31, 2022 | | | | 1,799,761 | | | 8 | | | 166,351 | |
| Atlanta, GA | | April 1, 2022 | | 210,858 | | | 1 | | | 21,119 | |
| Minneapolis/St. Paul, MN | | April 4, 2022 | | 160,000 | | | 1 | | | 13,472 | |
| West Michigan, MI | | April 14, 2022 | | 211,125 | | | 2 | | | 12,274 | |
| Pittsburgh, PA | | April 19, 2022 | | 400,000 | | | 1 | | | 50,178 | |
Greenville/Spartanburg, SC(2) | | April 22, 2022 | | — | | | — | | | 5,559 | |
| Birmingham, AL | | May 5, 2022 | | 67,168 | | | 1 | | | 7,871 | |
| South Bay/San Jose, CA | | June 7, 2022 | | 175,325 | | | 1 | | | 29,630 | |
| Washington, DC | | June 29, 2022 | | 140,555 | | | 1 | | | 20,257 | |
| Hampton Roads, VA | | June 29, 2022 | | 102,512 | | | 1 | | | 10,561 | |
| Three months ended June 30, 2022 | | | | 1,467,543 | | | 9 | | | 170,921 | |
| Atlanta, GA | | July 15, 2022 | | 159,048 | | | 1 | | | 10,062 | |
| Fresno, CA | | July 25, 2022 | | 232,072 | | | 1 | | | 30,121 | |
| El Paso, TX | | July 26, 2022 | | 326,166 | | | 4 | | | 37,792 | |
| Portland, OR | | September 12, 2022 | | 78,000 | | | 1 | | | 11,281 | |
| Louisville, KY | | September 21, 2022 | | 563,032 | | | 1 | | | 38,064 | |
| Three months ended September 30, 2022 | | | | 1,358,318 | | | 8 | | | 127,320 | |
| Chicago, IL | | December 28, 2022 | | 115,491 | | | 1 | | | 8,055 | |
| Three months ended December 31, 2022 | | | | 115,491 | | | 1 | | | 8,055 | |
| Year ended December 31, 2022 | | | | 4,741,113 | | | 26 | | | $ | 472,647 | |
(1) As defined by CoStar Realty Information Inc. If the building is located outside of a CoStar defined market, the city and state is reflected.
(2) The Company acquired vacant land parcels.
|
| | | | | | | | | | |
| Year ended December 31, 2017 |
| Location of Property | | Square Feet | | Buildings | | Purchase Price
(in thousands) |
| Jacksonville, FL | | 1,025,720 |
| | 4 |
| | $ | 34,264 |
|
| Sparks, NV | | 174,763 |
| | 1 |
| | 8,380 |
|
| Salisbury, NC | | 288,000 |
| | 1 |
| | 8,250 |
|
| Franklin Township, NJ | | 183,000 |
| | 1 |
| | 12,800 |
|
| Milford, CT | | 200,000 |
| | 1 |
| | 12,762 |
|
| Bedford Heights, OH | | 173,034 |
| | 1 |
| | 7,622 |
|
| Redford, MI | | 135,728 |
| | 1 |
| | 7,769 |
|
| Warren, MI | | 154,377 |
| | 1 |
| | 7,940 |
|
| Three months ended March 31, 2017 | | 2,334,622 |
| | 11 |
| | 99,787 |
|
| Waukegan, IL | | 261,075 |
| | 2 |
| | 13,850 |
|
| Gaffney, SC | | 226,968 |
| | 1 |
| | 7,200 |
|
| Dayton, OH | | 569,966 |
| | 1 |
| | 29,750 |
|
| Belvidere, IL | | 336,204 |
| | 1 |
| | 22,867 |
|
| San Diego, CA | | 205,440 |
| | 1 |
| | 19,362 |
|
| Edwardsville, KS | | 270,869 |
| | 1 |
| | 16,270 |
|
| Pedricktown, NJ | | 245,749 |
| | 1 |
| | 16,000 |
|
| Walton, KY | | 224,921 |
| | 1 |
| | 11,450 |
|
| Rock Hill, SC | | 275,000 |
| | 1 |
| | 6,675 |
|
| Laredo, TX | | 206,810 |
| | 1 |
| | 13,500 |
|
| Clinton, PA | | 297,200 |
| | 1 |
| | 23,650 |
|
| Batavia, IL | | 102,500 |
| | 1 |
| | 5,900 |
|
| Wallingford, CT | | 105,000 |
| | 1 |
| | 8,200 |
|
| Rockwall, TX | | 389,546 |
| | 1 |
| | 28,600 |
|
| Houston, TX | | 232,800 |
| | 3 |
| | 25,000 |
|
| Lebanon, PA | | 211,358 |
| | 1 |
| | 7,950 |
|
| Maple Grove, MN | | 108,628 |
| | 1 |
| | 10,031 |
|
| Romulus, MI | | 303,760 |
| | 1 |
| | 19,351 |
|
| Three months ended June 30, 2017 | | 4,573,794 |
| | 21 |
| | 285,606 |
|
| Stone Mountain, GA | | 78,000 |
| | 1 |
| | 4,175 |
|
| York, PA | | 382,886 |
| | 1 |
| | 18,981 |
|
| Pittston, PA | | 437,446 |
| | 1 |
| | 23,950 |
|
| O'Fallon, MO | | 109,854 |
| | 1 |
| | 5,740 |
|
| Belleville, MI | | 160,464 |
| | 1 |
| | 8,641 |
|
| Columbus, OH | | 147,645 |
| | 1 |
| | 6,954 |
|
| Groveport, OH | | 320,657 |
| | 1 |
| | 13,643 |
|
| Las Vegas, NV | | 34,916 |
| | 1 |
| | 4,642 |
|
| Mooresville, NC | | 499,200 |
| | 1 |
| | 25,750 |
|
| Swedesboro, NJ | | 123,962 |
| | 1 |
| | 7,250 |
|
| Three months ended September 30, 2017 | | 2,295,030 |
| | 10 |
| | 119,726 |
|
| Council Bluffs, IA | | 90,000 |
| | 1 |
| | 6,600 |
|
| Hilliard, OH | | 237,500 |
| | 1 |
| | 8,717 |
|
| Fountain Inn, SC | | 264,385 |
| | 1 |
| | 18,200 |
|
| West Columbia, SC | | 200,000 |
| | 1 |
| | 10,000 |
|
| Avondale, AZ | | 186,643 |
| | 1 |
| | 16,500 |
|
| El Paso, TX | | 498,382 |
| | 2 |
| | 16,850 |
|
| Stafford, TX | | 68,300 |
| | 1 |
| | 8,100 |
|
| South Easton, MA | | 86,000 |
| | 1 |
| | 8,125 |
|
| Madison, WI | | 283,000 |
| | 2 |
| | 14,300 |
|
| Three months ended December 31, 2017 | | 1,914,210 |
| | 11 |
| | 107,392 |
|
| Year ended December 31, 2017 | | 11,117,656 |
| | 53 |
| | $ | 612,511 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year ended December 31, 2021 |
Market(1) | | Date Acquired | | Square Feet | | Number of Buildings | | Purchase Price
(in thousands) |
| Omaha/Council Bluffs, NE-IA | | January 21, 2021 | | 370,000 | | | 1 | | | $ | 24,922 | |
| Minneapolis/St. Paul, MN | | February 24, 2021 | | 80,655 | | | 1 | | | 10,174 | |
| Long Island, NY | | February 25, 2021 | | 64,224 | | | 1 | | | 8,516 | |
| Sacramento, CA | | February 25, 2021 | | 267,284 | | | 1 | | | 25,917 | |
| Little Rock/N. Little Rock | | March 1, 2021 | | 300,160 | | | 1 | | | 24,317 | |
| Cleveland, OH | | March 18, 2021 | | 170,000 | | | 1 | | | 6,382 | |
| Three months ended March 31, 2021 | | | | 1,252,323 | | | 6 | | | 100,228 | |
| Indianapolis, IN | | May 17, 2021 | | 154,440 | | | 1 | | | 13,655 | |
| Baltimore, MD | | May 17, 2021 | | 46,851 | | | 1 | | | 6,228 | |
| Detroit, MI | | June 1, 2021 | | 248,040 | | | 1 | | | 23,786 | |
| Green Bay, WI | | June 7, 2021 | | 152,000 | | | 1 | | | 7,249 | |
| Phoenix, AZ | | June 14, 2021 | | 41,504 | | | 1 | | | 8,670 | |
| Cleveland, OH | | June 17, 2021 | | 179,577 | | | 1 | | | 19,602 | |
| Reno/Sparks, NV | | June 30, 2021 | | 183,435 | | | 1 | | | 13,892 | |
| Washington, DC | | June 30, 2021 | | 193,420 | | | 1 | | | 17,521 | |
| Stockton/Modesto, CA | | June 30, 2021 | | 150,000 | | | 1 | | | 16,118 | |
| Three months ended June 30, 2021 | | | | 1,349,267 | | | 9 | | | 126,721 | |
| Chicago, IL | | July 19, 2021 | | 109,355 | | | 2 | | | 13,341 | |
| Chicago, IL | | July 20, 2021 | | 207,223 | | | 1 | | | 23,345 | |
| Columbia, SC | | July 27, 2021 | | 194,290 | | | 1 | | | 14,546 | |
| South Bay/San Jose, CA | | August 9, 2021 | | 75,954 | | | 1 | | | 26,820 | |
| Columbus, OH | | August 19, 2021 | | 814,265 | | | 2 | | | 75,422 | |
| Salt Lake City, UT | | August 19, 2021 | | 177,071 | | | 1 | | | 35,141 | |
| Greenville/Spartanburg, SC | | August 23, 2021 | | 209,461 | | | 1 | | | 15,317 | |
| Indianapolis, IN | | August 26, 2021 | | 78,600 | | | 1 | | | 5,707 | |
| Birmingham, AL | | August 26, 2021 | | 595,176 | | | 1 | | | 36,850 | |
| Sacramento, CA | | August 30, 2021 | | 114,597 | | | 1 | | | 15,388 | |
| Chicago, IL | | September 2, 2021 | | 95,482 | | | 1 | | | 11,799 | |
| Chicago, IL | | September 16, 2021 | | 506,096 | | | 4 | | | 50,661 | |
| Milwaukee/Madison, WI | | September 16, 2021 | | 157,438 | | | 1 | | | 13,650 | |
| Denver, CO | | September 24, 2021 | | 195,674 | | | 2 | | | 39,136 | |
| Milwaukee/Madison, WI | | September 28, 2021 | | 156,482 | | | 1 | | | 10,807 | |
| Chicago, IL | | September 29, 2021 | | 110,035 | | | 1 | | | 10,585 | |
| Boston, MA | | September 29, 2021 | | 247,056 | | | 2 | | | 28,704 | |
| Three months ended September 30, 2021 | | | | 4,044,255 | | | 24 | | | 427,219 | |
| Omaha/Council Bluffs, NE-IA | | October 6, 2021 | | 99,616 | | | 2 | | | 8,669 | |
| El Paso, TX | | October 8, 2021 | | 276,360 | | | 1 | | | 27,844 | |
| St. Louis, MO | | October 12, 2021 | | 121,223 | | | 1 | | | 12,991 | |
| South Bay/San Jose, CA | | October 12, 2021 | | 31,172 | | | 1 | | | 11,691 | |
| Chicago, IL | | October 13, 2021 | | 56,676 | | | 1 | | | 5,735 | |
| Dallas/Ft. Worth, TX | | October 13, 2021 | | 202,140 | | | 2 | | | 25,913 | |
| Sacramento, CA | | October 25, 2021 | | 82,174 | | | 1 | | | 10,275 | |
| Detroit, MI | | November 1, 2021 | | 126,720 | | | 1 | | | 18,291 | |
| Philadelphia, PA | | November 3, 2021 | | 385,399 | | | 1 | | | 25,909 | |
| West Michigan, MI | | November 9, 2021 | | 159,900 | | | 1 | | | 19,649 | |
| Philadelphia, PA | | November 9, 2021 | | 109,504 | | | 1 | | | 8,071 | |
| Minneapolis/St. Paul, MN | | November 10, 2021 | | 316,636 | | | 1 | | | 30,583 | |
| Chicago, IL | | November 12, 2021 | | 579,338 | | | 4 | | | 62,948 | |
| Philadelphia, PA | | November 12, 2021 | | 128,959 | | | 1 | | | 26,446 | |
| Sacramento, CA | | December 1, 2021 | | 67,200 | | | 1 | | | 7,721 | |
| Des Moines, IA | | December 9, 2021 | | 200,957 | | | 1 | | | 22,866 | |
| Greenville/Spartanburg, SC | | December 17, 2021 | | 231,626 | | | 1 | | | 31,169 | |
| Milwaukee/Madison, WI | | December 17, 2021 | | 192,800 | | | 1 | | | 23,327 | |
| Sacramento, CA | | December 21, 2021 | | 188,830 | | | 2 | | | 27,616 | |
Sacramento, CA(2) | | December 22, 2021 | | — | | | — | | | 28,930 | |
| Des Moines, IA | | December 23, 2021 | | 179,459 | | | 1 | | | 13,556 | |
| Philadelphia, PA | | December 23, 2021 | | 589,580 | | | 1 | | | 53,790 | |
| Nashville, TN | | December 23, 2021 | | 58,672 | | | 1 | | | 7,271 | |
| Westchester/S. Connecticut, CT/NY | | December 23, 2021 | | 167,700 | | | 1 | | | 16,700 | |
| Washington, DC | | December 28, 2021 | | 1,231,200 | | | 2 | | | 140,668 | |
| Minneapolis/St. Paul, MN | | December 28, 2021 | | 83,000 | | | 1 | | | 11,058 | |
| Chicago, IL | | December 29, 2021 | | 102,000 | | | 1 | | | 9,742 | |
| Omaha/Council Bluffs, NE-IA | | December 30, 2021 | | 178,368 | | | 1 | | | 17,888 | |
| Atlanta, GA | | December 31, 2021 | | 103,720 | | | 1 | | | 11,083 | |
| Three months ended December 31, 2021 | | | | 6,250,929 | | | 35 | | | 718,400 | |
| Year ended December 31, 2021 | | | | 12,896,774 | | | 74 | | | $ | 1,372,568 | |
(1) As defined by CoStar Realty Information Inc. If the building is located outside of a CoStar defined market, the city and state is reflected.
(2) The Company acquired a building under development.
|
| | | | | | | | | | |
| Year ended December 31, 2016 |
| Location of Property | | Square Feet | | Buildings | | Purchase Price (in thousands) |
| Biddeford, ME | | 265,126 |
| | 2 |
| | $ | 12,452 |
|
| Fairfield, OH | | 206,448 |
| | 1 |
| | 5,330 |
|
| Mascot, TN | | 130,560 |
| | 1 |
| | 4,500 |
|
| Erlanger, KY | | 108,620 |
| | 1 |
| | 5,600 |
|
| Three months ended March 31, 2016 | | 710,754 |
| | 5 |
| | 27,882 |
|
| West Chicago, IL | | 249,470 |
| | 1 |
| | 8,663 |
|
| Visalia, CA | | 635,281 |
| | 1 |
| | 27,921 |
|
| Norcross, GA | | 152,036 |
| | 1 |
| | 5,508 |
|
| Reading, PA | | 248,000 |
| | 1 |
| | 9,594 |
|
| Charlotte, NC | | 104,852 |
| | 1 |
| | 6,517 |
|
| Three months ended June 30, 2016 | | 1,389,639 |
| | 5 |
| | 58,203 |
|
| Columbia, SC | | 185,600 |
| | 1 |
| | 7,300 |
|
| Graniteville, SC | | 450,000 |
| | 1 |
| | 15,675 |
|
| Fountain Inn, SC | | 168,087 |
| | 1 |
| | 7,025 |
|
| Langhorne, PA | | 217,000 |
| | 2 |
| | 11,250 |
|
| Warren, MI | | 268,000 |
| | 1 |
| | 18,700 |
|
| New Castle, DE | | 485,987 |
| | 1 |
| | 27,500 |
|
| Westborough, MA | | 121,700 |
| | 1 |
| | 7,885 |
|
| Cedar Hill, TX | | 420,000 |
| | 1 |
| | 19,100 |
|
| Forest Park, GA | | 799,200 |
| | 2 |
| | 24,915 |
|
| Rock Hill, SC | | 315,520 |
| | 1 |
| | 9,850 |
|
| Gardiner, ME | | 265,000 |
| | 1 |
| | 16,800 |
|
| Three months ended September 30, 2016 | | 3,696,094 |
| | 13 |
| | 166,000 |
|
| Langhorne, PA | | 172,647 |
| | 1 |
| | 9,500 |
|
| Grove City, OH | | 175,512 |
| | 1 |
| | 5,400 |
|
| Olathe, KS | | 496,373 |
| | 1 |
| | 23,194 |
|
| Houston, TX | | 223,599 |
| | 1 |
| | 13,444 |
|
| Itasca, IL | | 202,000 |
| | 1 |
| | 20,641 |
|
| Kenosha, WI | | 175,052 |
| | 1 |
| | 5,975 |
|
| Oklahoma City, OK | | 80,400 |
| | 1 |
| | 3,400 |
|
| San Antonio, TX | | 247,861 |
| | 1 |
| | 12,050 |
|
| Wood Dale, IL | | 137,607 |
| | 1 |
| | 8,565 |
|
| Hartland, WI | | 121,050 |
| | 1 |
| | 7,400 |
|
| Earth City, MO | | 116,783 |
| | 1 |
| | 5,450 |
|
| Spartanburg, SC | | 572,038 |
| | 1 |
| | 20,762 |
|
| West Columbia, SC | | 119,852 |
| | 1 |
| | 5,725 |
|
| West Chicago, IL | | 305,874 |
| | 5 |
| | 10,400 |
|
| DeForest, WI | | 254,431 |
| | 1 |
| | 7,800 |
|
| Montgomery, AL | | 332,000 |
| | 1 |
| | 8,750 |
|
| West Chester, OH | | 269,868 |
| | 1 |
| | 11,150 |
|
| West Columbia, SC | | 176,400 |
| | 1 |
| | 11,850 |
|
| Brooklyn Park, MN | | 200,720 |
| | 1 |
| | 20,532 |
|
| East Windsor, CT | | 126,111 |
| | 1 |
| | 7,725 |
|
| Three months ended December 31, 2016 | | 4,506,178 |
| | 24 |
| | 219,713 |
|
| Year ended December 31, 2016 | | 10,302,665 |
| | 47 |
| | $ | 471,798 |
|
The following table summarizes the allocation of the consideration paid at the date of acquisition during the years ended December 31, 20172022 and 2016, respectively,2021, for the acquired assets and liabilities in connection with the acquisitions identified in the tables above.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Year ended December 31, 2022 | | Year ended December 31, 2021 |
| Acquired Assets and Liabilities | | Purchase price (in thousands) | | Weighted average amortization period (years) of intangibles at acquisition | | Purchase price (in thousands) | | Weighted average amortization period (years) of intangibles at acquisition |
| Land | | $ | 39,346 | | | N/A | | $ | 137,827 | | | N/A |
| Buildings | | 360,209 | | | N/A | | 988,456 | | | N/A |
| Tenant improvements | | 2,640 | | | N/A | | 7,356 | | | N/A |
| Building and land improvements | | 19,589 | | | N/A | | 58,504 | | | N/A |
| Construction in progress | | — | | | N/A | | 24,581 | | | N/A |
| Other assets | | 2,134 | | | N/A | | 1,004 | | | N/A |
| Operating lease right-of-use assets | | 3,541 | | | N/A | | 5,627 | | | N/A |
| Deferred leasing intangibles - In-place leases | | 34,321 | | | 7.9 | | 103,051 | | | 7.8 |
| Deferred leasing intangibles - Tenant relationships | | 18,418 | | | 11.1 | | 52,579 | | | 10.6 |
| Deferred leasing intangibles - Above market leases | | 2,456 | | | 11.6 | | 10,764 | | | 11.4 |
| Deferred leasing intangibles - Below market leases | | (6,021) | | | 7.5 | | (10,691) | | | 6.1 |
| Operating lease liabilities | | (3,541) | | | N/A | | (5,627) | | | N/A |
| | | | | | | | |
| Below market assumed debt adjustment | | — | | | N/A | | 161 | | | 18.8 |
| | | | | | | | |
| Tenant prepaid rent | | (445) | | | N/A | | (1,024) | | | N/A |
| Total purchase price | | 472,647 | | | | | 1,372,568 | | | |
| Less: Mortgage note assumed | | — | | | | | (5,103) | | | |
| Net assets acquired | | $ | 472,647 | | | | | $ | 1,367,465 | | | |
|
| | | | | | | | | | | | |
| | | Year ended December 31, 2017 | | Year ended December 31, 2016 |
| Acquired Assets and Liabilities | | Purchase price (in thousands) | | Weighted average amortization period (years) of intangibles at acquisition | | Purchase price (in thousands) | | Weighted average amortization period (years) of intangibles at acquisition |
| Land | | $ | 59,004 |
| | N/A | | $ | 59,630 |
| | N/A |
| Buildings | | 413,829 |
| | N/A | | 283,758 |
| | N/A |
| Tenant improvements | | 10,044 |
| | N/A | | 8,670 |
| | N/A |
| Building and land improvements | | 31,848 |
| | N/A | | 29,073 |
| | N/A |
| Deferred leasing intangibles - In-place leases | | 62,493 |
| | 8.3 | | 62,533 |
| | 8.2 |
| Deferred leasing intangibles - Tenant relationships | | 27,056 |
| | 10.8 | | 30,446 |
| | 10.4 |
| Deferred leasing intangibles - Above market leases | | 14,375 |
| | 10.6 | | 10,576 |
| | 9.2 |
| Deferred leasing intangibles - Below market leases | | (5,222 | ) | | 8.5 | | (12,971 | ) | | 8.5 |
| Deferred leasing intangibles - Above market ground leases | | (916 | ) | | 49.0 | | — |
| | N/A |
| Above market assumed debt adjustment | | — |
| | N/A | | (75 | ) | | 7.2 |
| Other assets | | — |
| | N/A | | 158 |
| | N/A |
| Total purchase price | | 612,511 |
| | | | 471,798 |
| | |
| Less: Mortgage note assumed | | — |
| | | | (4,037 | ) | | |
| Net assets acquired | | $ | 612,511 |
| | | | $ | 467,761 |
| | |
On May 31, 2017, the Company acquired a property located in San Diego, CA for approximately $19.4 million. As partial consideration for the property acquired, the Company granted 687,827 Other Common Units with a fair value of approximately $18.6 million. For a discussion of the method used to determine the fair value of the Other Common Units issued, see Note 7.
On September 29, 2016,February 25, 2021, the Company assumed a mortgage note of approximately $4.0$5.1 million in connection with the acquisition of the property located in Rock Hill, SC.Long Island, NY. For a discussion of the method used to determine the fair value of the mortgage notes,note, see Note 4.
Dispositions
The following table below sets forthsummarizes the results of operationsCompany’s dispositions for the years ended December 31, 20172022, 2021, and 2016 for the properties acquired during the years ended December 31, 2017 and 2016, respectively, included in the Company’s Consolidated Statements2020.
| | | | | | | | | | | | | | | | | | | | |
| | Year ended December 31, |
| Sales of rental property, net (dollars in thousands) | | 2022 | | 2021 | | 2020 |
| Number of buildings | | 8 | | 22 | | 7 |
| Number of land parcels | | 1 | | — | | | — | |
| Building square feet (in millions) | | 1.8 | | 2.7 | | 3.4 |
2022 dispositions contribution to net income(1) | | $ | 1,008 | | | $ | 4,699 | | | $ | 4,764 | |
2021 dispositions contribution to net income(1) | | $ | — | | | $ | 862 | | | $ | 3,645 | |
2020 dispositions contribution to net income(1) | | $ | — | | | $ | — | | | $ | 1,788 | |
| Proceeds from sales of rental property, net | | $ | 135,348 | | | $ | 187,972 | | | $ | 273,560 | |
| Net book value | | $ | 77,861 | | | $ | 89,992 | | | $ | 137,827 | |
| Gain on the sales of rental property, net | | $ | 57,487 | | | $ | 97,980 | | | $ | 135,733 | |
(1) Exclusive of Operations from the date of acquisition.
|
| | | | | | | | |
| Results of Operations (in thousands) | | Year ended December 31, 2017 | | Year ended December 31, 2016 |
| Total revenue | | $ | 27,918 |
| | $ | 13,105 |
|
| Property acquisition costs | | $ | 5,181 |
| | $ | 4,386 |
|
| Net loss | | $ | 1,473 |
| | $ | 3,560 |
|
The following table sets forth pro forma information for the years ended December 31, 2017 and 2016. The below pro forma information does not purport to represent what the actual results of operations of the Company would have been had the acquisitions outlined above occurred on the first day of the applicable reporting period, nor do they purport to predict the results of operations of future periods. The pro forma information has not been adjusted for property sales.
|
| | | | | | | | |
Pro Forma (in thousands)(1) | | Year ended December 31, 2017 | | Year ended December 31, 2016 |
| Total revenue | | $ | 326,994 |
| | $ | 321,512 |
|
Net income(2) | | $ | 40,519 |
| | $ | 24,520 |
|
| Net income attributable to common stockholders | | $ | 29,101 |
| | $ | 9,715 |
|
| |
(1) | The unaudited pro forma information for the years ended December 31, 2017 and 2016 is presented as if the properties acquired during the years ended December 31, 2017 and 2016 were completed on January 1, 2016 and January 1, 2015, respectively. |
| |
(2) | The net income for the year ended December 31, 2017 excludes approximately $5.2 million of property acquisition costs related to the acquisition of buildings that closed during the year ended December 31, 2017, and the net income for the year ended December 31, 2016 was adjusted to include these acquisition costs. Net income for the year ended December 31, 2016 excludes approximately $4.4 million of property acquisition costs related to the acquisition of buildings that closed during the year ended December 31, 2016. |
Dispositions
During the year ended December 31, 2017, the Company sold 11 buildings comprised of approximately 1.9 million square feet with a net book value of approximately $40.9 million to third parties. These buildings contributed approximately $3.8 million, $7.0 million and $6.9 million to revenue for the years ended December 31, 2017, 2016 and 2015, respectively. These buildings contributed approximately $1.5 million, $1.5 million and $1.7 million to net income (exclusive ofany loss on impairmentimpairments, gain on involuntary conversion, and gain on the sales of rental property, net) for the years ended December 31, 2017, 2016 and 2015, respectively. Net proceeds from the sales of rental property were approximately $65.1 million and the Company recognized a gain on the sales of rental property, net of approximately $24.2 million for the year ended December 31, 2017. net.
All of the dispositions were sold to third parties and were accounted for under the full accrual method.
During the year ended December 31, 2016, the Company sold 24 buildings comprised of approximately 4.2 million square feet with a net book value of approximately $90.3 million to third parties. These buildings contributed approximately $11.2 million and $15.6 million to revenue (exclusive of termination income and acceleration of straight line rent) for the years ended December 31, 2016 and 2015, respectively. These buildings contributed approximately $1.3 million and $1.3 million to net income (exclusive of loss on impairments, loss on extinguishment of debt, gain on the sales of rental property, net, termination income, and acceleration of straight line rent and lease intangibles) for the years ended December 31, 2016 and 2015, respectively. Net proceeds from the sales of rental property were approximately $152.1 million and the Company recognized a gain on the sales of rental property, net of approximately $61.8 million for the year ended December 31, 2016. All of the dispositions were accounted for under the full accrual method.
During the year ended December 31, 2015, the Company sold six buildings comprised of approximately 0.8 million square feet with a net book value of approximately $17.2 million to third parties. These buildings contributed approximately $2.0 million to revenue (exclusive of termination income and acceleration of straight line rent and above market rent) for the year ended December 31, 2015. These buildings contributed approximately $0.8 million to net income (exclusive of gain on the sales of rental property, net, loss on impairments, termination income and acceleration of straight line rent and above market rent) for the year ended December 31, 2015. Net proceeds from the sales of rental property were approximately $22.2 million and the Company recognized a gain on the sales of rental property, net of approximately $5.0 million for the year ended December 31, 2015. All of the dispositions were accounted for under the full accrual method.
Assets Held for Sale net
As of December 31, 2017,2022, the related land and building and improvements, net and deferred leasing intangibles, net, of approximately $4.2 million, $13.6$0.6 million and $2.1$4.1 million, respectively, for two buildings located in Charlotte, NC wereone building was classified as assets held for sale, net on the accompanying Consolidated Balance Sheets. These buildingsThis building contributed approximately $2.9$0.4 million, $2.6 million and $2.2 million to revenue for the years ended December 31, 2017, 2016 and 2015, respectively. These buildings contributed approximately $0.9 million, $0.3$0.4 million, and $0.3 million to net income (exclusive of gain on involuntary conversion) forduring the years ended December 31, 2017, 20162022, 2021 and 2015,2020, respectively. Subsequent to December 31, 2022, in January 2023, this building was sold to a third party.
Gain on Involuntary Conversion
During the year ended December 31, 2017, the Company wrote down a building in the amount of approximately $0.8 million, related to the involuntary conversion event that occurred on September 1, 2016. The cumulative write down of the building since the involuntary conversion event was approximately $1.5 million as of December 31, 2017. The Company recognized a gain on involuntary conversion of approximately $0.3 million,$0, $0, and $0$2.2 million during the years ended December 31, 2017, 20162022, 2021 and 2015,2020, respectively. The gain on involuntary conversion during the year ended December 31, 2020 related to an eminent domain taking of a portion of a parcel of land.
Loss on Impairments
The following table summarizes the Company'sCompany’s loss on impairments for assets held and used during the yearyears ended December 31, 2017.
|
| | | | | | | | | | | | | | |
| Property Location | | Buildings | | Event or Change in Circumstance Leading to Impairment Evaluation(1) | | Valuation technique utilized to estimate fair value | | Fair Value(2) | | Loss on Impairments |
| (in thousands) |
| Cincinnati, OH | | 1 | | Market leasing conditions | (3) | Discounted cash flows | | | | |
| Three months ended December 31, 2017 | | | | $ | 1,543 |
| | $ | 1,879 |
|
| Year ended December 31, 2017 | | | | $ | 1,543 |
| | $ | 1,879 |
|
| |
(1) | The Company tested the asset group for impairment utilizing2022 and 2020. The Company did not recognize a probability weighted recovery analysis of certain scenarios, and it was determined that the carrying value of the property and intangibles were not recoverable from the estimated future undiscounted cash flows. |
| |
(2) | The estimated fair value of the property is based on Level 3 inputs and is a non-recurring fair value measurement. |
| |
(3) | Level 3 inputs used to determine fair value for the property impaired for the three months ended December 31, 2017: discount rate of 10.0% and exit capitalization rate of 10.0%. |
The following table summarizes the Company's loss on impairments for assets held and used during the year ended December 31, 2016.2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Market (1) | | Buildings | | Event or Change in Circumstance Leading to Impairment Evaluation(2) | | Valuation technique utilized to estimate fair value | | Fair Value(3) | | Loss on Impairments |
| (in thousands) |
| Hartford, CT | | 1 | | Change in estimated hold period | | Discounted cash flows | (4) | $ | 834 | | | $ | 1,783 | |
| | | | | | |
| Year ended December 31, 2022 | | | | | | $ | 1,783 | |
| Williamsport, PA | | 1 | | Change in estimated hold period | (5) | Discounted cash flows | (6) | $ | 5,019 | | | $ | 3,172 | |
| | | | | | |
| Albion, IN | | 5 | | Change in estimated hold period | (7) | Discounted cash flows | (8) | $ | 1,252 | | | $ | 2,405 | |
| | | | | | |
| Year ended December 31, 2020 | | | | | | $ | 5,577 | |
| | | | | | | | | | |
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| Property Location | | Buildings | | Event or Change in Circumstance Leading to Impairment Evaluation(1) | | Valuation technique utilized to estimate fair value | | Fair Value(2) | | Loss on Impairments |
| (in thousands) |
| Fairfield, VA | | 1 | | Change in estimated hold period | (3) | Executed purchase and sale agreement | |
|
| |
|
|
| Jackson, MS | | 1 | | Change in estimated hold period | (3) | Executed purchase and sale agreement | |
|
| |
|
|
| Jackson, MS | | 1 | | Change in estimated hold period | (3) | Executed purchase and sale agreement | |
|
| |
|
|
| Mishawaka, IN | | 1 | | Market leasing conditions | (3) | Discounted cash flows | (5) |
|
| |
|
|
| Newark, DE | | 1 | | Market leasing conditions | | Discounted cash flows | (5) |
|
| |
|
|
| Seville, OH | | 2 | | Market leasing conditions | | Discounted cash flows | (5) |
|
| |
|
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| Sparks, MD | | 2 | | Change in estimated hold period | (4) | Discounted cash flows | (5) |
|
| |
|
|
| Three months ended June 30, 2016 | | | | $ | 10,598 |
| | $ | 11,231 |
|
| Boardman, OH | | 1 | | Change in estimated hold period | (4) | Discounted cash flows | (6) |
|
| |
|
|
| Holland, MI | | 1 | | Change in estimated hold period | (4) | Discounted cash flows | (6) |
|
| |
|
|
| Pensacola, FL | | 1 | | Change in estimated hold period | (3) | Discounted cash flows | (6) |
|
| |
|
|
| Three months ended December 31, 2016 | | | | $ | 4,360 |
| | $ | 5,614 |
|
| Year ended December 31, 2016 | | | | $ | 14,958 |
| | $ | 16,845 |
|
| |
(1) | The Company tested the asset group for impairment utilizing a probability weighted recovery analysis of certain scenarios, and it was determined that the carrying value of the property and intangibles were not recoverable from the estimated future undiscounted cash flows. |
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(2) | The estimated fair value of the property is based on Level 3 inputs and is a non-recurring fair value measurement. |
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(3) | (2)The Company tested the asset group for impairment utilizing a probability weighted recovery analysis of certain scenarios, and it was determined that the carrying value of the property and intangibles were not recoverable from the estimated future undiscounted cash flows. (3)The estimated fair value of the property is based on Level 3 inputs and is a non-recurring fair value measurement. Level 3 is defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. (4)Level 3 inputs used to determine fair value for the property impaired: discount rate of 10.0% and exit capitalization rate of 8.5%. (5)This property was sold during the year ended December 31, 2016. |
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(4) | This property was sold during the year ended December 31, 2017. |
| |
(5) | Level 3 inputs used to determine fair value for the properties impaired for the three months ended June 30, 2016: discount rates ranged from 8.5% to 13.0% and exit capitalization rates ranged from 8.5% to 12.0%. |
| |
(6) | Level 3 inputs used to determine fair value for the properties impaired for the three months ended December 31, 2016: discount rate of 12.0% and exit capitalization rates ranging from 10.0% to 12.0%. |
The following table summarizes the Company's loss on impairments for assets held and used during the year ended December 31, 2015.2022.
(6)Level 3 inputs used to determine fair value for the property impaired: discount rate of 10.5% and exit capitalization rate of 10.0%. |
| | | | | | | | | | | | | | |
| Property Location | | Buildings | | Event or Change in Circumstance Leading to Impairment Evaluation(1) | | Valuation technique utilized to estimate fair value | | Fair Value(2) | | Loss on Impairments |
| (in thousands) |
| Hazelwood, MO | | 1 | | Change in estimated hold period | (3) | Executed purchase and sale agreement | |
|
| |
|
|
| Three months ended June 30, 2015 | | | | $ | 4,400 |
| | $ | 2,645 |
|
| Canton, OH | | 1 | | Change in estimated hold period | (4) | Discounted cash flows | (6) |
|
| |
|
|
| Jefferson, NC | | 1 | | Change in estimated hold period | (3) | Market transactions for comparable properties | |
|
| |
|
|
| Milwaukee, WI | | 1 | | Change in estimated hold period | (3) | Market transactions for comparable properties | |
|
| |
|
|
| Three months ended September 30, 2015 | | | | 6,515 |
| | 5,733 |
|
| Canton, OH | | 1 | | Change in estimated hold period | (4) | Market transactions for comparable properties | (7) |
|
| |
|
|
| Cincinnati, OH | | 1 | | Change in estimated hold period | | Discounted cash flows | (8) |
|
| |
|
|
| Dayton, OH | | 1 | | Change in estimated hold period | (4) | Discounted cash flows | (8) |
|
| |
|
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| Gloversville, NY | | 1 | | Change in estimated hold period | (4) | Discounted cash flows | (8) |
|
| |
|
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| Jackson, MS | | 1 | | Change in estimated hold period | (4) | Discounted cash flows | (8) |
|
| |
|
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| Jackson, MS | | 1 | | Change in estimated hold period | (4) | Discounted cash flows | (8) |
|
| |
|
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| Rapid City, SD | | 1 | | Change in estimated hold period | | Discounted cash flows | (8) |
|
| |
|
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| Sergeant Bluff, IA | | 1 | | Change in estimated hold period | | Discounted cash flows | (8) |
|
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|
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| Sparks, MD | | 2 | | Change in estimated hold period | (5) | Discounted cash flows | (8) |
|
| |
|
|
| Three months ended December 31, 2015 | | | | 22,238 |
| | 20,894 |
|
| Year ended December 31, 2015 | | | | $ | 33,153 |
| | $ | 29,272 |
|
| |
(1) | The Company tested the asset group for impairment utilizing a probability weighted recovery analysis of certain scenarios, and it was determined that the carrying value of the property and intangibles were not recoverable from the estimated future undiscounted cash flows. |
| |
(2) | The estimated fair value of the property is based on Level 3 inputs and is a non-recurring fair value measurement. |
| |
(3) | This property was sold during the year ended December 31, 2015. |
| |
(4) | This property was sold during the year ended December 31, 2016. |
| |
(5) | This property was sold during the year ended December 31, 2017. |
| |
(6) | Level 3 inputs used to determine fair value: discount rate of 9.0% and exit capitalization rate of 12.0%
|
| |
(7) | The future cash flows of the existing building were not estimated to generate a net positive cash flow. Accordingly, the property was valued at its highest and best use as a vacant/developable land parcel. Market transactions for comparable properties were utilized to estimate a land value. Estimated fair market value of the property represents the land value, less estimated expense of demolition of the building, plus estimated salvage value. |
| |
(8) | Level 3 inputs used to determine fair value for the properties impaired for the three months ended December 31, 2015: discount rates ranged from 8.5% to 16.0% and exit capitalization rates ranged from 8.0% to 14.0%. |
(8)Level 3 inputs used to determine fair value for the property impaired: discount rate of 11.0% and exit capitalization rate of 10.0%.
Deferred Leasing Intangibles
The following table summarizes the deferred leasing intangibles, net on the accompanying Consolidated Balance Sheets as of December 31, 20172022 and 2016.2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2022 | | December 31, 2021 |
| Deferred Leasing Intangibles (in thousands) | | Gross | | Accumulated Amortization | | Net | | Gross | | Accumulated Amortization | | Net |
| Above market leases | | $ | 86,172 | | | $ | (34,954) | | | $ | 51,218 | | | $ | 91,565 | | | $ | (32,110) | | | $ | 59,455 | |
| Other intangible lease assets | | 751,611 | | | (293,894) | | | 457,717 | | | 758,131 | | | (249,928) | | | 508,203 | |
| Total deferred leasing intangible assets | | $ | 837,783 | | | $ | (328,848) | | | $ | 508,935 | | | $ | 849,696 | | | $ | (282,038) | | | $ | 567,658 | |
| | | | | | | | | | | | |
| Below market leases | | $ | 57,020 | | | $ | (24,593) | | | $ | 32,427 | | | $ | 56,857 | | | $ | (21,136) | | | $ | 35,721 | |
| Total deferred leasing intangible liabilities | | $ | 57,020 | | | $ | (24,593) | | | $ | 32,427 | | | $ | 56,857 | | | $ | (21,136) | | | $ | 35,721 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | December 31, 2017 | | December 31, 2016 |
| Deferred Leasing Intangibles (in thousands) | | Gross | | Accumulated Amortization | | Net | | Gross | | Accumulated Amortization | | Net |
| Above market leases | | $ | 78,558 |
| | $ | (36,810 | ) | | $ | 41,748 |
| | $ | 70,668 |
| | $ | (32,868 | ) | | $ | 37,800 |
|
| Other intangible lease assets | | 515,337 |
| | (243,832 | ) | | 271,505 |
| | 461,321 |
| | (204,588 | ) | | 256,733 |
|
| Total deferred leasing intangible assets | | $ | 593,895 |
| | $ | (280,642 | ) | | $ | 313,253 |
| | $ | 531,989 |
| | $ | (237,456 | ) | | $ | 294,533 |
|
| | | | | | | | | | | | | |
| Below market leases | | $ | 34,776 |
| | $ | (13,555 | ) | | $ | 21,221 |
| | $ | 30,791 |
| | $ | (10,450 | ) | | $ | 20,341 |
|
| Total deferred leasing intangible liabilities | | $ | 34,776 |
| | $ | (13,555 | ) | | $ | 21,221 |
| | $ | 30,791 |
| | $ | (10,450 | ) | | $ | 20,341 |
|
The following table sets forthsummarizes the amortization expense and the net decreaseincrease (decrease) to rental income for the amortization of deferred leasing intangibles during the years ended December 31, 2017, 20162022, 2021 and 2015.2020.
| | | | | | | | | | | | | | | | | | | | |
| | | Year ended December 31, |
| Deferred Leasing Intangibles Amortization (in thousands) | | 2022 | | 2021 | | 2020 |
| Net increase (decrease) to rental income related to above and below market lease amortization | | $ | 329 | | | $ | (2,073) | | | $ | (4,363) | |
| Amortization expense related to other intangible lease assets | | $ | 95,901 | | | $ | 88,729 | | | $ | 83,160 | |
|
| | | | | | | | | | | | |
| | | Year ended December 31, |
| Deferred Leasing Intangibles Amortization (in thousands) | | 2017 | | 2016 | | 2015 |
| Net decrease to rental income related to above and below market lease amortization | | $ | 4,583 |
| | $ | 6,213 |
| | $ | 8,526 |
|
| Amortization expense related to other intangible lease assets | | $ | 72,936 |
| | $ | 66,291 |
| | $ | 60,834 |
|
The following table sets forthsummarizes the amortization of deferred leasing intangibles over the next five calendar years as of December 31, 2017.2022.
| | | | | | | | | | | | | | |
| Year | | Amortization Expense Related to Other Intangible Lease Assets (in thousands) | | Net Increase (Decrease) to Rental Income Related to Above and Below Market Lease Amortization (in thousands) |
| 2023 | | $ | 84,098 | | | $ | 249 | |
| 2024 | | $ | 72,640 | | | $ | (418) | |
| 2025 | | $ | 63,443 | | | $ | (252) | |
| 2026 | | $ | 54,351 | | | $ | (968) | |
| 2027 | | $ | 42,957 | | | $ | (1,778) | |
|
| | | | | | | | |
| Year | | Amortization Expense Related to Other Intangible Lease Assets (in thousands) | | Net Decrease to Rental Income Related to Above and Below Market Lease Amortization (in thousands) |
| 2018 | | $ | 63,957 |
| | $ | 4,475 |
|
| 2019 | | $ | 49,758 |
| | $ | 3,881 |
|
| 2020 | | $ | 39,765 |
| | $ | 3,466 |
|
| 2021 | | $ | 29,093 |
| | $ | 2,140 |
|
| 2022 | | $ | 22,037 |
| | $ | 1,172 |
|
4. Debt
The following table sets forth a summary ofsummarizes the Company’s outstanding indebtedness, including borrowings under the Company’s unsecured credit facility, unsecured term loans, unsecured notes, and mortgage notes as of December 31, 20172022 and 2016.2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Loan | | Principal Outstanding as of December 31, 2022 (in thousands) | | Principal Outstanding as of December 31, 2021 (in thousands) | | Interest
Rate(1)(2) | | Maturity Date | | Prepayment Terms(3) |
| Unsecured credit facility: | | | | | | | | | | |
Unsecured Credit Facility(4) | | $ | 175,000 | | | $ | 296,000 | | | Term SOFR + 0.855% | | October 23, 2026 | | i |
| Total unsecured credit facility | | 175,000 | | | 296,000 | | | | | | | |
| | | | | | | | | | |
| Unsecured term loans: | | | | | | | | | | |
Unsecured Term Loan D(5) | | — | | | 150,000 | | | 2.85 | % | | January 4, 2023 | | i |
Unsecured Term Loan E(5) | | — | | | 175,000 | | | 3.77 | % | | January 15, 2024 | | i |
| Unsecured Term Loan F | | 200,000 | | | 200,000 | | | 2.94 | % | | January 12, 2025 | | i |
| Unsecured Term Loan G | | 300,000 | | | 300,000 | | | 1.09 | % | | February 5, 2026 | | i |
| Unsecured Term Loan A | | 150,000 | | | 150,000 | | | 2.14 | % | | March 15, 2027 | | i |
| Unsecured Term Loan H | | 187,500 | | | — | | | 3.75 | % | | January 25, 2028 | | i |
| Unsecured Term Loan I | | 187,500 | | | — | | | 2.89 | % | | January 25, 2028 | | i |
| Total unsecured term loans | | 1,025,000 | | | 975,000 | | | | | | | |
| Total unamortized deferred financing fees and debt issuance costs | | (4,560) | | | (4,423) | | | | | | | |
| Total carrying value unsecured term loans, net | | 1,020,440 | | | 970,577 | | | | | | | |
| | | | | | | | | | |
| Unsecured notes: | | | | | | | | | | |
Series F Unsecured Notes(6) | | 100,000 | | | 100,000 | | | 3.98 | % | | January 5, 2023 | | ii |
| Series A Unsecured Notes | | 50,000 | | | 50,000 | | | 4.98 | % | | October 1, 2024 | | ii |
| Series D Unsecured Notes | | 100,000 | | | 100,000 | | | 4.32 | % | | February 20, 2025 | | ii |
| Series G Unsecured Notes | | 75,000 | | | 75,000 | | | 4.10 | % | | June 13, 2025 | | ii |
| Series B Unsecured Notes | | 50,000 | | | 50,000 | | | 4.98 | % | | July 1, 2026 | | ii |
| Series C Unsecured Notes | | 80,000 | | | 80,000 | | | 4.42 | % | | December 30, 2026 | | ii |
| Series E Unsecured Notes | | 20,000 | | | 20,000 | | | 4.42 | % | | February 20, 2027 | | ii |
| Series H Unsecured Notes | | 100,000 | | | 100,000 | | | 4.27 | % | | June 13, 2028 | | ii |
| Series I Unsecured Notes | | 275,000 | | | 275,000 | | | 2.80 | % | | September 29, 2031 | | ii |
| Series K Unsecured Notes | | 400,000 | | | — | | | 4.12 | % | | June 28, 2032 | | ii |
| Series J Unsecured Notes | | 50,000 | | | 50,000 | | | 2.95 | % | | September 28, 2033 | | ii |
| Total unsecured notes | | 1,300,000 | | | 900,000 | | | | | | | |
| Total unamortized deferred financing fees and debt issuance costs | | (4,558) | | | (3,059) | | | | | | | |
| Total carrying value unsecured notes, net | | 1,295,442 | | | 896,941 | | | | | | | |
| | | | | | | | | | |
| Mortgage notes (secured debt): | | | | | | | | | | |
| Wells Fargo Bank, National Association CMBS Loan | | — | | | 46,610 | | | 4.31 | % | | December 1, 2022 | | iii |
| Thrivent Financial for Lutherans | | 3,296 | | | 3,430 | | | 4.78 | % | | December 15, 2023 | | iv |
| United of Omaha Life Insurance Company | | 4,744 | | | 4,943 | | | 3.71 | % | | October 1, 2039 | | ii |
| Total mortgage notes | | 8,040 | | | 54,983 | | | | | | | |
| Net unamortized fair market value discount | | (137) | | | (136) | | | | | | | |
| Total unamortized deferred financing fees and debt issuance costs | | (5) | | | (103) | | | | | | | |
| Total carrying value mortgage notes, net | | 7,898 | | | 54,744 | | | | | | | |
Total / weighted average interest rate(6) | | $ | 2,498,780 | | | 2,218,262 | | | 3.39 | % | | | | |
(1)Interest rate as of December 31, 2022. At December 31, 2022, the one-month Term Secured Overnight Financing Rate (“Term SOFR”) was 4.35806%. The current interest rate is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums or discounts. The spread over the applicable rate for the Company’s unsecured credit facility and unsecured term loans is based on the Company’s debt rating and leverage ratio, as defined in the respective loan agreements.
(2)The unsecured credit facility has a stated rate of one-month Term SOFR plus a 0.10% adjustment and a spread of 0.775%, less a sustainability-related interest rate adjustment of 0.02%. The unsecured term loans A, F, and G have a stated interest rate of one-month Term SOFR plus a 0.10% adjustment and a spread of 0.85%, less a sustainability-related interest rate adjustment of 0.02%. The unsecured term loans H and I have a stated interest rate of one-month Term SOFR plus a 0.10% adjustment and a spread of 0.85%. As of December 31, 2022, one-month Term SOFR for the Unsecured Term Loans A, F, G, H, and I was swapped to a fixed rate of 1.31%, 2.11%, 0.26%, 2.90%, and 2.04%, respectively (which includes the 0.10% adjustment). One-month Term SOFR for the Unsecured Term Loan G will be swapped to a fixed rate of 0.95% effective April 18, 2023. One-month Term SOFR for the Unsecured Term Loan I will be swapped to a fixed rate of 2.66% effective January 4, 2023. One-month Term SOFR for the Unsecured Term Loan H will be swapped to a fixed rate of 2.50% effective January 12, 2024.
(3)Prepayment terms consist of (i) pre-payable with no penalty; (ii) pre-payable with penalty; (iii) pre-payable without penalty three months prior to the maturity date, subject to defeasance; and (iv) pre-payable without penalty three months prior to the maturity date.
|
| | | | | | | | | | | | | | | |
| Loan | | Principal Outstanding as of December 31, 2017 (in thousands) | | Principal Outstanding as of December 31, 2016
(in thousands) | | Interest
Rate (1) | | Maturity Date | | Prepayment Terms (2) |
| Unsecured credit facility: | | | | | | | | | | |
Unsecured Credit Facility (3) | | $ | 271,000 |
| | $ | 28,000 |
| | L + 1.15% |
| | Dec-18-2019 | | i |
| Total unsecured credit facility | | 271,000 |
| | 28,000 |
| | |
| | | | |
| | | | | | | | | | | |
| Unsecured term loans: | | |
| | | | |
| | | | |
| Unsecured Term Loan C | | 150,000 |
| | 150,000 |
| | L + 1.30% |
| | Sep-29-2020 | | i |
| Unsecured Term Loan B | | 150,000 |
| | 150,000 |
| | L + 1.30% |
| | Mar-21-2021 | | i |
| Unsecured Term Loan A | | 150,000 |
| | 150,000 |
| | L + 1.30% |
| | Mar-31-2022 | | i |
Unsecured Term Loan D (4) | | — |
| | — |
| | L + 1.30% |
| | Jan-04-2023 | | i |
| Total unsecured term loans | | 450,000 |
| | 450,000 |
| | | | | | |
| Less: Total unamortized deferred financing fees and debt issuance costs | | (3,735 | ) | | (3,392 | ) | | | | | | |
| Total carrying value unsecured term loans, net | | 446,265 |
| | 446,608 |
| | |
| | | | |
| | | | | | | | | | | |
| Unsecured notes: | | |
| | | | |
| | | | |
| Series F Unsecured Notes | | 100,000 |
| | 100,000 |
| | 3.98 | % | | Jan-05-2023 | | ii |
| Series A Unsecured Notes | | 50,000 |
| | 50,000 |
| | 4.98 | % | | Oct-1-2024 | | ii |
| Series D Unsecured Notes | | 100,000 |
| | 100,000 |
| | 4.32 | % | | Feb-20-2025 | | ii |
| Series B Unsecured Notes | | 50,000 |
| | 50,000 |
| | 4.98 | % | | Jul-1-2026 | | ii |
| Series C Unsecured Notes | | 80,000 |
| | 80,000 |
| | 4.42 | % | | Dec-30-2026 | | ii |
| Series E Unsecured Notes | | 20,000 |
| | 20,000 |
| | 4.42 | % | | Feb-20-2027 | | ii |
| Total unsecured notes | | 400,000 |
| | 400,000 |
| | | | | | |
| Less: Total unamortized deferred financing fees and debt issuance costs | | (1,766 | ) | | (2,034 | ) | | | | | | |
| Total carrying value unsecured notes, net | | 398,234 |
| | 397,966 |
| | |
| | | | |
| | | | | | | | | | | |
| Mortgage notes (secured debt): | | |
| | | | |
| | | | |
| Union Fidelity Life Insurance Company | | — |
| | 5,384 |
| | 5.81 | % | | Apr-30-2017 | | iii |
| Webster Bank, National Association | | — |
| | 2,853 |
| | 3.66 | % | | May-29-2017 | | iv |
| Webster Bank, National Association | | — |
| | 3,073 |
| | 3.64 | % | | May-31-2017 | | iv |
| Wells Fargo, National Association | | — |
| | 4,043 |
| | 5.90 | % | | Aug-1-2017 | | v |
| Connecticut General Life Insurance Company -1 Facility | | — |
| | 35,320 |
| | 6.50 | % | | Feb-1-2018 | | vi |
| Connecticut General Life Insurance Company -2 Facility | | — |
| | 36,892 |
| | 5.75 | % | | Feb-1-2018 | | vi |
| Connecticut General Life Insurance Company -3 Facility | | — |
| | 16,141 |
| | 5.88 | % | | Feb-1-2018 | | vi |
| Wells Fargo Bank, National Association CMBS Loan | | 54,949 |
| | 56,608 |
| | 4.31 | % | | Dec-1-2022 | | vii |
| Thrivent Financial for Lutherans | | 3,906 |
| | 4,012 |
| | 4.78 | % | | Dec-15-2023 | | iv |
| Total mortgage notes | | 58,855 |
| | 164,326 |
| | |
| | | | |
| Total unamortized fair market value premiums | | 61 |
| | 112 |
| | |
| | | | |
Less: Total unamortized deferred financing fees and debt issuance costs | | (634 | ) | | (873 | ) | | | | | | |
| Total carrying value mortgage notes, net | | 58,282 |
| | 163,565 |
| | |
| | | | |
Total / weighted average interest rate (5) | | $ | 1,173,781 |
| | $ | 1,036,139 |
| | 3.53 | % | | | | |
| |
(1) | Current interest rate as of December 31, 2017. At December 31, 2017 and 2016, the one-month LIBOR (“L”) was 1.56425% and 0.77167%, respectively. The current interest rate is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums. |
| |
(2) | Prepayment terms consist of (i) pre-payable with no penalty; (ii) pre-payable with penalty; (iii) pre-payable without penalty two months prior to the maturity date; (iv) pre-payable without penalty three months prior to the maturity date; (v) pre-payable without penalty three months prior to the maturity date, however can be defeased; (vi) pre-payable without penalty six months prior to the maturity date; and (vii) pre-payable without penalty three months prior to the maturity date, however can be defeased beginning January 1, 2016. |
| |
(3) | The capacity of the unsecured credit facility is $450.0 million. Deferred financing fees and debt issuance costs, net of accumulated amortization related to the unsecured credit facility of approximately $1.5 million and $2.3 million are included in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets as of December 31, 2017 and 2016, respectively. |
| |
(4) | Capacity of $150.0 million, which the Company has until July 27, 2018 to draw. |
| |
(5) | The weighted average interest rate was calculated using the fixed interest rate swapped on the current notional amount of $600.0 million of debt, and is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums. |
(5)The Unsecured Term Loan D and the Unsecured Term Loan E were repaid in full on July 26, 2022 in connection with the execution of the Unsecured Term Loan H and the Unsecured Term Loan I.
(6)Subsequent to December 31, 2022, on January 5, 2023, the Series F Unsecured Notes were repaid in full. Refer to Note 13 for additional details.
(7)The weighted average interest rate was calculated using the fixed interest rate swapped on the notional amount of $1,025.0 million of debt, and is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums or discounts.
The aggregate undrawn nominal commitment on the unsecured credit facility and term loans as of December 31, 20172022 was approximately $323.1$821.4 million, including issued letters of credit. The Company'sCompany’s actual borrowing capacity at any given point in
time may be less and isor restricted to a maximum amount based on the Company'sCompany’s debt covenant compliance. Total accrued interest for the Company'sCompany’s indebtedness was approximately $5.6$13.1 million and $5.7$8.6 million as of December 31, 20172022 and 2016,2021, respectively, and is included in accounts payable, accrued expenses and other liabilities on the accompanying Consolidated Balance Sheets.
The following table below sets forthsummarizes the costs included in interest expense related to the Company'sCompany’s debt arrangements on the accompanying Consolidated Statement of Operations for the years ended December 31, 2017, 20162022, 2021 and 2015.2020.
|
| | | | | | | | | | | | |
| | | Year ended December 31, |
| Costs Included in Interest Expense (in thousands) | | 2017 | | 2016 | | 2015 |
| Amortization of deferred financing fees and debt issuance costs and fair market value premiums | | $ | 2,087 |
| | $ | 1,698 |
| | $ | 1,262 |
|
| Facility fees and unused fees | | 1,169 |
| | 1,380 |
| | 1,202 |
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Year ended December 31, |
| Costs Included in Interest Expense (in thousands) | | | | | | 2022 | | 2021 | | 2020 |
| Amortization of deferred financing fees and debt issuance costs and fair market value premiums/discounts | | | | | | $ | 3,747 | | | $ | 2,931 | | | $ | 2,922 | |
| Facility, unused, and other fees | | | | | | $ | 1,548 | | | $ | 1,642 | | | $ | 1,311 | |
20172022 Debt Activity
On August 1, 2017,October 3, 2022, the three mortgage notes held with Connecticut General Life Insurance Company in which multiple properties served as collateralachieved a 2022 public disclosure assessment score of “A” from the Global Real Estate Sustainability Benchmark (GRESB). The improved score triggered a sustainability-related interest rate adjustment for the Unsecured Term Loan A, Unsecured Term Loan F, Unsecured Term Loan G, and Unsecured Credit Facility. The interest rate adjustment, a 0.02% interest rate reduction for each instrument, went into effect on October 17, 2022 and will end on June 29, 2024, in accordance with the respective loan agreements.
On September 1, 2022, the mortgage notes, were paidnote associated with the Wells Fargo Bank, National Association CMBS Loan was repaid in full.
On September 1, 2022, the Company entered into separate amended and restated loan agreements for the Unsecured Term Loan A, the Unsecured Term Loan F, and the Unsecured Term Loan G (“Amended and Restated Unsecured Term Loans”), to provide that borrowings under the Amended and Restated Unsecured Term Loans bear a current annual interest rate of one-month Term SOFR, plus an adjustment of 0.10% and a spread of 0.85%, based on the Company’s debt rating and leverage ratio (as defined in the applicable loan agreement). Other than the interest rate provisions described above, the material terms of the Amended and Restated Unsecured Term Loans, including the maturity dates, remain unchanged.
On July 26, 2022, the Company entered into an amended and restated credit agreement for the unsecured credit facility (the “July 2022 Credit Agreement”), which provided for an increase in the aggregate commitments available for borrowing under the unsecured credit facility from $750.0 million to up to $1.0 billion. The July 2022 Credit Agreement also provided for the replacement of one-month LIBOR for one-month Term SOFR, plus a 0.10% adjustment. In connection with the July 2022 Credit Agreement, the Company incurred approximately $1.4 million in costs which are being deferred and amortized through the maturity date of the unsecured credit facility. The unamortized fees will continue to be deferred and amortized through the maturity date. Other than the increase in the borrowing commitments and the interest rate provisions described above, the material terms of the unsecured credit facility remain unchanged.
On July 26, 2022, the Company entered into (i) an unsecured term loan agreement with Wells Fargo Bank, National Association and the other lenders party thereto, providing for a new senior unsecured term loan in the original principal amount of $187.5 million (“Unsecured Term Loan H”) and (ii) an unsecured term loan agreement with Bank of America, N.A., and the
other lenders party thereto, providing for a new senior unsecured term loan in the original principal amount of $187.5 million (“Unsecured Term Loan I”). In connection with the new unsecured term loans, the $150.0 million Unsecured Term Loan D and the $175.0 million Unsecured Term Loan E were repaid in full. Each of the Unsecured Term Loan H and the Unsecured Term Loan I bears a current annual interest rate of one-month Term SOFR, plus a 0.10% adjustment and a spread of 0.85% based on the Company’s debt rating and leverage ratio (as defined in the applicable loan agreement), and matures on January 25, 2028. In connection with the new unsecured term loans, the Company incurred approximately $1.2 million in costs which are being deferred and amortized through the maturity dates on the unsecured term loans. The Company also recognized debt extinguishment and modification expenses of approximately $0.8 million related to unamortized deferred financing fees and debt issuance costs related to the Unsecured Term Loan D and the Unsecured Term Loan E and other third-party costs.
On April 28, 2017,2022, the Company entered into a $150.0note purchase agreement (the “April 2022 NPA”) for the private placement by the Operating Partnership of $400.0 million senior unsecured term loan agreement ("notes (the “Series K Unsecured Term Loan D"Notes”). As of December 31, 2017, the maturing June 28, 2032, with a fixed annual interest rate onof 4.12%. The April 2022 NPA contains a number of financial covenants substantially similar to the Unsecured Term Loan D was LIBORfinancial covenants contained in the Company’s unsecured credit facility and other unsecured notes, plus a spread of 1.3% based on the Company's consolidated leverage ratio, as defined in the loan agreement. Unless otherwise terminated pursuant to the loan agreement, the Unsecured Term Loan D will mature on January 4, 2023. The Unsecured Term Loan D has an accordion featurefinancial covenant that allowsrequires the Company to increase its borrowing capacity to $250.0 million, subject tomaintain a minimum interest coverage ratio of not less than 1.50:1.00. The Operating Partnership issued the satisfaction of certain conditions and lender consents. The agreement includes a delayed draw feature that allows the Company to draw up to six advances of at least $25.0 million each until July 27, 2018. To the extent that the Company does not request advances of the $150.0 million of aggregate commitments by July 27, 2018, the unadvanced commitments terminate. The Company incurred approximately $1.0 million in deferred financing fees associated with theSeries K Unsecured Term Loan D, which will begin to be amortized through the maturity dateNotes on the date that the Company draws on the Unsecured Term Loan D. The Company also is required to pay an annual fee of $35,000. The Unsecured Term Loan D has an unused commitment fee equal to 0.15% of its unused commitments, which began to accrue on October 26, 2017 and are due and payable monthly until the earlier of (i) the date that commitments of $150.0 million have been fully advanced, (ii) July 27, 2018, and (iii) the date that commitments of $150.0 million have been reduced to zero pursuant to the Company's ability to terminate the aggregate commitments at any time upon notice.June 28, 2022. The Company and certain wholly owned subsidiaries of the Operating Partnership are guarantors of the Series K Unsecured Term Loan D. The agreement also contains financial and other covenants substantially similar to the covenants in the Company's unsecured credit facility.Notes.
2021 Debt Activity
On July 28, 2017,October 26, 2021, the Company entered into an amendment to itsthe unsecured credit facility agreement(the “October 2021 Credit Facility Amendment”). The October 2021 Credit Facility Amendment provides for an extension of the maturity date to October 24, 2025, with two six-month extension options, subject to certain conditions, and a reduced current interest rate of LIBOR plus a spread of 0.775% and facility fee of 0.15%, each based on the Company’s current debt rating (as defined in the credit agreement) and leverage level. In connection with the October 2021 Credit Facility Amendment, the Company incurred approximately $3.7 million in costs which are being deferred and amortized through the maturity date of the unsecured credit facility. The Company also incurred approximately $0.1 million of modification expenses which were recognized in debt extinguishment and modification expenses in the accompanying Consolidated Statements of Operations. Other than the maturity and interest rate provisions described above, the material terms of the unsecured credit facility remained unchanged.
On October 26, 2021, the Company entered into an amendment to the Unsecured Term Loan A (the “Amendment to Unsecured Term Loan A”). The Amendment to Unsecured Term Loan A provides for an extension of the maturity date to March 15, 2027 and a reduced current interest rate of LIBOR plus a spread of 0.85% based on the Company’s current debt rating (as defined in the loan agreement) and leverage level. In connection with the Amendment to Unsecured Term Loan A, the Company incurred approximately $0.6 million in costs which are being deferred and amortized through the new maturity date. The Company also incurred approximately $0.2 million of modification expenses which were recognized in debt extinguishment and modification expenses in the accompanying Consolidated Statements of Operations. Other than the maturity and interest rate provisions described above, the material terms of the Unsecured Term Loan A remain unchanged.
On October 26, 2021, the Company entered into amendments to its unsecured termthe Unsecured Term Loan E, the Unsecured Term Loan F, and the Unsecured Term Loan G (“Term Loan Amendments”) that provide for reduced current interest rates on each of the loans of LIBOR plus a spread of 0.85% based on the Company’s current debt rating (as defined in each loan agreements to conform certainagreement) and leverage level. In connection with the Term Loan Amendments, the Company incurred approximately $0.6 million in costs which are being deferred and amortized through the respective maturity dates. The Company also incurred approximately $1.2 million of modification expenses which were recognized in debt extinguishment and modification expenses in the accompanying Consolidated Statements of Operations. Other than the interest rate provisions described above, the material terms of the Unsecured Term Loan E, the Unsecured Term Loan F, and the Unsecured Term Loan G remain unchanged.
On October 26, 2021, the Company entered into an amendment to the Unsecured Term Loan D agreement.to conform certain provisions of such loan agreement to the unsecured credit facility.
On May 30, 2017,July 8, 2021, the mortgageCompany entered into a note held with Wells Fargo, National Association, in which the property located in Yorkville, WI served as collateralpurchase agreement (the “July 2021 NPA”) for the mortgage note, was paidprivate placement by the Operating Partnership of $275.0 million senior unsecured notes (the “Series I Unsecured Notes”) maturing September 29, 2031, with a fixed annual interest rate of 2.80%, and $50.0 million senior unsecured notes (the “Series J Unsecured Notes”) maturing September 28, 2033, with a fixed annual interest rate of 2.95%. The July 2021 NPA contains a number of financial covenants substantially similar to the financial covenants contained in full.the Company’s unsecured credit facility and other unsecured notes, plus a financial covenant that requires the Company to maintain a minimum interest coverage ratio of not less than 1.50:1.00.
The Operating Partnership issued the Series I Unsecured Notes and Series J Unsecured Notes on September 28, 2021. The Company and certain wholly owned subsidiaries of the Operating Partnership are guarantors of the unsecured notes.
On March 3, 2017, the mortgage note held with Webster Bank, National Association, in which the property located in East Windsor, CT served as collateral for the mortgage note, was paid in full.
On March 1, 2017, the mortgage note held with Webster Bank, National Association, in which the property located in Portland, ME served as collateral for the mortgage note, was paid in full.
On March 1, 2017, the mortgage note held with Union Fidelity Life Insurance Company, in which the property located in Hazelwood, MO served as collateral for the mortgage note, was paid in full.
2016 Debt Activity
On December 29, 2016, the Company drew the unsecured term loan with Wells Fargo, National Association and other lenders ("Unsecured Term Loan C") in the amount of $150.0 million.
On December 20, 2016, the Company amended and restated the unsecured term loans with Wells Fargo, National Association and other lenders ("Unsecured Term Loan A" and "Unsecured Term Loan B"). The transaction reduced the spread over the applicable rate, which is based on the Company's consolidated leverage ratio, as defined in the loan agreement, with no changes to maturity dates or other material terms of the loan. The spread over the LIBOR for the Unsecured Term Loan A was reduced from 1.65% to 1.30%, and the spread over the LIBOR for the Unsecured Term Loan B was reduced from 1.70% to 1.30%, assuming the most recently reported consolidated leverage ratios.
On December 8, 2016, the mortgage note held with Connecticut General Life Insurance Company (Facility 2) was partially paid in the amount of approximately $3.6 million in connection with the sale of the Georgetown, KY property, which had served as partial collateral for the mortgage note. The prepayment fees and associated unamortized deferred financing fees and debt issuance costs of approximately $0.1 million were written off to loss on extinguishment of debt in the accompanying Consolidated Statements of Operations during the year ended December 31, 2016.
On November 14, 2016, the mortgage note held with Connecticut General Life Insurance Company (Facility 2) was partially paid in the amount of approximately $6.2 million in connection with the sale of the Conyers, GA property, which had served as partial collateral for the mortgage note. The prepayment fees and associated unamortized deferred financing fees and debt issuance costs of approximately $0.2 million were written off to loss on extinguishment of debt in the accompanying Consolidated Statements of Operations during the year ended December 31, 2016.
On November 14, 2016, the mortgage note held with Connecticut General Life Insurance Company (Facility 1) was partially paid in the amount of approximately $21.0 million in connection with the sale of the Charlotte, NC property, which had served as partial collateral for the mortgage note. The prepayment fees and associated unamortized deferred financing fees and debt issuance costs of approximately $0.9 million were written off to loss on extinguishment of debt in the accompanying Consolidated Statements of Operations during the year ended December 31, 2016.
On November 14, 2016, the mortgage note held with Principal Life Insurance Company, for which the property located in Conyers, GA served as collateral for the mortgage note, was paid in full. The prepayment fees and associated unamortized deferred financing fees and debt issuance costs of approximately $0.1 million were written off to loss on extinguishment of debt in the accompanying Consolidated Statements of Operations during the year ended December 31, 2016.
On September 29, 2016,February 25, 2021, the Company assumed a mortgage note held with Thrivent Financial for LutheransUnited of Omaha Life Insurance Company of approximately $4.0$5.1 million in connection with the acquisition of the property located in Rock Hill, SC,Long Island, NY, which serves as collateral for the debt. The debt matures on December 15, 2023October 1, 2039 and bears interest at 4.78%3.71% per annum. The assumed debt was recorded at fair value and a fair value premiumdiscount of approximately $0.1$0.2 million was recorded. The fair value of debt was determined by discounting the future cash flows using the then current rate of approximately 4.45%4.10% at which loans would be made to borrowers with similar credit ratings for loans with similar remaining maturities, similar terms, and similar loan-to-value ratios. The fair value of the debt is based on Level 3 inputs and is a nonrecurring fair value measurement.
On June 22, 2016,February 5, 2021, the mortgage note held with Wells Fargo, National Association (CMBS loan) was partially defeasedCompany entered into an amendment to the unsecured credit facility (the “Credit Facility Amendment”). The Credit Facility Amendment provided for an increase in the amount of approximately $1.5aggregate commitments available for borrowing under the unsecured credit facility from $500 million into up to $750 million. In connection with the saleCredit Facility Amendment, the Company incurred approximately $1.2 million in costs which are being deferred and amortized through the maturity date of the Gloversville, NY property,unsecured credit facility. Other than the increase in the borrowing commitments, the material terms of the unsecured credit facility remain unchanged.
On February 5, 2021, the Company entered into an amendment to the Unsecured Term Loan G (the “Amendment to Unsecured Term Loan G”). The Amendment to Unsecured Term Loan G provided for an extension of the maturity date to February 5, 2026 and a reduced stated interest rate of one-month LIBOR plus a spread that ranges from 0.85% to 1.65% for LIBOR borrowings based on the Company’s debt ratings. The Amendment to Unsecured Term Loan G also amended the provision for a minimum interest rate, or floor, for LIBOR borrowings to 0.00% and for Base Rate borrowings to 1.00%. In connection with the Amendment to Unsecured Term Loan G, the Company incurred approximately $1.6 million in costs which had served as partial collateral forare being deferred and amortized through the mortgage note.new maturity date of February 5, 2026. The associated defeasance feesCompany also incurred approximately $0.7 million of modification expenses which were recognized in debt extinguishment and unamortized deferred financing fees and debt issuance costs of approximately $0.3 million were written off to loss on extinguishment of debtmodification expenses in the accompanying Consolidated StatementStatements of Operations forOperations. Additionally, the year ended December 31, 2016.
On May 18, 2016,Company reversed the mortgage note held with National Life Insurance Company, for which the property located in Charlotte, NC served as collateral, was paid in full.
On May 5, 2016, the mortgage note held with Webster Bank, National Association, for which the property located in Norton, MA served as collateral, was paid in full.
On April 26, 2016, the mortgage note held with Wells Fargo, National Association (CMBS loan) was partially defeased in the
amountpreviously accrued extension fees of approximately $1.7$1.1 million from the amendment to the Unsecured Term Loan G that was entered into on April 17, 2020, which resulted in connection with the sale of the Parsons, KS property, which had served as partial collateral for the mortgage note. The associated defeasance fees and unamortized deferred financing fees and debt issuance costs of approximately $0.2 million were written offa decrease to loss on extinguishment of debt in the accompanying Consolidated Statement of Operations for the year ended December 31, 2016.
On April 26, 2016, the mortgage note held with Wells Fargo, National Association (CMBS loan) was partially defeased in the
amount of approximately $1.8 million in connection with the sale of the Kansas City, KS property, which had served as partial collateral for the mortgage note. The associated defeasance fees and unamortized deferred financing fees and debt issuance costsinterest expense of approximately $0.3 million were written off to loss on extinguishment of debt inmillion. Other than the accompanying Consolidated Statement of Operations formaturity and interest rate provisions described above, the year ended December 31, 2016.
On March 17, 2016, the mortgage note held with Connecticut General Life Insurance Company (Facility 2) was partially paid in the amount of approximately $10.5 million in connection with the salematerial terms of the Gresham, OR property, which had served as partial collateral for the mortgage note. The prepayment fees and associated unamortized deferred financing fees and debt issuance costs of approximately $0.9 million were written off to loss on extinguishment of debt in the accompanying Consolidated Statement of Operations during the year ended December 31, 2016.Unsecured Term Loan G remain unchanged.
On March 3, 2016, the mortgage note held with Wells Fargo, National Association (CMBS loan) was partially defeased in the amount of approximately $1.2 million in connection with the sale of the Wichita, KS property, which had served as partial collateral for the mortgage note. The associated defeasance fees and unamortized deferred financing fees and debt issuance costs of approximately $0.2 million were written off to loss on extinguishment of debt in the accompanying Consolidated Statement of Operations during the year ended December 31, 2016.
On March 1, 2016 the mortgage note held with Sun Life Assurance Company of Canada (U.S.), for which the property located in Gahanna, OH served as collateral, was paid in full.
Financial Covenant Considerations
The Company’s ability to borrow under the unsecured credit facility, unsecured term loans, and unsecured notes are subject to its ongoing compliance with a number of customary financial covenants, including:
•a maximum consolidated leverage ratio of not greater than 0.60:1.00;
•a maximum secured leverage ratio of not greater than 0.40:1.00;
•a maximum unencumbered leverage ratio of not greater than 0.60:1.00;
a maximum secured recourse debt level of not greater than 0.075:1.00;
•a minimum fixed charge ratio of not less than or equal to 1.50:1.00;
•a minimum unsecured interest coverage ratio of not less than or equal to 1.75:1.00; and
a minimum tangible net worth covenant test.
The•with respect to the unsecured notes, are also subject to a minimum interest coverage ratio of not less than 1.50:1.00.
The Company was in compliance with all such applicable restrictions and financial and other covenants as of December 31, 20172022 and 2016.2021 related to its unsecured credit facility, unsecured term loans, and unsecured notes. In the event of a default under the unsecured credit facility or the unsecured term loans, the Company’s dividend distributions are limited to the minimum amount necessary for the Company to maintain its status as a REIT.
Each of the Company’s mortgage notes has specific properties and assignments of rents and leases that are collateral for these loans. TheseThe Wells Fargo Bank, National Association CMBS debt facilities containfacility contained certain financial and other covenants.covenants and was repaid in full in 2022. The Company was in compliance with all such applicable restrictions and financial and other covenants as of December 31, 2017 and 2016.2021, related to the Wells Fargo Bank, National Association CMBS loan. The real estate net book value of the properties that are collateral for the Company’s mortgage notesdebt arrangements was approximately $90.9$14.8 million and $229.9$88.5 million at December 31, 20172022 and 2016,2021, respectively, and is limited to senior, property-level secured debt financing arrangements.
Fair Value of Debt
The fair value offollowing table summarizes the aggregate principal amount outstanding under the Company’s debt is determined by discountingarrangements and the future cash flows using the current rates at which loans would be made to borrowers with similar credit ratings for loans with similar remaining maturities, similar terms, and similar loan-to-value ratios. The discount rates ranged from approximately 2.61% to 4.40% and 1.92% to 4.85% atcorresponding estimate of fair value as of December 31, 20172022 and 2016, respectively, and were applied to each individual debt instrument. The applicable fair value guidance establishes a three tier value hierarchy, which prioritizes the inputs used in measuring fair value.2021. The fair value of the Company’s debt is based on Level
3 inputs. The following table presents the aggregate principal outstanding of the Company’s debt and the corresponding estimate of fair value as of December 31, 2017 and 2016 (in thousands).
| | | | | | | | | | | | | December 31, 2022 | | December 31, 2021 |
| | | December 31, 2017 | | December 31, 2016 | |
| | | Principal Outstanding | | Fair Value | | Principal Outstanding | | Fair Value | |
| Indebtedness (in thousands) | | Indebtedness (in thousands) | | Principal Outstanding | | Fair Value | | Principal Outstanding | | Fair Value |
| Unsecured credit facility | | $ | 271,000 |
| | $ | 271,528 |
| | $ | 28,000 |
| | $ | 28,000 |
| Unsecured credit facility | | $ | 175,000 | | | $ | 175,000 | | | $ | 296,000 | | | $ | 296,000 | |
| Unsecured term loans | | 450,000 |
| | 451,463 |
| | 450,000 |
| | 450,000 |
| Unsecured term loans | | 1,025,000 | | | 1,025,000 | | | 975,000 | | | 975,224 | |
| Unsecured notes | | 400,000 |
| | 415,599 |
| | 400,000 |
| | 399,091 |
| Unsecured notes | | 1,300,000 | | | 1,150,283 | | | 900,000 | | | 937,183 | |
| Mortgage notes | | 58,855 |
| | 59,769 |
| | 164,326 |
| | 166,099 |
| Mortgage notes | | 8,040 | | | 6,855 | | | 54,983 | | | 56,323 | |
| Total principal amount | | 1,179,855 |
| | $ | 1,198,359 |
| | 1,042,326 |
| | $ | 1,043,190 |
| Total principal amount | | 2,508,040 | | | $ | 2,357,138 | | | 2,225,983 | | | $ | 2,264,730 | |
| Add: Total unamortized fair market value premiums | | 61 |
| | | | 112 |
| | | |
| Less: Total unamortized deferred financing fees and debt issuance costs | | (6,135 | ) | | | | (6,299 | ) | | | |
| Net unamortized fair market value discount | | Net unamortized fair market value discount | | (137) | | | | | (136) | | | |
| Total unamortized deferred financing fees and debt issuance costs | | Total unamortized deferred financing fees and debt issuance costs | | (9,123) | | | (7,585) | | |
| Total carrying value | | $ | 1,173,781 |
| | | | $ | 1,036,139 |
| | | Total carrying value | | $ | 2,498,780 | | | $ | 2,218,262 | | |
Future Principal Payments of Debt
The following table
reflectssummarizes the Company’s aggregate future principal payments of the Company’s debt at December 31,
2017.2022. |
| | | | |
| Year | | Future Principal Payments of Debt (in thousands) |
| 2018 | | $ | 1,844 |
|
| 2019 | | 272,926 |
|
| 2020 | | 152,006 |
|
| 2021 | | 152,103 |
|
| 2022 | | 197,681 |
|
| Thereafter | | 403,295 |
|
| Total aggregate principal payments | | 1,179,855 |
|
| Add: Total unamortized fair market value premiums | | 61 |
|
| Less: Total unamortized deferred financing fees and debt issuance costs | | (6,135 | ) |
| Total carrying value | | $ | 1,173,781 |
|
| | | | | | | | |
| Year | | Future Principal Payments of Debt
(in thousands) |
| 2023 | | $ | 103,502 | |
| 2024 | | 50,215 | |
| 2025 | | 550,223 | |
| 2026 | | 430,231 | |
| 2027 | | 170,240 | |
| Thereafter | | 1,203,629 | |
| Total aggregate principal payments | | $ | 2,508,040 | |
| | |
| | |
| | |
5. Use of Derivative Financial Instruments
Risk Management Objective of Using Derivatives
The Company’s use of derivative instruments is limited to the utilization of interest rate swaps to manage interest rate risk exposure on existing and future liabilities and not for speculative purposes. The principal objective of such arrangements is to minimize the risks and related costs associated with the Company’s operating and financial structure.
The following table detailssummarizes the Company’s outstanding interest rate swaps as of December 31, 2017.2022. All of the Company'sCompany’s interest rate swaps are designated as qualifying cash flow hedges.
| | Interest Rate
Derivative Counterparty | | Trade Date | | Effective Date | | Notional Amount
(in thousands) | | Fair Value
(in thousands) | | Pay Fixed Interest Rate | | Receive Variable Interest Rate | | Maturity Date | Interest Rate Derivative Counterparty | | Trade Date | | Effective Date | | Notional Amount
(in thousands) | | Fair Value
(in thousands) | | Pay Fixed Interest Rate | | Receive Variable Interest Rate | | Maturity Date |
| Regions Bank | | Mar-01-2013 | | Mar-01-2013 | | $ | 25,000 |
| | $ | 331 |
| | 1.3300 | % | | One-month L | | Feb-14-2020 | |
| Capital One, N.A. | | Jun-13-2013 | | Jul-01-2013 | | $ | 50,000 |
| | $ | 293 |
| | 1.6810 | % | | One-month L | | Feb-14-2020 | |
| Capital One, N.A. | | Jun-13-2013 | | Aug-01-2013 | | $ | 25,000 |
| | $ | 135 |
| | 1.7030 | % | | One-month L | | Feb-14-2020 | |
| Regions Bank | | Sep-30-2013 | | Feb-03-2014 | | $ | 25,000 |
| | $ | (18 | ) | | 1.9925 | % | | One-month L | | Feb-14-2020 | |
| The Toronto-Dominion Bank | | The Toronto-Dominion Bank | | Jul-20-2017 | | Jul-28-2022 | | $ | 25,000 | | | $ | 5 | | | 1.8830 | % | | One-month Term SOFR | | Jan-04-2023 |
| Royal Bank of Canada | | Royal Bank of Canada | | Jul-20-2017 | | Jul-28-2022 | | $ | 25,000 | | | $ | 5 | | | 1.8980 | % | | One-month Term SOFR | | Jan-04-2023 |
| Wells Fargo Bank, N.A. | | Wells Fargo Bank, N.A. | | Jul-20-2017 | | Jul-28-2022 | | $ | 25,000 | | | $ | 5 | | | 1.8750 | % | | One-month Term SOFR | | Jan-04-2023 |
| PNC Bank, N.A. | | PNC Bank, N.A. | | Jul-20-2017 | | Jul-28-2022 | | $ | 25,000 | | | $ | 5 | | | 1.8860 | % | | One-month Term SOFR | | Jan-04-2023 |
| PNC Bank, N.A. | | PNC Bank, N.A. | | Jul-20-2017 | | Jul-28-2022 | | $ | 50,000 | | | $ | 10 | | | 1.8850 | % | | One-month Term SOFR | | Jan-04-2023 |
| The Toronto-Dominion Bank | | The Toronto-Dominion Bank | | Apr-20-2020 | | Aug-10-2022 | | $ | 75,000 | | | $ | 981 | | | 0.2660 | % | | One-month Term SOFR | | Apr-18-2023 |
| Wells Fargo Bank, N.A. | | Wells Fargo Bank, N.A. | | Apr-20-2020 | | Aug-10-2022 | | $ | 75,000 | | | $ | 984 | | | 0.2520 | % | | One-month Term SOFR | | Apr-18-2023 |
| The Toronto-Dominion Bank | | The Toronto-Dominion Bank | | Apr-20-2020 | | Aug-10-2022 | | $ | 75,000 | | | $ | 981 | | | 0.2660 | % | | One-month Term SOFR | | Apr-18-2023 |
| Wells Fargo Bank, N.A. | | Wells Fargo Bank, N.A. | | Apr-20-2020 | | Aug-10-2022 | | $ | 75,000 | | | $ | 984 | | | 0.2520 | % | | One-month Term SOFR | | Apr-18-2023 |
| Bank of Montreal | | Bank of Montreal | | Jul-24-2018 | | Jul-26-2022 | | $ | 50,000 | | | $ | 999 | | | 2.9160 | % | | One-month Term SOFR | | Jan-12-2024 |
| The Toronto-Dominion Bank | | Oct-14-2015 | | Sep-29-2016 | | $ | 25,000 |
| | $ | 427 |
| | 1.3830 | % | | One-month L | | Sep-29-2020 | The Toronto-Dominion Bank | | Jul-24-2018 | | Jul-26-2022 | | $ | 50,000 | | | $ | 1,003 | | | 2.9080 | % | | One-month Term SOFR | | Jan-12-2024 |
| PNC Bank, N.A. | | Oct-14-2015 | | Sep-29-2016 | | $ | 50,000 |
| | $ | 845 |
| | 1.3906 | % | | One-month L | | Sep-29-2020 | PNC Bank, N.A. | | Jul-24-2018 | | Jul-26-2022 | | $ | 50,000 | | | $ | 997 | | | 2.9190 | % | | One-month Term SOFR | | Jan-12-2024 |
| U.S. Bank, N.A. | | U.S. Bank, N.A. | | Jul-24-2018 | | Jul-26-2022 | | $ | 25,000 | | | $ | 500 | | | 2.9120 | % | | One-month Term SOFR | | Jan-12-2024 |
| Wells Fargo Bank, N.A. | | Wells Fargo Bank, N.A. | | May-02-2019 | | Aug-15-2022 | | $ | 50,000 | | | $ | 2,179 | | | 2.2360 | % | | One-month Term SOFR | | Jan-15-2025 |
| U.S. Bank, N.A. | | U.S. Bank, N.A. | | May-02-2019 | | Aug-15-2022 | | $ | 50,000 | | | $ | 2,182 | | | 2.2380 | % | | One-month Term SOFR | | Jan-15-2025 |
| Regions Bank | | Regions Bank | | May-02-2019 | | Aug-15-2022 | | $ | 50,000 | | | $ | 2,177 | | | 2.2389 | % | | One-month Term SOFR | | Jan-15-2025 |
| Bank of Montreal | | Bank of Montreal | | Jul-16-2019 | | Aug-15-2022 | | $ | 50,000 | | | $ | 2,700 | | | 1.7100 | % | | One-month Term SOFR | | Jan-15-2025 |
| U.S. Bank, N.A. | | U.S. Bank, N.A. | | Feb-17-2021 | | Apr-18-2023 | | $ | 150,000 | | | $ | 12,024 | | | 0.9520 | % | | One-month Term SOFR | | Feb-5-2026 |
| Wells Fargo Bank, N.A. | | Wells Fargo Bank, N.A. | | Feb-17-2021 | | Apr-18-2023 | | $ | 75,000 | | | $ | 6,003 | | | 0.9460 | % | | One-month Term SOFR | | Feb-5-2026 |
| The Toronto-Dominion Bank | | The Toronto-Dominion Bank | | Feb-17-2021 | | Apr-18-2023 | | $ | 75,000 | | | $ | 6,050 | | | 0.9355 | % | | One-month Term SOFR | | Feb-5-2026 |
| Regions Bank | | Regions Bank | | Oct-26-2021 | | Aug-01-2022 | | $ | 50,000 | | | $ | 4,953 | | | 1.3090 | % | | One-month Term SOFR | | Mar-15-2027 |
| Bank of Montreal | | Bank of Montreal | | Oct-26-2021 | | Aug-01-2022 | | $ | 50,000 | | | $ | 4,976 | | | 1.3090 | % | | One-month Term SOFR | | Mar-15-2027 |
| PNC Bank, N.A. | | PNC Bank, N.A. | | Oct-26-2021 | | Aug-01-2022 | | $ | 50,000 | | | $ | 4,952 | | | 1.3150 | % | | One-month Term SOFR | | Mar-15-2027 |
| PNC Bank, N.A. | | PNC Bank, N.A. | | Jul-27-2022 | | Jan-04-2023 | | $ | 50,000 | | | $ | 2,623 | | | 2.6420 | % | | One-month Term SOFR | | Jan-25-2028 |
| The Toronto-Dominion Bank | | The Toronto-Dominion Bank | | Jul-27-2022 | | Jan-04-2023 | | $ | 50,000 | | | $ | 2,614 | | | 2.6530 | % | | One-month Term SOFR | | Jan-25-2028 |
| Regions Bank | | Oct-14-2015 | | Sep-29-2016 | | $ | 35,000 |
| | $ | 596 |
| | 1.3858 | % | | One-month L | | Sep-29-2020 | Regions Bank | | Jul-27-2022 | | Jan-04-2023 | | $ | 50,000 | | | $ | 2,583 | | | 2.6550 | % | | One-month Term SOFR | | Jan-25-2028 |
| U.S. Bank, N.A. | | Oct-14-2015 | | Sep-29-2016 | | $ | 25,000 |
| | $ | 421 |
| | 1.3950 | % | | One-month L | | Sep-29-2020 | U.S. Bank, N.A. | | Jul-27-2022 | | Jan-12-2024 | | $ | 75,000 | | | $ | 2,668 | | | 2.4865 | % | | One-month Term SOFR | | Jan-25-2028 |
| Capital One, N.A. | | Oct-14-2015 | | Sep-29-2016 | | $ | 15,000 |
| | $ | 252 |
| | 1.3950 | % | | One-month L | | Sep-29-2020 | |
| Royal Bank of Canada | | Jan-08-2015 | | Mar-20-2015 | | $ | 25,000 |
| | $ | 266 |
| | 1.7090 | % | | One-month L | | Mar-21-2021 | |
| The Toronto-Dominion Bank | | Jan-08-2015 | | Mar-20-2015 | | $ | 25,000 |
| | $ | 263 |
| | 1.7105 | % | | One-month L | | Mar-21-2021 | The Toronto-Dominion Bank | | Jul-27-2022 | | Jan-12-2024 | | $ | 50,000 | | | $ | 1,778 | | | 2.4910 | % | | One-month Term SOFR | | Jan-25-2028 |
| The Toronto-Dominion Bank | | Jan-08-2015 | | Sep-10-2017 | | $ | 100,000 |
| | $ | (566 | ) | | 2.2255 | % | | One-month L | | Mar-21-2021 | |
| Wells Fargo, N.A. | | Jan-08-2015 | | Mar-20-2015 | | $ | 25,000 |
| | $ | 276 |
| | 1.8280 | % | | One-month L | | Mar-31-2022 | |
| The Toronto-Dominion Bank | | Jan-08-2015 | | Feb-14-2020 | | $ | 25,000 |
| | $ | (107 | ) | | 2.4535 | % | | One-month L | | Mar-31-2022 | |
| Regions Bank | | Jan-08-2015 | | Feb-14-2020 | | $ | 50,000 |
| | $ | (236 | ) | | 2.4750 | % | | One-month L | | Mar-31-2022 | |
| Capital One, N.A. | | Jan-08-2015 | | Feb-14-2020 | | $ | 50,000 |
| | $ | (290 | ) | | 2.5300 | % | | One-month L | | Mar-31-2022 | |
| The Toronto-Dominion Bank | | Jul-20-2017 | | Oct-30-2017 | | $ | 25,000 |
| | $ | 327 |
| | 1.8485 | % | | One-month L | | Jan-04-2023 | |
| Royal Bank of Canada | | Jul-20-2017 | | Oct-30-2017 | | $ | 25,000 |
| | $ | 329 |
| | 1.8505 | % | | One-month L | | Jan-04-2023 | |
| Wells Fargo, N.A. | | Jul-20-2017 | | Oct-30-2017 | | $ | 25,000 |
| | $ | 329 |
| | 1.8505 | % | | One-month L | | Jan-04-2023 | |
| Wells Fargo Bank, N.A. | | Wells Fargo Bank, N.A. | | Jul-27-2022 | | Jan-12-2024 | | $ | 50,000 | | | $ | 1,756 | | | 2.4930 | % | | One-month Term SOFR | | Jan-25-2028 |
| PNC Bank, N.A. | | Jul-20-2017 | | Oct-30-2017 | | $ | 25,000 |
| | $ | 329 |
| | 1.8485 | % | | One-month L | | Jan-04-2023 | PNC Bank, N.A. | | Jul-27-2022 | | Jul-27-2022 | | $ | 50,000 | | | $ | 2,546 | | | 2.6790 | % | | One-month Term SOFR | | Jan-25-2028 |
| PNC Bank, N.A. | | Jul-20-2017 | | Oct-30-2017 | | $ | 50,000 |
| | $ | 660 |
| | 1.8475 | % | | One-month L | | Jan-04-2023 | |
In connection with the Amended and Restated Unsecured Term Loans that were entered into on September 1, 2022, as discussed in Note 4, the Company transitioned all of its outstanding interest rate swaps to one-month Term SOFR. The Company made various Accounting Standards Codification Topic 848 elections related to changes in critical terms of the hedging relationships due to reference rate reform to not result in a dedesignation of these hedging relationships. As of December 31, 2022, all of the Company's interest rate swap agreements were indexed to one-month Term SOFR.
The following table summarizes the fair value of the interest rate swaps outstanding as of December 31, 20172022 and 2016 was as follows.2021.
| | | Balance Sheet Line Item (in thousands) | | Notional Amount December 31, 2017 | | Fair Value December 31, 2017 | | Notional Amount December 31, 2016 | | Fair Value December 31, 2016 | Balance Sheet Line Item (in thousands) | | Notional Amount December 31, 2022 | | Fair Value December 31, 2022 | | Notional Amount December 31, 2021 | | Fair Value December 31, 2021 |
| Interest rate swaps-Asset | | $ | 475,000 |
| | $ | 6,079 |
| | $ | 300,000 |
| | $ | 1,471 |
| Interest rate swaps-Asset | | $ | 1,650,000 | | | $ | 72,223 | | | $ | 600,000 | | | $ | 5,220 | |
| Interest rate swaps-Liability | | $ | 250,000 |
| | $ | (1,217 | ) | | $ | 375,000 |
| | $ | (2,438 | ) | Interest rate swaps-Liability | | $ | — | | | $ | — | | | $ | 825,000 | | | $ | (17,052) | |
Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate swaps are to add stability to interest expense and to manage its exposure to interest rate movements. The Company uses interest rate swaps to fix the rate of its long term variable rate debt. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
The effective portion of changes in the fair value of
For derivatives designated and that qualify as qualifying cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income (loss) and will besubsequently reclassified to interest expense in the period thatsame periods during which the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings into interest expense. For the years ended December 31, 2017 and 2016, the Company recorded a gain of $0.2 million and $0.1 million, respectively, of hedge ineffectiveness in interest expense due to short-term, partial mismatches in notional amounts. For the year ended December 31, 2015, the Company did not record any hedge ineffectiveness related to the hedged derivatives.
Amounts reported in accumulated other comprehensive income (loss) related to derivatives designated as qualifying cash flow hedges will be reclassified to interest expense as interest payments are made on the Company'sCompany’s variable rate debt. The Company estimates that approximately $0.1$39.8 million will be reclassified from accumulated other comprehensive income (loss) as a decrease to interest expense over the next 12 months.
The following table below detailssummarizes the effect of cash flow hedge accounting and the location of the amounts related to the Company’s derivatives in the consolidated financial statements of the gain or loss recognized on interest rate swaps designated as cash flow hedges for the years ended December 31, 2017, 20162022, 2021 and 2015, (in thousands).2020. |
| | | | | | | | | | | | |
| | | Year ended December 31, |
| | | 2017 | | 2016 | | 2015 |
| Amount of gain (loss) recognized in accumulated other comprehensive income (loss) on interest rate swaps (effective portion) | | $ | 3,597 |
| | $ | (2,244 | ) | | $ | (5,387 | ) |
| Amount of loss reclassified from accumulated other comprehensive income (loss) into income (loss) as interest expense (effective portion) | | $ | 2,073 |
| | $ | 3,142 |
| | $ | 3,431 |
|
| Amount of gain recognized in interest expense (ineffective portion) | | $ | 190 |
| | $ | 66 |
| | $ | — |
|
| | | | | | | | | | | | | | | | | | | | |
| | | Year ended December 31, |
| Effect of Cash Flow Hedge Accounting (in thousands) | | 2022 | | 2021 | | 2020 |
| Income (loss) recognized in accumulated other comprehensive income (loss) on interest rate swaps | | $ | 85,726 | | | $ | 12,520 | | | $ | (35,548) | |
| Income (loss) reclassified from accumulated other comprehensive income (loss) into income as interest expense | | $ | 1,640 | | | $ | (16,336) | | | $ | (13,439) | |
| Total interest expense presented in the Consolidated Statements of Operations in which the effects of cash flow hedges are recorded | | $ | 78,018 | | | $ | 63,484 | | | $ | 62,343 | |
Credit-risk-related Contingent Features
The Company has agreements with each of its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company'sCompany’s default on the indebtedness.
As of December 31, 2017,2022, the Company had not breached the provisions of these agreements and hashad not posted any collateral related to these agreements.
As of December 31, 2017, the Company had no derivatives that were in a net liability position by counterparty.
Fair Value of Interest Rate Swaps
The Company’s valuation of the interest rate swaps is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs including interest rate curves. The fair values of interest rate swaps are determined by using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.
The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.
Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself andthe Company or its counterparties. However, as of December 31, 20172022 and 2016,2021, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.
The following tables set forthtable summarizes the Company’s financial instruments that are accounted forwere recorded at fair value on a recurring basis as of December 31, 20172022 and 2016.2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Fair Value Measurements as of December 31, 2022 Using |
| Balance Sheet Line Item (in thousands) | | Fair Value December 31, 2022 | | Level 1 | | Level 2 | | Level 3 |
| Interest rate swaps-Asset | | $ | 72,223 | | | $ | — | | | $ | 72,223 | | | $ | — | |
| Interest rate swaps-Liability | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | Fair Value Measurements as of
December 31, 2017 Using | | | | | Fair Value Measurements as of December 31, 2021 Using |
| Balance Sheet Line Item (in thousands) | | Fair Value December 31, 2017 | | Level 1 | | Level 2 | | Level 3 | Balance Sheet Line Item (in thousands) | | Fair Value December 31, 2021 | | Level 1 | | Level 2 | | Level 3 |
| Interest rate swaps-Asset | | $ | 6,079 |
| | $ | — |
| | $ | 6,079 |
| | $ | — |
| Interest rate swaps-Asset | | $ | 5,220 | | | $ | — | | | $ | 5,220 | | | $ | — | |
| Interest rate swaps-Liability | | $ | (1,217 | ) | | $ | — |
| | $ | (1,217 | ) | | $ | — |
| Interest rate swaps-Liability | | $ | (17,052) | | | $ | — | | | $ | (17,052) | | | $ | — | |
|
| | | | | | | | | | | | | | | | |
| | | | | Fair Value Measurements as of
December 31, 2016 Using |
| Balance Sheet Line Item (in thousands) | | Fair Value December 31, 2016 | | Level 1 | | Level 2 | | Level 3 |
| Interest rate swaps-Asset | | $ | 1,471 |
| | $ | — |
| | $ | 1,471 |
| | $ | — |
|
| Interest rate swaps-Liability | | $ | (2,438 | ) | | $ | — |
| | $ | (2,438 | ) | | $ | — |
|
6. Equity
Preferred Stock
Pursuant to its charter, theThe Company is authorized to issue 15,000,000up to 20,000,000 shares of preferred stock, par value $0.01 per share. The following table sets forth the Company's outstanding preferred stock issuances asAs of December 31, 2017.
|
| | | | | | | | | | | | |
| Preferred Stock Issuances | | Issuance Date | | Number of Shares | | Liquidation Value Per Share | | Interest Rate |
| Series B Cumulative Redeemable Preferred Stock | | April 16, 2013 | | 2,800,000 |
| | $ | 25.00 |
| | 6.625 | % |
| Series C Cumulative Redeemable Preferred Stock | | March 17, 2016 | | 3,000,000 |
| | $ | 25.00 |
| | 6.875 | % |
Dividends on the Series B Preferred Stock and Series CPreferred Stock (collectively, the "Preferred Stock Issuances") are payable quarterly in arrears on or about the last day of March, June, September,2022 and December 31, 2021, there were no shares of each year. The Preferred Stock Issuances rank on parity with each other and rank senior to the Company’s commonpreferred stock with respect to dividend rights and rights upon the liquidation, dissolutionissued or winding up of the Company. The Preferred Stock Issuances have no stated maturity date and are not subject to mandatory redemption or any sinking fund. Generally,outstanding.
On March 1, 2021, the Company is not permittedgave notice to redeem the Series B Preferred Stock orall 3,000,000 issued and outstanding shares of the Series C Preferred Stock prior to April 16, 2018 andon March 17, 2021, respectively, except in limited circumstances relating to31, 2021. The Company redeemed the Company’s ability to qualify as a REIT and in certain other circumstances related to a change of control.
The tables below set forth the dividends attributable to the Company's outstanding preferred stock issuances during the years ended December 31, 2017 and 2016.
|
| | | | | | | | | | | | |
| Quarter Ended 2017 | | Declaration Date | | Series B
Preferred Stock Per Share | | Series C
Preferred Stock Per Share | | Payment Date |
| December 31 | | November 2, 2017 | | $ | 0.4140625 |
| | $ | 0.4296875 |
| | December 29, 2017 |
| September 30 | | July 31, 2017 | | 0.4140625 |
| | 0.4296875 |
| | September 29, 2017 |
| June 30 | | May 1, 2017 | | 0.4140625 |
| | 0.4296875 |
| | June 30, 2017 |
| March 31 | | February 15, 2017 | | 0.4140625 |
| | 0.4296875 |
| | March 31, 2017 |
| Total | | | | $ | 1.6562500 |
| | $ | 1.7187500 |
| | |
|
| | | | | | | | | | | | | | | | |
| Quarter Ended 2016 | | Declaration Date | | Series A Preferred Stock Per Share | | Series B Preferred Stock Per Share | | Series C Preferred Stock Per Share | | Payment Date |
| December 31 | | November 2, 2016 | (1) | $ | 0.19375 |
| (1) | $ | 0.4140625 |
| | $ | 0.4296875 |
| | December 30, 2016 |
| September 30 | | August 1, 2016 | | 0.56250 |
| | 0.4140625 |
| | 0.4296875 |
| | September 30, 2016 |
| June 30 | | May 2, 2016 | | 0.56250 |
| | 0.4140625 |
| | 0.4965300 |
| (2) | June 30, 2016 |
| March 31 | | February 22, 2016 | | 0.56250 |
| | 0.4140625 |
| | — |
| | March 31, 2016 |
| Total | | | | $ | 1.88125 |
| | $ | 1.6562500 |
| | $ | 1.3559050 |
| | |
| |
(1) | On November 2, 2016, the Company redeemed all of the outstanding shares of the Series A Preferred Stock, at a cash redemption price of $25.00 per share, plus accrued and unpaid dividends to but excluding the redemption date, without interest. |
| |
(2) | Dividends for the Series C Preferred Stock were accrued and cumulative from and including March 17, 2016 to the first payment date on June 30, 2016. |
On February 14, 2018, the Company’s board of directors declared the Series B Preferred Stock and Series C Preferred Stock on March 31, 2021 at a cash redemption price of $25.00 per share, plus accrued and unpaid dividends to, but excluding, the redemption date. The Company recognized a deemed dividend to the holders of the Series C Preferred Stock of approximately $2.6 million on the accompanying Consolidated Statements of Operations for the quarter ending Marchyear ended December 31, 2018 at a quarterly rate2021 related to redemption costs and the original issuance costs of $0.4140625 per share and $0.4296875 per share, respectively.the Series C Preferred Stock.
Common Stock
The Company is authorized to issue up to 300,000,000 shares of common stock, par value $0.01 per share.
The following sets forthtable summarizes the terms of the Company’s at-the market ("ATM"at-the-market (“ATM”) common stock offering program as of December 31, 2017.2022.
| | | | | | | | | | | | | | | | | | | | |
| ATM Common Stock Offering Program | | Date | | Maximum Aggregate Offering Price (in thousands) | | Aggregate Available as of December 31, 2022 (in thousands) |
| 2022 $750 million ATM | | February 17, 2022 | | $ | 750,000 | | | $ | 750,000 | |
|
| | | | | | | | | | |
| ATM Common Stock Offering Program | | Date | | Maximum Aggregate Offering Price (in thousands) | | Aggregate Common Stock Available as of
December 31, 2017 (in thousands) |
| 2017 $500 million ATM | | November 13, 2017 | | $ | 500,000 |
| | $ | 489,674 |
|
The table below sets forthfollowing tables summarize the activity for the ATM common stock offering programsprogram during the yearsyear ended December 31, 20172022 and 20162021 (in thousands, except share data).
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year ended December 31, 2022 |
| ATM Common Stock Offering Program | | Shares
Sold | | Weighted Average Price Per Share | | | | | | Net Proceeds (in thousands) |
2019 $600 million ATM(1) | | 128,335 | | | $ | 45.03 | | | | | | | $ | 5,721 | |
| Total/weighted average | | 128,335 | | | $ | 45.03 | | | | | | | $ | 5,721 | |
|
| | | | | | | | | | | | | | | | | | | |
| | | Year ended December 31, 2017 |
| ATM Common Stock Offering Program | | Shares
Sold | | Weighted Average Price Per Share | | Gross
Proceeds | | Sales
Agents’ Fee | | Net
Proceeds |
| 2017 $500 million ATM | | 363,843 |
| | $ | 28.38 |
| | $ | 10,326 |
| | $ | 129 |
| | $ | 10,197 |
|
2017 $300 million ATM(1) | | 11,098,748 |
| | $ | 27.03 |
| | $ | 300,000 |
| | $ | 3,637 |
| | $ | 296,363 |
|
2016 $228 million ATM(1) | | 4,799,784 |
| | $ | 24.42 |
| | $ | 117,216 |
| | $ | 1,604 |
| | $ | 115,612 |
|
| Total/weighted average | | 16,262,375 |
| | $ | 26.29 |
| | $ | 427,542 |
| | $ | 5,370 |
| | $ | 422,172 |
|
| |
(1) | This program ended before December 31, 2017. |
(1) This program ended during the quarter ended March 31, 2022. |
| | | | | | | | | | | | | | | | | | | |
| | | Year ended December 31, 2016 |
| ATM Common Stock Offering Program | | Shares
Sold | | Weighted Average Price Per Share | | Gross
Proceeds | | Sales
Agents’ Fee | | Net
Proceeds |
2016 $228 million ATM(1) | | 4,763,838 |
| | $ | 23.28 |
| | $ | 110,887 |
| | $ | 1,550 |
| | $ | 109,337 |
|
2016 $200 million ATM(1) | | 7,326,200 |
| | $ | 23.45 |
| | $ | 171,782 |
| | $ | 2,429 |
| | $ | 169,353 |
|
| Total/weighted average | | 12,090,038 |
| | $ | 23.38 |
| | $ | 282,669 |
| | $ | 3,979 |
| | $ | 278,690 |
|
| |
(1) | These programs ended before December 31, 2017. |
| | | | | | | | | | | | | | | | | | | | |
| | Year ended December 31, 2021 |
ATM Common Stock Offering Program(1) | | Shares
Sold | | Weighted Average Price Per Share | | Net Proceeds (in thousands) |
2019 $600 million ATM(2) | | 5,110,002 | | | $ | 37.53 | | | $ | 189,974 | |
| Total/weighted average | | 5,110,002 | | | $ | 37.53 | | | $ | 189,974 | |
Dividends
The tables below set forth the dividends attributable to the(1)Excludes shares of common stock that were declaredsold under the ATM common stock offering program on a forward basis or paidissued upon physical settlement of the related forward sale agreements during the yearsperiod.
(2)This program ended Decemberduring the quarter ended March 31, 2017 and 2016. The Company's board of directors may alter the amounts of dividends paid or suspend dividend payments at any time and therefore dividend payments are not assured.2022.
|
| | | | | | | | | | |
| Month Ended 2017 | | Declaration Date | | Record Date | | Per Share | | Payment Date |
| December 31 | | July 31, 2017 | | December 29, 2017 | | $ | 0.117500 |
| | January 16, 2018 |
| November 30 | | July 31, 2017 | | November 30, 2017 | | 0.117500 |
| | December 15, 2017 |
| October 31 | | July 31, 2017 | | October 31, 2017 | | 0.117500 |
| | November 15, 2017 |
| September 30 | | May 1, 2017 | | September 29, 2017 | | 0.117500 |
| | October 16, 2017 |
| August 31 | | May 1, 2017 | | August 31, 2017 | | 0.117500 |
| | September 15, 2017 |
| July 31 | | May 1, 2017 | | July 31, 2017 | | 0.117500 |
| | August 15, 2017 |
| June 30 | | February 15, 2017 | | June 30, 2017 | | 0.116667 |
| | July 17, 2017 |
| May 31 | | February 15, 2017 | | May 31, 2017 | | 0.116667 |
| | June 15, 2017 |
| April 30 | | February 15, 2017 | | April 28, 2017 | | 0.116667 |
| | May 15, 2017 |
| March 31 | | November 2, 2016 | | March 31, 2017 | | 0.116667 |
| | April 17, 2017 |
| February 28 | | November 2, 2016 | | February 28, 2017 | | 0.116667 |
| | March 15, 2017 |
| January 31 | | November 2, 2016 | | January 31, 2017 | | 0.116667 |
| | February 15, 2017 |
| Total | | | | | | $ | 1.405002 |
| | |
|
| | | | | | | | | | |
| Month Ended 2016 | | Declaration Date | | Record Date | | Per Share | | Payment Date |
| December 31 | | August 1, 2016 | | December 30, 2016 | | $ | 0.115833 |
| | January 17, 2017 |
| November 30 | | August 1, 2016 | | November 30, 2016 | | 0.115833 |
| | December 15, 2016 |
| October 31 | | August 1, 2016 | | October 31, 2016 | | 0.115833 |
| | November 15, 2016 |
| September 30 | | May 2, 2016 | | September 30, 2016 | | 0.115833 |
| | October 17, 2016 |
| August 31 | | May 2, 2016 | | August 31, 2016 | | 0.115833 |
| | September 15, 2016 |
| July 31 | | May 2, 2016 | | July 29, 2016 | | 0.115833 |
| | August 15, 2016 |
| June 30 | | February 22, 2016 | | June 30, 2016 | | 0.115833 |
| | July 15, 2016 |
| May 31 | | February 22, 2016 | | May 31, 2016 | | 0.115833 |
| | June 15, 2016 |
| April 30 | | February 22, 2016 | | April 29, 2016 | | 0.115833 |
| | May 16, 2016 |
| March 31 | | October 22, 2015 | | March 31, 2016 | | 0.115833 |
| | April 15, 2016 |
| February 29 | | October 22, 2015 | | February 29, 2016 | | 0.115833 |
| | March 15, 2016 |
| January 31 | | October 22, 2015 | | January 29, 2016 | | 0.115833 |
| | February 16, 2016 |
| Total | | | | | | $ | 1.389996 |
| | |
On November 2, 2017,3, 2021, the Company’s boardCompany completed an underwritten public offering of directors declared thean aggregate of 8,000,000 shares of common stock dividend for the months ending January 31, 2018, February 28, 2018 and March 31, 2018 at a monthly rateprice to the underwriters of $0.118333$41.99 per share, consisting of (i) 5,250,000 shares offered directly by the Company and (ii) 2,750,000 shares offered by the forward dealer in connection with certain forward sales agreements. The offering closed on
November 8, 2021 and the Company received net proceeds from the sale of shares offered directly by the Company of approximately $220.4 million. On December 1, 2021, the underwriters exercised their option to purchase an additional 1,200,000 offered by the forward dealer in connection with certain forward sales agreements for an offering price of $41.87 per share and the underwriters’ option closed on December 3, 2021. On December 27, 2021, the Company partially physically settled the forward sales agreement by issuing 2,750,000 shares of common stock.stock and received net proceeds of approximately $115.0 million. On March 29, 2022, the Company physically settled in full the forward sales agreement by issuing 1,200,000 shares of common stock for net proceeds of approximately $49.7 million, or $41.39 per share.
On April 5, 2021, the Company sold 1,446,760 shares on a forward basis under the ATM common stock offering program at a price of $34.56 per share, or $50.0 million, and $34.2144 per share net of sales agent fees. The Company does not initially receive any proceeds from the sale of shares on a forward basis. On September 29, 2021, the Company physically settled in full the forward sales agreements under the ATM common stock offering program by issuing 1,446,760 shares of common stock and received net proceeds of approximately $48.4 million, or $33.4585 per share.
On November 16, 2020, the Company completed an underwritten public offering of an aggregate of 8,000,000 shares of common stock offered by the forward dealer in connection with certain forward sale agreements at a price to the underwriters of $30.02 per share. On December 15, 2020, the underwriters exercised their option to purchase an additional 1,200,000 shares for an offering price of $29.90 per share. The offering closed on November 19, 2020 and the underwriters’ option closed on December 17, 2020. On December 23, 2020, the Company partially physically settled the forward sales agreements by issuing 4,518,077 shares of common stock and received net proceeds of approximately $135.0 million. On September 29, 2021, the Company physically settled in full the forward sales agreements by issuing the remaining 4,681,923 shares of common stock and received net proceeds of approximately $133.8 million, or $28.5791 per share.
On January 13, 2020, the Company completed an underwritten public offering of an aggregate of 10,062,500 shares of common stock at a price to the underwriters of $30.9022 per share, consisting of (i) 5,600,000 shares offered directly by the Company and (ii) 4,462,500 shares offered by the forward dealer in connection with certain forward sale agreements (including 1,312,500 shares offered pursuant to the underwriters’ option to purchase additional shares, which option was exercised in full). The offering closed on January 16, 2020 and the Company received net proceeds from the sale of shares offered directly by the Company of approximately $173.1 million. On December 23, 2020, the Company physically settled the forward sales agreements in full by issuing 4,462,500 shares of common stock and received net proceeds of approximately $131.2 million.
Restricted Stock-Based Compensation
Pursuant to the 2011 Plan, the Company grants restricted shares of common stock to certain employees of the Company. The restricted shares of common stock are subject to time-based vesting. Restricted shares of common stock granted on January 12, 2015,in 2022, 2021, and 2020, subject to the recipient’s continued employment, will vest over four years in three equal installments on each anniversary date of the grant. Restricted shares of common stock granted on January 8, 2016 and January 6, 2017, subject to the recipient’s continued employment, will vest in four equal installments on January 1 of each year beginning in 20172023, 2022, and 2018,2021, respectively. Refer to Note 148 for details on restricted shares of common stock granted on January 5, 2018.in connection with the settlement of certain performance units. Holders of restricted shares of common stock have voting rights and rights to receive dividends. Restricted shares of common stock may not be sold, assigned, transferred, pledged or otherwise disposed of and are subject to a risk of forfeiture prior to the expiration of the applicable vesting period.
The following table summarizes activity related to the Company’s unvested restricted shares of common stock forduring the years ended December 31, 2017, 20162022, 2021 and 2015.2020.
| | | | | | | | | | | | | | |
| Unvested Restricted Shares of Common Stock | | Shares | | Weighted Average Grant Date Fair Value per Share |
| Balance at December 31, 2019 | | 193,045 | | | $ | 24.38 | |
| Granted | | 75,419 | | | $ | 31.60 | |
Vested(1) | | (81,408) | | | $ | 23.46 | |
| Forfeited | | (2,166) | | | $ | 26.92 | |
| Balance at December 31, 2020 | | 184,890 | | | $ | 27.70 | |
| Granted | | 90,304 | | | $ | 29.77 | |
Vested(1) | | (79,140) | | | $ | 27.01 | |
| Forfeited | | (10,339) | | | $ | 30.32 | |
| Balance at December 31, 2021 | | 185,715 | | | $ | 28.86 | |
| Granted | | 58,580 | | | $ | 44.19 | |
Vested(1) | | (73,556) | | | $ | 28.03 | |
| Forfeited | | (14,036) | | | $ | 36.16 | |
| Balance at December 31, 2022 | | 156,703 | | | $ | 34.32 | |
(1)The Company repurchased and retired 25,836, 27,706, and 34,117, restricted shares of common stock that vested during the years ended December 31, 2022, 2021, and 2020, respectively.
|
| | | | |
| Unvested Restricted Shares of Common Stock | | Shares | |
| Balance at December 31, 2014 | | 263,916 |
| |
| Granted | | 94,290 |
| (1) |
| Vested | | (72,185 | ) | |
| Forfeited | | (14,906 | ) | |
| Balance at December 31, 2015 | | 271,115 |
| |
| Granted | | 101,289 |
| (2) |
| Vested | | (98,746 | ) | |
| Forfeited | | (1,321 | ) | |
| Balance at December 31, 2016 | | 272,337 |
| |
| Granted | | 75,001 |
| (3) |
| Vested | | (109,209 | ) | |
| Forfeited | | (922 | ) | |
| Balance at December 31, 2017 | | 237,207 |
| |
| |
(1) | The grant date fair value per share was $26.17. |
| |
(2) | The grant date fair value per share was $17.98. |
| |
(3) | The grant date fair value per share was $24.41. |
The unrecognized compensation expense associated with the Company’s restricted shares of common stock at December 31, 20172022 was approximately $2.7$3.0 million and is expected to be recognized over a weighted average period of approximately 2.4 years.
The following table summarizes the fair value at vesting date for the restricted shares of common stock that vested during the years ended December 31, 2017, 20162022, 2021 and 2015.2020.
| | | | | | | | | | | Year ended December 31, |
| | | Year ended December 31, | |
| | | 2017 | | 2016 | | 2015 | |
| Vested Restricted Shares of Common Stock | | Vested Restricted Shares of Common Stock | | 2022 | | 2021 | | 2020 |
| Vested restricted shares of common stock | | 109,209 |
| | 98,746 |
| | 72,185 |
| Vested restricted shares of common stock | | 73,556 | | | 79,140 | | | 81,408 | |
| Fair value of vested restricted shares of common stock (in thousands) | | $ | 2,591 |
| | $ | 1,813 |
| | $ | 1,751 |
| Fair value of vested restricted shares of common stock (in thousands) | | $ | 3,528 | | | $ | 2,581 | | | $ | 2,568 | |
7. Noncontrolling Interest
The Company is structured as an UPREIT, and owns substantially all of its assets and conducts substantially all of its business through its Operating Partnership. The Company’s consolidated financial statements include the accounts of the Company, the Operating Partnership and their subsidiaries. Thefollowing table below summarizes the activity for noncontrolling interest in the Company forduring the years ended December 31, 2017, 20162022, 2021 and 2015.2020.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Noncontrolling Interest | | LTIP Units | | Other
Common Units | | Total
Noncontrolling Common Units | | Noncontrolling Interest Percentage |
| Balance at December 31, 2019 | | 1,697,358 | | | 2,039,494 | | | 3,736,852 | | | 2.5 | % |
| Granted/Issued | | 278,806 | | | — | | | 278,806 | | | N/A |
| Forfeited | | — | | | — | | | — | | | N/A |
| Conversions from LTIP units to Other Common Units | | (283,741) | | | 283,741 | | | — | | | N/A |
| Redemptions from Other Common Units to common stock | | — | | | (730,420) | | | (730,420) | | | N/A |
| | | | | | | | |
| Balance at December 31, 2020 | | 1,692,423 | | | 1,592,815 | | | 3,285,238 | | | 2.0 | % |
| Granted/Issued | | 405,844 | | | — | | | 405,844 | | | N/A |
| Forfeited | | — | | | — | | | — | | | N/A |
| Conversions from LTIP units to Other Common Units | | (149,143) | | | 149,143 | | | — | | | N/A |
| Redemptions from Other Common Units to common stock | | — | | | (171,318) | | | (171,318) | | | N/A |
| | | | | | | | |
| Balance at December 31, 2021 | | 1,949,124 | | | 1,570,640 | | | 3,519,764 | | | 1.9 | % |
| Granted/Issued | | 470,237 | | | — | | | 470,237 | | | N/A |
| Forfeited | | (6,791) | | | — | | | (6,791) | | | N/A |
| Conversions from LTIP units to Other Common Units | | (98,494) | | | 98,494 | | | — | | | N/A |
| Redemptions from Other Common Units to common stock | | — | | | (98,494) | | | (98,494) | | | N/A |
| | | | | | | | |
| Balance at December 31, 2022 | | 2,314,076 | | | 1,570,640 | | | 3,884,716 | | | 2.1 | % |
|
| | | | | | | | | | | |
| | LTIP Units | | Other Common Units | | Total Noncontrolling Common Units | | Noncontrolling Interest |
| Balance at December 31, 2014 | 1,307,036 |
| | 1,124,813 |
| | 2,431,849 |
| | 3.6 | % |
Granted/Issued
| 323,069 |
| | 864,283 |
| | 1,187,352 |
| | N/A |
|
| Forfeitures | — |
| | — |
| | — |
| | N/A |
|
| Conversions from LTIP units to Other Common Units | (20,000 | ) | | 20,000 |
| | — |
| | N/A |
|
| Redemptions from Other Common Units to common stock | — |
| | (90,824 | ) | | (90,824 | ) | | N/A |
|
| Redemption of Other Common Units for cash | — |
| | (2,400 | ) | | (2,400 | ) | | N/A |
|
| Balance at December 31, 2015 | 1,610,105 |
| | 1,915,872 |
| | 3,525,977 |
| | 4.9 | % |
| Granted/Issued | 176,396 |
| | — |
| | 176,396 |
| | N/A |
|
| Forfeitures | — |
| | — |
| | — |
| | N/A |
|
| Conversions from LTIP units to Other Common Units | (209,985 | ) | | 209,985 |
| | — |
| | N/A |
|
| Redemptions from Other Common Units to common stock | — |
| | (68,492 | ) | | (68,492 | ) | | N/A |
|
| Balance at December 31, 2016 | 1,576,516 |
| | 2,057,365 |
| | 3,633,881 |
| | 4.3 | % |
| Granted/Issued | 126,239 |
| | 687,827 |
| | 814,066 |
| | N/A |
|
| Forfeitures | — |
| | — |
| | — |
| | N/A |
|
| Conversions from LTIP units to Other Common Units | (245,685 | ) | | 245,685 |
| | — |
| | N/A |
|
| Redemptions from Other Common Units to common stock | — |
| | (351,260 | ) | | (351,260 | ) | | N/A |
|
| Balance at December 31, 2017 | 1,457,070 |
| | 2,639,617 |
| | 4,096,687 |
| | 4.1 | % |
The Company adjusts the carrying value of noncontrolling interest to reflect its share of the book value of the Operating Partnership when there has been a change in the Company’s ownership of the Operating Partnership. Such adjustments are recorded to additional paid-in capital as a rebalancing of noncontrolling interest on the accompanying Consolidated Statements of Equity.
LTIP Units
LTIP units are granted to certain executive officers and senior employees of the Company as part of their compensation, and to independent directors for their service. LTIP units are valued by reference to the value of the Company’s common stock and are subject to such conditions and restrictions as the compensation committee of the board of directors may determine, including continued employment or service.
LTIP units granted on January 12, 2015 to certain executive officers and senior employees, subject to the recipient’s continued employment, will vest quarterly over three years, with the first vesting date being March 31, 2015. LTIP units granted on January 12, 2015 to independent directors, subject to the recipient’s continued service, will vest on January 12, 2016. LTIP units granted on January 6, 2017, January 8, 2016, and February 22, 2016 to certain senior executive officers and senior employees, subject to the recipient’s continued employment, will vest quarterly over four years, with the first vesting date being March 31, 2017, March 31, 2016, and March 31, 2016, respectively. LTIP units granted on January 6, 2017 and January 6, 2016 to independent directors, subject to the recipient’s continued service, will vest on January 1, 2018 and January 1, 2017, respectively. Refer to Note 14 for details on the LTIP units granted on January 5, 2018. Vested LTIP units can be converted to Other Common Units on a one-for-one basis once a materialan equity transaction has occurred that results in the accretion of the member’s capital account to the economic equivalent of an Other Common Unit. All LTIP units, whether vested or not, will receive the same monthly per unit distributions as Other Common Units, which equal per share dividends on common stock.
OnLTIP units granted in January 25, 2016,2022, 2021, and 2020 to certain senior executive officers and senior employees, subject to the recipient’s continued employment, will vest quarterly over four years, with the first vesting date having been March 31, 2022, 2021, and 2020, respectively. LTIP units granted in January 2022, 2021, and 2020 to independent directors, subject to the recipient’s continued service, will vest on January 1, 2023, 2022, and 2021, respectively.
Refer to Note 8 for a discussion of the LTIP units granted in January 2023, 2022, and 2021, pursuant to the January 2020, 2019, and 2018 performance units, respectively.
The fair value of the LTIP units at the date of grant was determined by a lattice-binomial option-pricing model based on a Monte Carlo simulation. The fair value of the LTIP units is based on Level 3 inputs and is a non-recurring fair value measurement. The following table summarizes the assumptions used in valuing such LTIP units granted during the years ended December 31, 2022, 2021 and 2020 (excluding those LTIP units granted pursuant to the settlements of performance units; refer to Note 8 for details).
| | | | | | | | | | | | | | | | | | | | |
| | Year ended December 31, |
| LTIP Units Granted and Assumptions | | 2022 | | 2021 | | 2020 |
| Grant date | | January 10, 2022 | | January 7, 2021 | | January 8, 2020 |
| Expected term (years) | | 10 | | 10 | | 10 |
| Expected stock price volatility | | 34.0 | % | | 34.0 | % | | 18.0 | % |
| Expected dividend yield | | 4.0 | % | | 5.0 | % | | 5.75 | % |
| Risk-free interest rate | | 1.204 | % | | 0.229 | % | | 1.61 | % |
| Fair value of LTIP units at issuance (in thousands) | | $ | 4,385 | | | $ | 4,316 | | | $ | 4,030 | |
| LTIP units at issuance | | 104,241 | | | 153,430 | | | 136,741 | |
| Fair value unit price per LTIP unit at issuance | | $ | 42.07 | | | $ | 28.13 | | | $ | 29.47 | |
The expected stock price volatility is based on a mix of the historical and implied volatilities of the Company and Geoffrey G. Jervis,certain peer group companies. The expected dividend yield is based on the Company’s Chief Financial Officer,average historical dividend yield and the dividend yield as of the valuation date for each award. The risk-free interest rate is based on U.S. Treasury note yields matching a three-year time period.
On August 17, 2021, the Company and David G. King, the Company’s Executive Vice President and Treasurer,Director of Real Estate Operations, agreed that Mr. Jervis’sKing’s employment with the Company would terminate effective February 25, 2016.September 17, 2021. Pursuant to the terms and conditions of the executive employment agreement and the several LTIP unit agreements and performance award agreements between the Company and Mr. Jervis, andKing, Mr. King received a severance package from the Company’s 2015 Outperformance Program ("OPP"), Mr. Jervis receivedCompany, including a lump sum cash payment, the continuation of certain insurance benefits, immediate vesting of outstanding LTIP units and eligibility to receive a pro-rated award payment under the OPP.for outstanding performance units. Accordingly, the Company accelerated the expense recognition of Mr. Jervis'sKing's unvested LTIP units in the amount of approximately $1.6$0.5 million, which is included in general and administrative expenses for the year ended December 31, 20162021 on
the accompanying Consolidated Statements of Operations. Additionally, the unrecognized compensation expense associated with Mr. Jervis's participation in the OPP after February 25, 2016King’s performance units will not be recognized. The Company also incurred approximately $1.5$1.6 million related to the lump sum cash payment and continuation of certain insurance benefits, which is included in general and administrative expenses during the year ended December 31, 20162021 on the accompanying Consolidated Statements of Operations. On October 15, 2021, Mr. King received 57,100 shares of common stock for his pro-rated award payment for outstanding performance units.
On May 4, 2015, the Company and the Operating Partnership and Benjamin S. Butcher, the Company’s Chief Executive Officer, President and Chairman of the Board, entered into an amended and restated employment agreement. The amended and restated agreement is for an initial term of three years. The agreement automatically extends for successive one year terms unless, not fewer than 60 days before the term’s end, either party provides a notice of non-renewal to the other party. In connection with the amended and restated agreement, the compensation committee of the board of directors granted Mr. Butcher a retention award of 100,000 LTIP units that vest one-half on the third anniversary of the grant and one-sixth on the fourth, fifth and sixth anniversaries.
The LTIP units issued under the 2011 Plan were valued using the Monte Carlo lattice binomial option-pricing model at the grant date. The fair value of the LTIP units are based on Level 3 inputs and are non-recurring fair value measurements. The table below sets forth the assumptions used in valuing such LTIP units for the years ended December 31, 2017, 2016 and 2015.
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| LTIP Units | | Assumptions |
| Grant date | | January 6, 2017 | | February 22, 2016 | | January 8, 2016 | | January 6, 2016 | | May 4, 2015 | | January 12, 2015 |
| Expected term (years) | | 10 |
| | 10 |
| | 10 |
| | 10 |
| | 10 |
| | 10 |
|
| Expected volatility | | 23.0 | % | | 22.0 | % | | 22.0 | % | | 22.0 | % | | 20.0 | % | | 20.0 | % |
| Expected dividend yield | | 6.0 | % | | 6.0 | % | | 6.0 | % | | 6.0 | % | | 6.0 | % | | 6.0 | % |
| Risk-free interest rate | | 1.61 | % | | 1.01 | % | | 1.28 | % | | 1.36 | % | | 0.66 | % | | 0.62 | % |
| Fair value of LTIP units at issuance (in thousands) | | $ | 2,924 |
| | $ | 277 |
| | $ | 2,254 |
| | $ | 390 |
| | $ | 2,038 |
| | $ | 5,450 |
|
| LTIP units at issuance | | 126,239 |
| | 18,386 |
| | 135,546 |
| | 22,464 |
| | 100,000 |
| | 223,069 |
|
| Fair value unit price per LTIP unit at issuance | | $ | 23.16 |
| | $ | 15.07 |
| | $ | 16.63 |
| | $ | 17.36 |
| | $ | 20.38 |
| | $ | 24.43 |
|
The following table summarizes activity related to the Company’s unvested LTIP units forduring the years ended December 31, 2017, 20162022, 2021 and 2015.2020.
| | | | | | | | | | | | | | |
| Unvested LTIP Units | | LTIP Units | | Weighted Average Grant Date Fair Value per Share |
| Balance at December 31, 2019 | | 227,348 | | | $ | 23.37 | |
| Granted | | 278,806 | | | $ | 29.47 | |
| Vested | | (294,706) | | | $ | 26.87 | |
| Forfeited | | — | | | $ | — | |
| Balance at December 31, 2020 | | 211,448 | | | $ | 26.54 | |
| Granted | | 405,844 | | | $ | 28.13 | |
| Vested | | (427,184) | | | $ | 27.47 | |
| Forfeited | | — | | | $ | — | |
| Balance at December 31, 2021 | | 190,108 | | | $ | 27.84 | |
| Granted | | 470,237 | | | $ | 42.07 | |
| Vested | | (513,438) | | | $ | 38.67 | |
| Forfeited | | (6,791) | | | $ | 34.02 | |
| Balance at December 31, 2022 | | 140,116 | | | $ | 35.60 | |
|
| | | |
Unvested LTIP Units | | LTIP Units |
Balance at December 31, 2014 | | 448,887 |
|
Granted | | 323,069 |
|
Vested | | (237,046 | ) |
Forfeited | | — |
|
Balance at December 31, 2015 | | 534,910 |
|
Granted | | 176,396 |
|
Vested | | (307,883 | ) |
Forfeited | | — |
|
Balance at December 31, 2016 | | 403,423 |
|
Granted | | 126,239 |
|
Vested | | (229,355 | ) |
Forfeited | | — |
|
Balance at December 31, 2017 | | 300,307 |
|
The unrecognized compensation expense associated with the Company’s LTIP units at December 31, 20172022 was approximately $4.8$2.6 million and is expected to be recognized over a weighted average period of approximately 2.62.4 years.
The following table summarizes the fair value at vesting date for the LTIP units that vested during years ended December 31, 2017, 20162022, 2021 and 2015.2020.
| | | | | | | | | | | | | | | | | | | | |
| | | Year ended December 31, |
| Vested LTIP units | | 2022 | | 2021 | | 2020 |
| Vested LTIP units | | 513,438 | | | 427,184 | | | 294,706 | |
| Fair value of vested LTIP units (in thousands) | | $ | 21,662 | | | $ | 16,390 | | | $ | 8,805 | |
|
| | | | | | | | | | | | |
| | | Year ended December 31, |
| | | 2017 | | 2016 | | 2015 |
| Vested LTIP units | | 229,355 |
| | 307,883 |
| | 237,046 |
|
| Fair value of vested LTIP units (in thousands) | | $ | 6,101 |
| | $ | 6,393 |
| | $ | 4,853 |
|
Other Common Units
Other Common Units and shares of the Company’s common stock have essentially the same economic characteristics in that Other Common Units directly, and shares of the Company’s common stock indirectly, through the Company’s interest in the Operating Partnership, share equally in the total net income or loss distributions of the Operating Partnership. Subject to certain restrictions, investors who own Other Common Units have the right to cause the Operating Partnership to redeem any or all of their Other Common Units for cash equal to the then-current value of one share of the Company’s common stock, or, at the Company’s election, shares of common stock on a one-for-one basis. When redeeming the Other Common Unit for cash, the value of a share of common stock is calculated as the average common stock closing price on the NYSE for the 10 trading days immediately preceding the redemption notice date. Each Other Common Unit will receivereceives the same monthly distribution as a share of common stock.
As partial consideration for a property acquired on May 31, 2017, the Company granted 687,827 Other Common Units with a fair value of approximately $18.6 million. The number of Other Common Units granted was calculated based on the trailing five-day average common stock closing price ending on the second business day that immediately preceded the grant date. As partial consideration for a property acquired on December 11, 2015, the Company granted 51,607 Other Common Units with a fair value of approximately $1.0 million based on the Company’s NYSE closing stock price on December 11, 2015. As partial consideration for a property acquired on January 22, 2015, the Company granted 812,676 Other Common Units with a fair value of approximately $21.9 million based on the Company’s NYSE closing stock price on January 22, 2015. The number of Other Common Units granted for the 2015 transactions was calculated based on the trailing 10-day average common stock closing price ending on the business day that immediately preceded the grant date. The fair value of the shares of the Other Common Units granted was calculated based on the closing stock price per the NYSE on the grant date multiplied by the number of Other Common Units granted. The issuance of the Other Common Units was effected in reliance upon an exemption from registration provided by Section 4(2) under the Securities Act of 1933, as amended. The Company relied on the exemption based on representations given by the holders of the Other Common Units.
8. Equity Incentive Plan
The 2011 Plan provides for the issuance of equity-based awards, including stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock awards and other awards based on shares of the Company’s common stock, such as LTIP units in the Operating Partnership, that may be made by the Company directly to the executive officers, directors, employees, and other individuals providing bona fide services to or for the Company.
Subject to certain adjustments identified within the 2011 Plan, the aggregate number of shares of the Company’s common stock that may be awarded under the 2011 Plan is 3,642,4616,642,461 shares. Under the 2011 Plan, each LTIP unit awarded will be equivalent to an award of one share of common stock reserved under the 2011 Plan, thereby reducing the number of shares of common stock available for other equity awards on a one-for-one basis.
The 2011 Plan may be terminated, amended, modified or suspended at any time by the board of directors, subject to stockholder approval as required by law or stock exchange rules. The 2011 Plan expires on March 31, 2021.April 30, 2028.
On January 6, 2017, the Company granted performance units, approved by the compensation committee of the board of directors, underUnder the 2011 Plan, the Company grants performance units to provide certain key employees of the Company with incentives designed to align those key employees' interests more closely with those of the stockholders. The terms of the January 6, 2017 performance units grant is substantially the same as the March 8, 2016 performance units grant as discussed below, except that the measuring period commences on January 1, 2017 and ends on December 31, 2019. Refer to Note 14 for details on the performance units granted on January 5, 2018.
On March 8, 2016, the Company granted performance units, approved by the compensation committee of the board of directors, under the 2011 Plan to provide certain key employees of the Company with incentives designed to align those key employees' interests more closely with those of the stockholders.
Company. The ultimate value of the performance units depends on the Company’s total stockholder return ("TSR"(“TSR”) over a three-year period commencing January 1, 2016 and ending on December 31, 2018 (the "measuring period"“measuring period”). At the end of the measuring period, the performance units convert into shares of common stock, or, at the Company'sCompany’s election and with the award recipient'srecipient’s consent, LTIP units or other securities (“Award Shares”), at a rate depending on the Company’s TSR over the measuring period as compared to three different benchmarks and on the absolute amount of the Company’s TSR. A recipient of performance units may receive as few as zero shares or as many as 250% of the number of target units, plus deemed dividends. The target amount of the performance units is nominally
allocated as: (i) 25% to the Company’s TSR compared to the TSR of an industry peer group; (ii) 25% to the Company’s TSR compared to the TSR of a size-based peer group; and (iii) 50% to the Company’s TSR compared to the TSR of the companies in the MSCI US REIT index.
No dividends are paid to the recipient during the measuring period. At the end of the measuring period, if the Company’s TSR is such that the recipient earns shares of common stock or, at the Company's election and with the award recipient's consent, LTIP units or other securities (“Award Shares”),Shares, the recipient will receive additional Award Shares relating to dividends deemed to have been paid and reinvested on the Award Shares. The Company, in the discretion of the compensation committee of the board of directors, may pay the cash value of the deemed dividends instead of issuing additional Award Shares. The number of Award Shares is determinedare immediately vested at the end of the measuring period,period.
In January 2022, 2021, and one-half2020, the Company granted performance units approved by the compensation committee of the Award Shares and all dividend shares vest immediately. The other one-halfboard of directors, under the 2011 Plan to certain key employees of the Award Shares will be restricted (subject to forfeiture)Company. The measuring periods commenced on January 1, 2022, 2021, and vest one year after the2020, respectively, and end of the measuring period.on December 31, 2024, 2023, and 2022, respectively.
The fair value of the performance units atas of the grant date of grant was determined by a lattice-binomial option-pricing model based on a Monte Carlo simulation. The fair value of the performance units areis based on Level 3 inputs and are non-recurring fair value measurements. The performance unit equity compensation expense is recognized into earnings ratably from the grant date into earnings over the respective vesting periods. The following table below sets forthsummarizes the assumptions used in valuing the performance units granted during the years ended December 31, 20172022, 2021 and 2016.2020.
| | | | | | | | Year ended December 31, |
| Performance Units | | Assumptions | |
| Performance Units Granted Assumptions | | Performance Units Granted Assumptions | | 2022 | | 2021 | | 2020 |
| Grant date | | January 6, 2017 |
| | March 8, 2016 |
| Grant date | | January 10, 2022 | | January 7, 2021 | | January 8, 2020 |
| Expected volatility | | 23.0 | % | | 23.0 | % | |
| Expected stock price volatility | | Expected stock price volatility | | 34.1 | % | | 34.4 | % | | 17.4 | % |
| Expected dividend yield | | 6.0 | % | | 6.0 | % | Expected dividend yield | | 4.0 | % | | 5.0 | % | | 5.75 | % |
| Risk-free interest rate | | 1.61 | % | | 1.08 | % | Risk-free interest rate | | 1.1979 | % | | 0.2271 | % | | 1.59 | % |
| Fair value of performance units grant (in thousands) | | $ | 2,882 |
| | $ | 2,614 |
| Fair value of performance units grant (in thousands) | | $ | 6,289 | | | $ | 5,522 | | | $ | 5,389 | |
|
On January 12, 2015,The expected stock price volatility is based on a mix of the historical and implied volatilities of the Company and certain peer group companies. The expected dividend yield is based on the Company’s average historical dividend yield and the dividend yield as of the valuation date for each award. The risk-free interest rate is based on U.S. Treasury note yields matching the three-year time period of the performance period.
During the years ended December 31, 2022, 2021, and 2020, it was determined that the Company’s total stockholder return exceeded the threshold percentage and return hurdle for each of the 2020, 2019, and 2018 performance units, respectively. The following table summarizes the compensation committee of the board of directors approved issuances of the Company approved the 2015 Outperformance Program (the “2015 OPP”) under the 2011 Plan, to provide certain key employees of the Company or its affiliates with incentives to contribute to the growthLTIP units and financial success of the Company and its affiliates. On January 1, 2018, the Company’s three year measurement period pursuant to the 2015 OPP concluded; refer to Note 14 for details.
Recipients of awards under the 2015 OPP will share in an outperformance pool if the Company’s TSR, including both share appreciation and dividends, exceeds an absolute hurdle over a three year measurement period from January 1, 2015 to January 1, 2018 (the “measurement period”), based on a beginning value of $24.49 per share of the Company’s common stock, as well as a relative hurdle based on the MSCI US REIT Index. Provided the Company’s increase in cumulative absolute TSR over the measurement period equals or exceeds 25% (the “threshold percentage”), the outperformance pool consists of 10% of the excess TSR above an absolute TSR hurdle. The hurdle is equal to the total return of the MSCI US REIT Index plus five percentage points over the measurement period.
The aggregate reward for all recipients collectively is capped at the lesser of (i) 0.24% of the product of the total number of shares of common stock for the conclusion of the measuring periods for performance units for the years ended December 31, 2022, 2021, and Noncontrolling Common Units outstanding on January 1, 20182020.
| | | | | | | | | | | | | | | | | | | | |
| Settlement of Performance Units in LTIP Units or Shares of Common Stock | | 2020 Performance Units | | 2019 Performance Units | | 2018 Performance Units(1) |
| Measuring period conclusion date | | December 31, 2022 | | December 31, 2021 | | December 31, 2020 |
| Issuance date | | January 11, 2023 | | January 10, 2022 | | January 7, 2021 |
| Vested LTIP units | | 167,844 | | 365,996 | | 127,671 |
| Vested shares of common stock | | 40,660 | | 27,934 | | 44,591 |
| Shares of common stock repurchased and retired | | 875 | | 8,257 | | 17,731 |
(1)The compensation committee of the board of directors also approved the issuance of 124,743 LTIP units and the average6,352 restricted shares of common stock price of the Company for the 20 trading days ending immediately prior to January 1, 2018, and (ii) $15.4 million.that vested in one year on December 31, 2021.
Each participant’s award under the 2015 OPP is designated as a specified percentage of the aggregate outperformance pool. If the threshold percentage and return hurdle were achieved at the end of the measurement period, the outperformance pool will be calculated and then allocated to the award recipients. The 2015 OPP provides that awards will be paid in the form of fully vested shares of the Company’s common stock, or, at the Company's election and with the award recipient’s consent, other securities or cash.
The 2015 OPP awards were valued at approximately $1.6 million utilizing a Monte Carlo simulation to estimate the probability of the conditions being satisfied. The Monte Carlo simulation used a statistical formula underlying the Black-Scholes and binomial formulas and such simulation was run approximately 500,000 times. For each simulation, the payoff is calculated at the settlement date, which is then discounted to the award date at a risk-free interest rate. The average of the values over all simulations is the expected value of the award on the award date. Assumptions used in the valuations included (i) factors associated with the underlying performance of the Company’s stock price and total stockholder return over the term of the awards including total stock return volatility and risk-free interest and (ii) factors associated with the relative performance of the Company’s stock price and total stockholder return when compared to the MSCI US REIT Index. The valuation was performed in a risk-neutral framework, so no assumption was made with respect to an equity risk premium. The fair value of the 2015 OPP awards was estimated on the date
of grant using the following Level 3 inputs in the Monte Carlo valuation: expected price volatility for the Company and the MSCI US REIT Index of 20% and 13.6%, respectively, and a risk free rate of 0.9814%. The expense associated with the value of the 2015 OPP awards will be amortized ratably over the measurement period.
The unrecognized compensation expense associated with the Company's Performance-based Compensation PlansCompany’s performance units at December 31, 20172022 was approximately $3.1$5.0 million and is expected to be recognized over a weighted average period of approximately 2.11.7 years.
At December 31, 2022 and 2021, the number of shares available for issuance under the 2011 Plan were 1,269,097 and 1,634,019, respectively. The number of shares available for issuance under the 2011 Plan as of December 31, 2022 do not include an allocation for the 2022 and 2021 performance units as the awards were not determinable as of December 31, 2022. The number of shares available for issuance under the 2011 Plan as of December 31, 2021 do not include an allocation for the 2021 and 2020 performance units as the awards were not determinable as of December 31, 2021.
Non-cash Compensation Expense
The following table summarizes the amountamounts recorded in general and administrative expenses in the accompanying Consolidated Statements of Operations for the amortization of restricted shares of common stock, LTIP units, Performance-based Compensation Plans,performance units, and the Company’s board of directors’director compensation for the years ended December 31, 2017, 20162022, 2021 and 2015.2020.
| | | | | Year ended December 31, | | | Year ended December 31, |
| Non-Cash Compensation Expense (in thousands) | | 2017 | | 2016 | | 2015 | Non-Cash Compensation Expense (in thousands) | | 2022 | | 2021 | | 2020 |
| Restricted shares of common stock | | $ | 2,373 |
| | $ | 2,157 |
| | $ | 1,932 |
| Restricted shares of common stock | | $ | 2,103 | | | $ | 2,236 | | | $ | 1,924 | |
| LTIP units | | 4,675 |
| | 6,089 |
| (1) | 4,774 |
| LTIP units | | 3,996 | | | 6,489 | | (1) | 3,903 | |
| Performance-based Compensation Plans | | 2,147 |
| | 1,137 |
| | 523 |
| |
Board of directors compensation (2) | | 352 |
| | 346 |
| | 349 |
| |
| Performance units | | Performance units | | 5,423 | | | 5,730 | | | 5,358 | |
Director compensation(2) | | Director compensation(2) | | 504 | | | 488 | | | 496 | |
| Total non-cash compensation expense | | $ | 9,547 |
| | $ | 9,729 |
| | $ | 7,578 |
| Total non-cash compensation expense | | $ | 12,026 | | | $ | 14,943 | | | $ | 11,681 | |
| |
(1) | Inclusive of approximately $1.6(1)Inclusive of approximately $0.5 million of non-cash compensation expense during the year ended December 31, 2016 associated with the severance cost of an executive officer as discussed Note 7. |
| |
(2) | All of the Company’s independent directors elected to receive shares of common stock in lieu of cash for their service during the years ended December 31, 2017, 2016 and 2015. The number of shares of common stock granted is calculated based on the trailing 10 days average common stock price ending on the third business day preceding the grant date. |
At December 31, 20172021 associated with the severance cost of an executive officer, as discussed in Note 7.
(2)All of the Company’s independent directors elected to receive shares of common stock in lieu of cash for their service during the years ended December 31, 2022, 2021 and 2016, the number of shares available for issuance under the 2011 Plan were 983,735 and 1,156,578, respectively.2020. The number of shares availableof common stock granted was calculated based on the trailing 10 days average common stock price on the third business day preceding the grant date.
9. Leases
Lessor Leases
The Company has operating leases in which it is the lessor for issuanceits rental property. Certain leases contain variable lease payments based upon changes in the Consumer Price Index (“CPI”). Billings for real estate taxes and other expenses are also considered to be variable lease payments. Certain leases contain options to renew or terminate the lease, and options for the lessee to purchase the rental property, all of which are predominately at the sole discretion of the lessee.
The following table summarizes the components of rental income included in the accompanying Consolidated Statements of Operations for the years ended December 31, 2022, 2021 and 2020.
| | | | | | | | | | | | | | | | | | | | |
| | | Year ended December 31, |
| Rental Income (in thousands) | | 2022 | | 2021 | | 2020 |
| Fixed lease payments | | $ | 500,267 | | | $ | 424,356 | | | $ | 371,088 | |
| Variable lease payments | | 135,888 | | | 118,584 | | | 103,389 | |
| Straight-line rental income | | 17,893 | | | 18,565 | | | 12,711 | |
| Net increase (decrease) to rental income related to above and below market lease amortization | | 329 | | | (2,073) | | | (4,363) | |
| Total rental income | | $ | 654,377 | | | $ | 559,432 | | | $ | 482,825 | |
As of December 31, 2022 and December 31, 2021, the Company had accrued rental income of approximately $91.2 million and $75.8 million, respectively, included in tenant accounts receivable on the accompanying Consolidated Balance Sheets.
As of December 31, 2022 and December 31, 2021, the Company’s total liability associated with tenant lease security deposits was approximately $19.1 million and $15.2 million, respectively, which is included in tenant prepaid rent and security deposits on the accompanying Consolidated Balance Sheets.
The following table summarizes the maturity of fixed lease payments under the 2011 Plan do not include an allocation for the Performance-based Compensation Plans as the awards were not determinableCompany’s leases as of December 31, 20172022.
| | | | | | | | |
| Year | | Maturity of Fixed Lease Payments (in thousands) |
| 2023 | | $ | 519,937 | |
| 2024 | | $ | 482,016 | |
| 2025 | | $ | 424,221 | |
| 2026 | | $ | 347,440 | |
| 2027 | | $ | 271,204 | |
| Thereafter | | $ | 844,941 | |
Lessee Leases
The Company has operating leases in which it is the lessee for its ground leases and 2016. On January 1, 2018,corporate office leases. These leases have remaining lease terms of approximately 0.4 years to 47.7 years. Certain ground leases contain options to extend the leases for ten years to 20 years, all of which are reasonably certain to be exercised, and are included in the computation of the Company’s three year measurement period pursuantright-of-use assets and operating lease liabilities.
The following table summarizes supplemental information related to operating lease right-of-use assets and operating lease liabilities recognized in the 2015 OPP concluded; referCompany’s Consolidated Balance Sheets as of December 31, 2022 and December 31, 2021.
| | | | | | | | | | | | | | |
| Operating Lease Term and Discount Rate | | December 31, 2022 | | December 31, 2021 |
| Weighted average remaining lease term (years) | | 31.2 | | 29.0 |
| Weighted average discount rate | | 6.7 | % | | 6.6 | % |
The following table summarizes the operating lease cost included in the Company’s Consolidated Statements of Operations for the years ended December 31, 2022, 2021 and 2020.
| | | | | | | | | | | | | | | | | | | | |
| | | Year ended December 31, |
| Operating Lease Cost (in thousands) | | 2022 | | 2021 | | 2020 |
| Operating lease cost included in property expense attributable to ground leases | | $ | 2,372 | | | $ | 1,740 | | | $ | 1,424 | |
| Operating lease cost included in general and administrative expense attributable to corporate office leases | | 1,747 | | | 1,735 | | | 1,592 | |
| Total operating lease cost | | $ | 4,119 | | | $ | 3,475 | | | $ | 3,016 | |
The following table summarizes supplemental cash flow information related to Note 14operating leases in the Company’s Consolidated Statements of Cash Flows for details.the years ended December 31, 2022, 2021 and 2020.
| | | | | | | | | | | | | | | | | | | | |
| | | Year ended December 31, |
| Operating Leases (in thousands) | | 2022 | | 2021 | | 2020 |
| Cash paid for amounts included in the measurement of lease liabilities (operating cash flows) | | $ | 3,784 | | | $ | 2,426 | | | $ | 2,355 | |
| Right-of-use assets obtained in exchange for new lease liabilities | | $ | — | | | $ | 146 | | | $ | 7,718 | |
9.The following table summarizes the maturity of operating lease liabilities under the Company’s ground leases and corporate office leases as of December 31, 2022.
| | | | | | | | |
| Year | | Maturity of Operating Lease Liabilities(1) (in thousands) |
| 2023 | | $ | 3,875 | |
| 2024 | | 3,914 | |
| 2025 | | 3,959 | |
| 2026 | | 2,993 | |
| 2027 | | 2,023 | |
| Thereafter | | 81,962 | |
| Total lease payments | | 98,726 | |
| Less: Imputed interest | | (63,626) | |
| Present value of operating lease liabilities | | $ | 35,100 | |
(1)Operating lease liabilities do not include estimates of CPI rent changes required by certain ground lease agreements. Therefore, actual payments may differ from those presented.
10. Earnings Per Share
The Company usesUnder the two-class method of computing earnings per common share, which is an earnings allocation formula that determines earnings per share forrestricted shares of common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Unvested restricted stock awards are considered participating securities as these stock-based awards contain non-forfeitable rights to dividends, unless and until a forfeiture occurs, and these awards must be included in the computation of earnings per share pursuant to the two-class method. During the years ended December 31, 2017, 20162022, 2021 and 2015,2020, there were 237,896, 276,367161,704, 198,171 and 280,839,187,283, respectively, unvested shares of restricted stock on a weighted average basis that were considered participating securities. Participating securities are included in the computation of diluted EPSearnings per share using the treasury stock method if the impact is dilutive.more dilutive than the two-class method. Other potentially dilutive shares of common sharesstock from the Company's Performance-based Compensation PlansCompany’s performance units and forward sales agreements are considered when calculating diluted EPS.earnings per share.
The following table sets forthreconciles the numerators and denominators in the computation of basic and diluted earnings per common share for the years ended December 31, 2017, 20162022, 2021 and 2015.2020.
| | | | | | | | | | | | | | | | | | | | |
| | Year ended December 31, |
| Earnings Per Share (in thousands, except per share data) | | 2022 | | 2021 | | 2020 |
| Numerator | | | | | | |
| Net income attributable to common stockholders | | $ | 178,089 | | | $ | 188,175 | | | $ | 196,720 | |
| Denominator | | | | | | |
| Weighted average common shares outstanding — basic | | 178,753 | | | 163,442 | | | 148,791 | |
Effect of dilutive securities(1) | | | | | | |
| Share-based compensation | | 187 | | | 640 | | | 412 | |
| Shares issuable under forward sales agreements | | — | | | 8 | | | 12 | |
| Weighted average common shares outstanding — diluted | | 178,940 | | | 164,090 | | | 149,215 | |
| Net income per share — basic and diluted | | | | | | |
| Net income per share attributable to common stockholders — basic | | $ | 1.00 | | | $ | 1.15 | | | $ | 1.32 | |
| Net income per share attributable to common stockholders — diluted | | $ | 1.00 | | | $ | 1.15 | | | $ | 1.32 | |
|
| | | | | | | | | | | | |
| | | Year ended December 31, |
| Earnings Per Share (in thousands, except share data) | | 2017 | | 2016 | | 2015 |
| Numerator | | | | | | |
| Net income (loss) | | $ | 32,200 |
| | $ | 35,588 |
| | $ | (29,345 | ) |
| Less: preferred stock dividends | | 9,794 |
| | 13,897 |
| | 10,848 |
|
| Less: amount allocated to participating securities | | 334 |
| | 384 |
| | 385 |
|
| Less: income (loss) attributable to noncontrolling interest after preferred stock dividends | | 941 |
| | 1,069 |
| | (1,962 | ) |
| Net income (loss) attributable to common stockholders | | $ | 21,131 |
| | $ | 20,238 |
| | $ | (38,616 | ) |
| Denominator | | |
| | | | |
| Weighted average common shares outstanding — basic | | 89,537,714 |
| | 70,637,185 |
| | 66,307,972 |
|
Effect of dilutive securities(1) | | | | | | |
| Share-based compensation | | 465,845 |
| | 215,363 |
| | — |
|
| Weighted average common shares outstanding — diluted | | 90,003,559 |
| | 70,852,548 |
| | 66,307,972 |
|
| Net income (loss) per share — basic and diluted | | | | | | |
| Net income (loss) per share attributable to common stockholders — basic | | $ | 0.24 |
| | $ | 0.29 |
| | $ | (0.58 | ) |
| Net income (loss) per share attributable to common stockholders — diluted | | $ | 0.23 |
| | $ | 0.29 |
| | $ | (0.58 | ) |
| |
(1) | (1)During the years ended December 31, 2017, 2016 and 2015, there were 237,896, 276,367, and 280,839, unvested shares of restricted common stock, respectively, on a weighted average basis that were not included in the computation of diluted earnings per share because to do so would have been antidilutive for the period. During the year ended December 31, 2015, there were no unvested shares of Performance-based Compensation Plans on a weighted average basis that were included in the computation of diluted earnings per share because to do so would have been antidilutive for the period. |
10. Future Minimum Rents
The Company’s properties are leased to tenants under triple net, modified, and gross leases. Minimum contractual lease payments receivable, excluding tenant reimbursement of expenses, under non-cancelable operating leases in effect as of December 31, 2017 are approximately as follows.2022, 2021, and 2020, there were 162, 198, and 187, unvested restricted shares of common stock (on a weighted average basis), respectively, that were not included in the computation of diluted earnings per share because the allocation of income under the two-class method was more dilutive.
|
| | | | |
| Year | | Future Minimum Rents (in thousands) |
| 2018 | | $ | 263,703 |
|
| 2019 | | $ | 235,967 |
|
| 2020 | | $ | 203,058 |
|
| 2021 | | $ | 158,243 |
|
| 2022 | | $ | 126,990 |
|
| Thereafter | | $ | 442,259 |
|
11. Commitments and Contingencies
The Company is subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are generally covered by insurance subject to deductible requirements. Management believes that the ultimate settlement of these actions will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows.
On April 18, 2012, the Company entered into an agreement with affiliates of Columbus Nova Real Estate Acquisition Group, Inc. ("Columbus Nova") to source sale leaseback transactions for potential acquisitions by the Company. The agreement called for various fees to be paid to Columbus Nova for its services including acquisition fees, credit monitoring fees, and a one-time incentive fee if certain performance thresholds were met. The measurement period for the incentive fee ended on May 31, 2017. The incentive fee was settled in cash during the year ended December 31, 2017 and an incentive fee loss of approximately $0.7 million for the year ended December 31, 2017 is included in other expenses on the accompanying Consolidated Statements of Operations. As of December 31, 2016, the fair value of the incentive fee was zero. The estimated fair value as of December 31, 2016 was calculated using the discounted cash flow method under the income approach using the following Level 3 inputs: discount rates of 8.0% to 12.0% and exit capitalization rates of 7.0% to 12.0%.
The Company has letters of credit of approximately $5.9$3.6 million as of December 31, 20172022 related to developmentconstruction projects and certain other agreements.
Ground and Operating Lease Agreements
Future minimum rental payments under the terms of the fixed non-cancelable ground leases and operating leases, including any bargain renewal terms, under which the Company is the lessee as of December 31, 2017 are as follows. To the extent any tenant is responsible for those costs under its respective lease, those costs have been excluded from the table below.
|
| | | | |
| Year | | Future Minimum Rental Payments (1) (in thousands) |
| 2018 | | $ | 1,962 |
|
| 2019 | | $ | 2,000 |
|
| 2020 | | $ | 2,015 |
|
| 2021 | | $ | 1,120 |
|
| 2022 | | $ | 817 |
|
| Thereafter | | $ | 31,488 |
|
| |
(1) | Future minimum rental payments do not include estimates of CPI rent changes required by certain lease agreements. Therefore, actual minimum rental payments may differ than those presented. |
12. Employee Benefit Plans
Effective April 20, 2011, the Company adopted a 401(k) Defined Contribution Savings Plan (the “Plan”) for its employees. Under the Plan, as amended, employees, as defined, are eligible to participate in the Plan after they have completed three months of service. The Company provides a discretionary match of 50% of the employee’s contributions annually up to 6.0% of the employee’s annual compensation, subject to a cap imposed by federal tax law. The Company’s aggregate matching contribution for the years ended December 31, 2017, 20162022, 2021 and 20152020 was approximately $0.3$0.5 million, $0.4$0.5 million and $0.2$0.3 million, respectively. The Company’s contribution is subject to avest over three year vesting schedule,years, such that employees who have been with the Company for three years are fully vested in past and future contributions.
13. Related-Party Transactions
STAG Industrial Management, LLC ("Manager"), a wholly owned subsidiary of the Company, was performing certain asset management services for STAG Investments II, LLC (“Fund II”), a private, fully-invested fund that was an affiliate of the Company, that as of December 31, 2017 was legally dissolved. The Manager was paid an annual asset management fee based on the equity investment in the Fund II assets, which was 1.25% of the equity investment. In June 2013, Fund II and the Company amended the service agreement to exclude disposition services from the asset management services to be performed by the Company and results in a concomitant reduction in the asset management fee. As of December 31, 2017, the Company no longer earned asset management fees. The Company recognized asset management fee income of approximately $0.1 million, $0.2 million and $0.4 million for the years ended December 31, 2017, 2016 and 2015, respectively, which is included in other income on the accompanying Consolidated Statements of Operations. As of December 31, 2017 and 2016, the Company had a receivable in the amount of approximately $0 and $48,000, respectively, related to the asset management fee income included within prepaid expenses and other assets on the accompanying Consolidated Balance Sheets.
14. Subsequent Events
GAAP requires an entityThe Company identified the following events subsequent to disclose certain eventsDecember 31, 2022 that occur after the balance sheet date but before financial statements are issued or are available to be issued (“subsequent events”). There are two types of subsequent events. The first type consists of events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherentnot recognized in the process of preparing financial statements (“recognized subsequent events”). No significant recognized subsequent events were noted.statements.
The second type consists of events that provide evidence about conditions that did not exist at the date of the balance sheet but arose subsequent to that date (“non-recognized subsequent events”). The following non-recognized subsequent events are noted.
On January 5, 2018,2023, the Company redeemed in full at maturity the $100.0 million in aggregate principal amount of the Series F Unsecured Notes with a fixed interest rate of 3.98%.
On January 11, 2023, the Company granted 76,65955,954 restricted shares of common stock to certain employees of the Company pursuant to the 2011 Plan. The restricted shares of common stock granted will vest over four years in four equal installments on January 1 of each year beginning in 2019.January 1, 2024. The fair value of the restricted shares of common stock at the date of grant was $26.40$34.73 per share.
On January 5, 2018,11, 2023, the Company granted 21,55226,392 LTIP units to non-employee, independent directors and 116,064112,634 LTIP units to certain executive officers and senior employees pursuant to the 2011 Plan. The LTIP units granted to non-employee, independent directors will vest on January 1, 2019.2024. The LTIP units granted to certain executive officers and senior employees will vest in equal quarterly installments over four years, with the first vesting date being March 31, 2018.2023. The aggregate fair value of the LTIP units at the date of grant was approximately $3.4$4.6 million, as determined by a lattice-binomial option-pricing model based on a Monte Carlo simulation using an expected term of ten years, a weighted average volatility factor of 22.0%37.0%, a
weighted average expected dividend yield of 6.0%4.0%, and a weighted average risk-free interest rate of 2.09%3.9%. The fair value of the LTIP units areis based on Level 3 inputs and areis a non-recurring fair value measurements.measurement.
On January 5, 2018,11, 2023, the Company granted performance units to certain executive officers and senior employees pursuant to the 2011 Plan. The terms of the January 5, 201811, 2023 performance units grant isare substantially the same as the January 6, 2017 performance units grant as discussed in Note 8, except that the measuring period commencescommenced on January 1, 20182023 and ends on December 31, 2020.2025, and the size-based peer group was eliminated. The target amount of the performance units granted on January 11, 2023 is nominally allocated as: (i) 50% to the Company’s TSR compared to the TSR of an industry peer group; and (ii) 50% to the Company’s TSR compared to the TSR of the companies in the MSCI US REIT index. The aggregate fair value of the performance units at the date of grant was approximately $5.5$4.5 million, as determined by a lattice-binomial option-pricing model based on a Monte Carlo simulation using a weighted average volatility factor of 22.0%37.4%, a weighted average expected dividend yield of 6.0%4.0%, and a weighted average risk-free interest rate of 2.09%3.906%. The fair value of the performance units areis based on Level 3 inputs and areis a non-recurring fair value measurements.measurement.
On January 1, 2018, the Company’s three year measurement period pursuant to the 2015 OPP concluded. It was determined that the Company's TSR exceeded the threshold percentage and return hurdle and a pool of approximately $6.2 million was awarded to the participants. The compensation committee of the board of directors approved the issuance of 183,256 vested LTIP units and 53,722 vested shares of common stock (of which 15,183 shares of common stock were repurchased and retired) to the participants, which were issued on January 5, 2018.
STAG Industrial, Inc.
Schedule II—Valuation and Qualifying Accounts
(in thousands)
Allowance for Doubtful Receivables and Accrued Rent Reserves
|
| | | | | | | | | | | | | | | |
| | STAG Industrial, Inc. |
| | Beginning of Period | | Costs and Expenses | | Amounts Written Off | | Balance at End of Period |
| December 31, 2017 | $ | 188 |
| | $ | 123 |
| | $ | — |
| | $ | 311 |
|
| December 31, 2016 | $ | 106 |
| | $ | 125 |
| | $ | (43 | ) | | $ | 188 |
|
| December 31, 2015 | $ | 104 |
| | $ | 190 |
| | $ | (188 | ) | | $ | 106 |
|
STAG Industrial, Inc.
Schedule III—Real Estate and Accumulated Depreciation
December 31, 20172022
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Initial Cost to STAG Industrial, Inc. | | | | Gross Amounts at Which Carried at December 31, 2022 | | | | |
| State & City | | Address | | Encumbrances(1) | | Building & Improvements(2) | | Land(3) | | Costs Capitalized Subsequent to Acquisition and Valuation Provision | | Building & Improvements | | Land | | Total | | Accumulated Depreciation(4) | | Year Acquired |
| Alabama | | | | | | | | | | | | | | | | | | | | |
| Birmingham | | 103 Shades Creek Circle | | $ | — | | | $ | 6,779 | | | $ | 1,307 | | | $ | 97 | | | $ | 6,876 | | | $ | 1,307 | | | $ | 8,183 | | | $ | (472) | | | 2020 |
| Birmingham | | 2991 Shannon Oxmoor Road | | — | | | 5,828 | | | 1,341 | | | — | | | 5,828 | | | 1,341 | | | 7,169 | | | (375) | | | 2020 |
| Birmingham | | 101 39th Street North | | — | | | 6,239 | | | 590 | | | — | | | 6,239 | | | 590 | | | 6,829 | | | (129) | | | 2022 |
| Birmingham | | 101 Shades Creek Circle | | — | | | 3,958 | | | 836 | | | 167 | | | 4,125 | | | 836 | | | 4,961 | | | (281) | | | 2020 |
| Montgomery | | 4300 Alatex Road | | — | | | 7,523 | | | 418 | | | 1,789 | | | 9,312 | | | 418 | | | 9,730 | | | (2,269) | | | 2016 |
| Moody | | 2415 Highway 78 East | | — | | | 31,546 | | | 2,293 | | | 262 | | | 31,808 | | | 2,293 | | | 34,101 | | | (1,595) | | | 2021 |
| Phenix City | | 16 Downing Drive | | — | | | 1,415 | | | 276 | | | 280 | | | 1,695 | | | 276 | | | 1,971 | | | (525) | | | 2012 |
| Arizona | | | | | | | | | | | | | | | | | | | | |
| Avondale | | 925 N. 127th Avenue | | — | | | 13,163 | | | 1,674 | | | 28 | | | 13,191 | | | 1,674 | | | 14,865 | | | (2,260) | | | 2017 |
| Chandler | | 464 E. Chilton Drive | | — | | | 9,728 | | | 2,847 | | | 671 | | | 10,399 | | | 2,847 | | | 13,246 | | | (676) | | | 2020 |
| Gilbert | | 335 South Hamilton Court | | — | | | 5,784 | | | 2,107 | | | 240 | | | 6,024 | | | 2,107 | | | 8,131 | | | (302) | | | 2021 |
| Mesa | | 7447 E. Ray Road | | — | | | 7,930 | | | 1,277 | | | 311 | | | 8,241 | | | 1,277 | | | 9,518 | | | (534) | | | 2020 |
| Tucson | | 6161 South Palo Verde Road | | — | | | 8,037 | | | 996 | | | 107 | | | 8,144 | | | 996 | | | 9,140 | | | (1,357) | | | 2018 |
| Arkansas | | | | | | | | | | | | | | | | | | | | |
| Bryant | | 3700 Bryant Crossing Drive | | — | | | 17,386 | | | 1,143 | | | — | | | 17,386 | | | 1,143 | | | 18,529 | | | (990) | | | 2021 |
| Rogers | | 8th and Easy Street | | — | | | 7,878 | | | 1,072 | | | 1,625 | | | 9,503 | | | 1,072 | | | 10,575 | | | (2,669) | | | 2011 |
| California | | | | | | | | | | | | | | | | | | | | |
| Fresno | | 2624 E. Edgar Avenue | | — | | | 23,590 | | | 3,049 | | | — | | | 23,590 | | | 3,049 | | | 26,639 | | | (392) | | | 2022 |
| Hollister | | 2401 Bert Drive | | — | | | 26,049 | | | 2,913 | | | — | | | 26,049 | | | 2,913 | | | 28,962 | | | (431) | | | 2022 |
| Lodi | | 1170 South Guild Avenue | | — | | | 34,550 | | | 4,975 | | | — | | | 34,550 | | | 4,975 | | | 39,525 | | | (2,301) | | | 2020 |
| McClellan | | 4841 Urbani Avenue | | — | | | 14,582 | | | 1,048 | | | — | | | 14,582 | | | 1,048 | | | 15,630 | | | (1,320) | | | 2020 |
| Morgan Hill | | 18695 Madrone Parkway | | — | | | 7,608 | | | 2,562 | | | — | | | 7,608 | | | 2,562 | | | 10,170 | | | (280) | | | 2021 |
| Morgan Hill | | 18255 Sutter Boulevard | | — | | | 19,849 | | | 3,943 | | | — | | | 19,849 | | | 3,943 | | | 23,792 | | | (833) | | | 2021 |
| Rancho Cordova | | 2587 Mercantile Drive | | — | | | 4,346 | | | 678 | | | 33 | | | 4,379 | | | 678 | | | 5,057 | | | (269) | | | 2020 |
| Rancho Cordova | | 2431 Mercantile Drive | | — | | | 4,747 | | | 498 | | | 322 | | | 5,069 | | | 498 | | | 5,567 | | | (405) | | | 2020 |
| Roseville | | 8825 Washington Boulevard | | — | | | 11,411 | | | 2,140 | | | — | | | 11,411 | | | 2,140 | | | 13,551 | | | (561) | | | 2021 |
| Sacramento | | 1635 Main Avenue | | — | | | 8,609 | | | 845 | | | 160 | | | 8,769 | | | 845 | | | 9,614 | | | (574) | | | 2020 |
| Sacramento | | 5440 Stationers Way | | — | | | 21,258 | | | 2,203 | | | 150 | | | 21,408 | | | 2,203 | | | 23,611 | | | (1,355) | | | 2021 |
| Sacramento | | 5601 Warehouse Way | | — | | | 8,137 | | | 1,347 | | | 804 | | | 8,941 | | | 1,347 | | | 10,288 | | | (332) | | | 2021 |
| Sacramento | | 8500 Carbide Court | | — | | | 5,231 | | | 1,614 | | | — | | | 5,231 | | | 1,614 | | | 6,845 | | | (190) | | | 2021 |
| Sacramento | | 8440 Florin Road | | — | | | 12,184 | | | 3,921 | | | — | | | 12,184 | | | 3,921 | | | 16,105 | | | (517) | | | 2021 |
| Sacramento | | 900 National Drive | | — | | | 7,560 | | | 1,479 | | | — | | | 7,560 | | | 1,479 | | | 9,039 | | | (273) | | | 2021 |
| Sacramento | | 7728 Wilbur Way | | — | | | 9,225 | | | 857 | | | — | | | 9,225 | | | 857 | | | 10,082 | | | (1,016) | | | 2019 |
| San Diego | | 2055 Dublin Drive | | — | | | 14,895 | | | 2,290 | | | 322 | | | 15,217 | | | 2,290 | | | 17,507 | | | (2,631) | | | 2017 |
| Stockton | | 4091 Gold River Lane | | — | | | 4,133 | | | 663 | | | — | | | 4,133 | | | 663 | | | 4,796 | | | (282) | | | 2020 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to STAG Industrial, Inc. | | | | Gross Amounts at Which Carried at December 31, 2017 | | | | |
| City/State | | Encumbrances (1) | | Building & Improvements (2) | | Land | | Costs Capitalized Subsequent to Acquisition and Valuation Provision | | Building & Improvements | | Land | | Total | | Accumulated Depreciation (3) | | Acq Date |
| Albion, IN | | $ | — |
| | $ | 93 |
| | $ | 67 |
| | $ | — |
| | $ | 93 |
| | $ | 67 |
| | $ | 160 |
| | $ | (27 | ) | | 2006 |
| Albion, IN | | — |
| | 932 |
| | 103 |
| | — |
| | 932 |
| | 103 |
| | 1,035 |
| | (271 | ) | | 2006 |
| Albion, IN | | — |
| | 1,107 |
| | 55 |
| | — |
| | 1,107 |
| | 55 |
| | 1,162 |
| | (322 | ) | | 2006 |
| Albion, IN | | — |
| | 970 |
| | 332 |
| | — |
| | 970 |
| | 332 |
| | 1,302 |
| | (282 | ) | | 2006 |
| Albion, IN | | — |
| | 1,397 |
| | 52 |
| | — |
| | 1,397 |
| | 52 |
| | 1,449 |
| | (407 | ) | | 2006 |
| Albion, IN | | — |
| | 1,528 |
| | 126 |
| | — |
| | 1,528 |
| | 126 |
| | 1,654 |
| | (445 | ) | | 2006 |
| Kendallville, IN | | — |
| | 1,510 |
| | 142 |
| | — |
| | 1,510 |
| | 142 |
| | 1,652 |
| | (440 | ) | | 2006 |
| Albion, IN | | — |
| | 710 |
| | 187 |
| | — |
| | 710 |
| | 187 |
| | 897 |
| | (207 | ) | | 2006 |
| Alexandria, MN | | — |
| | 5,855 |
| | 960 |
| | 151 |
| | 6,006 |
| | 960 |
| | 6,966 |
| | (1,077 | ) | | 2008 |
| Allentown, PA | | — |
| | 7,336 |
| | 1,962 |
| | 783 |
| | 8,119 |
| | 1,962 |
| | 10,081 |
| | (1,196 | ) | | 2014 |
| Arlington, TX | | — |
| | 2,374 |
| | 413 |
| | 304 |
| | 2,678 |
| | 413 |
| | 3,091 |
| | (664 | ) | | 2007 |
| Arlington, TX | | — |
| | 6,151 |
| | 1,246 |
| | 913 |
| | 7,064 |
| | 1,246 |
| | 8,310 |
| | (1,042 | ) | | 2012 |
| Avon, CT | | — |
| | 2,750 |
| | 336 |
| | 483 |
| | 3,233 |
| | 336 |
| | 3,569 |
| | (460 | ) | | 2012 |
| Avondale, AZ | | — |
| | 13,163 |
| | 1,674 |
| | — |
| | 13,163 |
| | 1,674 |
| | 14,837 |
| | (37 | ) | | 2017 |
| Batavia, IL | | — |
| | 4,273 |
| | 618 |
| | — |
| | 4,273 |
| | 618 |
| | 4,891 |
| | (110 | ) | | 2017 |
| Bedford Heights, OH | | — |
| | 5,279 |
| | 837 |
| | 520 |
| | 5,799 |
| | 837 |
| | 6,636 |
| | (190 | ) | | 2017 |
| Belfast, ME | | — |
| | 10,331 |
| | 1,883 |
| | 487 |
| | 10,818 |
| | 1,883 |
| | 12,701 |
| | (1,958 | ) | | 2008 |
| Belvidere, IL | | — |
| | 4,083 |
| | 442 |
| | 255 |
| | 4,338 |
| | 442 |
| | 4,780 |
| | (347 | ) | | 2015 |
| Belvidere, IL | | — |
| | 16,914 |
| | 2,341 |
| | — |
| | 16,914 |
| | 2,341 |
| | 19,255 |
| | (397 | ) | | 2017 |
| Belvidere, IL | | — |
| | 3,956 |
| | 733 |
| | 36 |
| | 3,992 |
| | 733 |
| | 4,725 |
| | (528 | ) | | 2013 |
| Belvidere, IL | | — |
| | 3,436 |
| | 1,310 |
| | — |
| | 3,436 |
| | 1,310 |
| | 4,746 |
| | (595 | ) | | 2013 |
| Belvidere, IL | | — |
| | 3,517 |
| | 538 |
| | 114 |
| | 3,631 |
| | 538 |
| | 4,169 |
| | (433 | ) | | 2013 |
| Belvidere, IL | | — |
| | 6,899 |
| | 670 |
| | — |
| | 6,899 |
| | 670 |
| | 7,569 |
| | (868 | ) | | 2013 |
| Belvidere, IL | | — |
| | 4,299 |
| | 668 |
| | — |
| | 4,299 |
| | 668 |
| | 4,967 |
| | (577 | ) | | 2013 |
| Belvidere, IL | | — |
| | 3,711 |
| | 866 |
| | 159 |
| | 3,870 |
| | 866 |
| | 4,736 |
| | (566 | ) | | 2013 |
| Belvidere, IL | | — |
| | 2,808 |
| | 586 |
| | 22 |
| | 2,830 |
| | 586 |
| | 3,416 |
| | (446 | ) | | 2013 |
| Belvidere, IL | | — |
| | 8,303 |
| | 1,542 |
| | 591 |
| | 8,894 |
| | 1,542 |
| | 10,436 |
| | (1,270 | ) | | 2013 |
| Belvidere, IL | | — |
| | 71 |
| | 216 |
| | — |
| | 71 |
| | 216 |
| | 287 |
| | (71 | ) | | 2013 |
| Belleville, MI | | — |
| | 6,524 |
| | 724 |
| | — |
| | 6,524 |
| | 724 |
| | 7,248 |
| | (96 | ) | | 2017 |
| Biddeford, ME | | — |
| | 8,164 |
| | 1,369 |
| | 3,916 |
| | 12,080 |
| | 1,369 |
| | 13,449 |
| | (827 | ) | | 2016 |
| Boardman, OH | | — |
| | 3,473 |
| | 282 |
| | 834 |
| | 4,307 |
| | 282 |
| | 4,589 |
| | (1,172 | ) | | 2007 |
| Brooklyn Park, MN | | — |
| | 11,988 |
| | 1,926 |
| | — |
| | 11,988 |
| | 1,926 |
| | 13,914 |
| | (427 | ) | | 2016 |
| Buena Vista, VA | | — |
| | 2,500 |
| | 534 |
| | 635 |
| | 3,135 |
| | 534 |
| | 3,669 |
| | (567 | ) | | 2012 |
| Buffalo, NY | | — |
| | 2,924 |
| | 146 |
| | — |
| | 2,924 |
| | 146 |
| | 3,070 |
| | (455 | ) | | 2012 |
| Burlington, NJ | | — |
| | 42,652 |
| | 5,135 |
| | 79 |
| | 42,731 |
| | 5,135 |
| | 47,866 |
| | (3,810 | ) | | 2015 |
| Burlington, NJ | | — |
| | 19,577 |
| | 4,030 |
| | 1,238 |
| | 20,815 |
| | 4,030 |
| | 24,845 |
| | (1,957 | ) | | 2015 |
| Calhoun, GA | | — |
| | 2,764 |
| | 388 |
| | — |
| | 2,764 |
| | 388 |
| | 3,152 |
| | (297 | ) | | 2014 |
| Camarillo, CA | | — |
| | 10,785 |
| | 7,242 |
| | 237 |
| | 11,022 |
| | 7,242 |
| | 18,264 |
| | (1,394 | ) | | 2014 |
| Camarillo, CA | | — |
| | 19,857 |
| | 7,989 |
| | 25 |
| | 19,882 |
| | 7,989 |
| | 27,871 |
| | (2,324 | ) | | 2014 |
| Cedar Hill, TX | | — |
| | 11,971 |
| | 4,066 |
| | — |
| | 11,971 |
| | 4,066 |
| | 16,037 |
| | (886 | ) | | 2016 |
| Charlotte, NC | | — |
| | 8,768 |
| | 3,535 |
| | 3,306 |
| | 12,074 |
| | 3,535 |
| | 15,609 |
| | (2,630 | ) | | 2010 |
| Charlotte, NC | | — |
| | 2,443 |
| | 805 |
| | 4 |
| | 2,447 |
| | 805 |
| | 3,252 |
| | (345 | ) | | 2014 |
| Charlotte, NC | | — |
| | 3,554 |
| | 386 |
| | 287 |
| | 3,841 |
| | 386 |
| | 4,227 |
| | (452 | ) | | 2014 |
| Charlotte, NC | | — |
| | 3,961 |
| | 515 |
| | — |
| | 3,961 |
| | 515 |
| | 4,476 |
| | (283 | ) | | 2015 |
| Charlotte, NC | | — |
| | 4,445 |
| | 678 |
| | — |
| | 4,445 |
| | 678 |
| | 5,123 |
| | (257 | ) | | 2016 |
| Chattanooga, TN | | — |
| | 2,321 |
| | 187 |
| | — |
| | 2,321 |
| | 187 |
| | 2,508 |
| | (265 | ) | | 2015 |
| Chattanooga, TN | | — |
| | 4,730 |
| | 380 |
| | 13 |
| | 4,743 |
| | 380 |
| | 5,123 |
| | (540 | ) | | 2015 |
| Chattanooga, TN | | — |
| | 8,459 |
| | 424 |
| | — |
| | 8,459 |
| | 424 |
| | 8,883 |
| | (1,100 | ) | | 2015 |
| Cheektowaga, NY | | — |
| | 2,757 |
| | 216 |
| | 808 |
| | 3,565 |
| | 216 |
| | 3,781 |
| | (713 | ) | | 2008 |
| Chesterfield, MI | | — |
| | 1,169 |
| | 207 |
| | 62 |
| | 1,231 |
| | 207 |
| | 1,438 |
| | (420 | ) | | 2007 |
| Chesterfield, MI | | — |
| | 798 |
| | 150 |
| | 128 |
| | 926 |
| | 150 |
| | 1,076 |
| | (232 | ) | | 2007 |
| Chesterfield, MI | | — |
| | 802 |
| | 151 |
| | 224 |
| | 1,026 |
| | 151 |
| | 1,177 |
| | (301 | ) | | 2007 |
| Chesterfield, MI | | — |
| | 5,304 |
| | 942 |
| | 2,150 |
| | 7,454 |
| | 942 |
| | 8,396 |
| | (2,054 | ) | | 2007 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Initial Cost to STAG Industrial, Inc. | | | | Gross Amounts at Which Carried at December 31, 2022 | | | | |
| State & City | | Address | | Encumbrances(1) | | Building & Improvements(2) | | Land(3) | | Costs Capitalized Subsequent to Acquisition and Valuation Provision | | Building & Improvements | | Land | | Total | | Accumulated Depreciation(4) | | Year Acquired |
| Stockton | | 3841 Metro Drive | | — | | | 12,552 | | | 1,806 | | | 524 | | | 13,076 | | | 1,806 | | | 14,882 | | | (644) | | | 2021 |
| Stockton | | 3843 Gold River Lane | | — | | | 4,136 | | | 660 | | | — | | | 4,136 | | | 660 | | | 4,796 | | | (281) | | | 2020 |
| West Sacramento | | 3525 Carlin Drive | | — | | | 33,707 | | | 4,350 | | | — | | | 33,707 | | | 4,350 | | | 38,057 | | | — | | | 2021 |
| Colorado | | | | | | | | | | | | | | | | | | | | |
| Grand Junction | | 2139 Bond Street | | — | | | 4,002 | | | 314 | | | — | | | 4,002 | | | 314 | | | 4,316 | | | (924) | | | 2015 |
| Johnstown | | 4150 Ronald Reagan Boulevard | | — | | | 14,964 | | | 1,133 | | | 27 | | | 14,991 | | | 1,133 | | | 16,124 | | | (1,341) | | | 2019 |
| Longmont | | 4300 Godding Hollow Parkway | | — | | | 5,322 | | | 734 | | | 903 | | | 6,225 | | | 734 | | | 6,959 | | | (837) | | | 2018 |
| Loveland | | 4550 Byrd Drive | | — | | | 16,591 | | | 3,452 | | | 136 | | | 16,727 | | | 3,452 | | | 20,179 | | | (623) | | | 2021 |
| Loveland | | 4510 Byrd Drive | | — | | | 14,134 | | | 3,047 | | | 2,928 | | | 17,062 | | | 3,047 | | | 20,109 | | | (623) | | | 2021 |
| Connecticut | | | | | | | | | | | | | | | | | | | | |
| Avon | | 60 Security Drive | | — | | | 1,282 | | | 107 | | | 239 | | | 1,521 | | | 107 | | | 1,628 | | | (802) | | | 2012 |
| East Windsor | | 4 Craftsman Road | | — | | | 5,711 | | | 400 | | | 191 | | | 5,902 | | | 400 | | | 6,302 | | | (1,296) | | | 2016 |
| East Windsor | | 24 Thompson Road | | — | | | 4,571 | | | 348 | | | 1,182 | | | 5,753 | | | 348 | | | 6,101 | | | (1,854) | | | 2012 |
| Milford | | 200 Research Drive | | — | | | 13,853 | | | 1,650 | | | 236 | | | 14,089 | | | 1,650 | | | 15,739 | | | (501) | | | 2021 |
| Milford | | 40 Pepes Farm Road | | — | | | 10,040 | | | 1,264 | | | 1,038 | | | 11,078 | | | 1,264 | | | 12,342 | | | (2,308) | | | 2017 |
| North Haven | | 300 Montowese Avenue Extension | | — | | | 39,253 | | | 4,086 | | | 4,513 | | | 43,766 | | | 4,086 | | | 47,852 | | | (10,599) | | | 2015 |
| Wallingford | | 5 Sterling Drive | | — | | | 6,071 | | | 585 | | | 317 | | | 6,388 | | | 585 | | | 6,973 | | | (1,138) | | | 2017 |
| Delaware | | | | | | | | | | | | | | | | | | | | |
| New Castle | | 400 Lukens Drive | | — | | | 17,767 | | | 2,616 | | | 198 | | | 17,965 | | | 2,616 | | | 20,581 | | | (4,735) | | | 2016 |
| Florida | | | | | | | | | | | | | | | | | | | | |
| Daytona Beach | | 530 Fentress Boulevard | | — | | | 875 | | | 1,237 | | | 2,381 | | | 3,256 | | | 1,237 | | | 4,493 | | | (1,504) | | | 2007 |
| Fort Myers | | 16341 Domestic Avenue | | — | | | 22,005 | | | 2,729 | | | — | | | 22,005 | | | 2,729 | | | 24,734 | | | (1,332) | | | 2020 |
| Jacksonville | | 775 Whittaker Road | | — | | | 3,391 | | | 451 | | | 415 | | | 3,806 | | | 451 | | | 4,257 | | | (835) | | | 2017 |
| Jacksonville | | 9601 North Main Street | | — | | | 7,803 | | | 650 | | | 640 | | | 8,443 | | | 650 | | | 9,093 | | | (1,712) | | | 2017 |
| Jacksonville | | 550 Gun Club Road | | — | | | 7,837 | | | 674 | | | 1,557 | | | 9,394 | | | 674 | | | 10,068 | | | (1,953) | | | 2017 |
| Jacksonville | | 555 Zoo Parkway | | — | | | 7,025 | | | 596 | | | 1,016 | | | 8,041 | | | 596 | | | 8,637 | | | (1,634) | | | 2017 |
| Jacksonville | | 9779 Pritchard Road | | — | | | 14,319 | | | 1,284 | | | 1,418 | | | 15,737 | | | 1,284 | | | 17,021 | | | (1,705) | | | 2019 |
| Lake Worth | | 2230 4th Avenue North | | — | | | 2,530 | | | 1,533 | | | — | | | 2,530 | | | 1,533 | | | 4,063 | | | (182) | | | 2020 |
| Lake Worth | | 3600 23rd Avenue South | | — | | | 4,729 | | | 1,502 | | | — | | | 4,729 | | | 1,502 | | | 6,231 | | | (311) | | | 2020 |
| Lake Worth | | 2269 4th Avenue North | | — | | | 4,751 | | | 2,254 | | | — | | | 4,751 | | | 2,254 | | | 7,005 | | | (337) | | | 2020 |
| Lakeland | | 4675 Drane Field Road | | — | | | 13,060 | | | 1,099 | | | — | | | 13,060 | | | 1,099 | | | 14,159 | | | (883) | | | 2020 |
| Ocala | | 650 Southwest 27th Avenue | | — | | | 13,257 | | | 731 | | | 2,902 | | | 16,159 | | | 731 | | | 16,890 | | | (4,002) | | | 2013 |
| Orlando | | 1854 Central Florida Parkway | | — | | | 4,814 | | | 1,339 | | | 1,530 | | | 6,344 | | | 1,339 | | | 7,683 | | | (1,422) | | | 2013 |
| Orlando | | 7050 Overland Road | | — | | | 1,996 | | | 721 | | | — | | | 1,996 | | | 721 | | | 2,717 | | | (674) | | | 2012 |
| Tampa | | 4330 Williams Road | | — | | | 6,390 | | | 829 | | | 71 | | | 6,461 | | | 829 | | | 7,290 | | | (787) | | | 2019 |
| West Palm Beach | | 4268 Westroads Drive | | — | | | 6,835 | | | 2,906 | | | 600 | | | 7,435 | | | 2,906 | | | 10,341 | | | (481) | | | 2020 |
| Georgia | | | | | | | | | | | | | | | | | | | | |
| Atlanta | | 4200 SW Shirley Drive | | — | | | 8,382 | | | 1,679 | | | 542 | | | 8,924 | | | 1,679 | | | 10,603 | | | (124) | | | 2022 |
| Augusta | | 1816 Tobacco Road | | — | | | 6,249 | | | 937 | | | — | | | 6,249 | | | 937 | | | 7,186 | | | (1,127) | | | 2018 |
| Buford | | 4823 Roy Carlson Boulevard | | — | | | 9,195 | | | 1,061 | | | 985 | | | 10,180 | | | 1,061 | | | 11,241 | | | (300) | | | 2021 |
| Calhoun | | 103 Enterprise Drive | | — | | | 2,743 | | | 388 | | | 79 | | | 2,822 | | | 388 | | | 3,210 | | | (678) | | | 2014 |
| Dallas | | 351 Thomas D. Murphy Drive | | — | | | 1,712 | | | 475 | | | — | | | 1,712 | | | 475 | | | 2,187 | | | (599) | | | 2012 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to STAG Industrial, Inc. | | | | Gross Amounts at Which Carried at December 31, 2017 | | | | |
| City/State | | Encumbrances (1) | | Building & Improvements (2) | | Land | | Costs Capitalized Subsequent to Acquisition and Valuation Provision | | Building & Improvements | | Land | | Total | | Accumulated Depreciation (3) | | Acq Date |
| Chester, VA | | — |
| | 3,402 |
| | 775 |
| | — |
| | 3,402 |
| | 775 |
| | 4,177 |
| | (613 | ) | | 2014 |
| Chicopee, MA | | — |
| | 5,867 |
| | 504 |
| | 77 |
| | 5,944 |
| | 504 |
| | 6,448 |
| | (1,020 | ) | | 2012 |
| Chippewa Falls, WI | | — |
| | 2,303 |
| | 133 |
| | — |
| | 2,303 |
| | 133 |
| | 2,436 |
| | (416 | ) | | 2011 |
| Chippewa Falls, WI | | — |
| | 544 |
| | 44 |
| | — |
| | 544 |
| | 44 |
| | 588 |
| | (96 | ) | | 2011 |
| Cincinnati, OH | | — |
| | 2,395 |
| | 119 |
| | 895 |
| | 3,290 |
| | 119 |
| | 3,409 |
| | (1,866 | ) | | 2007 |
| Cleveland, TN | | — |
| | 3,161 |
| | 554 |
| | 84 |
| | 3,245 |
| | 554 |
| | 3,799 |
| | (638 | ) | | 2011 |
| Clinton, PA | | — |
| | 19,339 |
| | — |
| | — |
| | 19,339 |
| | — |
| | 19,339 |
| | (382 | ) | | 2017 |
| Clinton, TN | | — |
| | 3,302 |
| | 403 |
| | 78 |
| | 3,380 |
| | 403 |
| | 3,783 |
| | (493 | ) | | 2015 |
| Columbus, OH | | — |
| | 5,222 |
| | 337 |
| | — |
| | 5,222 |
| | 337 |
| | 5,559 |
| | (76 | ) | | 2017 |
| Columbus, OH | | — |
| | 3,123 |
| | 489 |
| | 167 |
| | 3,290 |
| | 489 |
| | 3,779 |
| | (594 | ) | | 2014 |
| Columbia, SC | | — |
| | 5,171 |
| | 783 |
| | — |
| | 5,171 |
| | 783 |
| | 5,954 |
| | (367 | ) | | 2016 |
| West Columbia, SC | | — |
| | 6,988 |
| | 715 |
| | 868 |
| | 7,856 |
| | 715 |
| | 8,571 |
| | (1,006 | ) | | 2013 |
| Council Bluffs, IA | | — |
| | 4,438 |
| | 414 |
| | — |
| | 4,438 |
| | 414 |
| | 4,852 |
| | (38 | ) | | 2017 |
| Dallas, GA | | — |
| | 1,712 |
| | 475 |
| | — |
| | 1,712 |
| | 475 |
| | 2,187 |
| | (311 | ) | | 2012 |
| LaGrange, GA | | — |
| | 3,175 |
| | 240 |
| | 331 |
| | 3,506 |
| | 240 |
| | 3,746 |
| | (711 | ) | | 2007 |
| Danville, KY | | — |
| | 11,772 |
| | 965 |
| | 3,699 |
| | 15,471 |
| | 965 |
| | 16,436 |
| | (2,722 | ) | | 2007 |
| Daytona Beach, FL | | — |
| | 875 |
| | 1,237 |
| | 1,711 |
| | 2,586 |
| | 1,237 |
| | 3,823 |
| | (760 | ) | | 2007 |
| Dayton, OH | | — |
| | 5,896 |
| | 331 |
| | 391 |
| | 6,287 |
| | 331 |
| | 6,618 |
| | (598 | ) | | 2015 |
| Dayton, OH | | — |
| | 23,725 |
| | 2,465 |
| | — |
| | 23,725 |
| | 2,465 |
| | 26,190 |
| | (707 | ) | | 2017 |
| DeForest, WI | | — |
| | 5,402 |
| | 1,131 |
| | 151 |
| | 5,553 |
| | 1,131 |
| | 6,684 |
| | (262 | ) | | 2016 |
| DeKalb, IL | | — |
| | 4,568 |
| | 489 |
| | — |
| | 4,568 |
| | 489 |
| | 5,057 |
| | (669 | ) | | 2013 |
| De Pere, WI | | — |
| | 6,144 |
| | 525 |
| | — |
| | 6,144 |
| | 525 |
| | 6,669 |
| | (1,056 | ) | | 2012 |
| Duncan, SC | | — |
| | 11,258 |
| | 1,002 |
| | 745 |
| | 12,003 |
| | 1,002 |
| | 13,005 |
| | (2,070 | ) | | 2012 |
| Duncan, SC | | — |
| | 6,739 |
| | 709 |
| | 81 |
| | 6,820 |
| | 709 |
| | 7,529 |
| | (1,028 | ) | | 2012 |
| Durham, NC | | — |
| | 2,700 |
| | 753 |
| | 31 |
| | 2,731 |
| | 753 |
| | 3,484 |
| | (291 | ) | | 2015 |
| Earth City, MO | | — |
| | 2,806 |
| | 1,123 |
| | 60 |
| | 2,866 |
| | 1,123 |
| | 3,989 |
| | (176 | ) | | 2016 |
| Edgefield, SC | | — |
| | 938 |
| | 220 |
| | 750 |
| | 1,688 |
| | 220 |
| | 1,908 |
| | (325 | ) | | 2012 |
| Edwardsville, KS | | — |
| | 13,224 |
| | 1,360 |
| | — |
| | 13,224 |
| | 1,360 |
| | 14,584 |
| | (300 | ) | | 2017 |
| Elizabethtown, PA | | — |
| | 5,357 |
| | 1,000 |
| | 152 |
| | 5,509 |
| | 1,000 |
| | 6,509 |
| | (605 | ) | | 2014 |
| Elkhart, IN | | — |
| | 210 |
| | 25 |
| | 143 |
| | 353 |
| | 25 |
| | 378 |
| | (71 | ) | | 2007 |
| Elkhart, IN | | — |
| | 3,519 |
| | 422 |
| | 571 |
| | 4,090 |
| | 422 |
| | 4,512 |
| | (1,005 | ) | | 2007 |
| El Paso, TX | | — |
| | 3,674 |
| | — |
| | — |
| | 3,674 |
| | — |
| | 3,674 |
| | (17 | ) | | 2017 |
| El Paso, TX | | — |
| | 10,398 |
| | — |
| | — |
| | 10,398 |
| | — |
| | 10,398 |
| | (49 | ) | | 2017 |
| El Paso, TX | | — |
| | 9,099 |
| | 1,248 |
| | 26 |
| | 9,125 |
| | 1,248 |
| | 10,373 |
| | (1,048 | ) | | 2014 |
| El Paso, TX | | — |
| | 7,905 |
| | 1,124 |
| | — |
| | 7,905 |
| | 1,124 |
| | 9,029 |
| | (1,096 | ) | | 2014 |
| El Paso, TX | | — |
| | 14,159 |
| | 1,854 |
| | 812 |
| | 14,971 |
| | 1,854 |
| | 16,825 |
| | (1,685 | ) | | 2014 |
| El Paso, TX | | — |
| | 9,897 |
| | 1,581 |
| | 99 |
| | 9,996 |
| | 1,581 |
| | 11,577 |
| | (1,102 | ) | | 2014 |
| El Paso, TX | | — |
| | 5,893 |
| | 1,136 |
| | — |
| | 5,893 |
| | 1,136 |
| | 7,029 |
| | (554 | ) | | 2015 |
| El Paso, TX | | — |
| | 3,096 |
| | — |
| | 1,088 |
| | 4,184 |
| | — |
| | 4,184 |
| | (721 | ) | | 2012 |
| Erlanger, KY | | — |
| | 3,826 |
| | 635 |
| | 6 |
| | 3,832 |
| | 635 |
| | 4,467 |
| | (291 | ) | | 2016 |
| East Troy, WI | | — |
| | 4,962 |
| | 304 |
| | — |
| | 4,962 |
| | 304 |
| | 5,266 |
| | (530 | ) | | 2014 |
| East Windsor, CT | | — |
| | 5,711 |
| | 400 |
| | 72 |
| | 5,783 |
| | 400 |
| | 6,183 |
| | (284 | ) | | 2016 |
| East Windsor, CT | | — |
| | 4,713 |
| | 348 |
| | 614 |
| | 5,327 |
| | 348 |
| | 5,675 |
| | (1,264 | ) | | 2012 |
| Fairborn, OH | | — |
| | 5,650 |
| | 867 |
| | — |
| | 5,650 |
| | 867 |
| | 6,517 |
| | (779 | ) | | 2015 |
| Fairfield, OH | | — |
| | 2,842 |
| | 948 |
| | 17 |
| | 2,859 |
| | 948 |
| | 3,807 |
| | (298 | ) | | 2016 |
| Farmington, NY | | — |
| | 5,342 |
| | 410 |
| | 20 |
| | 5,362 |
| | 410 |
| | 5,772 |
| | (1,447 | ) | | 2007 |
| Forest Park, GA | | — |
| | 9,527 |
| | 1,733 |
| | 744 |
| | 10,271 |
| | 1,733 |
| | 12,004 |
| | (590 | ) | | 2016 |
| Forest Park, GA | | — |
| | 8,189 |
| | 1,715 |
| | 127 |
| | 8,316 |
| | 1,715 |
| | 10,031 |
| | (431 | ) | | 2016 |
| Fort Wayne, IN | | — |
| | 3,142 |
| | 112 |
| | — |
| | 3,142 |
| | 112 |
| | 3,254 |
| | (359 | ) | | 2014 |
| Fort Worth, TX | | — |
| | 2,965 |
| | 389 |
| | 752 |
| | 3,717 |
| | 389 |
| | 4,106 |
| | (700 | ) | | 2011 |
| Gaffney, SC | | — |
| | 4,712 |
| | 1,233 |
| | 85 |
| | 4,797 |
| | 1,233 |
| | 6,030 |
| | (173 | ) | | 2017 |
| Gahanna, OH | | — |
| | 4,191 |
| | 1,265 |
| | 1,258 |
| | 5,449 |
| | 1,265 |
| | 6,714 |
| | (1,290 | ) | | 2011 |
| Gardiner, ME | | — |
| | 8,983 |
| | 948 |
| | — |
| | 8,983 |
| | 948 |
| | 9,931 |
| | (565 | ) | | 2016 |
| Garland, TX | | — |
| | 5,425 |
| | 1,344 |
| | 294 |
| | 5,719 |
| | 1,344 |
| | 7,063 |
| | (889 | ) | | 2014 |
| Garland, TX | | — |
| | 6,058 |
| | 1,542 |
| | 586 |
| | 6,644 |
| | 1,542 |
| | 8,186 |
| | (577 | ) | | 2015 |
| Germantown, WI | | — |
| | 6,035 |
| | 1,186 |
| | — |
| | 6,035 |
| | 1,186 |
| | 7,221 |
| | (964 | ) | | 2014 |
| Gloversville, NY | | (714 | ) | | 1,299 |
| | 117 |
| | — |
| | 1,299 |
| | 117 |
| | 1,416 |
| | (208 | ) | | 2012 |
| Gloversville, NY | | (1,154 | ) | | 2,603 |
| | 151 |
| | — |
| | 2,603 |
| | 151 |
| | 2,754 |
| | (420 | ) | | 2012 |
| Gloversville, NY | | (824 | ) | | 1,486 |
| | 154 |
| | 36 |
| | 1,522 |
| | 154 |
| | 1,676 |
| | (238 | ) | | 2012 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Initial Cost to STAG Industrial, Inc. | | | | Gross Amounts at Which Carried at December 31, 2022 | | | | |
| State & City | | Address | | Encumbrances(1) | | Building & Improvements(2) | | Land(3) | | Costs Capitalized Subsequent to Acquisition and Valuation Provision | | Building & Improvements | | Land | | Total | | Accumulated Depreciation(4) | | Year Acquired |
| Forest Park | | 5345 Old Dixie Highway | | — | | | 8,189 | | | 1,715 | | | 1,396 | | | 9,585 | | | 1,715 | | | 11,300 | | | (2,129) | | | 2016 |
| Lithonia | | 1995 Lithonia Industrial Boulevard | | — | | | 18,052 | | | 943 | | | 197 | | | 18,249 | | | 943 | | | 19,192 | | | (395) | | | 2022 |
| Norcross | | 4075 Blue Ridge Industrial Parkway | | — | | | 2,415 | | | 1,589 | | | 2,485 | | | 4,900 | | | 1,589 | | | 6,489 | | | (744) | | | 2016 |
| Savannah | | 1086 Oracal Parkway | | — | | | 13,034 | | | 439 | | | 119 | | | 13,153 | | | 439 | | | 13,592 | | | (3,174) | | | 2014 |
| Shannon | | 212 Burlington Drive | | — | | | 12,949 | | | 393 | | | 154 | | | 13,103 | | | 393 | | | 13,496 | | | (3,247) | | | 2013 |
| Smyrna | | 3500 Highlands Parkway | | — | | | 3,092 | | | 264 | | | 1,722 | | | 4,814 | | | 264 | | | 5,078 | | | (1,065) | | | 2012 |
| Statham | | 1965 Statham Drive | | — | | | 6,130 | | | 588 | | | 1,258 | | | 7,388 | | | 588 | | | 7,976 | | | (2,187) | | | 2012 |
| Stone Mountain | | 1635 Stone Ridge Drive | | — | | | 2,548 | | | 612 | | | 780 | | | 3,328 | | | 612 | | | 3,940 | | | (663) | | | 2017 |
| Idaho | | | | | | | | | | | | | | | | | | | | |
| Idaho Falls | | 3900 South American Way | | — | | | 2,712 | | | 356 | | | 71 | | | 2,783 | | | 356 | | | 3,139 | | | (773) | | | 2013 |
| Illinois | | | | | | | | | | | | | | | | | | | | |
| Bartlett | | 1590 W. Stearns Road | | — | | | 19,493 | | | 2,198 | | | 449 | | | 19,942 | | | 2,198 | | | 22,140 | | | (910) | | | 2021 |
| Batavia | | 1100 North Raddant Road | | — | | | 7,763 | | | 1,124 | | | — | | | 7,763 | | | 1,124 | | | 8,887 | | | (505) | | | 2020 |
| Batavia | | 1862 Suncast Lane | | — | | | 4,427 | | | 598 | | | 274 | | | 4,701 | | | 598 | | | 5,299 | | | (191) | | | 2021 |
| Batavia | | 1100 Paramount Parkway | | — | | | 4,238 | | | 618 | | | — | | | 4,238 | | | 618 | | | 4,856 | | | (845) | | | 2017 |
| Belvidere | | 3458 Morreim Drive | | — | | | 4,083 | | | 442 | | | 255 | | | 4,338 | | | 442 | | | 4,780 | | | (1,107) | | | 2015 |
| Belvidere | | 775 Logistics Drive | | — | | | 16,914 | | | 2,341 | | | 31 | | | 16,945 | | | 2,341 | | | 19,286 | | | (3,377) | | | 2017 |
| Belvidere | | 725 Landmark Drive | | — | | | 3,485 | | | 538 | | | 121 | | | 3,606 | | | 538 | | | 4,144 | | | (896) | | | 2013 |
| Belvidere | | 888 Landmark Drive | | — | | | 6,824 | | | 670 | | | 78 | | | 6,902 | | | 670 | | | 7,572 | | | (1,687) | | | 2013 |
| Belvidere | | 3915 & 3925 Morreim Drive | | — | | | 4,291 | | | 668 | | | — | | | 4,291 | | | 668 | | | 4,959 | | | (1,095) | | | 2013 |
| Belvidere | | 725 & 729 Logistics Drive | | — | | | 3,699 | | | 866 | | | 274 | | | 3,973 | | | 866 | | | 4,839 | | | (1,123) | | | 2013 |
| Belvidere | | 857 Landmark Drive | | — | | | 8,269 | | | 1,542 | | | 1,665 | | | 9,934 | | | 1,542 | | | 11,476 | | | (2,648) | | | 2013 |
| Belvidere | | 984 Landmark Drive | | — | | | 71 | | | 216 | | | — | | | 71 | | | 216 | | | 287 | | | (71) | | | 2013 |
| Cary | | 680 Industrial Drive | | — | | | 3,331 | | | 498 | | | 16 | | | 3,347 | | | 498 | | | 3,845 | | | (228) | | | 2020 |
| Crystal Lake | | 220 Exchange Drive | | — | | | 8,465 | | | 1,343 | | | 69 | | | 8,534 | | | 1,343 | | | 9,877 | | | (409) | | | 2021 |
| Crystal Lake | | 300 Exchange Drive | | — | | | 9,742 | | | 1,568 | | | — | | | 9,742 | | | 1,568 | | | 11,310 | | | (467) | | | 2021 |
| Crystal Lake | | 450 Congress Parkway | | — | | | 8,861 | | | 1,456 | | | 8 | | | 8,869 | | | 1,456 | | | 10,325 | | | (452) | | | 2021 |
| Crystal Lake | | 215 Exchange Drive | | — | | | 10,737 | | | 1,790 | | | — | | | 10,737 | | | 1,790 | | | 12,527 | | | (504) | | | 2021 |
| DeKalb | | 1085 Peace Road | | — | | | 4,505 | | | 489 | | | — | | | 4,505 | | | 489 | | | 4,994 | | | (1,296) | | | 2013 |
| Elgin | | 1360 Madeline Lane | | — | | | 19,754 | | | 1,135 | | | 60 | | | 19,814 | | | 1,135 | | | 20,949 | | | (668) | | | 2021 |
| Elgin | | 1385 Madeline Lane | | — | | | 15,366 | | | 1,057 | | | 213 | | | 15,579 | | | 1,057 | | | 16,636 | | | (565) | | | 2021 |
| Elgin | | 1690 Cambridge Drive | | — | | | 3,332 | | | 270 | | | — | | | 3,332 | | | 270 | | | 3,602 | | | (121) | | | 2021 |
| Elmhurst | | 934 North Church Road | | — | | | 6,326 | | | 874 | | | — | | | 6,326 | | | 874 | | | 7,200 | | | (194) | | | 2022 |
| Gurnee | | 3818 Grandville Avenue & 1200 Northwestern Avenue | | — | | | 11,231 | | | 1,716 | | | 1,272 | | | 12,503 | | | 1,716 | | | 14,219 | | | (3,019) | | | 2014 |
| Harvard | | 875 West Diggins Street | | — | | | 2,875 | | | 1,157 | | | 695 | | | 3,570 | | | 1,157 | | | 4,727 | | | (1,115) | | | 2013 |
| Hodgkins | | 6600 River Road | | — | | | 30,599 | | | 2,570 | | | — | | | 30,599 | | | 2,570 | | | 33,169 | | | (1,877) | | | 2020 |
| Hodgkins | | 6620 River Road | | — | | | 6,163 | | | 3,127 | | | — | | | 6,163 | | | 3,127 | | | 9,290 | | | (291) | | | 2021 |
| Itasca | | 1251 W. Ardmore Avenue | | — | | | 3,621 | | | 1,223 | | | — | | | 3,621 | | | 1,223 | | | 4,844 | | | (162) | | | 2021 |
| Itasca | | 1500 Bryn Mawr Avenue | | — | | | 3,871 | | | 2,073 | | | — | | | 3,871 | | | 2,073 | | | 5,944 | | | (193) | | | 2021 |
| Itasca | | 1800 Bruning Drive | | — | | | 12,216 | | | 2,428 | | | 1,224 | | | 13,440 | | | 2,428 | | | 15,868 | | | (3,270) | | | 2016 |
| Lisle | | 4925 Indiana Avenue | | — | | | 8,368 | | | 2,302 | | | — | | | 8,368 | | | 2,302 | | | 10,670 | | | (1,017) | | | 2019 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to STAG Industrial, Inc. | | | | Gross Amounts at Which Carried at December 31, 2017 | | | | |
| City/State | | Encumbrances (1) | | Building & Improvements (2) | | Land | | Costs Capitalized Subsequent to Acquisition and Valuation Provision | | Building & Improvements | | Land | | Total | | Accumulated Depreciation (3) | | Acq Date |
| Golden, CO | | — |
| | 6,164 |
| | 742 |
| | 261 |
| | 6,425 |
| | 742 |
| | 7,167 |
| | (844 | ) | | 2013 |
| Goshen, IN | | — |
| | 6,509 |
| | 1,442 |
| | 1,768 |
| | 8,277 |
| | 1,442 |
| | 9,719 |
| | (1,446 | ) | | 2010 |
| Grand Junction, CO | | — |
| | 4,002 |
| | 314 |
| | — |
| | 4,002 |
| | 314 |
| | 4,316 |
| | (334 | ) | | 2015 |
| Grand Rapids, MI | | — |
| | 7,532 |
| | 169 |
| | 34 |
| | 7,566 |
| | 169 |
| | 7,735 |
| | (739 | ) | | 2015 |
| Graniteville, SC | | — |
| | 8,389 |
| | 1,629 |
| | — |
| | 8,389 |
| | 1,629 |
| | 10,018 |
| | (685 | ) | | 2016 |
| Greenwood, SC | | (1,484 | ) | | 1,848 |
| | 166 |
| | — |
| | 1,848 |
| | 166 |
| | 2,014 |
| | (285 | ) | | 2012 |
| Greenwood, SC | | (1,264 | ) | | 1,232 |
| | 169 |
| | 290 |
| | 1,522 |
| | 169 |
| | 1,691 |
| | (241 | ) | | 2012 |
| Fountain Inn, SC | | — |
| | 13,511 |
| | 1,878 |
| | — |
| | 13,511 |
| | 1,878 |
| | 15,389 |
| | (85 | ) | | 2017 |
| Greenville, SC | | — |
| | 3,379 |
| | 309 |
| | 35 |
| | 3,414 |
| | 309 |
| | 3,723 |
| | (342 | ) | | 2015 |
| Greer, SC | | — |
| | 1,434 |
| | 129 |
| | 303 |
| | 1,737 |
| | 129 |
| | 1,866 |
| | (148 | ) | | 2015 |
| Greer, SC | | — |
| | 1,748 |
| | 128 |
| | 64 |
| | 1,812 |
| | 128 |
| | 1,940 |
| | (162 | ) | | 2015 |
| Greer, SC | | — |
| | 460 |
| | 153 |
| | 25 |
| | 485 |
| | 153 |
| | 638 |
| | (43 | ) | | 2015 |
| Greer, SC | | — |
| | 3,016 |
| | 306 |
| | 99 |
| | 3,115 |
| | 306 |
| | 3,421 |
| | (305 | ) | | 2015 |
| Fountain Inn, SC | | — |
| | 4,438 |
| | 719 |
| | 95 |
| | 4,533 |
| | 719 |
| | 5,252 |
| | (458 | ) | | 2016 |
| Groveport, OH | | — |
| | 10,920 |
| | 642 |
| | 84 |
| | 11,004 |
| | 642 |
| | 11,646 |
| | (149 | ) | | 2017 |
| Grove City, OH | | — |
| | 3,974 |
| | 730 |
| | — |
| | 3,974 |
| | 730 |
| | 4,704 |
| | (300 | ) | | 2016 |
| Gurnee, IL | | — |
| | 11,380 |
| | 1,716 |
| | 211 |
| | 11,591 |
| | 1,716 |
| | 13,307 |
| | (1,241 | ) | | 2014 |
| Gurnee, IL | | — |
| | 4,902 |
| | 1,337 |
| | 954 |
| | 5,856 |
| | 1,337 |
| | 7,193 |
| | (1,109 | ) | | 2012 |
| Hampstead, MD | | — |
| | 34,969 |
| | 780 |
| | — |
| | 34,969 |
| | 780 |
| | 35,749 |
| | (4,607 | ) | | 2013 |
| Harrisonburg, VA | | — |
| | 11,179 |
| | 1,455 |
| | 144 |
| | 11,323 |
| | 1,455 |
| | 12,778 |
| | (1,603 | ) | | 2012 |
| Hartland, WI | | — |
| | 4,634 |
| | 1,526 |
| | — |
| | 4,634 |
| | 1,526 |
| | 6,160 |
| | (249 | ) | | 2016 |
| Harvard, IL | | — |
| | 2,980 |
| | 1,157 |
| | — |
| | 2,980 |
| | 1,157 |
| | 4,137 |
| | (778 | ) | | 2013 |
| Hazelwood, MO | | — |
| | 5,815 |
| | 1,382 |
| | 1,391 |
| | 7,206 |
| | 1,382 |
| | 8,588 |
| | (1,594 | ) | | 2011 |
| Hebron, KY | | — |
| | 4,601 |
| | 370 |
| | — |
| | 4,601 |
| | 370 |
| | 4,971 |
| | (607 | ) | | 2014 |
| Hilliard, OH | | — |
| | 7,412 |
| | 550 |
| | 8 |
| | 7,420 |
| | 550 |
| | 7,970 |
| | (52 | ) | | 2017 |
| Holland, MI | | (3,067 | ) | | 3,475 |
| | 279 |
| | 60 |
| | 3,535 |
| | 279 |
| | 3,814 |
| | (715 | ) | | 2012 |
| Houston, TX | | — |
| | 7,790 |
| | 2,255 |
| | 9 |
| | 7,799 |
| | 2,255 |
| | 10,054 |
| | (1,123 | ) | | 2013 |
| Houston, TX | | — |
| | 4,906 |
| | 1,428 |
| | 17 |
| | 4,923 |
| | 1,428 |
| | 6,351 |
| | (817 | ) | | 2014 |
| Houston, TX | | — |
| | 5,019 |
| | 565 |
| | 780 |
| | 5,799 |
| | 565 |
| | 6,364 |
| | (1,009 | ) | | 2014 |
| Houston, TX | | — |
| | 8,448 |
| | 2,546 |
| | 158 |
| | 8,606 |
| | 2,546 |
| | 11,152 |
| | (374 | ) | | 2016 |
| Houston, TX | | — |
| | 5,037 |
| | 1,502 |
| | — |
| | 5,037 |
| | 1,502 |
| | 6,539 |
| | (219 | ) | | 2017 |
| Houston, TX | | — |
| | 5,564 |
| | 953 |
| | — |
| | 5,564 |
| | 953 |
| | 6,517 |
| | (197 | ) | | 2017 |
| Houston, TX | | — |
| | 7,052 |
| | 927 |
| | — |
| | 7,052 |
| | 927 |
| | 7,979 |
| | (152 | ) | | 2017 |
| Huntersville, NC | | — |
| | 3,123 |
| | 1,061 |
| | 109 |
| | 3,232 |
| | 1,061 |
| | 4,293 |
| | (483 | ) | | 2012 |
| Idaho Falls, ID | | — |
| | 2,735 |
| | 356 |
| | — |
| | 2,735 |
| | 356 |
| | 3,091 |
| | (450 | ) | | 2013 |
| Independence, VA | | (1,379 | ) | | 2,212 |
| | 226 |
| | 110 |
| | 2,322 |
| | 226 |
| | 2,548 |
| | (524 | ) | | 2012 |
| Itasca, IL | | — |
| | 12,216 |
| | 2,428 |
| | 5 |
| | 12,221 |
| | 2,428 |
| | 14,649 |
| | (668 | ) | | 2016 |
| Jackson, TN | | — |
| | 2,374 |
| | 230 |
| | 337 |
| | 2,711 |
| | 230 |
| | 2,941 |
| | (473 | ) | | 2012 |
| Jacksonville, FL | | — |
| | 3,438 |
| | 451 |
| | 410 |
| | 3,848 |
| | 451 |
| | 4,299 |
| | (164 | ) | | 2017 |
| Jacksonville, FL | | — |
| | 7,867 |
| | 650 |
| | 161 |
| | 8,028 |
| | 650 |
| | 8,678 |
| | (328 | ) | | 2017 |
| Jacksonville, FL | | — |
| | 8,195 |
| | 674 |
| | 1,557 |
| | 9,752 |
| | 674 |
| | 10,426 |
| | (399 | ) | | 2017 |
| Jacksonville, FL | | — |
| | 7,266 |
| | 596 |
| | 1,016 |
| | 8,282 |
| | 596 |
| | 8,878 |
| | (327 | ) | | 2017 |
| Janesville, WI | | — |
| | 17,477 |
| | 828 |
| | 530 |
| | 18,007 |
| | 828 |
| | 18,835 |
| | (2,758 | ) | | 2013 |
| Jefferson City, TN | | — |
| | 8,494 |
| | 1,350 |
| | — |
| | 8,494 |
| | 1,350 |
| | 9,844 |
| | (1,893 | ) | | 2014 |
| Johnstown, NY | | (714 | ) | | 1,304 |
| | 178 |
| | — |
| | 1,304 |
| | 178 |
| | 1,482 |
| | (227 | ) | | 2012 |
| Johnstown, NY | | (1,044 | ) | | 1,592 |
| | 216 |
| | — |
| | 1,592 |
| | 216 |
| | 1,808 |
| | (228 | ) | | 2012 |
| Johnstown, NY | | (852 | ) | | 978 |
| | 151 |
| | — |
| | 978 |
| | 151 |
| | 1,129 |
| | (206 | ) | | 2012 |
| Johnstown, NY | | (1,594 | ) | | 1,467 |
| | 140 |
| | — |
| | 1,467 |
| | 140 |
| | 1,607 |
| | (257 | ) | | 2012 |
| Kansas City, MO | | — |
| | 5,539 |
| | 703 |
| | 92 |
| | 5,631 |
| | 703 |
| | 6,334 |
| | (730 | ) | | 2012 |
| Kenosha, WI | | — |
| | 3,991 |
| | 797 |
| | — |
| | 3,991 |
| | 797 |
| | 4,788 |
| | (253 | ) | | 2016 |
| Kentwood, MI | | — |
| | 2,478 |
| | 407 |
| | — |
| | 2,478 |
| | 407 |
| | 2,885 |
| | (377 | ) | | 2013 |
| Knoxville, TN | | — |
| | 3,201 |
| | 447 |
| | — |
| | 3,201 |
| | 447 |
| | 3,648 |
| | (421 | ) | | 2015 |
| Lafayette, IN | | (1,182 | ) | | 2,205 |
| | 295 |
| | 79 |
| | 2,284 |
| | 295 |
| | 2,579 |
| | (328 | ) | | 2012 |
| Lafayette, IN | | (2,006 | ) | | 3,405 |
| | 410 |
| | 123 |
| | 3,528 |
| | 410 |
| | 3,938 |
| | (487 | ) | | 2012 |
| Lafayette, IN | | (4,122 | ) | | 8,135 |
| | 906 |
| | 261 |
| | 8,396 |
| | 906 |
| | 9,302 |
| | (1,428 | ) | | 2012 |
| Lancaster, PA | | — |
| | 5,480 |
| | 1,520 |
| | — |
| | 5,480 |
| | 1,520 |
| | 7,000 |
| | (1,014 | ) | | 2015 |
| Langhorne, PA | | — |
| | 3,868 |
| | 1,370 |
| | 36 |
| | 3,904 |
| | 1,370 |
| | 5,274 |
| | (294 | ) | | 2016 |
| Langhorne, PA | | — |
| | 3,105 |
| | 1,308 |
| | 33 |
| | 3,138 |
| | 1,308 |
| | 4,446 |
| | (287 | ) | | 2016 |
| Langhorne, PA | | — |
| | 6,372 |
| | 1,884 |
| | 1 |
| | 6,373 |
| | 1,884 |
| | 8,257 |
| | (305 | ) | | 2016 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Initial Cost to STAG Industrial, Inc. | | | | Gross Amounts at Which Carried at December 31, 2022 | | | | |
| State & City | | Address | | Encumbrances(1) | | Building & Improvements(2) | | Land(3) | | Costs Capitalized Subsequent to Acquisition and Valuation Provision | | Building & Improvements | | Land | | Total | | Accumulated Depreciation(4) | | Year Acquired |
| Machesney Park | | 7166 Greenlee Drive | | — | | | 3,525 | | | 300 | | | 43 | | | 3,568 | | | 300 | | | 3,868 | | | (829) | | | 2015 |
| McHenry | | 831/833 Ridgeview Drive | | — | | | 3,818 | | | 576 | | | 120 | | | 3,938 | | | 576 | | | 4,514 | | | (703) | | | 2018 |
| McHenry | | 921 Ridgeview Drive | | — | | | 4,010 | | | 448 | | | 27 | | | 4,037 | | | 448 | | | 4,485 | | | (675) | | | 2018 |
| Montgomery | | 2001 Baseline Road | | — | | | — | | | 173 | | | — | | | — | | | 173 | | | 173 | | | — | | | 2018 |
| Montgomery | | 2001 Baseline Road | | — | | | 12,373 | | | 2,190 | | | 2,996 | | | 15,369 | | | 2,190 | | | 17,559 | | | (4,302) | | | 2012 |
| Saint Charles | | 3810-3820 Stern Avenue | | — | | | 7,028 | | | 1,321 | | | — | | | 7,028 | | | 1,321 | | | 8,349 | | | (248) | | | 2021 |
| Saint Charles | | 3850 Ohio Avenue | | — | | | 5,976 | | | 1,160 | | | — | | | 5,976 | | | 1,160 | | | 7,136 | | | (20) | | | 2022 |
| Sauk Village | | 21399 Torrence Avenue | | — | | | 5,405 | | | 877 | | | 676 | | | 6,081 | | | 877 | | | 6,958 | | | (1,563) | | | 2013 |
| Schaumburg | | 710 East State Parkway | | — | | | 4,086 | | | 689 | | | 177 | | | 4,263 | | | 689 | | | 4,952 | | | (364) | | | 2020 |
| Vernon Hills | | 888 Forest Edge Drive | | — | | | 9,383 | | | 2,416 | | | 465 | | | 9,848 | | | 2,416 | | | 12,264 | | | (381) | | | 2021 |
| Waukegan | | 3751 Sunset Avenue | | — | | | 5,030 | | | 1,004 | | | — | | | 5,030 | | | 1,004 | | | 6,034 | | | (941) | | | 2017 |
| West Chicago | | 1300 Northwest Avenue | | — | | | 2,036 | | | 768 | | | 772 | | | 2,808 | | | 768 | | | 3,576 | | | (858) | | | 2016 |
| West Chicago | | 1400 Northwest Avenue | | — | | | 668 | | | 382 | | | 282 | | | 950 | | | 382 | | | 1,332 | | | (238) | | | 2016 |
| West Chicago | | 1450 Northwest Avenue | | — | | | 768 | | | 450 | | | 272 | | | 1,040 | | | 450 | | | 1,490 | | | (283) | | | 2016 |
| West Chicago | | 1145 & 1149 Howard | | — | | | 842 | | | 369 | | | 392 | | | 1,234 | | | 369 | | | 1,603 | | | (295) | | | 2016 |
| West Chicago | | 1270 Nuclear Drive | | — | | | 892 | | | 216 | | | 315 | | | 1,207 | | | 216 | | | 1,423 | | | (280) | | | 2016 |
| West Chicago | | 1726-1850 Blackhawk Drive | | — | | | 6,135 | | | 915 | | | 1,283 | | | 7,418 | | | 915 | | | 8,333 | | | (1,801) | | | 2016 |
| West Dundee | | 901-907 Wesemann Drive | | — | | | 12,640 | | | 948 | | | 45 | | | 12,685 | | | 948 | | | 13,633 | | | (491) | | | 2021 |
| Wood Dale | | 321 Forster Avenue | | — | | | 4,982 | | | 1,226 | | | — | | | 4,982 | | | 1,226 | | | 6,208 | | | (957) | | | 2016 |
| Woodstock | | 1005 Courtaulds Drive | | — | | | 3,796 | | | 496 | | | 183 | | | 3,979 | | | 496 | | | 4,475 | | | (1,264) | | | 2012 |
| Indiana | | | | | | | | | | | | | | | | | | | | |
| Albion | | 600 South 7th Street | | — | | | 407 | | | 53 | | | — | | | 407 | | | 53 | | | 460 | | | (318) | | | 2006 |
| Albion | | 1514 Progress Drive | | — | | | 1,443 | | | 126 | | | — | | | 1,443 | | | 126 | | | 1,569 | | | (562) | | | 2006 |
| Elkhart | | 2701 Marina Drive | | — | | | 210 | | | 25 | | | 143 | | | 353 | | | 25 | | | 378 | | | (133) | | | 2007 |
| Elkhart | | 23590 County Road 6 | | �� | | | 3,519 | | | 422 | | | 1,175 | | | 4,694 | | | 422 | | | 5,116 | | | (1,649) | | | 2007 |
| Fort Wayne | | 3424 Centennial Drive | | — | | | 3,076 | | | 112 | | | 3 | | | 3,079 | | | 112 | | | 3,191 | | | (739) | | | 2014 |
| Goshen | | 2600 College Avenue | | — | | | 5,998 | | | 1,442 | | | 1,824 | | | 7,822 | | | 1,442 | | | 9,264 | | | (2,386) | | | 2011 |
| Greenwood | | 2441 E. Main Street | | — | | | 12,745 | | | 911 | | | — | | | 12,745 | | | 911 | | | 13,656 | | | (656) | | | 2021 |
| Indianapolis | | 7701 West New York Street | | — | | | 3,931 | | | 620 | | | — | | | 3,931 | | | 620 | | | 4,551 | | | (179) | | | 2021 |
| Jeffersonville | | 101 Jacobs Way | | — | | | 35,174 | | | 2,891 | | | — | | | 35,174 | | | 2,891 | | | 38,065 | | | (375) | | | 2022 |
| Lafayette | | 1520 Kepner Drive | | — | | | 2,205 | | | 295 | | | 65 | | | 2,270 | | | 295 | | | 2,565 | | | (618) | | | 2012 |
| Lafayette | | 1540-1530 Kepner Drive | | — | | | 3,405 | | | 410 | | | 372 | | | 3,777 | | | 410 | | | 4,187 | | | (1,008) | | | 2012 |
| Lafayette | | 1521 Kepner Drive | | — | | | 7,920 | | | 906 | | | 514 | | | 8,434 | | | 906 | | | 9,340 | | | (2,389) | | | 2012 |
| Lebanon | | 100 Purity Drive | | — | | | 21,160 | | | 1,654 | | | — | | | 21,160 | | | 1,654 | | | 22,814 | | | (3,000) | | | 2018 |
| Lebanon | | 800 Edwards Drive | | — | | | 36,091 | | | 2,359 | | | — | | | 36,091 | | | 2,359 | | | 38,450 | | | (3,531) | | | 2019 |
| Lebanon | | 121 N. Enterprise Boulevard | | — | | | 50,300 | | | 2,948 | | | — | | | 50,300 | | | 2,948 | | | 53,248 | | | (4,466) | | | 2019 |
| Marion | | 2201 E. Loew Road | | — | | | 2,934 | | | 243 | | | 718 | | | 3,652 | | | 243 | | | 3,895 | | | (1,164) | | | 2012 |
| Portage | | 6515 Ameriplex Drive | | — | | | 28,094 | | | 1,626 | | | 425 | | | 28,519 | | | 1,626 | | | 30,145 | | | (3,331) | | | 2019 |
| Portage | | 725 George Nelson Drive | | — | | | 5,416 | | | — | | | — | | | 5,416 | | | — | | | 5,416 | | | (1,474) | | | 2012 |
| South Bend | | 3310 William Richardson Court | | — | | | 4,718 | | | 411 | | | 294 | | | 5,012 | | | 411 | | | 5,423 | | | (1,434) | | | 2012 |
| Yoder | | 2909 Pleasant Center Road | | — | | | 24,504 | | | 941 | | | 665 | | | 25,169 | | | 941 | | | 26,110 | | | (2,480) | | | 2020 |
| Iowa | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to STAG Industrial, Inc. | | | | Gross Amounts at Which Carried at December 31, 2017 | | | | |
| City/State | | Encumbrances (1) | | Building & Improvements (2) | | Land | | Costs Capitalized Subsequent to Acquisition and Valuation Provision | | Building & Improvements | | Land | | Total | | Accumulated Depreciation (3) | | Acq Date |
| Lansing, MI | | — |
| | 8,164 |
| | 501 |
| | — |
| | 8,164 |
| | 501 |
| | 8,665 |
| | (1,592 | ) | | 2011 |
| Lansing, MI | | — |
| | 4,077 |
| | 580 |
| | — |
| | 4,077 |
| | 580 |
| | 4,657 |
| | (681 | ) | | 2012 |
| Lansing, MI | | (5,496 | ) | | 7,162 |
| | 429 |
| | — |
| | 7,162 |
| | 429 |
| | 7,591 |
| | (1,149 | ) | | 2012 |
| Lansing, MI | | — |
| | 5,209 |
| | 907 |
| | — |
| | 5,209 |
| | 907 |
| | 6,116 |
| | (809 | ) | | 2013 |
| Laredo, TX | | — |
| | 10,195 |
| | 1,535 |
| | — |
| | 10,195 |
| | 1,535 |
| | 11,730 |
| | (238 | ) | | 2017 |
| Las Vegas, NV | | — |
| | 3,259 |
| | 770 |
| | — |
| | 3,259 |
| | 770 |
| | 4,029 |
| | (40 | ) | | 2017 |
| Laurens, SC | | — |
| | 4,254 |
| | 151 |
| | — |
| | 4,254 |
| | 151 |
| | 4,405 |
| | (349 | ) | | 2015 |
| Lebanon, PA | | — |
| | 5,235 |
| | 1,380 |
| | — |
| | 5,235 |
| | 1,380 |
| | 6,615 |
| | (509 | ) | | 2017 |
| Lenexa, KS | | — |
| | 7,610 |
| | 2,368 |
| | — |
| | 7,610 |
| | 2,368 |
| | 9,978 |
| | (1,340 | ) | | 2014 |
| Lewiston, ME | | — |
| | 5,515 |
| | 173 |
| | 1,525 |
| | 7,040 |
| | 173 |
| | 7,213 |
| | (2,067 | ) | | 2007 |
| Lexington, NC | | — |
| | 3,968 |
| | 232 |
| | 688 |
| | 4,656 |
| | 232 |
| | 4,888 |
| | (851 | ) | | 2008 |
| Libertyville, IL | | — |
| | 6,455 |
| | 421 |
| | 80 |
| | 6,535 |
| | 421 |
| | 6,956 |
| | (649 | ) | | 2015 |
| Libertyville, IL | | — |
| | 770 |
| | 143 |
| | 9 |
| | 779 |
| | 143 |
| | 922 |
| | (264 | ) | | 2015 |
| Londonderry, NH | | — |
| | 6,683 |
| | 730 |
| | — |
| | 6,683 |
| | 730 |
| | 7,413 |
| | (967 | ) | | 2013 |
| Longmont, CO | | — |
| | 9,647 |
| | 1,529 |
| | 581 |
| | 10,228 |
| | 1,529 |
| | 11,757 |
| | (1,243 | ) | | 2014 |
| Loudon, TN | | — |
| | 3,751 |
| | 170 |
| | — |
| | 3,751 |
| | 170 |
| | 3,921 |
| | (348 | ) | | 2015 |
| Louisville, KY | | — |
| | 3,875 |
| | 386 |
| | 520 |
| | 4,395 |
| | 386 |
| | 4,781 |
| | (982 | ) | | 2011 |
| Louisville, KY | | — |
| | 6,182 |
| | 616 |
| | 632 |
| | 6,814 |
| | 616 |
| | 7,430 |
| | (1,512 | ) | | 2011 |
| Macedonia, OH | | — |
| | 8,195 |
| | 1,690 |
| | 44 |
| | 8,239 |
| | 1,690 |
| | 9,929 |
| | (813 | ) | | 2015 |
| Machesney Park, IL | | — |
| | 3,742 |
| | 300 |
| | — |
| | 3,742 |
| | 300 |
| | 4,042 |
| | (426 | ) | | 2015 |
| Madison, WI | | — |
| | 6,365 |
| | 609 |
| | — |
| | 6,365 |
| | 609 |
| | 6,974 |
| | (21 | ) | | 2017 |
| Madison, WI | | — |
| | 4,518 |
| | 444 |
| | — |
| | 4,518 |
| | 444 |
| | 4,962 |
| | (14 | ) | | 2017 |
| Madison, TN | | — |
| | 5,758 |
| | 1,655 |
| | 1,786 |
| | 7,544 |
| | 1,655 |
| | 9,199 |
| | (1,319 | ) | | 2010 |
| Malden, MA | | — |
| | 2,817 |
| | 366 |
| | — |
| | 2,817 |
| | 366 |
| | 3,183 |
| | (764 | ) | | 2007 |
| Malden, MA | | — |
| | 3,961 |
| | 507 |
| | — |
| | 3,961 |
| | 507 |
| | 4,468 |
| | (1,073 | ) | | 2007 |
| Maple Grove, MN | | — |
| | 6,634 |
| | 969 |
| | — |
| | 6,634 |
| | 969 |
| | 7,603 |
| | (161 | ) | | 2017 |
| Marion, IA | | — |
| | 2,257 |
| | 691 |
| | 49 |
| | 2,306 |
| | 691 |
| | 2,997 |
| | (428 | ) | | 2013 |
| Marion, IN | | (2,803 | ) | | 2,934 |
| | 243 |
| | 718 |
| | 3,652 |
| | 243 |
| | 3,895 |
| | (521 | ) | | 2012 |
| Marshall, MI | | — |
| | 1,051 |
| | 199 |
| | — |
| | 1,051 |
| | 199 |
| | 1,250 |
| | (207 | ) | | 2013 |
| Mascot, TN | | — |
| | 3,228 |
| | 284 |
| | — |
| | 3,228 |
| | 284 |
| | 3,512 |
| | (373 | ) | | 2016 |
| Mascot, TN | | — |
| | 3,452 |
| | 385 |
| | 65 |
| | 3,517 |
| | 385 |
| | 3,902 |
| | (664 | ) | | 2013 |
| Salem, OH | | — |
| | 7,674 |
| | 858 |
| | 252 |
| | 7,926 |
| | 858 |
| | 8,784 |
| | (1,986 | ) | | 2006 |
| Mason, OH | | — |
| | 4,731 |
| | 673 |
| | — |
| | 4,731 |
| | 673 |
| | 5,404 |
| | (680 | ) | | 2014 |
| Mayville, WI | | — |
| | 4,118 |
| | 547 |
| | 330 |
| | 4,448 |
| | 547 |
| | 4,995 |
| | (1,275 | ) | | 2007 |
| Mebane, NC | | — |
| | 4,570 |
| | 481 |
| | 457 |
| | 5,027 |
| | 481 |
| | 5,508 |
| | (750 | ) | | 2012 |
| Mebane, NC | | — |
| | 4,148 |
| | 443 |
| | — |
| | 4,148 |
| | 443 |
| | 4,591 |
| | (675 | ) | | 2012 |
| Mebane, NC | | — |
| | 4,999 |
| | 358 |
| | 9 |
| | 5,008 |
| | 358 |
| | 5,366 |
| | (717 | ) | | 2013 |
| Mechanicsburg, PA | | — |
| | 5,143 |
| | 1,482 |
| | 770 |
| | 5,913 |
| | 1,482 |
| | 7,395 |
| | (933 | ) | | 2014 |
| Mechanicsburg, PA | | — |
| | 7,144 |
| | 1,800 |
| | — |
| | 7,144 |
| | 1,800 |
| | 8,944 |
| | (935 | ) | | 2014 |
| New Kingston, PA | | — |
| | 8,687 |
| | 2,041 |
| | — |
| | 8,687 |
| | 2,041 |
| | 10,728 |
| | (1,121 | ) | | 2014 |
| Mechanicsburg, PA | | — |
| | 8,008 |
| | 1,452 |
| | — |
| | 8,008 |
| | 1,452 |
| | 9,460 |
| | (1,027 | ) | | 2014 |
| Milford, CT | | — |
| | 10,040 |
| | 1,264 |
| | 300 |
| | 10,340 |
| | 1,264 |
| | 11,604 |
| | (378 | ) | | 2017 |
| Montgomery, AL | | — |
| | 7,523 |
| | 418 |
| | 1,329 |
| | 8,852 |
| | 418 |
| | 9,270 |
| | (326 | ) | | 2016 |
| Montgomery, IL | | — |
| | 12,485 |
| | 2,190 |
| | 1,934 |
| | 14,419 |
| | 2,190 |
| | 16,609 |
| | (2,047 | ) | | 2012 |
| Mooresville, NC | | — |
| | 18,010 |
| | 4,195 |
| | — |
| | 18,010 |
| | 4,195 |
| | 22,205 |
| | (196 | ) | | 2017 |
| Mooresville, NC | | — |
| | 7,411 |
| | 701 |
| | 216 |
| | 7,627 |
| | 701 |
| | 8,328 |
| | (1,541 | ) | | 2011 |
| Mountain Home, NC | | — |
| | 2,472 |
| | 523 |
| | — |
| | 2,472 |
| | 523 |
| | 2,995 |
| | (325 | ) | | 2014 |
| Murfreesboro, TN | | — |
| | 2,863 |
| | 722 |
| | 9 |
| | 2,872 |
| | 722 |
| | 3,594 |
| | (487 | ) | | 2014 |
| Nashua, NH | | — |
| | 8,682 |
| | 1,431 |
| | — |
| | 8,682 |
| | 1,431 |
| | 10,113 |
| | (1,266 | ) | | 2014 |
| Nashville, TN | | — |
| | 3,601 |
| | 547 |
| | — |
| | 3,601 |
| | 547 |
| | 4,148 |
| | (503 | ) | | 2013 |
| Newark, DE | | — |
| | 1,478 |
| | 197 |
| | 392 |
| | 1,870 |
| | 197 |
| | 2,067 |
| | (539 | ) | | 2007 |
| Newark, DE | | — |
| | 1,891 |
| | 232 |
| | 205 |
| | 2,096 |
| | 232 |
| | 2,328 |
| | (671 | ) | | 2007 |
| New Berlin, WI | | — |
| | 6,500 |
| | 1,068 |
| | 141 |
| | 6,641 |
| | 1,068 |
| | 7,709 |
| | (1,093 | ) | | 2013 |
| New Castle, DE | | — |
| | 17,767 |
| | 2,616 |
| | — |
| | 17,767 |
| | 2,616 |
| | 20,383 |
| | (1,151 | ) | | 2016 |
| New Hope, MN | | — |
| | 1,970 |
| | 1,919 |
| | — |
| | 1,970 |
| | 1,919 |
| | 3,889 |
| | (448 | ) | | 2013 |
| Lopatcong, NJ | | — |
| | 9,822 |
| | 1,554 |
| | 1,599 |
| | 11,421 |
| | 1,554 |
| | 12,975 |
| | (736 | ) | | 2010 |
| Newton, NC | | — |
| | 7,568 |
| | 732 |
| | 1,283 |
| | 8,851 |
| | 732 |
| | 9,583 |
| | (718 | ) | | 2010 |
| North Haven, CT | | — |
| | 39,911 |
| | 4,086 |
| | 1,387 |
| | 41,298 |
| | 4,086 |
| | 45,384 |
| | (4,893 | ) | | 2015 |
| North Jackson, OH | | — |
| | 4,427 |
| | 1,528 |
| | — |
| | 4,427 |
| | 1,528 |
| | 5,955 |
| | (617 | ) | | 2013 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Initial Cost to STAG Industrial, Inc. | | | | Gross Amounts at Which Carried at December 31, 2022 | | | | |
| State & City | | Address | | Encumbrances(1) | | Building & Improvements(2) | | Land(3) | | Costs Capitalized Subsequent to Acquisition and Valuation Provision | | Building & Improvements | | Land | | Total | | Accumulated Depreciation(4) | | Year Acquired |
| Ankeny | | 5910 Southeast Rio Circle | | — | | | 13,709 | | | 846 | | | 105 | | | 13,814 | | | 846 | | | 14,660 | | | (1,352) | | | 2019 |
| Ankeny | | 6150 Southeast Rio Circle | | — | | | 19,104 | | | 1,421 | | | — | | | 19,104 | | | 1,421 | | | 20,525 | | | (618) | | | 2021 |
| Council Bluffs | | 1209 31st Avenue | | — | | | 4,438 | | | 414 | | | — | | | 4,438 | | | 414 | | | 4,852 | | | (759) | | | 2017 |
| Des Moines | | 3915 Delaware Avenue | | — | | | 9,342 | | | 1,685 | | | 28 | | | 9,370 | | | 1,685 | | | 11,055 | | | (363) | | | 2021 |
| Des Moines | | 1900 E. 17th Street | | — | | | 4,477 | | | 556 | | | — | | | 4,477 | | | 556 | | | 5,033 | | | (767) | | | 2018 |
| Marion | | 6301 North Gateway Drive | | — | | | 2,229 | | | 691 | | | 188 | | | 2,417 | | | 691 | | | 3,108 | | | (772) | | | 2013 |
| Kansas | | | | | | | | | | | | | | | | | | | | |
| Edwardsville | | 9601 Woodend Road | | — | | | 13,007 | | | 1,360 | | | 544 | | | 13,551 | | | 1,360 | | | 14,911 | | | (2,695) | | | 2017 |
| Lenexa | | 9700 Lackman Road | | — | | | 9,649 | | | 1,759 | | | 33 | | | 9,682 | | | 1,759 | | | 11,441 | | | (1,105) | | | 2019 |
| Lenexa | | 14000 Marshall Drive | | — | | | 7,610 | | | 2,368 | | | — | | | 7,610 | | | 2,368 | | | 9,978 | | | (2,755) | | | 2014 |
| Olathe | | 1202 South Lone Elm Road | | — | | | 16,272 | | | 1,193 | | | 67 | | | 16,339 | | | 1,193 | | | 17,532 | | | (1,826) | | | 2019 |
| Olathe | | 16231 South Lone Elm Road | | — | | | 20,763 | | | 2,431 | | | 4,199 | | | 24,962 | | | 2,431 | | | 27,393 | | | (6,257) | | | 2016 |
| Wichita | | 2655/2755 South Eastmoor Street | | — | | | 1,815 | | | 88 | | | 10 | | | 1,825 | | | 88 | | | 1,913 | | | (512) | | | 2012 |
| Wichita | | 2652 South Eastmoor Street | | — | | | 1,839 | | | 107 | | | 183 | | | 2,022 | | | 107 | | | 2,129 | | | (625) | | | 2012 |
| Wichita | | 2510 South Eastmoor Street | | — | | | 833 | | | 76 | | | 181 | | | 1,014 | | | 76 | | | 1,090 | | | (428) | | | 2012 |
| Kentucky | | | | | | | | | | | | | | | | | | | | |
| Bardstown | | 300 Spencer Mattingly Lane | | — | | | 2,295 | | | 379 | | | 125 | | | 2,420 | | | 379 | | | 2,799 | | | (896) | | | 2007 |
| Danville | | 1355 Lebanon Road | | — | | | 11,593 | | | 965 | | | 4,325 | | | 15,918 | | | 965 | | | 16,883 | | | (4,958) | | | 2011 |
| Erlanger | | 1500-1532 Interstate Drive | | — | | | 3,791 | | | 635 | | | 346 | | | 4,137 | | | 635 | | | 4,772 | | | (985) | | | 2016 |
| Florence | | 9200 Brookfield Court | | — | | | 7,914 | | | 863 | | | 88 | | | 8,002 | | | 863 | | | 8,865 | | | (1,196) | | | 2019 |
| Florence | | 1100 Burlington Pike | | — | | | 10,858 | | | 3,109 | | | 282 | | | 11,140 | | | 3,109 | | | 14,249 | | | (2,334) | | | 2018 |
| Hebron | | 2151 Southpark Drive | | — | | | 4,526 | | | 370 | | | 773 | | | 5,299 | | | 370 | | | 5,669 | | | (1,356) | | | 2014 |
| Louisville | | 6350 Ladd Avenue | | — | | | 3,615 | | | 386 | | | 1,326 | | | 4,941 | | | 386 | | | 5,327 | | | (1,345) | | | 2011 |
| Louisville | | 6400 Ladd Avenue | | — | | | 5,767 | | | 616 | | | 1,745 | | | 7,512 | | | 616 | | | 8,128 | | | (2,035) | | | 2011 |
| Louisiana | | | | | | | | | | | | | | | | | | | | |
| Baton Rouge | | 6565 Exchequer Drive | | — | | | 5,871 | | | 1,619 | | | 626 | | | 6,497 | | | 1,619 | | | 8,116 | | | (835) | | | 2019 |
| Baton Rouge | | 6735 Exchequer Drive | | — | | | 6,682 | | | 2,567 | | | — | | | 6,682 | | | 2,567 | | | 9,249 | | | (987) | | | 2019 |
| Baton Rouge | | 12100 Little Cayman Avenue | | — | | | 15,402 | | | 1,962 | | | 42 | | | 15,444 | | | 1,962 | | | 17,406 | | | (2,443) | | | 2018 |
| Shreveport | | 7540 Bert Kouns Industrial Loop | | — | | | 5,572 | | | 1,804 | | | 1,276 | | | 6,848 | | | 1,804 | | | 8,652 | | | (1,457) | | | 2015 |
| Maine | | | | | | | | | | | | | | | | | | | | |
| Biddeford | | 1 Baker's Way | | — | | | 8,164 | | | 1,369 | | | 4,849 | | | 13,013 | | | 1,369 | | | 14,382 | | | (3,241) | | | 2016 |
| Gardiner | | 47 Market Street | | — | | | 8,983 | | | 948 | | | 23 | | | 9,006 | | | 948 | | | 9,954 | | | (2,429) | | | 2016 |
| Lewiston | | 19 Mollison Way | | — | | | 5,374 | | | 173 | | | 1,064 | | | 6,438 | | | 173 | | | 6,611 | | | (2,442) | | | 2007 |
| Portland | | 125 Industrial Way | | — | | | 3,648 | | | 891 | | | 284 | | | 3,932 | | | 891 | | | 4,823 | | | (1,008) | | | 2012 |
| Maryland | | | | | | | | | | | | | | | | | | | | |
| Elkridge | | 6685 Santa Barbara Court | | — | | | 8,776 | | | 2,982 | | | 38 | | | 8,814 | | | 2,982 | | | 11,796 | | | (1,095) | | | 2019 |
| Hagerstown | | 11835 Newgate Boulevard | | — | | | 55,177 | | | 6,036 | | | — | | | 55,177 | | | 6,036 | | | 61,213 | | | (1,978) | | | 2021 |
| Hagerstown | | 11841 Newgate Boulevard | | — | | | 55,448 | | | 6,174 | | | 133 | | | 55,581 | | | 6,174 | | | 61,755 | | | (2,060) | | | 2021 |
| Hagerstown | | 105 Enterprise Lane | | — | | | 11,213 | | | 3,472 | | | — | | | 11,213 | | | 3,472 | | | 14,685 | | | (683) | | | 2021 |
| Hampstead | | 630 Hanover Pike | | — | | | 34,933 | | | 780 | | | 2,738 | | | 37,671 | | | 780 | | | 38,451 | | | (9,145) | | | 2013 |
| Hunt Valley | | 11100 Gilroy Road | | — | | | 4,904 | | | 538 | | | — | | | 4,904 | | | 538 | | | 5,442 | | | (253) | | | 2021 |
| White Marsh | | 6210 Days Cove Road | | — | | | 6,912 | | | 963 | | | 774 | | | 7,686 | | | 963 | | | 8,649 | | | (978) | | | 2018 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to STAG Industrial, Inc. | | | | Gross Amounts at Which Carried at December 31, 2017 | | | | |
| City/State | | Encumbrances (1) | | Building & Improvements (2) | | Land | | Costs Capitalized Subsequent to Acquisition and Valuation Provision | | Building & Improvements | | Land | | Total | | Accumulated Depreciation (3) | | Acq Date |
| North Jackson, OH | | — |
| | 7,681 |
| | 486 |
| | — |
| | 7,681 |
| | 486 |
| | 8,167 |
| | (835 | ) | | 2011 |
| Norcorss, GA | | — |
| | 2,586 |
| | 1,589 |
| | — |
| | 2,586 |
| | 1,589 |
| | 4,175 |
| | (331 | ) | | 2016 |
| Norton, MA | | — |
| | 6,740 |
| | 2,839 |
| | — |
| | 6,740 |
| | 2,839 |
| | 9,579 |
| | (1,412 | ) | | 2011 |
| Novi, MI | | (2,693 | ) | | 3,879 |
| | 252 |
| | 13 |
| | 3,892 |
| | 252 |
| | 4,144 |
| | (761 | ) | | 2012 |
| Novi, MI | | — |
| | 6,035 |
| | 626 |
| | — |
| | 6,035 |
| | 626 |
| | 6,661 |
| | (516 | ) | | 2015 |
| Oakwood Village, OH | | — |
| | 3,091 |
| | 343 |
| | — |
| | 3,091 |
| | 343 |
| | 3,434 |
| | (399 | ) | | 2015 |
| Ocala, FL | | — |
| | 13,296 |
| | 731 |
| | 952 |
| | 14,248 |
| | 731 |
| | 14,979 |
| | (1,810 | ) | | 2013 |
| O'Fallon, MO | | — |
| | 3,632 |
| | 1,233 |
| | — |
| | 3,632 |
| | 1,233 |
| | 4,865 |
| | (69 | ) | | 2017 |
| O'Fallon, MO | | — |
| | 2,676 |
| | 1,242 |
| | 266 |
| | 2,942 |
| | 1,242 |
| | 4,184 |
| | (587 | ) | | 2010 |
| O'Hara, PA | | (15,443 | ) | | 18,875 |
| | 1,435 |
| | 7,468 |
| | 26,343 |
| | 1,435 |
| | 27,778 |
| | (3,936 | ) | | 2012 |
| Oklahoma City, OK | | — |
| | 2,211 |
| | 746 |
| | 5 |
| | 2,216 |
| | 746 |
| | 2,962 |
| | (159 | ) | | 2016 |
| Oklahoma City, OK | | — |
| | 9,199 |
| | 1,614 |
| | 1,373 |
| | 10,572 |
| | 1,614 |
| | 12,186 |
| | (827 | ) | | 2015 |
| Olathe, KS | | — |
| | 20,763 |
| | 2,431 |
| | 156 |
| | 20,919 |
| | 2,431 |
| | 23,350 |
| | (987 | ) | | 2016 |
| Orlando, FL | | — |
| | 4,839 |
| | 1,339 |
| | — |
| | 4,839 |
| | 1,339 |
| | 6,178 |
| | (768 | ) | | 2013 |
| Orlando, FL | | — |
| | 1,996 |
| | 721 |
| | — |
| | 1,996 |
| | 721 |
| | 2,717 |
| | (356 | ) | | 2012 |
| Pedricktown, NJ | | — |
| | 10,696 |
| | 2,414 |
| | — |
| | 10,696 |
| | 2,414 |
| | 13,110 |
| | (263 | ) | | 2017 |
| Pensacola, FL | | — |
| | 2,989 |
| | 145 |
| | 343 |
| | 3,332 |
| | 145 |
| | 3,477 |
| | (1,293 | ) | | 2007 |
| Phenix City, AL | | (1,539 | ) | | 1,493 |
| | 276 |
| | 252 |
| | 1,745 |
| | 276 |
| | 2,021 |
| | (306 | ) | | 2012 |
| Phoenix, AZ | | — |
| | 5,770 |
| | 1,653 |
| | — |
| | 5,770 |
| | 1,653 |
| | 7,423 |
| | (554 | ) | | 2015 |
| Piedmont, SC | | — |
| | 4,152 |
| | 231 |
| | 86 |
| | 4,238 |
| | 231 |
| | 4,469 |
| | (372 | ) | | 2015 |
| Piedmont, SC | | — |
| | 2,127 |
| | 158 |
| | — |
| | 2,127 |
| | 158 |
| | 2,285 |
| | (196 | ) | | 2015 |
| Piedmont, SC | | — |
| | 2,302 |
| | 204 |
| | — |
| | 2,302 |
| | 204 |
| | 2,506 |
| | (333 | ) | | 2015 |
| Pineville, NC | | — |
| | 1,380 |
| | 392 |
| | — |
| | 1,380 |
| | 392 |
| | 1,772 |
| | (277 | ) | | 2012 |
| Pittston, PA | | — |
| | 19,959 |
| | 677 |
| | — |
| | 19,959 |
| | 677 |
| | 20,636 |
| | (283 | ) | | 2017 |
| Plymouth, MI | | — |
| | 4,670 |
| | 365 |
| | — |
| | 4,670 |
| | 365 |
| | 5,035 |
| | (533 | ) | | 2015 |
| Pocatello, ID | | — |
| | 3,472 |
| | 399 |
| | 363 |
| | 3,835 |
| | 399 |
| | 4,234 |
| | (1,147 | ) | | 2007 |
| Portage, IN | | — |
| | 5,416 |
| | — |
| | — |
| | 5,416 |
| | — |
| | 5,416 |
| | (758 | ) | | 2012 |
| Portland, TN | | — |
| | 8,353 |
| | 1,662 |
| | 66 |
| | 8,419 |
| | 1,662 |
| | 10,081 |
| | (1,678 | ) | | 2012 |
| Portland, ME | | — |
| | 3,727 |
| | 891 |
| | 10 |
| | 3,737 |
| | 891 |
| | 4,628 |
| | (611 | ) | | 2012 |
| Rapid City, SD | | — |
| | 10,662 |
| | 2,071 |
| | 1,020 |
| | 11,682 |
| | 2,071 |
| | 13,753 |
| | (3,858 | ) | | 2007 |
| Reading, PA | | — |
| | 5,401 |
| | 1,708 |
| | 67 |
| | 5,468 |
| | 1,708 |
| | 7,176 |
| | (442 | ) | | 2016 |
| Muhlenberg TWP, PA | | — |
| | 13,866 |
| | 843 |
| | 232 |
| | 14,098 |
| | 843 |
| | 14,941 |
| | (2,181 | ) | | 2012 |
| Redford, MI | | — |
| | 6,114 |
| | 728 |
| | 368 |
| | 6,482 |
| | 728 |
| | 7,210 |
| | (359 | ) | | 2017 |
| Reno, NV | | — |
| | 3,461 |
| | 1,372 |
| | — |
| | 3,461 |
| | 1,372 |
| | 4,833 |
| | (511 | ) | | 2014 |
| Rock Hill, SC | | (3,906 | ) | | 6,297 |
| | 1,411 |
| | 351 |
| | 6,648 |
| | 1,411 |
| | 8,059 |
| | (456 | ) | | 2016 |
| Rock Hill, SC | | — |
| | 4,512 |
| | 1,095 |
| | — |
| | 4,512 |
| | 1,095 |
| | 5,607 |
| | (151 | ) | | 2017 |
| Rockwall, TX | | — |
| | 16,066 |
| | 2,683 |
| | — |
| | 16,066 |
| | 2,683 |
| | 18,749 |
| | (363 | ) | | 2017 |
| Rogers, MN | | — |
| | 11,787 |
| | 1,671 |
| | 238 |
| | 12,025 |
| | 1,671 |
| | 13,696 |
| | (3,198 | ) | | 2011 |
| Rogers, AR | | — |
| | 8,280 |
| | 1,072 |
| | 287 |
| | 8,567 |
| | 1,072 |
| | 9,639 |
| | (1,665 | ) | | 2011 |
| Romulus, MI | | — |
| | 15,043 |
| | 1,080 |
| | — |
| | 15,043 |
| | 1,080 |
| | 16,123 |
| | (372 | ) | | 2017 |
| Rural Hall, NC | | — |
| | 5,664 |
| | 439 |
| | 366 |
| | 6,030 |
| | 439 |
| | 6,469 |
| | (1,250 | ) | | 2008 |
| Salem, OR | | — |
| | 3,150 |
| | 599 |
| | 640 |
| | 3,790 |
| | 599 |
| | 4,389 |
| | (716 | ) | | 2010 |
| Salem, OR | | — |
| | 1,452 |
| | 266 |
| | 433 |
| | 1,885 |
| | 266 |
| | 2,151 |
| | (404 | ) | | 2010 |
| Salisbury, NC | | — |
| | 5,284 |
| | 1,535 |
| | 28 |
| | 5,312 |
| | 1,535 |
| | 6,847 |
| | (288 | ) | | 2017 |
| San Antonio, TX | | — |
| | 10,395 |
| | 1,568 |
| | 35 |
| | 10,430 |
| | 1,568 |
| | 11,998 |
| | (428 | ) | | 2016 |
| Sauk Village, IL | | — |
| | 5,405 |
| | 877 |
| | 105 |
| | 5,510 |
| | 877 |
| | 6,387 |
| | (787 | ) | | 2013 |
| Savage, MN | | — |
| | 3,996 |
| | 3,194 |
| | 546 |
| | 4,542 |
| | 3,194 |
| | 7,736 |
| | (943 | ) | | 2014 |
| Savannah, GA | | — |
| | 13,219 |
| | 439 |
| | — |
| | 13,219 |
| | 439 |
| | 13,658 |
| | (1,626 | ) | | 2014 |
| San Diego, CA | | — |
| | 15,016 |
| | 2,290 |
| | 22 |
| | 15,038 |
| | 2,290 |
| | 17,328 |
| | (389 | ) | | 2017 |
| South Easton, MA | | — |
| | 5,880 |
| | 403 |
| | — |
| | 5,880 |
| | 403 |
| | 6,283 |
| | (17 | ) | | 2017 |
| Sergeant Bluff, IA | | — |
| | 6,188 |
| | 247 |
| | 450 |
| | 6,638 |
| | 247 |
| | 6,885 |
| | (3,800 | ) | | 2007 |
| Seville, OH | | — |
| | 4,536 |
| | 766 |
| | 171 |
| | 4,707 |
| | 766 |
| | 5,473 |
| | (1,074 | ) | | 2007 |
| Shannon, GA | | — |
| | 12,969 |
| | 393 |
| | — |
| | 12,969 |
| | 393 |
| | 13,362 |
| | (1,513 | ) | | 2013 |
| South Holland, IL | | — |
| | 3,900 |
| | 714 |
| | — |
| | 3,900 |
| | 714 |
| | 4,614 |
| | (765 | ) | | 2013 |
| Shreveport, LA | | — |
| | 6,265 |
| | 1,804 |
| | 145 |
| | 6,410 |
| | 1,804 |
| | 8,214 |
| | (834 | ) | | 2015 |
| Simpsonville, SC | | — |
| | 2,960 |
| | 957 |
| | 848 |
| | 3,808 |
| | 957 |
| | 4,765 |
| | (549 | ) | | 2012 |
| Simpsonville, SC | | — |
| | 3,418 |
| | 470 |
| | 938 |
| | 4,356 |
| | 470 |
| | 4,826 |
| | (576 | ) | | 2012 |
| Smithfield, NC | | — |
| | 10,657 |
| | 613 |
| | 12 |
| | 10,669 |
| | 613 |
| | 11,282 |
| | (857 | ) | | 2011 |
| Smyrna, GA | | — |
| | 3,286 |
| | 264 |
| | — |
| | 3,286 |
| | 264 |
| | 3,550 |
| | (603 | ) | | 2012 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Initial Cost to STAG Industrial, Inc. | | | | Gross Amounts at Which Carried at December 31, 2022 | | | | |
| State & City | | Address | | Encumbrances(1) | | Building & Improvements(2) | | Land(3) | | Costs Capitalized Subsequent to Acquisition and Valuation Provision | | Building & Improvements | | Land | | Total | | Accumulated Depreciation(4) | | Year Acquired |
| Massachusetts | | | | | | | | | | | | | | | | | | | | |
| Chicopee | | 2189 Westover Road | | — | | | 5,614 | | | 504 | | | 3,145 | | | 8,759 | | | 504 | | | 9,263 | | | (1,651) | | | 2012 |
| Hudson | | 4 Robert Bonazzoli Avenue | | — | | | 12,662 | | | 723 | | | 76 | | | 12,738 | | | 723 | | | 13,461 | | | (513) | | | 2021 |
| Malden | | 219 Medford Street | | — | | | 2,817 | | | 366 | | | — | | | 2,817 | | | 366 | | | 3,183 | | | (1,124) | | | 2007 |
| Malden | | 243 Medford Street | | — | | | 3,961 | | | 507 | | | — | | | 3,961 | | | 507 | | | 4,468 | | | (1,580) | | | 2007 |
| Middleborough | | 16 Leona Drive | | — | | | 7,243 | | | 2,397 | | | — | | | 7,243 | | | 2,397 | | | 9,640 | | | (1,337) | | | 2019 |
| Norton | | 202 South Washington Street | | — | | | 6,105 | | | 2,839 | | | 250 | | | 6,355 | | | 2,839 | | | 9,194 | | | (1,872) | | | 2011 |
| South Easton | | 55 Bristol Drive | | — | | | 5,826 | | | 403 | | | 481 | | | 6,307 | | | 403 | | | 6,710 | | | (957) | | | 2017 |
| Sterling | | 15 Chocksett Road | | — | | | 10,797 | | | 1,472 | | | — | | | 10,797 | | | 1,472 | | | 12,269 | | | (453) | | | 2021 |
| Stoughton | | 100 Campanelli Parkway | | — | | | 2,613 | | | 2,256 | | | 1,660 | | | 4,273 | | | 2,256 | | | 6,529 | | | (1,564) | | | 2015 |
| Stoughton | | 12 Campanelli Parkway | | — | | | 1,138 | | | 538 | | | 293 | | | 1,431 | | | 538 | | | 1,969 | | | (446) | | | 2015 |
| Westborough | | 35 Otis Street | | — | | | 5,733 | | | 661 | | | 23 | | | 5,756 | | | 661 | | | 6,417 | | | (1,104) | | | 2016 |
| Michigan | | | | | | | | | | | | | | | | | | | | |
| Belleville | | 8200 Haggerty Road | | — | | | 6,484 | | | 724 | | | 616 | | | 7,100 | | | 724 | | | 7,824 | | | (1,321) | | | 2017 |
| Canton | | 47440 Michigan Avenue | | — | | | 23,732 | | | 2,378 | | | 180 | | | 23,912 | | | 2,378 | | | 26,290 | | | (2,401) | | | 2020 |
| Chesterfield | | 50501 E. Russell Schmidt | | — | | | 1,099 | | | 207 | | | 12 | | | 1,111 | | | 207 | | | 1,318 | | | (440) | | | 2007 |
| Chesterfield | | 50371 E. Russell Schmidt | | — | | | 798 | | | 150 | | | 477 | | | 1,275 | | | 150 | | | 1,425 | | | (428) | | | 2007 |
| Chesterfield | | 50271 E. Russell Schmidt | | — | | | 802 | | | 151 | | | 210 | | | 1,012 | | | 151 | | | 1,163 | | | (458) | | | 2007 |
| Chesterfield | | 50900 E. Russell Schmidt | | — | | | 5,006 | | | 942 | | | 2,365 | | | 7,371 | | | 942 | | | 8,313 | | | (2,931) | | | 2007 |
| Grand Rapids | | 5445 International Parkway | | — | | | 7,082 | | | 1,241 | | | 43 | | | 7,125 | | | 1,241 | | | 8,366 | | | (548) | | | 2020 |
| Grand Rapids | | 5079 33rd Street | | — | | | 4,907 | | | 892 | | | — | | | 4,907 | | | 892 | | | 5,799 | | | (136) | | | 2022 |
| Grand Rapids | | 5333 33rd Street | | — | | | 3,460 | | | 1,052 | | | — | | | 3,460 | | | 1,052 | | | 4,512 | | | (127) | | | 2022 |
| Grand Rapids | | 5050 Kendrick Street, SE | | — | | | 7,332 | | | 169 | | | 34 | | | 7,366 | | | 169 | | | 7,535 | | | (1,809) | | | 2015 |
| Holland | | 4757 128th Avenue | | — | | | 3,273 | | | 279 | | | 208 | | | 3,481 | | | 279 | | | 3,760 | | | (949) | | | 2012 |
| Kentwood | | 4660 East Paris Avenue, SE | | — | | | 7,955 | | | 307 | | | 29 | | | 7,984 | | | 307 | | | 8,291 | | | (1,047) | | | 2019 |
| Kentwood | | 4647 60th Street SE | | — | | | 16,933 | | | 1,256 | | | 1,803 | | | 18,736 | | | 1,256 | | | 19,992 | | | (694) | | | 2021 |
| Kentwood | | 4070 East Paris Avenue | | — | | | 2,436 | | | 407 | | | 120 | | | 2,556 | | | 407 | | | 2,963 | | | (664) | | | 2013 |
| Lansing | | 7009 West Mount Hope Highway | | — | | | 7,706 | | | 501 | | | 7,357 | | | 15,063 | | | 501 | | | 15,564 | | | (3,602) | | | 2011 |
| Lansing | | 2780 Sanders Road | | — | | | 3,961 | | | 580 | | | 43 | | | 4,004 | | | 580 | | | 4,584 | | | (1,092) | | | 2012 |
| Lansing | | 5640 Pierson Highway | | — | | | 7,056 | | | 429 | | | 100 | | | 7,156 | | | 429 | | | 7,585 | | | (2,084) | | | 2012 |
| Lansing | | 2051 South Canal Road | | — | | | 5,176 | | | 907 | | | — | | | 5,176 | | | 907 | | | 6,083 | | | (1,413) | | | 2013 |
| Livonia | | 38150 Plymouth Road | | — | | | 7,032 | | | 1,390 | | | 582 | | | 7,614 | | | 1,390 | | | 9,004 | | | (1,331) | | | 2018 |
| Livonia | | 38220 Plymouth Road | | — | | | 8,918 | | | 848 | | | 987 | | | 9,905 | | | 848 | | | 10,753 | | | (1,229) | | | 2018 |
| Marshall | | 1511 George Brown Drive | | — | | | 1,042 | | | 199 | | | 130 | | | 1,172 | | | 199 | | | 1,371 | | | (369) | | | 2013 |
| Novi | | 22925 Venture Drive | | — | | | 3,649 | | | 252 | | | 363 | | | 4,012 | | | 252 | | | 4,264 | | | (1,090) | | | 2012 |
| Novi | | 25250 Regency Drive | | — | | | 6,035 | | | 626 | | | 23 | | | 6,058 | | | 626 | | | 6,684 | | | (1,530) | | | 2015 |
| Novi | | 43800 Gen Mar Drive | | — | | | 16,918 | | | 1,381 | | | 925 | | | 17,843 | | | 1,381 | | | 19,224 | | | (2,571) | | | 2018 |
| Plymouth | | 14835 Pilot Drive | | — | | | 4,620 | | | 365 | | | 250 | | | 4,870 | | | 365 | | | 5,235 | | | (1,165) | | | 2015 |
| Redford | | 12100 Inkster Road | | — | | | 6,114 | | | 728 | | | 50 | | | 6,164 | | | 728 | | | 6,892 | | | (1,615) | | | 2017 |
| Romulus | | 9800 Inkster Road | | — | | | 14,942 | | | 1,254 | | | — | | | 14,942 | | | 1,254 | | | 16,196 | | | (2,643) | | | 2018 |
| Romulus | | 27651 Hildebrandt Road | | — | | | 14,949 | | | 1,080 | | | 289 | | | 15,238 | | | 1,080 | | | 16,318 | | | (2,948) | | | 2017 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to STAG Industrial, Inc. | | | | Gross Amounts at Which Carried at December 31, 2017 | | | | |
| City/State | | Encumbrances (1) | | Building & Improvements (2) | | Land | | Costs Capitalized Subsequent to Acquisition and Valuation Provision | | Building & Improvements | | Land | | Total | | Accumulated Depreciation (3) | | Acq Date |
| South Bend, IN | | — |
| | 4,834 |
| | 411 |
| | — |
| | 4,834 |
| | 411 |
| | 5,245 |
| | (804 | ) | | 2012 |
| Franklin Township, NJ | | — |
| | 8,322 |
| | 2,272 |
| | — |
| | 8,322 |
| | 2,272 |
| | 10,594 |
| | (446 | ) | | 2017 |
| Sparks, NV | | — |
| | 6,328 |
| | 938 |
| | 934 |
| | 7,262 |
| | 938 |
| | 8,200 |
| | (327 | ) | | 2017 |
| Spartanburg, SC | | — |
| | 15,100 |
| | 1,867 |
| | 166 |
| | 15,266 |
| | 1,867 |
| | 17,133 |
| | (862 | ) | | 2016 |
| Spartanburg, SC | | — |
| | 3,694 |
| | 342 |
| | — |
| | 3,694 |
| | 342 |
| | 4,036 |
| | (547 | ) | | 2014 |
| Spartanburg, SC | | — |
| | 5,797 |
| | 493 |
| | 432 |
| | 6,229 |
| | 493 |
| | 6,722 |
| | (963 | ) | | 2012 |
| Stafford, TX | | — |
| | 6,570 |
| | 339 |
| | — |
| | 6,570 |
| | 339 |
| | 6,909 |
| | (19 | ) | | 2017 |
| Statham, GA | | — |
| | 6,130 |
| | 588 |
| | 1,151 |
| | 7,281 |
| | 588 |
| | 7,869 |
| | (965 | ) | | 2012 |
| Sterling Heights, MI | | (1,484 | ) | | 4,191 |
| | 513 |
| | 415 |
| | 4,606 |
| | 513 |
| | 5,119 |
| | (683 | ) | | 2012 |
| Stone Mountain, GA | | — |
| | 2,738 |
| | 612 |
| | 645 |
| | 3,383 |
| | 612 |
| | 3,995 |
| | (63 | ) | | 2017 |
| Stoughton, MA | | — |
| | 2,613 |
| | 2,256 |
| | 824 |
| | 3,437 |
| | 2,256 |
| | 5,693 |
| | (904 | ) | | 2015 |
| Stoughton, MA | | — |
| | 1,216 |
| | 538 |
| | — |
| | 1,216 |
| | 538 |
| | 1,754 |
| | (268 | ) | | 2015 |
| Streetsboro, OH | | — |
| | 5,481 |
| | 2,161 |
| | 214 |
| | 5,695 |
| | 2,161 |
| | 7,856 |
| | (1,473 | ) | | 2010 |
| Strongsville, OH | | — |
| | 5,853 |
| | 491 |
| | 94 |
| | 5,947 |
| | 491 |
| | 6,438 |
| | (761 | ) | | 2014 |
| Sun Prairie, WI | | — |
| | 5,809 |
| | 2,360 |
| | 2,377 |
| | 8,186 |
| | 2,360 |
| | 10,546 |
| | (1,454 | ) | | 2008 |
| Swedesboro, NJ | | — |
| | 5,129 |
| | 1,212 |
| | — |
| | 5,129 |
| | 1,212 |
| | 6,341 |
| | (74 | ) | | 2017 |
| Toledo, OH | | — |
| | 6,831 |
| | 213 |
| | — |
| | 6,831 |
| | 213 |
| | 7,044 |
| | (1,215 | ) | | 2012 |
| Burlington, NJ | | — |
| | — |
| | 3,267 |
| | 248 |
| | 248 |
| | 3,267 |
| | 3,515 |
| | — |
| | 2015 |
| Libertyville, IL | | — |
| | — |
| | 369 |
| | 2 |
| | 2 |
| | 369 |
| | 371 |
| | — |
| | 2015 |
| Libertyville, IL | | — |
| | — |
| | 397 |
| | 2 |
| | 2 |
| | 397 |
| | 399 |
| | — |
| | 2015 |
| Tulsa, OK | | — |
| | 8,242 |
| | 966 |
| | — |
| | 8,242 |
| | 966 |
| | 9,208 |
| | (691 | ) | | 2015 |
| Twinsburg, OH | | — |
| | 8,027 |
| | 590 |
| | — |
| | 8,027 |
| | 590 |
| | 8,617 |
| | (1,793 | ) | | 2007 |
| Visalia, CA | | — |
| | 21,839 |
| | 4,346 |
| | — |
| | 21,839 |
| | 4,346 |
| | 26,185 |
| | (1,616 | ) | | 2016 |
| Vonore, TN | | — |
| | 8,243 |
| | 2,355 |
| | 85 |
| | 8,328 |
| | 2,355 |
| | 10,683 |
| | (1,771 | ) | | 2011 |
| Waco, TX | | — |
| | 1,394 |
| | — |
| | 619 |
| | 2,013 |
| | — |
| | 2,013 |
| | (299 | ) | | 2008 |
| West Allis, WI | | — |
| | 1,905 |
| | 462 |
| | 371 |
| | 2,276 |
| | 462 |
| | 2,738 |
| | (191 | ) | | 2015 |
| West Allis, WI | | — |
| | 1,860 |
| | 444 |
| | 24 |
| | 1,884 |
| | 444 |
| | 2,328 |
| | (170 | ) | | 2015 |
| West Allis, WI | | — |
| | 929 |
| | 252 |
| | 176 |
| | 1,105 |
| | 252 |
| | 1,357 |
| | (97 | ) | | 2015 |
| West Allis, WI | | — |
| | 1,039 |
| | 251 |
| | — |
| | 1,039 |
| | 251 |
| | 1,290 |
| | (97 | ) | | 2015 |
| Walker, MI | | — |
| | 4,872 |
| | 855 |
| | 136 |
| | 5,008 |
| | 855 |
| | 5,863 |
| | (1,097 | ) | | 2010 |
| Wallingford, CT | | — |
| | 6,111 |
| | 585 |
| | — |
| | 6,111 |
| | 585 |
| | 6,696 |
| | (149 | ) | | 2017 |
| Walton, KY | | — |
| | 6,244 |
| | 2,105 |
| | — |
| | 6,244 |
| | 2,105 |
| | 8,349 |
| | (191 | ) | | 2017 |
| Ware Shoals, SC | | (244 | ) | | 197 |
| | 133 |
| | — |
| | 197 |
| | 133 |
| | 330 |
| | (35 | ) | | 2012 |
| Warren, MI | | — |
| | 6,111 |
| | 502 |
| | 10 |
| | 6,121 |
| | 502 |
| | 6,623 |
| | (247 | ) | | 2017 |
| Warren, MI | | — |
| | 16,035 |
| | 1,290 |
| | — |
| | 16,035 |
| | 1,290 |
| | 17,325 |
| | (813 | ) | | 2016 |
| Waukegan, IL | | — |
| | 5,140 |
| | 1,004 |
| | — |
| | 5,140 |
| | 1,004 |
| | 6,144 |
| | (166 | ) | | 2017 |
| Waukegan, IL | | — |
| | 5,547 |
| | 914 |
| | — |
| | 5,547 |
| | 914 |
| | 6,461 |
| | (80 | ) | | 2017 |
| West Chester, OH | | — |
| | 8,868 |
| | 936 |
| | — |
| | 8,868 |
| | 936 |
| | 9,804 |
| | (356 | ) | | 2016 |
| West Chicago, IL | | — |
| | 2,036 |
| | 768 |
| | 772 |
| | 2,808 |
| | 768 |
| | 3,576 |
| | (119 | ) | | 2016 |
| West Chicago, IL | | — |
| | 674 |
| | 382 |
| | 286 |
| | 960 |
| | 382 |
| | 1,342 |
| | (71 | ) | | 2016 |
| West Chicago, IL | | — |
| | 768 |
| | 450 |
| | 272 |
| | 1,040 |
| | 450 |
| | 1,490 |
| | (71 | ) | | 2016 |
| West Chicago, IL | | — |
| | 895 |
| | 369 |
| | 269 |
| | 1,164 |
| | 369 |
| | 1,533 |
| | (84 | ) | | 2016 |
| West Chicago, IL | | — |
| | 904 |
| | 216 |
| | 276 |
| | 1,180 |
| | 216 |
| | 1,396 |
| | (57 | ) | | 2016 |
| West Chicago, IL | | — |
| | 6,247 |
| | 915 |
| | 969 |
| | 7,216 |
| | 915 |
| | 8,131 |
| | (546 | ) | | 2016 |
| West Columbia, SC | | — |
| | 9,570 |
| | 488 |
| | — |
| | 9,570 |
| | 488 |
| | 10,058 |
| | (380 | ) | | 2016 |
| West Columbia, SC | | — |
| | 9,151 |
| | 240 |
| | 7 |
| | 9,158 |
| | 240 |
| | 9,398 |
| | (47 | ) | | 2017 |
| West Columbia, SC | | — |
| | 4,646 |
| | 551 |
| | 2,301 |
| | 6,947 |
| | 551 |
| | 7,498 |
| | (286 | ) | | 2016 |
| Westborough, MA | | — |
| | 5,808 |
| | 661 |
| | — |
| | 5,808 |
| | 661 |
| | 6,469 |
| | (271 | ) | | 2016 |
| Hamilton, OH | | — |
| | 8,585 |
| | 1,046 |
| | 598 |
| | 9,183 |
| | 1,046 |
| | 10,229 |
| | (1,661 | ) | | 2014 |
| Wichita, KS | | (1,484 | ) | | 1,815 |
| | 88 |
| | 11 |
| | 1,826 |
| | 88 |
| | 1,914 |
| | (263 | ) | | 2012 |
| Wichita, KS | | (1,621 | ) | | 1,839 |
| | 107 |
| | 131 |
| | 1,970 |
| | 107 |
| | 2,077 |
| | (323 | ) | | 2012 |
| Wichita, KS | | (742 | ) | | 833 |
| | 76 |
| | 181 |
| | 1,014 |
| | 76 |
| | 1,090 |
| | (168 | ) | | 2012 |
| Williamsport, PA | | — |
| | 9,059 |
| | 688 |
| | — |
| | 9,059 |
| | 688 |
| | 9,747 |
| | (1,404 | ) | | 2013 |
| Winston-Salem, NC | | — |
| | 11,054 |
| | 610 |
| | 16 |
| | 11,070 |
| | 610 |
| | 11,680 |
| | (1,387 | ) | | 2014 |
| Wood Dale, IL | | — |
| | 5,042 |
| | 1,226 |
| | — |
| | 5,042 |
| | 1,226 |
| | 6,268 |
| | (205 | ) | | 2016 |
| Woodstock, IL | | — |
| | 3,796 |
| | 496 |
| | — |
| | 3,796 |
| | 496 |
| | 4,292 |
| | (645 | ) | | 2012 |
| York, PA | | — |
| | 14,538 |
| | 2,152 |
| | 96 |
| | 14,634 |
| | 2,152 |
| | 16,786 |
| | (195 | ) | | 2017 |
| Yorkville, WI | | — |
| | 4,893 |
| | 416 |
| | — |
| | 4,893 |
| | 416 |
| | 5,309 |
| | (454 | ) | | 2014 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Initial Cost to STAG Industrial, Inc. | | | | Gross Amounts at Which Carried at December 31, 2022 | | | | |
| State & City | | Address | | Encumbrances(1) | | Building & Improvements(2) | | Land(3) | | Costs Capitalized Subsequent to Acquisition and Valuation Provision | | Building & Improvements | | Land | | Total | | Accumulated Depreciation(4) | | Year Acquired |
| Sterling Heights | | 42600 Merrill Street | | — | | | 4,191 | | | 1,133 | | | 1,385 | | | 5,576 | | | 1,133 | | | 6,709 | | | (1,454) | | | 2012 |
| Walker | | 2640 Northridge Drive | | — | | | 4,593 | | | 855 | | | 342 | | | 4,935 | | | 855 | | | 5,790 | | | (1,444) | | | 2011 |
| Warren | | 13301 Stephens Road | | — | | | 5,820 | | | 502 | | | 116 | | | 5,936 | | | 502 | | | 6,438 | | | (1,136) | | | 2017 |
| Warren | | 27027 Mound Road | | — | | | 17,584 | | | 1,984 | | | — | | | 17,584 | | | 1,984 | | | 19,568 | | | (1,684) | | | 2020 |
| Warren | | 25295 Guenther Road | | — | | | 19,273 | | | 531 | | | — | | | 19,273 | | | 531 | | | 19,804 | | | (986) | | | 2021 |
| Warren | | 7500 Tank Avenue | | — | | | 16,035 | | | 1,290 | | | — | | | 16,035 | | | 1,290 | | | 17,325 | | | (3,658) | | | 2016 |
| Wixom | | 48238 Frank Street | | — | | | 14,433 | | | 293 | | | — | | | 14,433 | | | 293 | | | 14,726 | | | (509) | | | 2021 |
| Zeeland | | 750 E. Riley Avenue | | — | | | 12,100 | | | 487 | | | — | | | 12,100 | | | 487 | | | 12,587 | | | (1,745) | | | 2019 |
| Minnesota | | | | | | | | | | | | | | | | | | | | |
| Blaine | | 3705 95th Avenue NE | | — | | | 16,873 | | | 2,258 | | | — | | | 16,873 | | | 2,258 | | | 19,131 | | | (2,160) | | | 2019 |
| Bloomington | | 11300 Hampshire Avenue South | | — | | | 8,582 | | | 1,702 | | | 23 | | | 8,605 | | | 1,702 | | | 10,307 | | | (1,502) | | | 2018 |
| Brooklyn Park | | 6688 93rd Avenue North | | — | | | 11,988 | | | 1,926 | | | — | | | 11,988 | | | 1,926 | | | 13,914 | | | (2,396) | | | 2016 |
| Carlos | | 4750 County Road 13 NE | | — | | | 5,855 | | | 960 | | | 151 | | | 6,006 | | | 960 | | | 6,966 | | | (1,962) | | | 2011 |
| Eagan | | 3355 Discovery Road | | — | | | 15,290 | | | 2,526 | | | — | | | 15,290 | | | 2,526 | | | 17,816 | | | (2,070) | | | 2019 |
| Inver Grove Height | | 8450 Courthouse Boulevard | | — | | | 6,964 | | | 2,595 | | | — | | | 6,964 | | | 2,595 | | | 9,559 | | | (416) | | | 2021 |
| Maple Grove | | 6250 Sycamore Lane North | | — | | | 6,634 | | | 969 | | | 473 | | | 7,107 | | | 969 | | | 8,076 | | | (1,450) | | | 2017 |
| Maple Grove | | 8175 Jefferson Highway | | — | | | 10,397 | | | 2,327 | | | 143 | | | 10,540 | | | 2,327 | | | 12,867 | | | (918) | | | 2020 |
| Mendota Heights | | 2250 Pilot Knob Road | | — | | | 3,492 | | | 1,494 | | | 1,062 | | | 4,554 | | | 1,494 | | | 6,048 | | | (1,037) | | | 2018 |
| New Hope | | 5520 North Highway 169 | | — | | | 1,902 | | | 1,919 | | | 449 | | | 2,351 | | | 1,919 | | | 4,270 | | | (675) | | | 2013 |
| Newport | | 710 Hastings Avenue | | — | | | 8,367 | | | 1,765 | | | — | | | 8,367 | | | 1,765 | | | 10,132 | | | (284) | | | 2021 |
| Oakdale | | 550 Hale Avenue | | — | | | 6,556 | | | 647 | | | 202 | | | 6,758 | | | 647 | | | 7,405 | | | (1,039) | | | 2019 |
| Oakdale | | 585-595 Hale Avenue | | — | | | 5,022 | | | 1,396 | | | 298 | | | 5,320 | | | 1,396 | | | 6,716 | | | (897) | | | 2018 |
| Plymouth | | 9800 13th Avenue North | | — | | | 4,978 | | | 1,599 | | | — | | | 4,978 | | | 1,599 | | | 6,577 | | | (1,013) | | | 2018 |
| Plymouth | | 6050 Nathan Lane | | — | | | 5,855 | | | 1,109 | | | 24 | | | 5,879 | | | 1,109 | | | 6,988 | | | (723) | | | 2019 |
| Plymouth | | 6075 Trenton Lane North | | — | | | 6,919 | | | 1,569 | | | — | | | 6,919 | | | 1,569 | | | 8,488 | | | (824) | | | 2019 |
| Savage | | 14399 Huntington Avenue | | — | | | 3,836 | | | 3,194 | | | 1,253 | | | 5,089 | | | 3,194 | | | 8,283 | | | (1,614) | | | 2014 |
| Shakopee | | 5101/4901 Valley Industrial Boulevard | | — | | | 11,596 | | | 584 | | | — | | | 11,596 | | | 584 | | | 12,180 | | | (314) | | | 2022 |
| Shakopee | | 1451 Dean Lakes Trail | | — | | | 12,496 | | | 927 | | | 61 | | | 12,557 | | | 927 | | | 13,484 | | | (1,223) | | | 2019 |
| Saint Paul | | 1700 Wynne Avenue | | — | | | 23,675 | | | 2,258 | | | — | | | 23,675 | | | 2,258 | | | 25,933 | | | (905) | | | 2021 |
| South Saint Paul | | 411 Farwell Avenue | | — | | | 14,975 | | | 2,378 | | | 498 | | | 15,473 | | | 2,378 | | | 17,851 | | | (2,626) | | | 2018 |
| Mississippi | | | | | | | | | | | | | | | | | | | | |
| Southaven | | 228 Access Drive | | — | | | 28,566 | | | 1,000 | | | 26 | | | 28,592 | | | 1,000 | | | 29,592 | | | (1,985) | | | 2020 |
| Missouri | | | | | | | | | | | | | | | | | | | | |
| Berkeley | | 8901 Springdale Avenue | | — | | | 9,859 | | | 1,423 | | | — | | | 9,859 | | | 1,423 | | | 11,282 | | | (410) | | | 2021 |
| Earth City | | 1 American Eagle Plaza | | — | | | 2,751 | | | 1,123 | | | 60 | | | 2,811 | | | 1,123 | | | 3,934 | | | (674) | | | 2016 |
| Fenton | | 2501 & 2509 Cassens Drive | | — | | | 9,358 | | | 791 | | | — | | | 9,358 | | | 791 | | | 10,149 | | | (1,044) | | | 2019 |
| Hazelwood | | 7275 Hazelwood Avenue | | — | | | 5,030 | | | 1,382 | | | 1,599 | | | 6,629 | | | 1,382 | | | 8,011 | | | (1,959) | | | 2011 |
| Kansas City | | 4001 North Norfleet Road | | — | | | 48,342 | | | 4,239 | | | — | | | 48,342 | | | 4,239 | | | 52,581 | | | (1,579) | | | 2022 |
| O'Fallon | | 6705 Keaton Corporate Parkway | | — | | | 3,606 | | | 1,233 | | | 401 | | | 4,007 | | | 1,233 | | | 5,240 | | | (949) | | | 2017 |
| O'Fallon | | 3801 Lloyd King Drive | | — | | | 2,579 | | | 1,242 | | | 829 | | | 3,408 | | | 1,242 | | | 4,650 | | | (1,053) | | | 2011 |
| Nebraska | | | | | | | | | | | | | | | | | | | | |
| Bellevue | | 10601 S 15th Street | | — | | | 20,384 | | | 1,691 | | | — | | | 20,384 | | | 1,691 | | | 22,075 | | | (1,385) | | | 2021 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to STAG Industrial, Inc. | | | | Gross Amounts at Which Carried at December 31, 2017 | | | | |
| City/State | | Encumbrances (1) | | Building & Improvements (2) | | Land | | Costs Capitalized Subsequent to Acquisition and Valuation Provision | | Building & Improvements | | Land | | Total | | Accumulated Depreciation (3) | | Acq Date |
| Bardstown, KY | | — |
| | 2,398 |
| | 379 |
| | — |
| | 2,398 |
| | 379 |
| | 2,777 |
| | (680 | ) | | 2007 |
| Total | | $ | (58,855 | ) | | $ | 2,099,229 |
| | $ | 325,773 |
| | $ | 99,110 |
| | $ | 2,198,339 |
| | $ | 325,773 |
| | $ | 2,524,112 |
| | $ | (251,943 | ) | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Initial Cost to STAG Industrial, Inc. | | | | Gross Amounts at Which Carried at December 31, 2022 | | | | |
| State & City | | Address | | Encumbrances(1) | | Building & Improvements(2) | | Land(3) | | Costs Capitalized Subsequent to Acquisition and Valuation Provision | | Building & Improvements | | Land | | Total | | Accumulated Depreciation(4) | | Year Acquired |
| La Vista | | 11720 Peel Circle | | — | | | 14,679 | | | 1,232 | | | — | | | 14,679 | | | 1,232 | | | 15,911 | | | (512) | | | 2021 |
| Omaha | | 10488 S. 136th Street | | — | | | 13,736 | | | 1,602 | | | 52 | | | 13,788 | | | 1,602 | | | 15,390 | | | (1,588) | | | 2019 |
| Omaha | | 9995 I Street | | — | | | 3,202 | | | 572 | | | 164 | | | 3,366 | | | 572 | | | 3,938 | | | (363) | | | 2019 |
| Omaha | | 10025 I Street | | — | | | 2,449 | | | 579 | | | 133 | | | 2,582 | | | 579 | | | 3,161 | | | (351) | | | 2019 |
| Omaha | | 9931 South 136th Street | | — | | | 2,636 | | | 828 | | | 221 | | | 2,857 | | | 828 | | | 3,685 | | | (127) | | | 2021 |
| Omaha | | 9950 South 134th Street | | — | | | 3,398 | | | 868 | | | — | | | 3,398 | | | 868 | | | 4,266 | | | (135) | | | 2021 |
| Nevada | | | | | | | | | | | | | | | | | | | | |
| Fernley | | 190 Resource Drive | | — | | | 11,401 | | | 1,034 | | | — | | | 11,401 | | | 1,034 | | | 12,435 | | | (612) | | | 2021 |
| Las Vegas | | 730 Pilot Road | | — | | | 12,390 | | | 2,615 | | | 236 | | | 12,626 | | | 2,615 | | | 15,241 | | | (2,079) | | | 2018 |
| Las Vegas | | 3450 West Teco Avenue | | — | | | 3,259 | | | 770 | | | 117 | | | 3,376 | | | 770 | | | 4,146 | | | (566) | | | 2017 |
| Paradise | | 4565 Wynn Road | | — | | | 4,514 | | | 949 | | | — | | | 4,514 | | | 949 | | | 5,463 | | | (516) | | | 2019 |
| Paradise | | 6460 Arville Street | | — | | | 3,415 | | | 1,465 | | | 251 | | | 3,666 | | | 1,465 | | | 5,131 | | | (538) | | | 2019 |
| Reno | | 9025 Moya Boulevard | | — | | | 3,356 | | | 1,372 | | | 107 | | | 3,463 | | | 1,372 | | | 4,835 | | | (960) | | | 2014 |
| Sparks | | 325 E. Nugget Avenue | | — | | | 6,328 | | | 938 | | | 977 | | | 7,305 | | | 938 | | | 8,243 | | | (1,789) | | | 2017 |
| New Hampshire | | | | | | | | | | | | | | | | | | | | |
| Londonderry | | 29 Jack's Bridge Road/Clark Road | | — | | | 6,683 | | | 730 | | | — | | | 6,683 | | | 730 | | | 7,413 | | | (1,949) | | | 2013 |
| Nashua | | 80 Northwest Boulevard | | — | | | 8,470 | | | 1,431 | | | 487 | | | 8,957 | | | 1,431 | | | 10,388 | | | (2,380) | | | 2014 |
| New Jersey | | | | | | | | | | | | | | | | | | | | |
| Branchburg | | 291 Evans Way | | — | | | 10,852 | | | 2,367 | | | 149 | | | 11,001 | | | 2,367 | | | 13,368 | | | (1,093) | | | 2019 |
| Burlington | | 8 Campus Drive | | — | | | 15,797 | | | 3,267 | | | 266 | | | 16,063 | | | 3,267 | | | 19,330 | | | (964) | | | 2015 |
| Burlington | | 6 Campus Drive | | — | | | 19,577 | | | 4,030 | | | 1,356 | | | 20,933 | | | 4,030 | | | 24,963 | | | (5,011) | | | 2015 |
| Franklin Township | | 17 & 20 Veronica Avenue | | — | | | 8,264 | | | 2,272 | | | 1,555 | | | 9,819 | | | 2,272 | | | 12,091 | | | (2,157) | | | 2017 |
| Lumberton | | 101 Mount Holly Bypass | | — | | | 6,372 | | | 1,121 | | | — | | | 6,372 | | | 1,121 | | | 7,493 | | | (1,036) | | | 2019 |
| Moorestown | | 550 Glen Avenue | | — | | | 5,678 | | | 466 | | | 80 | | | 5,758 | | | 466 | | | 6,224 | | | (793) | | | 2019 |
| Moorestown | | 600 Glen Court | | — | | | 4,749 | | | 510 | | | 40 | | | 4,789 | | | 510 | | | 5,299 | | | (750) | | | 2019 |
| Mt. Laurel | | 103 Central Avenue | | — | | | 6,695 | | | 616 | | | 942 | | | 7,637 | | | 616 | | | 8,253 | | | (538) | | | 2020 |
| Pedricktown | | One Gateway Boulevard | | — | | | 10,250 | | | 2,414 | | | 4,544 | | | 14,794 | | | 2,414 | | | 17,208 | | | (2,172) | | | 2017 |
| Swedesboro | | 2165 Center Square Road | | — | | | 5,129 | | | 1,212 | | | 818 | | | 5,947 | | | 1,212 | | | 7,159 | | | (1,046) | | | 2017 |
| Westampton | | 800 Highland Drive | | — | | | 27,336 | | | 3,647 | | | — | | | 27,336 | | | 3,647 | | | 30,983 | | | (676) | | | 2021 |
| New Mexico | | | | | | | | | | | | | | | | | | | | |
| Santa Teresa | | 150 Earhardt Drive | | — | | | 8,906 | | | 723 | | | — | | | 8,906 | | | 723 | | | 9,629 | | | (131) | | | 2022 |
| New York | | | | | | | | | | | | | | | | | | | | |
| Buffalo | | 1236-50 William Street | | — | | | 2,924 | | | 146 | | | — | | | 2,924 | | | 146 | | | 3,070 | | | (862) | | | 2012 |
| Cheektowaga | | 40-60 Industrial Parkway | | — | | | 2,699 | | | 216 | | | 1,032 | | | 3,731 | | | 216 | | | 3,947 | | | (1,280) | | | 2011 |
| Farmington | | 5786 Collett Road | | — | | | 5,282 | | | 410 | | | 896 | | | 6,178 | | | 410 | | | 6,588 | | | (2,200) | | | 2007 |
| Gloversville | | 125 Belzano Drive | | — | | | 1,299 | | | 117 | | | 7 | | | 1,306 | | | 117 | | | 1,423 | | | (404) | | | 2012 |
| Gloversville | | 122 Belzano Drive | | — | | | 2,559 | | | 151 | | | 73 | | | 2,632 | | | 151 | | | 2,783 | | | (751) | | | 2012 |
| Gloversville | | 109 Belzano Drive | | — | | | 1,486 | | | 154 | | | 164 | | | 1,650 | | | 154 | | | 1,804 | | | (480) | | | 2012 |
| Johnstown | | 123 Union Avenue | | — | | | 1,592 | | | 216 | | | 33 | | | 1,625 | | | 216 | | | 1,841 | | | (445) | | | 2012 |
| Johnstown | | 231 Enterprise Drive | | — | | | 955 | | | 151 | | | 96 | | | 1,051 | | | 151 | | | 1,202 | | | (369) | | | 2012 |
| Johnstown | | 150 Enterprise Avenue | | — | | | 1,440 | | | 140 | | | — | | | 1,440 | | | 140 | | | 1,580 | | | (470) | | | 2012 |
| Rochester | | 2883 Brighton Henrietta Townline Road | | — | | | 6,979 | | | 619 | | | 601 | | | 7,580 | | | 619 | | | 8,199 | | | (543) | | | 2020 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Initial Cost to STAG Industrial, Inc. | | | | Gross Amounts at Which Carried at December 31, 2022 | | | | |
| State & City | | Address | | Encumbrances(1) | | Building & Improvements(2) | | Land(3) | | Costs Capitalized Subsequent to Acquisition and Valuation Provision | | Building & Improvements | | Land | | Total | | Accumulated Depreciation(4) | | Year Acquired |
| Rochester | | 1350 Scottsville Road | | — | | | 6,746 | | | 208 | | | — | | | 6,746 | | | 208 | | | 6,954 | | | (638) | | | 2020 |
| Ronkonkoma | | 845 South 1st Street | | (4,744) | | | 6,091 | | | 1,213 | | | 40 | | | 6,131 | | | 1,213 | | | 7,344 | | | (381) | | | 2021 |
| North Carolina | | | | | | | | | | | | | | | | | | | | |
| Catawba | | 3389 Catawba Industrial Place | | — | | | 8,166 | | | 1,692 | | | — | | | 8,166 | | | 1,692 | | | 9,858 | | | (593) | | | 2020 |
| Charlotte | | 1401 Tar Heel Road | | — | | | 3,842 | | | 515 | | | 63 | | | 3,905 | | | 515 | | | 4,420 | | | (759) | | | 2015 |
| Charlotte | | 2027 Gateway Boulevard | | — | | | 3,654 | | | 913 | | | 30 | | | 3,684 | | | 913 | | | 4,597 | | | (555) | | | 2018 |
| Charlotte | | 3115 Beam Road | | — | | | 4,839 | | | 369 | | | 179 | | | 5,018 | | | 369 | | | 5,387 | | | (392) | | | 2020 |
| Durham | | 2702 Weck Drive | | — | | | 2,589 | | | 753 | | | 138 | | | 2,727 | | | 753 | | | 3,480 | | | (632) | | | 2015 |
| Garner | | 2337 US Highway 70E | | — | | | 11,790 | | | 3,420 | | | — | | | 11,790 | | | 3,420 | | | 15,210 | | | (832) | | | 2020 |
| Greensboro | | 415 Westcliff Road | | — | | | 6,383 | | | 691 | | | 208 | | | 6,591 | | | 691 | | | 7,282 | | | (957) | | | 2018 |
| Huntersville | | 13201 Reese Boulevard Unit 100 | | — | | | 3,123 | | | 1,061 | | | 980 | | | 4,103 | | | 1,061 | | | 5,164 | | | (1,077) | | | 2012 |
| Lexington | | 200 Woodside Drive | | — | | | 3,863 | | | 232 | | | 1,345 | | | 5,208 | | | 232 | | | 5,440 | | | (1,601) | | | 2011 |
| Mebane | | 7412 Oakwood Street | | — | | | 4,570 | | | 481 | | | 552 | | | 5,122 | | | 481 | | | 5,603 | | | (1,548) | | | 2012 |
| Mebane | | 7600 Oakwood Street | | — | | | 4,148 | | | 443 | | | — | | | 4,148 | | | 443 | | | 4,591 | | | (1,302) | | | 2012 |
| Mebane | | 7110 E. Washington Street | | — | | | 4,981 | | | 358 | | | 1,338 | | | 6,319 | | | 358 | | | 6,677 | | | (1,514) | | | 2013 |
| Mocksville | | 171 Enterprise Way | | — | | | 5,582 | | | 1,091 | | | 459 | | | 6,041 | | | 1,091 | | | 7,132 | | | (771) | | | 2019 |
| Mooresville | | 119 Super Sport Drive | | — | | | 17,889 | | | 4,195 | | | 334 | | | 18,223 | | | 4,195 | | | 22,418 | | | (3,038) | | | 2017 |
| Mooresville | | 313 Mooresville Boulevard | | — | | | 6,968 | | | 701 | | | 466 | | | 7,434 | | | 701 | | | 8,135 | | | (2,269) | | | 2011 |
| Mountain Home | | 199 N. Egerton Road | | — | | | 2,359 | | | 523 | | | — | | | 2,359 | | | 523 | | | 2,882 | | | (571) | | | 2014 |
| Newton | | 1500 Prodelin Drive | | — | | | 7,338 | | | 732 | | | 1,283 | | | 8,621 | | | 732 | | | 9,353 | | | (2,069) | | | 2011 |
| Pineville | | 10519 Industrial Drive | | — | | | 1,179 | | | 392 | | | — | | | 1,179 | | | 392 | | | 1,571 | | | (312) | | | 2012 |
| Rural Hall | | 300 Forum Parkway | | — | | | 5,375 | | | 439 | | | 1,007 | | | 6,382 | | | 439 | | | 6,821 | | | (2,035) | | | 2011 |
| Salisbury | | 990 Cedar Springs Road | | — | | | 5,009 | | | 1,535 | | | 2,625 | | | 7,634 | | | 1,535 | | | 9,169 | | | (1,659) | | | 2017 |
| Smithfield | | 3250 Highway 70 Business West | | — | | | 10,397 | | | 613 | | | 72 | | | 10,469 | | | 613 | | | 11,082 | | | (2,023) | | | 2011 |
| Troutman | | 279 & 281 Old Murdock Road | | — | | | 13,392 | | | 802 | | | 297 | | | 13,689 | | | 802 | | | 14,491 | | | (2,243) | | | 2018 |
| Winston-Salem | | 2655 Annapolis Drive | | — | | | 10,716 | | | 610 | | | 16 | | | 10,732 | | | 610 | | | 11,342 | | | (2,863) | | | 2014 |
| Youngsville | | 200 K-Flex Way | | — | | | 16,150 | | | 1,836 | | | — | | | 16,150 | | | 1,836 | | | 17,986 | | | (2,296) | | | 2018 |
| Ohio | | | | | | | | | | | | | | | | | | | | |
| Bedford Heights | | 26801 Fargo Avenue | | — | | | 5,267 | | | 837 | | | 955 | | | 6,222 | | | 837 | | | 7,059 | | | (1,514) | | | 2017 |
| Boardman | | 365 McClurg Road | | — | | | 3,473 | | | 282 | | | 872 | | | 4,345 | | | 282 | | | 4,627 | | | (1,785) | | | 2007 |
| Canal Winchester | | 6200-6250 Winchester Boulevard | | — | | | 37,431 | | | 6,403 | | | — | | | 37,431 | | | 6,403 | | | 43,834 | | | (1,649) | | | 2021 |
| Canal Winchester | | 6260-6300 Winchester Boulevard | | — | | | 19,432 | | | 3,708 | | | 359 | | | 19,791 | | | 3,708 | | | 23,499 | | | (970) | | | 2021 |
| Columbus | | 1605 Westbelt Drive | | — | | | 5,222 | | | 337 | | | 125 | | | 5,347 | | | 337 | | | 5,684 | | | (1,054) | | | 2017 |
| Columbus | | 5330 Crosswinds Drive | | — | | | 45,112 | | | 3,410 | | | (269) | | | 44,843 | | | 3,410 | | | 48,253 | | | (3,038) | | | 2020 |
| Columbus | | 200 McCormick Boulevard | | — | | | 8,960 | | | 988 | | | — | | | 8,960 | | | 988 | | | 9,948 | | | (282) | | | 2022 |
| Columbus | | 3900-3990 Business Park Drive | | — | | | 2,976 | | | 489 | | | 657 | | | 3,633 | | | 489 | | | 4,122 | | | (1,028) | | | 2014 |
| Dayton | | 2815 South Gettysburg Avenue | | — | | | 5,896 | | | 331 | | | 529 | | | 6,425 | | | 331 | | | 6,756 | | | (1,681) | | | 2015 |
| Etna | | 8591 Mink Street SW | | — | | | 73,402 | | | 2,939 | | | 107 | | | 73,509 | | | 2,939 | | | 76,448 | | | (5,287) | | | 2020 |
| Fairborn | | 1340 E Dayton Yellow Springs Road | | — | | | 5,569 | | | 867 | | | 272 | | | 5,841 | | | 867 | | | 6,708 | | | (1,749) | | | 2015 |
| Fairfield | | 4275 Thunderbird Lane | | — | | | 2,788 | | | 948 | | | 822 | | | 3,610 | | | 948 | | | 4,558 | | | (904) | | | 2016 |
| Fairfield | | 3840 Port Union Road | | — | | | 5,337 | | | 1,086 | | | 252 | | | 5,589 | | | 1,086 | | | 6,675 | | | (1,054) | | | 2018 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Initial Cost to STAG Industrial, Inc. | | | | Gross Amounts at Which Carried at December 31, 2022 | | | | |
| State & City | | Address | | Encumbrances(1) | | Building & Improvements(2) | | Land(3) | | Costs Capitalized Subsequent to Acquisition and Valuation Provision | | Building & Improvements | | Land | | Total | | Accumulated Depreciation(4) | | Year Acquired |
| Gahanna | | 1120 Morrison Road | | — | | | 3,806 | | | 1,265 | | | 2,244 | | | 6,050 | | | 1,265 | | | 7,315 | | | (1,810) | | | 2011 |
| Groveport | | 5830 Green Pointe Drive South | | — | | | 10,828 | | | 642 | | | 236 | | | 11,064 | | | 642 | | | 11,706 | | | (1,968) | | | 2017 |
| Hilliard | | 4251 Leap Road | | — | | | 7,412 | | | 550 | | | 896 | | | 8,308 | | | 550 | | | 8,858 | | | (1,574) | | | 2017 |
| Macedonia | | 8295 Bavaria Drive | | — | | | 10,219 | | | 1,001 | | | — | | | 10,219 | | | 1,001 | | | 11,220 | | | (297) | | | 2022 |
| Macedonia | | 1261 Highland Road | | — | | | 8,063 | | | 1,690 | | | 292 | | | 8,355 | | | 1,690 | | | 10,045 | | | (2,025) | | | 2015 |
| Maple Heights | | 16645 Granite Road | | — | | | 4,357 | | | 922 | | | — | | | 4,357 | | | 922 | | | 5,279 | | | (268) | | | 2021 |
| Mason | | 7258 Innovation Way | | — | | | 4,582 | | | 673 | | | — | | | 4,582 | | | 673 | | | 5,255 | | | (1,172) | | | 2014 |
| North Jackson | | 500 South Bailey Road | | — | | | 4,356 | | | 1,528 | | | 511 | | | 4,867 | | | 1,528 | | | 6,395 | | | (1,300) | | | 2013 |
| North Jackson | | 382 Rosemont Road | | — | | | 7,681 | | | 486 | | | 1,269 | | | 8,950 | | | 486 | | | 9,436 | | | (2,011) | | | 2011 |
| Oakwood Village | | 26350 Broadway | | — | | | 3,041 | | | 343 | | | 178 | | | 3,219 | | | 343 | | | 3,562 | | | (828) | | | 2015 |
| Salem | | 800 Pennsylvania Avenue | | — | | | 7,674 | | | 858 | | | 1,112 | | | 8,786 | | | 858 | | | 9,644 | | | (3,281) | | | 2006 |
| Seville | | 276 West Greenwich Road | | — | | | 1,591 | | | 273 | | | 103 | | | 1,694 | | | 273 | | | 1,967 | | | (582) | | | 2011 |
| Streetsboro | | 9777 Mopar Drive | | — | | | 4,909 | | | 2,161 | | | 1,157 | | | 6,066 | | | 2,161 | | | 8,227 | | | (1,671) | | | 2011 |
| Strongsville | | 14450 Foltz Industrial Parkway | | — | | | 16,487 | | | 1,315 | | | — | | | 16,487 | | | 1,315 | | | 17,802 | | | (791) | | | 2021 |
| Strongsville | | 12930 Darice Parkway | | — | | | 5,750 | | | 491 | | | 963 | | | 6,713 | | | 491 | | | 7,204 | | | (1,635) | | | 2014 |
| Toledo | | 1800 Jason Street | | — | | | 6,487 | | | 213 | | | 250 | | | 6,737 | | | 213 | | | 6,950 | | | (1,894) | | | 2012 |
| Twinsburg | | 8601 Independence Parkway | | — | | | 19,772 | | | 3,855 | | | — | | | 19,772 | | | 3,855 | | | 23,627 | | | (1,426) | | | 2020 |
| Twinsburg | | 7990 Bavaria Road | | — | | | 8,027 | | | 590 | | | 87 | | | 8,114 | | | 590 | | | 8,704 | | | (2,829) | | | 2007 |
| West Chester | | 9696 International Boulevard | | — | | | 8,868 | | | 936 | | | — | | | 8,868 | | | 936 | | | 9,804 | | | (1,890) | | | 2016 |
| West Jefferson | | 1550 West Main Street | | — | | | 70,213 | | | 2,015 | | | 31 | | | 70,244 | | | 2,015 | | | 72,259 | | | (8,480) | | | 2019 |
| Oklahoma | | | | | | | | | | | | | | | | | | | | |
| Oklahoma City | | 4949 Southwest 20th Street | | — | | | 2,211 | | | 746 | | | 124 | | | 2,335 | | | 746 | | | 3,081 | | | (764) | | | 2016 |
| Oklahoma City | | 5101 South Council Road | | — | | | 9,199 | | | 1,614 | | | 1,466 | | | 10,665 | | | 1,614 | | | 12,279 | | | (2,526) | | | 2015 |
| Tulsa | | 11607 E. 43rd Street North | | — | | | 8,242 | | | 966 | | | — | | | 8,242 | | | 966 | | | 9,208 | | | (2,119) | | | 2015 |
| Tulsa | | 10757 East Ute Street | | — | | | 7,167 | | | 644 | | | 125 | | | 7,292 | | | 644 | | | 7,936 | | | (694) | | | 2020 |
| Oregon | | | | | | | | | | | | | | | | | | | | |
| Salem | | 4060 Fairview Industrial Drive | | — | | | 3,039 | | | 599 | | | 780 | | | 3,819 | | | 599 | | | 4,418 | | | (1,154) | | | 2011 |
| Salem | | 4050 Fairview Industrial Drive | | — | | | 1,372 | | | 266 | | | 529 | | | 1,901 | | | 266 | | | 2,167 | | | (588) | | | 2011 |
| Wilsonville | | 9400 SW Barber Street | | — | | | 10,142 | | | 696 | | | 18 | | | 10,160 | | | 696 | | | 10,856 | | | (100) | | | 2022 |
| Pennsylvania | | | | | | | | | | | | | | | | | | | | |
| Allentown | | 7132 Daniels Drive | | — | | | 7,199 | | | 1,962 | | | 2,130 | | | 9,329 | | | 1,962 | | | 11,291 | | | (2,433) | | | 2014 |
| Burgettstown | | 157 Starpointe Boulevard | | — | | | 23,416 | | | 1,248 | | | 178 | | | 23,594 | | | 1,248 | | | 24,842 | | | (3,065) | | | 2019 |
| Charleroi | | 200 Simko Boulevard | | — | | | 10,539 | | | 935 | | | 47 | | | 10,586 | | | 935 | | | 11,521 | | | (1,598) | | | 2018 |
| Clinton | | 2300 Sweeney Drive | | — | | | 19,339 | | | — | | | 25 | | | 19,364 | | | — | | | 19,364 | | | (3,654) | | | 2017 |
| Clinton | | 2251 Sweeney Drive | | — | | | 12,390 | | | — | | | — | | | 12,390 | | | — | | | 12,390 | | | (1,830) | | | 2018 |
| Clinton | | 2300 Sweeney Drive Extension | | — | | | 16,840 | | | — | | | 931 | | | 17,771 | | | — | | | 17,771 | | | (2,249) | | | 2018 |
| Clinton | | 1200 Clifford Ball Drive | | — | | | 10,524 | | | — | | | — | | | 10,524 | | | — | | | 10,524 | | | (795) | | | 2020 |
| Clinton | | 1111 Clifford Ball Drive | | — | | | 5,668 | | | — | | | — | | | 5,668 | | | — | | | 5,668 | | | (436) | | | 2020 |
| Clinton | | 1300 Clifford Ball Drive | | — | | | 18,152 | | | — | | | — | | | 18,152 | | | — | | | 18,152 | | | (1,308) | | | 2020 |
| Clinton | | 1100 Clifford Ball Drive | | — | | | 40,282 | | | — | | | — | | | 40,282 | | | — | | | 40,282 | | | (1,097) | | | 2022 |
| Croydon | | 3001 State Road | | — | | | 4,655 | | | 829 | | | — | | | 4,655 | | | 829 | | | 5,484 | | | (726) | | | 2018 |
| Elizabethtown | | 11 and 33 Industrial Road | | — | | | 5,315 | | | 1,000 | | | 732 | | | 6,047 | | | 1,000 | | | 7,047 | | | (1,495) | | | 2014 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Initial Cost to STAG Industrial, Inc. | | | | Gross Amounts at Which Carried at December 31, 2022 | | | | |
| State & City | | Address | | Encumbrances(1) | | Building & Improvements(2) | | Land(3) | | Costs Capitalized Subsequent to Acquisition and Valuation Provision | | Building & Improvements | | Land | | Total | | Accumulated Depreciation(4) | | Year Acquired |
| Export | | 1003 Corporate Lane | | — | | | 5,604 | | | 667 | | | — | | | 5,604 | | | 667 | | | 6,271 | | | (724) | | | 2019 |
| Hazleton | | 69 Green Mountain Road | | — | | | 43,685 | | | 4,995 | | | 154 | | | 43,839 | | | 4,995 | | | 48,834 | | | (1,773) | | | 2021 |
| Imperial | | 200 Solar Drive | | — | | | 22,135 | | | 1,762 | | | — | | | 22,135 | | | 1,762 | | | 23,897 | | | (2,281) | | | 2019 |
| Lancaster | | 2919 Old Tree Drive | | — | | | 5,134 | | | 1,520 | | | 1,280 | | | 6,414 | | | 1,520 | | | 7,934 | | | (1,996) | | | 2015 |
| Langhorne | | 2151 Cabot Boulevard West | | — | | | 3,771 | | | 1,370 | | | 103 | | | 3,874 | | | 1,370 | | | 5,244 | | | (816) | | | 2016 |
| Langhorne | | 2201 Cabot Boulevard West | | — | | | 3,018 | | | 1,308 | | | 528 | | | 3,546 | | | 1,308 | | | 4,854 | | | (952) | | | 2016 |
| Langhorne | | 121 Wheeler Court | | — | | | 6,327 | | | 1,884 | | | 1,083 | | | 7,410 | | | 1,884 | | | 9,294 | | | (1,508) | | | 2016 |
| Langhorne | | 1 Cabot Boulevard East | | — | | | 4,203 | | | 1,155 | | | 83 | | | 4,286 | | | 1,155 | | | 5,441 | | | (561) | | | 2020 |
| Lebanon | | 1 Keystone Drive | | — | | | 5,083 | | | 1,380 | | | 163 | | | 5,246 | | | 1,380 | | | 6,626 | | | (1,858) | | | 2017 |
| Mechanicsburg | | 6350 Brackbill Boulevard | | — | | | 5,079 | | | 1,482 | | | 1,813 | | | 6,892 | | | 1,482 | | | 8,374 | | | (1,587) | | | 2014 |
| Mechanicsburg | | 6360 Brackbill Boulevard | | — | | | 7,042 | | | 1,800 | | | 989 | | | 8,031 | | | 1,800 | | | 9,831 | | | (1,911) | | | 2014 |
| Mechanicsburg | | 245 Salem Church Road | | — | | | 7,977 | | | 1,452 | | | 726 | | | 8,703 | | | 1,452 | | | 10,155 | | | (2,155) | | | 2014 |
| Muhlenberg Township | | 171-173 Tuckerton Road | | — | | | 13,784 | | | 843 | | | 2,498 | | | 16,282 | | | 843 | | | 17,125 | | | (4,294) | | | 2012 |
| New Galilee | | 1750 Shenango Road | | — | | | 25,636 | | | 1,127 | | | 274 | | | 25,910 | | | 1,127 | | | 27,037 | | | (2,805) | | | 2019 |
| New Kensington | | 115 Hunt Valley Road | | — | | | 9,145 | | | 177 | | | — | | | 9,145 | | | 177 | | | 9,322 | | | (1,258) | | | 2018 |
| New Kingstown | | 6 Doughten Road | | — | | | 8,625 | | | 2,041 | | | 619 | | | 9,244 | | | 2,041 | | | 11,285 | | | (2,383) | | | 2014 |
| O'Hara Township | | 100 Papercraft Park | | — | | | 18,612 | | | 1,435 | | | 8,179 | | | 26,791 | | | 1,435 | | | 28,226 | | | (8,204) | | | 2012 |
| Pittston | | One Commerce Road | | — | | | 19,603 | | | 677 | | | 97 | | | 19,700 | | | 677 | | | 20,377 | | | (3,327) | | | 2017 |
| Reading | | 2001 Centre Avenue | | — | | | 5,294 | | | 1,708 | | | 1,276 | | | 6,570 | | | 1,708 | | | 8,278 | | | (1,190) | | | 2016 |
| Warrendale | | 410-426 Keystone Drive | | — | | | 12,089 | | | 1,853 | | | 786 | | | 12,875 | | | 1,853 | | | 14,728 | | | (1,694) | | | 2018 |
| York | | 2925 East Market Street | | — | | | 14,209 | | | 2,152 | | | 381 | | | 14,590 | | | 2,152 | | | 16,742 | | | (2,306) | | | 2017 |
| York | | 57 Grumbacher Road | | — | | | 14,832 | | | 966 | | | 28 | | | 14,860 | | | 966 | | | 15,826 | | | (2,085) | | | 2018 |
| York | | 420 Emig Road | | — | | | 7,886 | | | 869 | | | — | | | 7,886 | | | 869 | | | 8,755 | | | (1,237) | | | 2019 |
| York | | 915 Woodland View Drive | | — | | | 5,788 | | | 1,139 | | | 138 | | | 5,926 | | | 1,139 | | | 7,065 | | | (292) | | | 2021 |
| York | | 2800 Concord Road | | — | | | 21,154 | | | 1,478 | | | 599 | | | 21,753 | | | 1,478 | | | 23,231 | | | (826) | | | 2021 |
| South Carolina | | | | | | | | | | | | | | | | | | | | |
| Columbia | | 128 Crews Drive | | — | | | 5,171 | | | 783 | | | 162 | | | 5,333 | | | 783 | | | 6,116 | | | (1,283) | | | 2016 |
| Duncan | | 110 Hidden Lakes Circle | | — | | | 10,981 | | | 1,002 | | | 1,267 | | | 12,248 | | | 1,002 | | | 13,250 | | | (3,865) | | | 2012 |
| Duncan | | 112 Hidden Lakes Circle | | — | | | 6,739 | | | 709 | | | 1,586 | | | 8,325 | | | 709 | | | 9,034 | | | (2,408) | | | 2012 |
| Duncan | | 175 Spartangreen Boulevard | | — | | | 12,390 | | | 936 | | | 52 | | | 12,442 | | | 936 | | | 13,378 | | | (546) | | | 2021 |
| Edgefield | | One Tranter Drive | | — | | | 938 | | | 220 | | | 887 | | | 1,825 | | | 220 | | | 2,045 | | | (693) | | | 2012 |
| Fountain Inn | | 107 Southchase Boulevard | | — | | | 8,308 | | | 766 | | | 412 | | | 8,720 | | | 766 | | | 9,486 | | | (1,482) | | | 2018 |
| Fountain Inn | | 141 Southchase Boulevard | | — | | | 14,984 | | | 1,878 | | | 81 | | | 15,065 | | | 1,878 | | | 16,943 | | | (2,911) | | | 2017 |
| Fountain Inn | | 111 Southchase Boulevard | | — | | | 4,260 | | | 719 | | | 95 | | | 4,355 | | | 719 | | | 5,074 | | | (1,125) | | | 2016 |
| Gaffney | | 50 Peachview Boulevard | | — | | | 4,383 | | | 1,233 | | | 2,058 | | | 6,441 | | | 1,233 | | | 7,674 | | | (1,167) | | | 2017 |
| Goose Creek | | 6 Corporate Parkway | | — | | | 29,360 | | | 4,459 | | | — | | | 29,360 | | | 4,459 | | | 33,819 | | | (3,413) | | | 2019 |
| Greenwood | | 215 Mill Avenue | | — | | | 1,824 | | | 166 | | | 641 | | | 2,465 | | | 166 | | | 2,631 | | | (587) | | | 2012 |
| Greenwood | | 308-310 Maxwell Avenue | | — | | | 1,168 | | | 169 | | | 673 | | | 1,841 | | | 169 | | | 2,010 | | | (470) | | | 2012 |
| Greer | | 2501 Highway 101 | | — | | | 10,841 | | | 1,126 | | | 658 | | | 11,499 | | | 1,126 | | | 12,625 | | | (1,811) | | | 2018 |
| Greer | | 8 Shelter Drive | | — | | | 4,939 | | | 681 | | | 3,478 | | | 8,417 | | | 681 | | | 9,098 | | | (1,522) | | | 2018 |
| Greer | | 1000 Robinson Road | | — | | | 25,631 | | | 849 | | | — | | | 25,631 | | | 849 | | | 26,480 | | | (760) | | | 2021 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Initial Cost to STAG Industrial, Inc. | | | | Gross Amounts at Which Carried at December 31, 2022 | | | | |
| State & City | | Address | | Encumbrances(1) | | Building & Improvements(2) | | Land(3) | | Costs Capitalized Subsequent to Acquisition and Valuation Provision | | Building & Improvements | | Land | | Total | | Accumulated Depreciation(4) | | Year Acquired |
| Greer | | 1817 East Poinsett Street | | — | | | 37,469 | | | 3,674 | | | 72 | | | 37,541 | | | 3,674 | | | 41,215 | | | — | | | 2022 |
| Greer | | 1809 East Poinsett Street | | — | | | 41 | | | 1,885 | | | — | | | 41 | | | 1,885 | | | 1,926 | | | — | | | 2022 |
| Greer | | 129 Metro Court | | — | | | 1,434 | | | 129 | | | 392 | | | 1,826 | | | 129 | | | 1,955 | | | (455) | | | 2015 |
| Greer | | 149 Metro Court | | — | | | 1,731 | | | 128 | | | 558 | | | 2,289 | | | 128 | | | 2,417 | | | (482) | | | 2015 |
| Greer | | 153 Metro Court | | — | | | 460 | | | 153 | | | 155 | | | 615 | | | 153 | | | 768 | | | (185) | | | 2015 |
| Greer | | 154 Metro Court | | — | | | 2,963 | | | 306 | | | 959 | | | 3,922 | | | 306 | | | 4,228 | | | (911) | | | 2015 |
| Laurens | | 103 Cherry Blossom Drive | | — | | | 4,033 | | | 151 | | | 52 | | | 4,085 | | | 151 | | | 4,236 | | | (853) | | | 2015 |
| Piedmont | | 1100 Piedmont Highway | | — | | | 4,093 | | | 231 | | | 450 | | | 4,543 | | | 231 | | | 4,774 | | | (999) | | | 2015 |
| Piedmont | | 1102 Piedmont Highway | | — | | | 2,092 | | | 158 | | | 45 | | | 2,137 | | | 158 | | | 2,295 | | | (482) | | | 2015 |
| Piedmont | | 1104 Piedmont Highway | | — | | | 2,166 | | | 204 | | | — | | | 2,166 | | | 204 | | | 2,370 | | | (623) | | | 2015 |
| Piedmont | | 513 Old Griffin Road | | — | | | 9,260 | | | 797 | | | 2,022 | | | 11,282 | | | 797 | | | 12,079 | | | (1,485) | | | 2018 |
| Piedmont | | 1610 Old Grove Road | | — | | | 18,893 | | | 1,971 | | | — | | | 18,893 | | | 1,971 | | | 20,864 | | | (3,481) | | | 2019 |
| Piedmont | | 100 Exchange Logistics Park Drive | | — | | | 25,151 | | | 569 | | | 1,001 | | | 26,152 | | | 569 | | | 26,721 | | | (624) | | | 2022 |
| Piedmont | | 119 Matrix Parkway | | — | | | 13,912 | | | 331 | | | — | | | 13,912 | | | 331 | | | 14,243 | | | (363) | | | 2022 |
| Rock Hill | | 2751 Commerce Drive, Unit C | | (3,296) | | | 6,146 | | | 1,411 | | | 767 | | | 6,913 | | | 1,411 | | | 8,324 | | | (1,572) | | | 2016 |
| Rock Hill | | 1953 Langston Street | | — | | | 4,333 | | | 1,095 | | | 897 | | | 5,230 | | | 1,095 | | | 6,325 | | | (1,075) | | | 2017 |
| Rock Hill | | 2225 Williams Industrial Boulevard | | — | | | 10,903 | | | 1,118 | | | — | | | 10,903 | | | 1,118 | | | 12,021 | | | (839) | | | 2020 |
| Simpsonville | | 101 Harrison Bridge Road | | — | | | 2,960 | | | 957 | | | 3,659 | | | 6,619 | | | 957 | | | 7,576 | | | (1,635) | | | 2012 |
| Simpsonville | | 103 Harrison Bridge Road | | — | | | 3,364 | | | 470 | | | 1,053 | | | 4,417 | | | 470 | | | 4,887 | | | (1,212) | | | 2012 |
| Simpsonville | | 1312 Old Stage Road | | — | | | 24,200 | | | 1,454 | | | 3,426 | | | 27,626 | | | 1,454 | | | 29,080 | | | (3,700) | | | 2018 |
| Spartanburg | | 5675 North Blackstock Road | | — | | | 15,100 | | | 1,867 | | | 271 | | | 15,371 | | | 1,867 | | | 17,238 | | | (3,932) | | | 2016 |
| Spartanburg | | 950 Brisack Road | | — | | | 3,564 | | | 342 | | | 1,026 | | | 4,590 | | | 342 | | | 4,932 | | | (1,234) | | | 2014 |
| Spartanburg | | 2071 Fryml Drive | | — | | | 7,624 | | | 663 | | | — | | | 7,624 | | | 663 | | | 8,287 | | | (1,019) | | | 2019 |
| Spartanburg | | 2171 Fryml Drive | | — | | | 4,480 | | | 530 | | | 86 | | | 4,566 | | | 530 | | | 5,096 | | | (671) | | | 2019 |
| Spartanburg | | 2010 Nazareth Church Road | | — | | | 16,535 | | | 895 | | | 745 | | | 17,280 | | | 895 | | | 18,175 | | | (1,995) | | | 2019 |
| Spartanburg | | 150-160 National Avenue | | — | | | 5,797 | | | 493 | | | 944 | | | 6,741 | | | 493 | | | 7,234 | | | (1,914) | | | 2012 |
| Summerville | | 105 Eastport Lane | | — | | | 4,710 | | | 1,157 | | | 534 | | | 5,244 | | | 1,157 | | | 6,401 | | | (567) | | | 2019 |
| West Columbia | | 185 McQueen Street | | — | | | 6,946 | | | 715 | | | 2,355 | | | 9,301 | | | 715 | | | 10,016 | | | (2,386) | | | 2013 |
| West Columbia | | 610 Kelsey Court | | — | | | 9,488 | | | 488 | | | — | | | 9,488 | | | 488 | | | 9,976 | | | (1,728) | | | 2016 |
| West Columbia | | 825 Bistline Drive | | — | | | 9,151 | | | 240 | | | 1,008 | | | 10,159 | | | 240 | | | 10,399 | | | (1,669) | | | 2017 |
| West Columbia | | 810 Bistline Drive | | — | | | 10,881 | | | 564 | | | — | | | 10,881 | | | 564 | | | 11,445 | | | (1,245) | | | 2019 |
| West Columbia | | 1000 Technology Drive | | — | | | 26,023 | | | 1,422 | | | — | | | 26,023 | | | 1,422 | | | 27,445 | | | (3,436) | | | 2019 |
| West Columbia | | 842 Bistline Drive | | — | | | 12,723 | | | 1,217 | | | 1,749 | | | 14,472 | | | 1,217 | | | 15,689 | | | (725) | | | 2021 |
| West Columbia | | 222 Old Wire Road | | — | | | 4,646 | | | 551 | | | 2,301 | | | 6,947 | | | 551 | | | 7,498 | | | (2,064) | | | 2016 |
| Tennessee | | | | | | | | | | | | | | | | | | | | |
| Chattanooga | | 1800 Crutchfield Street Building A | | — | | | 2,181 | | | 187 | | | 14 | | | 2,195 | | | 187 | | | 2,382 | | | (486) | | | 2015 |
| Chattanooga | | 1800 Crutchfield Street Building B | | — | | | 4,448 | | | 380 | | | 84 | | | 4,532 | | | 380 | | | 4,912 | | | (1,009) | | | 2015 |
| Chattanooga | | 1100 Wisdom Street & 1295 Stuart Street | | — | | | 7,959 | | | 424 | | | 397 | | | 8,356 | | | 424 | | | 8,780 | | | (2,312) | | | 2015 |
| Cleveland | | 4405 Michigan Avenue Road NE | | — | | | 3,161 | | | 554 | | | 84 | | | 3,245 | | | 554 | | | 3,799 | | | (1,110) | | | 2011 |
| Clinton | | 1330 Carden Farm Drive | | — | | | 3,101 | | | 403 | | | 241 | | | 3,342 | | | 403 | | | 3,745 | | | (827) | | | 2015 |
| Jackson | | 1094 Flex Drive | | — | | | 2,374 | | | 230 | | | 628 | | | 3,002 | | | 230 | | | 3,232 | | | (952) | | | 2012 |
| Knoxville | | 2525 Quality Drive | | — | | | 3,104 | | | 447 | | | 46 | | | 3,150 | | | 447 | | | 3,597 | | | (820) | | | 2015 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Initial Cost to STAG Industrial, Inc. | | | | Gross Amounts at Which Carried at December 31, 2022 | | | | |
| State & City | | Address | | Encumbrances(1) | | Building & Improvements(2) | | Land(3) | | Costs Capitalized Subsequent to Acquisition and Valuation Provision | | Building & Improvements | | Land | | Total | | Accumulated Depreciation(4) | | Year Acquired |
| Knoxville | | 2522 and 2526 Westcott Boulevard | | — | | | 4,919 | | | 472 | | | — | | | 4,919 | | | 472 | | | 5,391 | | | (757) | | | 2018 |
| Knoxville | | 5700 Casey Drive | | — | | | 7,812 | | | 1,117 | | | 735 | | | 8,547 | | | 1,117 | | | 9,664 | | | (1,203) | | | 2019 |
| Lebanon | | 535 Maddox-Simpson Parkway | | — | | | 16,067 | | | 1,016 | | | 50 | | | 16,117 | | | 1,016 | | | 17,133 | | | (2,648) | | | 2019 |
| Lebanon | | 675 Maddox-Simpson Parkway | | — | | | 5,891 | | | 519 | | | — | | | 5,891 | | | 519 | | | 6,410 | | | (202) | | | 2021 |
| Loudon | | 1700 Elizabeth Lee Parkway | | — | | | 3,686 | | | 170 | | | 1,572 | | | 5,258 | | | 170 | | | 5,428 | | | (993) | | | 2015 |
| Madison | | 538 Myatt Drive | | — | | | 5,758 | | | 1,655 | | | 1,891 | | | 7,649 | | | 1,655 | | | 9,304 | | | (2,511) | | | 2011 |
| Mascot | | 9575 Commission Drive | | — | | | 3,179 | | | 284 | | | 75 | | | 3,254 | | | 284 | | | 3,538 | | | (846) | | | 2016 |
| Mascot | | 2122 Holston Bend Drive | | — | | | 4,323 | | | 385 | | | 611 | | | 4,934 | | | 385 | | | 5,319 | | | (1,117) | | | 2013 |
| Memphis | | 7625 Appling Center Drive | | — | | | 13,463 | | | 539 | | | — | | | 13,463 | | | 539 | | | 14,002 | | | (377) | | | 2022 |
| Memphis | | 4880 East Tuggle Road | | — | | | 41,078 | | | 2,501 | | | 1,000 | | | 42,078 | | | 2,501 | | | 44,579 | | | (4,863) | | | 2019 |
| Murfreesboro | | 1975 Joe B. Jackson Parkway | | — | | | 9,617 | | | 2,206 | | | 6 | | | 9,623 | | | 2,206 | | | 11,829 | | | (258) | | | 2022 |
| Murfreesboro | | 540 New Salem Road | | — | | | 2,799 | | | 722 | | | 151 | | | 2,950 | | | 722 | | | 3,672 | | | (942) | | | 2014 |
| Nashville | | 3258 Ezell Pike | | — | | | 3,455 | | | 547 | | | 174 | | | 3,629 | | | 547 | | | 4,176 | | | (873) | | | 2013 |
| Vonore | | 90 Deer Crossing Road | | — | | | 7,821 | | | 2,355 | | | 85 | | | 7,906 | | | 2,355 | | | 10,261 | | | (2,347) | | | 2011 |
| Texas | | | | | | | | | | | | | | | | | | | | |
| Arlington | | 3311 Pinewood Drive | | — | | | 2,374 | | | 413 | | | 385 | | | 2,759 | | | 413 | | | 3,172 | | | (1,039) | | | 2007 |
| Arlington | | 401 N. Great Southwest Parkway | | — | | | 5,767 | | | 1,246 | | | 1,165 | | | 6,932 | | | 1,246 | | | 8,178 | | | (1,816) | | | 2012 |
| Cedar Hill | | 1650 U.S. Highway 67 | | — | | | 11,870 | | | 4,066 | | | 1,774 | | | 13,644 | | | 4,066 | | | 17,710 | | | (3,813) | | | 2016 |
| Conroe | | 16548 Donwick Drive | | — | | | 20,995 | | | 1,853 | | | 1,018 | | | 22,013 | | | 1,853 | | | 23,866 | | | (2,930) | | | 2018 |
| El Paso | | 32 Celerity Wagon | | — | | | 3,532 | | | — | | | 196 | | | 3,728 | | | — | | | 3,728 | | | (714) | | | 2017 |
| El Paso | | 48 Walter Jones Boulevard | | — | | | 10,250 | | | — | | | 163 | | | 10,413 | | | — | | | 10,413 | | | (2,237) | | | 2017 |
| El Paso | | 1601 Northwestern Drive | | — | | | 9,052 | | | 1,248 | | | 850 | | | 9,902 | | | 1,248 | | | 11,150 | | | (2,491) | | | 2014 |
| El Paso | | 6500 N. Desert Boulevard | | — | | | 7,518 | | | 1,124 | | | 474 | | | 7,992 | | | 1,124 | | | 9,116 | | | (1,992) | | | 2014 |
| El Paso | | 1550 Northwestern Drive | | — | | | 14,011 | | | 1,854 | | | 2,433 | | | 16,444 | | | 1,854 | | | 18,298 | | | (4,037) | | | 2014 |
| El Paso | | 1701 Northwestern Drive | | — | | | 9,897 | | | 1,581 | | | 2,031 | | | 11,928 | | | 1,581 | | | 13,509 | | | (2,716) | | | 2014 |
| El Paso | | 7801 Northern Pass Road | | — | | | 5,893 | | | 1,136 | | | — | | | 5,893 | | | 1,136 | | | 7,029 | | | (1,628) | | | 2015 |
| El Paso | | 12285 Gateway Boulevard West | | — | | | 22,571 | | | 1,725 | | | — | | | 22,571 | | | 1,725 | | | 24,296 | | | (872) | | | 2021 |
| El Paso | | 9571 Pan American Drive | | — | | | 9,382 | | | 1,101 | | | — | | | 9,382 | | | 1,101 | | | 10,483 | | | (145) | | | 2022 |
| El Paso | | 9555 Plaza Circle | | — | | | 4,666 | | | 626 | | | 128 | | | 4,794 | | | 626 | | | 5,420 | | | (86) | | | 2022 |
| El Paso | | 9494 Escobar Drive | | — | | | 8,551 | | | 701 | | | — | | | 8,551 | | | 701 | | | 9,252 | | | (133) | | | 2022 |
| El Paso | | 47 Butterfield Circle & 12 Leigh Fisher Boulevard | | — | | | 3,096 | | | — | | | 1,588 | | | 4,684 | | | — | | | 4,684 | | | (1,604) | | | 2012 |
| Garland | | 2901 W. Kingsley Road | | — | | | 5,166 | | | 1,344 | | | 3,230 | | | 8,396 | | | 1,344 | | | 9,740 | | | (1,740) | | | 2014 |
| Grapevine | | 2402 Esters Boulevard | | — | | | 9,522 | | | — | | | 84 | | | 9,606 | | | — | | | 9,606 | | | (393) | | | 2021 |
| Grapevine | | 2400 Esters Boulevard | | — | | | 15,029 | | | — | | | 301 | | | 15,330 | | | — | | | 15,330 | | | (619) | | | 2021 |
| Houston | | 18601 Intercontinental Crossing Drive | | — | | | 8,744 | | | 1,505 | | | — | | | 8,744 | | | 1,505 | | | 10,249 | | | (1,327) | | | 2019 |
| Houston | | 9302 Ley Road | | — | | | 8,879 | | | 1,236 | | | — | | | 8,879 | | | 1,236 | | | 10,115 | | | (991) | | | 2019 |
| Houston | | 10343 Ella Boulevard | | — | | | 16,586 | | | 1,747 | | | — | | | 16,586 | | | 1,747 | | | 18,333 | | | (1,447) | | | 2019 |
| Houston | | 4949 Windfern Road | | — | | | 7,610 | | | 2,255 | | | 405 | | | 8,015 | | | 2,255 | | | 10,270 | | | (2,177) | | | 2013 |
| Houston | | 1020 Rankin Road | | — | | | 4,802 | | | 565 | | | 957 | | | 5,759 | | | 565 | | | 6,324 | | | (1,681) | | | 2014 |
| Houston | | 7300 Airport Boulevard | | — | | | 14,087 | | | 2,546 | | | 1,053 | | | 15,140 | | | 2,546 | | | 17,686 | | | (2,249) | | | 2016 |
| Houston | | 13627 West Hardy | | — | | | 4,989 | | | 1,502 | | | — | | | 4,989 | | | 1,502 | | | 6,491 | | | (1,407) | | | 2017 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Initial Cost to STAG Industrial, Inc. | | | | Gross Amounts at Which Carried at December 31, 2022 | | | | |
| State & City | | Address | | Encumbrances(1) | | Building & Improvements(2) | | Land(3) | | Costs Capitalized Subsequent to Acquisition and Valuation Provision | | Building & Improvements | | Land | | Total | | Accumulated Depreciation(4) | | Year Acquired |
| Houston | | 868 Pear Street | | — | | | 5,508 | | | 953 | | | — | | | 5,508 | | | 953 | | | 6,461 | | | (1,347) | | | 2017 |
| Houston | | 14620 Henry Road | | — | | | 7,052 | | | 927 | | | 66 | | | 7,118 | | | 927 | | | 8,045 | | | (1,299) | | | 2017 |
| Houston | | 7049 Brookhollow West Drive | | — | | | 9,371 | | | 809 | | | 15 | | | 9,386 | | | 809 | | | 10,195 | | | (1,321) | | | 2018 |
| Houston | | 10401 S. Sam Houston Parkway | | — | | | 9,456 | | | 1,108 | | | 318 | | | 9,774 | | | 1,108 | | | 10,882 | | | (948) | | | 2019 |
| Humble | | 18727 Kenswick Drive | | — | | | 21,476 | | | 2,255 | | | — | | | 21,476 | | | 2,255 | | | 23,731 | | | (2,345) | | | 2019 |
| Katy | | 1800 North Mason Road | | — | | | 7,571 | | | 2,192 | | | — | | | 7,571 | | | 2,192 | | | 9,763 | | | (1,003) | | | 2019 |
| Katy | | 21601 Park Row Drive | | — | | | 3,421 | | | 1,655 | | | — | | | 3,421 | | | 1,655 | | | 5,076 | | | (432) | | | 2019 |
| Laredo | | 13710 IH 35 Frontage Road | | — | | | 13,847 | | | 2,538 | | | — | | | 13,847 | | | 2,538 | | | 16,385 | | | (1,752) | | | 2019 |
| Laredo | | 13808 Humphrey Road | | — | | | 12,410 | | | 1,535 | | | — | | | 12,410 | | | 1,535 | | | 13,945 | | | (2,390) | | | 2017 |
| McAllen | | 5601 West Military Highway | | — | | | 13,549 | | | 818 | | | 1,584 | | | 15,133 | | | 818 | | | 15,951 | | | (914) | | | 2020 |
| Mission | | 802 Trinity Street | | — | | | 12,623 | | | 1,882 | | | 572 | | | 13,195 | | | 1,882 | | | 15,077 | | | (2,114) | | | 2018 |
| Rockwall | | 3400 Discovery Boulevard | | — | | | 16,066 | | | 2,683 | | | — | | | 16,066 | | | 2,683 | | | 18,749 | | | (3,471) | | | 2017 |
| Stafford | | 13720 Stafford Road | | — | | | 6,570 | | | 339 | | | 41 | | | 6,611 | | | 339 | | | 6,950 | | | (1,107) | | | 2017 |
| Waco | | 101 Apron Road | | — | | | 1,394 | | | — | | | 922 | | | 2,316 | | | — | | | 2,316 | | | (754) | | | 2011 |
| Utah | | | | | | | | | | | | | | | | | | | | |
| Provo | | 3715 S. Tracy Hall Parkway | | — | | | 27,225 | | | 1,945 | | | — | | | 27,225 | | | 1,945 | | | 29,170 | | | (1,080) | | | 2021 |
| Virginia | | | | | | | | | | | | | | | | | | | | |
| Chester | | 2001 Ware Bottom Spring Road | | — | | | 3,402 | | | 775 | | | — | | | 3,402 | | | 775 | | | 4,177 | | | (1,114) | | | 2014 |
| Fredericksburg | | 2031 International Parkway | | — | | | 15,235 | | | 2,182 | | | — | | | 15,235 | | | 2,182 | | | 17,417 | | | (268) | | | 2022 |
| Harrisonburg | | 4500 Early Road | | — | | | 11,057 | | | 1,455 | | | 1,180 | | | 12,237 | | | 1,455 | | | 13,692 | | | (3,241) | | | 2012 |
| Independence | | One Compair Way | | — | | | 2,061 | | | 226 | | | — | | | 2,061 | | | 226 | | | 2,287 | | | (578) | | | 2012 |
| North Chesterfield | | 8001 Greenpine Road | | — | | | 6,174 | | | 1,599 | | | — | | | 6,174 | | | 1,599 | | | 7,773 | | | (898) | | | 2019 |
| Norfolk | | 4555 Progress Road | | — | | | 7,989 | | | 1,259 | | | — | | | 7,989 | | | 1,259 | | | 9,248 | | | (140) | | | 2022 |
| Richmond | | 5250 Klockner Drive | | — | | | 3,801 | | | 819 | | | 726 | | | 4,527 | | | 819 | | | 5,346 | | | (638) | | | 2020 |
| Washington | | | | | | | | | | | | | | | | | | | | |
| Ridgefield | | 6111 S. 6th Way | | — | | | 9,711 | | | 2,307 | | | 780 | | | 10,491 | | | 2,307 | | | 12,798 | | | (1,320) | | | 2019 |
| Wisconsin | | | | | | | | | | | | | | | | | | | | |
| Appleton | | 1919 W. College Avenue | | — | | | 5,757 | | | 261 | | | — | | | 5,757 | | | 261 | | | 6,018 | | | (296) | | | 2021 |
| Caledonia | | 1343 27th Street | | — | | | 3,339 | | | 225 | | | — | | | 3,339 | | | 225 | | | 3,564 | | | (550) | | | 2018 |
| Cudahy | | 5831 S. Pennsylvania Avenue | | — | | | 4,778 | | | 1,427 | | | — | | | 4,778 | | | 1,427 | | | 6,205 | | | (493) | | | 2020 |
| De Pere | | 2191 American Boulevard | | — | | | 6,042 | | | 525 | | | 101 | | | 6,143 | | | 525 | | | 6,668 | | | (1,872) | | | 2012 |
| DeForest | | 505-507 Stokely Drive | | — | | | 5,298 | | | 1,131 | | | 592 | | | 5,890 | | | 1,131 | | | 7,021 | | | (1,111) | | | 2016 |
| Delavan | | 329 Hallberg Street | | — | | | 2,059 | | | 127 | | | 30 | | | 2,089 | | | 127 | | | 2,216 | | | (306) | | | 2019 |
| Delavan | | 1714 Hobbs Drive | | — | | | 4,676 | | | 241 | | | 69 | | | 4,745 | | | 241 | | | 4,986 | | | (634) | | | 2019 |
| East Troy | | 2761 Buell Drive | | — | | | 4,936 | | | 304 | | | 57 | | | 4,993 | | | 304 | | | 5,297 | | | (1,163) | | | 2014 |
| Elkhorn | | 555 Koopman Lane | | — | | | 3,897 | | | 351 | | | 493 | | | 4,390 | | | 351 | | | 4,741 | | | (570) | | | 2019 |
| Elkhorn | | 390 Koopman Lane | | — | | | 3,621 | | | 210 | | | — | | | 3,621 | | | 210 | | | 3,831 | | | (485) | | | 2019 |
| Franklin | | 5215 W Airways Avenue | | — | | | 8,193 | | | 1,551 | | | — | | | 8,193 | | | 1,551 | | | 9,744 | | | (411) | | | 2021 |
| Germantown | | N117 W18456 Fulton Drive | | — | | | 6,023 | | | 442 | | | — | | | 6,023 | | | 442 | | | 6,465 | | | (858) | | | 2018 |
| Germantown | | N106 W13131 Bradley Way | | — | | | 3,296 | | | 359 | | | 222 | | | 3,518 | | | 359 | | | 3,877 | | | (561) | | | 2018 |
| Germantown | | N102 W19400 Willow Creek Way | | — | | | 10,908 | | | 1,175 | | | — | | | 10,908 | | | 1,175 | | | 12,083 | | | (1,533) | | | 2018 |
| Germantown | | 11900 N. River Lane | | — | | | 5,977 | | | 1,186 | | | — | | | 5,977 | | | 1,186 | | | 7,163 | | | (1,818) | | | 2014 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Initial Cost to STAG Industrial, Inc. | | | | Gross Amounts at Which Carried at December 31, 2022 | | | | |
| State & City | | Address | | Encumbrances(1) | | Building & Improvements(2) | | Land(3) | | Costs Capitalized Subsequent to Acquisition and Valuation Provision | | Building & Improvements | | Land | | Total | | Accumulated Depreciation(4) | | Year Acquired |
| Hartland | | 500 North Shore Drive | | — | | | 4,634 | | | 1,526 | | | — | | | 4,634 | | | 1,526 | | | 6,160 | | | (1,057) | | | 2016 |
| Hudson | | 2700 Harvey Street | | — | | | 7,982 | | | 683 | | | 6 | | | 7,988 | | | 683 | | | 8,671 | | | (809) | | | 2020 |
| Janesville | | 2929 Venture Drive | | — | | | 17,477 | | | 828 | | | 979 | | | 18,456 | | | 828 | | | 19,284 | | | (5,073) | | | 2013 |
| Kenosha | | 9625 55th Street | | — | | | 3,968 | | | 797 | | | 763 | | | 4,731 | | | 797 | | | 5,528 | | | (1,117) | | | 2016 |
| Madison | | 4718 Helgesen Drive | | — | | | 6,365 | | | 609 | | | 475 | | | 6,840 | | | 609 | | | 7,449 | | | (1,118) | | | 2017 |
| Madison | | 4722 Helgesen Drive | | — | | | 4,489 | | | 444 | | | 39 | | | 4,528 | | | 444 | | | 4,972 | | | (725) | | | 2017 |
| Mayville | | 605 Fourth Street | | — | | | 4,118 | | | 547 | | | 623 | | | 4,741 | | | 547 | | | 5,288 | | | (1,963) | | | 2007 |
| Mukwonago | | 103 Hill Court | | — | | | 10,844 | | | 1,478 | | | 219 | | | 11,063 | | | 1,478 | | | 12,541 | | | (479) | | | 2021 |
| Muskego | | S64 W15660 Commerce Center Parkway | | — | | | 5,497 | | | 393 | | | 154 | | | 5,651 | | | 393 | | | 6,044 | | | (642) | | | 2020 |
| New Berlin | | 16250 West Woods Edge Drive | | — | | | 15,917 | | | 277 | | | — | | | 15,917 | | | 277 | | | 16,194 | | | (1,468) | | | 2019 |
| New Berlin | | 16555 W. Smalls Road | | — | | | 20,176 | | | 955 | | | — | | | 20,176 | | | 955 | | | 21,131 | | | (652) | | | 2021 |
| New Berlin | | 5600 S. Moorland Road | | — | | | 6,409 | | | 1,068 | | | 43 | | | 6,452 | | | 1,068 | | | 7,520 | | | (1,696) | | | 2013 |
| Oak Creek | | 525 West Marquette Avenue | | — | | | 4,350 | | | 526 | | | — | | | 4,350 | | | 526 | | | 4,876 | | | (759) | | | 2018 |
| Oak Creek | | 7475 South 6th Street | | — | | | 6,125 | | | 805 | | | 355 | | | 6,480 | | | 805 | | | 7,285 | | | (1,002) | | | 2018 |
| Pewaukee | | W288 N2801 Duplainville Road | | — | | | 6,678 | | | 841 | | | 1,001 | | | 7,679 | | | 841 | | | 8,520 | | | (1,474) | | | 2018 |
| Pewaukee | | W277 N2837 Duplainville Road | | — | | | 4,516 | | | 439 | | | 52 | | | 4,568 | | | 439 | | | 5,007 | | | (796) | | | 2018 |
| Pleasant Prairie | | 10411 80th Avenue | | — | | | 18,219 | | | 2,297 | | | — | | | 18,219 | | | 2,297 | | | 20,516 | | | (2,042) | | | 2018 |
| Pleasant Prairie | | 8901 102nd Street | | — | | | 4,949 | | | 523 | | | 440 | | | 5,389 | | | 523 | | | 5,912 | | | (886) | | | 2018 |
| Sun Prairie | | 1615 Commerce Drive | | — | | | 5,809 | | | 2,360 | | | 2,499 | | | 8,308 | | | 2,360 | | | 10,668 | | | (2,811) | | | 2011 |
| West Allis | | 2207 S. 114th Street | | — | | | 1,757 | | | 462 | | | 2,024 | | | 3,781 | | | 462 | | | 4,243 | | | (808) | | | 2015 |
| West Allis | | 2075 S. 114th Street | | — | | | 1,848 | | | 444 | | | 1,698 | | | 3,546 | | | 444 | | | 3,990 | | | (655) | | | 2015 |
| West Allis | | 2145 S. 114th Street | | — | | | 846 | | | 252 | | | 1,051 | | | 1,897 | | | 252 | | | 2,149 | | | (400) | | | 2015 |
| West Allis | | 2025 S. 114th Street | | — | | | 956 | | | 251 | | | 801 | | | 1,757 | | | 251 | | | 2,008 | | | (329) | | | 2015 |
| Yorkville | | 13900 West Grandview Parkway | | — | | | 4,886 | | | 416 | | | 323 | | | 5,209 | | | 416 | | | 5,625 | | | (1,165) | | | 2014 |
| | Total | | $ | (8,040) | | | $ | 5,197,960 | | | $ | 647,663 | | | $ | 277,672 | | | $ | 5,475,632 | | | $ | 647,663 | | | $ | 6,123,295 | | | $ | (764,809) | | | |
(1)Balance excludes the net unamortized balance of fair market value discount of approximately $0.1 million and unamortized deferred financing fees and debt issuance costs of approximately $5,000.
(2)The initial costs of buildings and improvements is the acquisition costs plus building expansions and non-cash transfers of acquired other assets to initial cost of building and improvements, less asset impairment write-downs and disposals of building and tenant improvements.
(3)Represents values at acquisition date less any impairments.
(4)Depreciation expense is computed using the straight-line method based on the following estimated useful lives:
| |
(1) | Balance excludes the unamortized balance of fair market value premiums of approximately $0.1 million and unamortized deferred financing fees and debt issuance costs of approximately 0.6 million. |
| |
(2) | The initial costs of building and improvements is the acquisition costs less asset impairment write-downs and disposals of building and tenant improvements. |
| |
(3) | Depreciation expense is computed using the straight-line method based on the following lives: |
|
| | |
BuildingDescription | | 40 YearsEstimated Useful Life |
| Building | | 40 Years |
| Building and land improvements (maximum) | | Up to 20 yearsYears |
| Tenant improvements | | Shorter of useful life or terms of related lease |
As of December 31, 2017,2022, the aggregate cost for federal income tax purposes of investments in real estate was approximately $3.2$7.1 billion.
| | | | | Year ended December 31, | | Year ended December 31, |
| | | 2017 | | 2016 | | 2015 | | | 2022 | | 2021 | | 2020 |
| Real Estate: | | |
| | |
| | |
| Real Estate: | | | | | | |
| Balance at beginning of period | | $ | 2,009,716 |
| | $ | 1,711,612 |
| | $ | 1,415,965 |
| Balance at beginning of period | | $ | 5,664,907 | | | $ | 4,521,301 | | | $ | 3,959,883 | |
| Additions during period | | |
| | |
| | |
| Additions during period | | | | | | |
| Other acquisitions | | 514,725 |
| | 381,131 |
| | 330,504 |
| Other acquisitions | | 423,918 | | | 1,217,478 | | | 664,616 | |
| Improvements, etc. | | 53,099 |
| | 33,133 |
| | 16,851 |
| Improvements, etc. | | 120,151 | | | 40,797 | | | 59,702 | |
| Other additions | | — |
| | — |
| | — |
| Other additions | | — | | | — | | | — | |
| Deductions during period | | |
| | |
| | |
| Deductions during period | | | | | | |
| Cost of real estate sold | | (48,674 | ) | | (97,342 | ) | | (21,443 | ) | Cost of real estate sold | | (80,470) | | | (107,192) | | | (152,716) | |
| Write-off of tenant improvements | | (2,166 | ) | | (2,585 | ) | | (1,205 | ) | Write-off of tenant improvements | | (3,428) | | | (7,477) | | | (5,025) | |
| Asset impairments and involuntary conversion | | (2,588 | ) | | (16,233 | ) | | (29,060 | ) | Asset impairments and involuntary conversion | | (1,783) | | | — | | | (5,159) | |
| Balance at the end of the period including assets held for sale | | $ | 2,524,112 |
| | $ | 2,009,716 |
| | $ | 1,711,612 |
| Balance at the end of the period including assets held for sale | | 6,123,295 | | | 5,664,907 | | | 4,521,301 | |
| Assets held for sale | | (20,731 | ) | | — |
| | — |
| Assets held for sale | | (6,324) | | | — | | | (562) | |
| Balance at the end of the period excluding assets held for sale | | 2,503,381 |
| | 2,009,716 |
| | 1,711,612 |
| Balance at the end of the period excluding assets held for sale | | $ | 6,116,971 | | | $ | 5,664,907 | | | $ | 4,520,739 | |
| Accumulated Depreciation: | | |
| | |
| | |
| Accumulated Depreciation: | | | | | | |
| Balance at beginning of period | | $ | 187,413 |
| | $ | 147,917 |
| | $ | 105,435 |
| Balance at beginning of period | | $ | 611,867 | | | $ | 495,466 | | | $ | 393,506 | |
| Additions during period | | |
| | |
| | |
| Additions during period | | | | | | |
| Depreciation and amortization expense | | 75,314 |
| | 57,391 |
| | 48,186 |
| Depreciation and amortization expense | | 170,088 | | | 142,966 | | | 126,382 | |
| Other additions | | — |
| | — |
| | — |
| Other additions | | — | | | — | | | — | |
| Deductions during period | | |
| | |
| | |
| Deductions during period | | | | | | |
| Disposals | | (10,784 | ) | | (17,895 | ) | | (5,704 | ) | Disposals | | (17,146) | | | (26,565) | | | (24,422) | |
| Balance at the end of the period including assets held for sale | | $ | 251,943 |
| | $ | 187,413 |
| | $ | 147,917 |
| Balance at the end of the period including assets held for sale | | 764,809 | | | 611,867 | | | 495,466 | |
| Assets held for sale | | (2,886 | ) | | — |
| | — |
| Assets held for sale | | (1,681) | | | — | | | (118) | |
| Balance at the end of the period excluding assets held for sale | | $ | 249,057 |
| | $ | 187,413 |
| | $ | 147,917 |
| Balance at the end of the period excluding assets held for sale | | $ | 763,128 | | | $ | 611,867 | | | $ | 495,348 | |
