Exhibit 99.1
STAG INDUSTRIAL ANNOUNCES FOURTH QUARTER AND FULL YEAR
2015 RESULTS
Boston, MA — February 25, 2016 - STAG Industrial, Inc. (the “Company”) (NYSE:STAG), a real estate investment trust focused on the acquisition and operation of single-tenant, industrial properties throughout the United States, today announced its financial and operating results for the fourth quarter 2015.
“The fourth quarter was a strong finish to a solid operational year for STAG,” said Ben Butcher, Chief Executive Officer of the Company. “This was readily apparent in the continuation of our robust leasing activity, healthy acquisition volume, continued asset dispositions and resultant portfolio improvements and most importantly, continued strong earnings growth.”
Highlights:
• Achieved $0.40 of Core FFO per diluted share for the fourth quarter of 2015, an increase of 8.1% compared to the fourth quarter ended December 31, 2014. Generated Core FFO of $28.3 million compared to $23.9 million for the fourth quarter of 2014, an increase of 18.3%. For the year ended December 31, 2015, Core FFO increased 23.9% in the aggregate compared to the same period last year.
• Generated Cash NOI of $48.8 million compared to $41.4 million for the fourth quarter of 2014, an increase of 18.0%. For the year ended December 31, 2015, Cash NOI increased 27.0% in the aggregate compared to the same period last year.
• Acquired 14 buildings consisting of 3.1 million square feet for $138 million with an aggregate Capitalization Rate of 8.8% in the fourth quarter of 2015. For the year ended December 31, 2015, the Company acquired 49 buildings consisting of 8.7 million square feet for $427 million with an aggregate Capitalization Rate of 8.4%.
• Sold four buildings consisting of 486,577 square feet for $13 million during the fourth quarter. For the year ended December 31, 2015, sold six buildings consisting of 808,387 square feet for $22 million.
• Achieved occupancy of 95.6% and executed leases for 1.4 million square feet for the fourth quarter of 2015. Achieved an increase in cash and GAAP rent of 0.5% and 12.0%, respectively, for the quarter’s leasing activity. For the year ended December 31, 2015, executed leases for 5.7 million square feet and achieved an increase in cash and GAAP rent of 1.6% and 7.1%, respectively, for the year’s leasing activity.
• Experienced 69.8% Retention for 4.9 million square feet of leases expiring in the year. Achieved an increase in cash and GAAP rent of 4.2% and 8.4%, respectively, for the year’s renewals.
• Agreed to pricing of a new $100 million private placement of senior unsecured notes, and issued the notes on December 15, 2015. The notes pay a fixed rate of 3.98% and mature on January 5, 2023.
• Subsequent to year end, appointed William R. Crooker to serve as the Company’s Chief Financial Officer, Executive Vice President, and Treasurer effective January 26, 2016.
Please refer to the Non-GAAP Financial Measures and Other Defined Terms section at the end of this release for definitions of capitalized terms used in this release.
The Company will host a conference call tomorrow, February 26, 2016, to discuss the quarter’s results and provide information about acquisitions, operations, capital markets, and corporate activities. Details of the call can be found at the end of this release.
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Key Financial Measures
For the three months ended December 31, 2015, Cash NOI was $48.8 million, which represents growth of 18.0% as compared to the three months ended December 31, 2014. Contributions to the growth in Cash NOI includes $7.7 million related to acquisition volume (net of dispositions), $(0.9) million of termination fee income, and $0.6 million from same store operations over the comparison period. Adjusting Cash NOI to account for termination income and the timing of acquisitions and dispositions, Run Rate Cash NOI would have been $49.3 million for the three months ended December 31, 2015.
Adjusted EBITDA was $41.9 million for the three months ended December 31, 2015, which represents growth of 23.2% over the three months ended December 31, 2014. Adjusting Adjusted EBITDA to account for the timing of acquisitions and dispositions, Run Rate Adjusted EBITDA would have been $43.8 million for the three months ended December 31, 2015.
For the three months ended December 31, 2015, Core FFO was $28.3 million, which represents growth of 18.3% as compared to the three months ended December 31, 2014. On a diluted, per share basis, Core FFO was $0.40 which represents growth of 8.1% compared to the three months ended December 31, 2014.
Net loss for the three months ended December 31, 2015 was $20.1 million. Included in net loss is depreciation and amortization expense of $30.5 million and a loss on impairments of $20.9 million related to 10 buildings. The impairments are primarily related to legacy, non-core flex/office assets that the Company is actively looking to dispose of to enhance the quality of the portfolio.
The Company’s key financial measures are noted in the chart below:
KEY FINANCIAL MEASURES
| | Three months ended December 31, | | Year ended December 31, |
| | 2015 | | 2014 | | % Change | | 2015 | | 2014 | | % Change |
($000,000s, except per share data) | | | | | | | | | | | | |
Cash NOI | | $48.8 | | $41.4 | | 18.0% | | $180.9 | | $142.4 | | 27.0% |
Adjusted EBITDA | | $41.9 | | $34.0 | | 23.2% | | $156.1 | | $121.7 | | 28.2% |
Core FFO | | $28.3 | | $23.9 | | 18.3% | | $104.4 | | $84.2 | | 23.9% |
Core FFO per share / unit - basic and diluted | | $0.40 | | $0.37 | | 8.1% | | $1.49 | | $1.45 | | 2.8% |
AFFO | | $28.8 | | $22.6 | | 27.4% | | $107.3 | | $83.0 | | 29.3% |
Net loss | | $(20.1) | | $(2.6) | | - | | $(31.5) | | $(5.0) | | - |
Definitions of Cash NOI, Run Rate Cash NOI, Adjusted EBITDA, FFO, Core FFO, and AFFO, all non-GAAP financial measures, together with reconciliations to Net Income (Loss) in accordance with GAAP, appear at the end of this release. Please also see the Company’s supplemental information package for additional disclosure.
Acquisition & Disposition Activity
During the three months ended December 31, 2015, the Company acquired 14 buildings consisting of 3.1 million square feet for $138 million with an aggregate Capitalization Rate of 8.8%. These buildings had a weighted average occupancy rate of 94.6% upon acquisition. The chart below details the acquisition activity for the three months ended December 31, 2015:
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FOURTH QUARTER 2015 ACQUISITION ACTIVITY
Location (CBSA) (1) | | Date Acquired | | Square Feet | | Buildings | | Purchase Price
(MM) (2) | | Remaining Lease Term
(Years) |
Durham-Chapel Hill, NC | | 10/7/2015 | | 80,600 | | 1 | | $4.2 | | 3.7 |
Charlotte-Gastonia-Rock Hill, NC-SC | | 10/15/2015 | | 124,680 | | 1 | | 5.4 | | 7.1 |
Shreveport-Bossier City, LA | | 10/26/2015 | | 420,259 | | 1 | | 11.0 | | 3.9 |
Dayton, OH | | 11/23/2015 | | 205,761 | | 1 | | 8.8 | | 4.9 |
Milwaukee-Waukesha-West Allis, WI | | 12/4/2015 | | 241,977 | | 4 | | 9.9 | | 7.3 |
Knoxville, TN | | 12/10/2015 | | 104,000 | | 1 | | 5.4 | | 5.0 |
Dallas-Fort Worth-Arlington, TX | | 12/11/2015 | | 164,914 | | 1 | | 7.6 | | NA |
Greenville-Mauldin-Easley, SC | | 12/11/2015 | | 125,000 | | 1 | | 5.5 | | 4.6 |
Lancaster, PA | | 12/17/2015 | | 240,529 | | 1 | | 9.4 | | 2.4 |
Grand Rapids-Wyoming, MI | | 12/23/2015 | | 301,317 | | 1 | | 9.4 | | 5.1 |
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD | | 12/28/2015 | | 1,048,631 | | 1 | | 61.5 | | 5.0 |
Total/Weighted Average | | | | 3,057,668 | | 14 | | $138.1 | | 4.9 |
(1) Core based statistical area
(2) Excludes property acquisition costs
For the year ended December 31, 2015, the Company acquired 49 buildings consisting of 8.7 million square feet for $427 million with an aggregate Capitalization Rate of 8.4%. The chart below details the acquisition activity for the year ended December 31, 2015:
2015 ACQUISITION ACTIVITY
| | Square Feet | | Buildings | | Purchase Price
(MM) (1) | | Remaining Lease
Term (Years) | | Capitalization Rate |
Q1 | | 1,485,717 | | 5 | | $97.1 | | 5.7 | | 8.0% |
Q2 | | 1,639,383 | | 12 | | 83.8 | | 6.0 | | 8.4% |
Q3 | | 2,509,084 | | 18 | | 108.3 | | 5.5 | | 8.2% |
Q4 | | 3,057,668 | | 14 | | 138.1 | | 4.9 | | 8.8% |
Total/Weighted Average | | 8,691,852 | | 49 | | $427.3 | | 5.4 | | 8.4% |
(1) Excludes property acquisition costs
Subsequent to quarter end and through February 25, 2016, the Company acquired three additional buildings consisting of 471,574 square feet for $17.8 million. These buildings were under contract as of December 31, 2015. As of February 25, 2016, the Company had entered into two contracts to acquire another two buildings for $10.1 million. The Company also executed non-binding letters of intent (“LOIs”) to acquire four additional buildings for $47.8 million.(1)
As of February 25, 2016, the Company’s Pipeline of potential acquisitions is $1.4 billion across 136 buildings.
During the three months ended December 31, 2015, the Company sold four buildings consisting of 486,577 square feet for $12.8 million, resulting in a gain on sales of $3.3 million. For the year ended December 31, 2015 the Company sold six buildings consisting of 808,387 square feet for $22.1 million, resulting in a gain on sales of $5.0 million.
(1) The purchase and sale agreements for the properties under contract are subject to satisfaction of closing conditions, and the properties under LOI require the negotiation and execution of definitive purchase and sale agreements. There can be no assurance that any of the properties under contract or LOI will be acquired on the terms anticipated or at all.
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Leasing Activity
During the three months ended December 31, 2015, the Company executed ten leases consisting of 1.4 million square feet. The chart below details the leases signed:
FOURTH QUARTER 2015 LEASING ACTIVITY
Lease Type | | Square Feet | | W.A. Lease
Term
(Years) | | Base Rent
$/PSF | | Lease
Commissions
$/PSF | | Tenant
Improvements
$/PSF | | Total Costs
$/PSF | | Cash Rent
Change | | GAAP Rent
Change | |
New Leases | | 529,785 | | 11.2 | | $2.72 | | $0.88 | | $0.94 | | $1.82 | | 0.5% | | 12.6% | |
Renewal Leases | | 251,800 | | 5.8 | | $3.22 | | $0.42 | | $0.21 | | $0.63 | | 0.5% | | 10.9% | |
Total /Weighted Avg New & Renewal | | 781,585 | | 9.5 | | $2.88 | | $0.73 | | $0.71 | | $1.44 | | 0.5% | | 12.0% | |
Temporary Leases | | 657,970 | | | | | | | | | | | | | | | |
Total Leasing Activity | | 1,439,555 | | | | | | | | | | | | | | | |
For the year ended December 31, 2015, the Company executed 55 leases consisting of approximately 5.7 million square feet. The chart below details the leasing activity for the year ended December 31, 2015:
2015 LEASING ACTIVITY
Lease Type | | Square Feet | | W.A. Lease
Term
(Years) | | Base Rent
$/PSF | | Lease
Commissions
$/PSF | | Tenant
Improvements
$/PSF | | Total Costs
$/PSF | | Cash Rent
Change(1) | | GAAP Rent
Change(1) | |
New Leases | | 1,439,366 | | 7.8 | | $3.63 | | $0.80 | | $1.20 | | $2.00 | | 11.2 | % | 16.4% | |
Renewal Leases | | 2,950,326 | | 4.1 | | $3.98 | | $0.38 | | $0.23 | | $0.61 | | (1.0) | % | 4.6% | |
Total /Weighted Avg New & Renewal | | 4,389,692 | | 5.4 | | $3.87 | | $0.51 | | $0.55 | | $1.06 | | 1.6 | % | 7.1% | |
Temporary Leases | | 1,356,770 | | | | | | | | | | | | | | | |
Total Leasing Activity | | 5,746,462 | | | | | | | | | | | | | | | |
(1) Rent change for new leases where there were no prior comparable leases, due to extended downtime or materially different lease structures, are excluded (six leases / 414,392 SF)
The Company experienced 49.2% Retention for 806,030 square feet of leases expiring in the quarter. This Retention rate was impacted by one lease for 400,000 square feet, 200,000 square feet of which the Company relet with no downtime. The Retention for the year ended December 31, 2015 was 69.8% for 4.9 million square feet of leases expiring. The chart below details the quarterly retention activity:
2015 RETENTION
Quarter | | Expiring Square
Footage | | Retained Square
Footage | | W.A. Lease Term
(Years) | | Retention Rate | | Cash Rent Change | | GAAP Rent Change |
Q1 | | 1,528,723 | | 979,987 | | 3.5 | | 64.1% | | 6.7% | | 9.6% |
Q2 | | 468,169 | | 136,789 | | 3.8 | | 29.2% | | 3.9% | | 10.0% |
Q3 | | 2,135,464 | | 1,931,464 | | 2.1 | | 90.4% | | 3.3% | | 8.5% |
Q4 | | 806,030 | | 396,430 | | 3.5 | | 49.2% | | 0.8% | | 4.2% |
Total / Weighted Average | | 4,938,386 | | 3,444,670 | | 2.8 | | 69.8% | | 4.2% | | 8.4% |
Portfolio Highlights
The Company’s occupancy rate at the end of the fourth quarter was 95.6% compared to the prior year occupancy level of 94.9%. The Company’s portfolio totaled approximately 54.7 million square feet as of December 31, 2015, representing an increase in square footage of 16.3% since December 31, 2014. The chart below details the portfolio characteristics:
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PORTFOLIO CHARACTERISTICS
| | December 31, 2015 | | December 31, 2014 |
Square Feet | | 54,712,384 | | 47,024,076 |
Occupancy | | 95.6% | | 94.9% |
Number of Tenants | | 266 | | 227 |
Average Lease Size (square feet) | | 163,884 | | 170,890 |
Average Building Size (square feet) | | 188,015 | | 189,613 |
Average Building Age (years) | | 28 | | 29 |
Average Minimum and Maximum Clear Height (feet)(1) | | 25-29 | | 26-29 |
(1) Excludes flex / office buildings
The chart below details the Company’s tenant credit profile:
TENANT CREDIT PROFILE (1)
| | December 31, 2015 | | December 31, 2014 |
Tenants Publicly Rated | | 56.9% | | 53.6% |
Tenants Rated Investment Grade | | 28.8% | | 27.6% |
Tenant Revenue > $100 Million | | 88.0% | | 87.5% |
Tenant Revenue > $1 Billion | | 60.8% | | 58.3% |
(1) Includes tenants, guarantors, and / or non-guarantor parents
Liquidity, Capital Markets Activity, and Financial Statistics
As of December 31, 2015, the Company had total Debt Capacity of $544 million and liquidity of $422 million, comprised of $12 million of cash and $410 million of Immediate Availability on the Company’s unsecured credit facility and unsecured term loans.
On October 6, 2015, the Company agreed to the pricing of a $100 million note purchase agreement providing for the future private placement of senior unsecured notes (“Series F”). On December 15, 2015, the Company issued the $100 million Series F notes which bear interest at a fixed rate of 3.98% and mature on January 5, 2023.
On December 16, 2015, the Company funded the previously committed $150 million unsecured, 7-Year Term Loan B. The proceeds were used to repay amounts drawn under the unsecured Revolving Credit Facility.
As of December 31, 2015, the Company’s enterprise value was approximately $2.4 billion, comprised of $1.3 billion of equity market capitalization, $139 million of preferred equity and total debt of $987 million.
As of December 31, 2015, the Company had approximately $987 million of debt outstanding with a weighted average remaining term of 6.5 years and a weighted average interest rate of 4.1%. All of the outstanding floating rate debt is fixed through interest rate swaps except for the Revolving Credit Facility.
The chart below details the Company’s debt capital structure and financial ratios:
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DEBT CAPITAL STRUCTURE AND FINANCIAL RATIOS
| | December 31, 2015 | | December 31, 2014 |
Total Debt ($000s) | | $987,180 | | $686,347 |
Weighted Average Duration (years) | | 6.5 | | 6.9 |
Weighted Average Interest Rate | | 4.1% | | 4.0% |
% Secured | | 23.4% | | 33.0% |
% Maturing Next 12 Months | | 1.4% | | 0.0% |
Net Debt to Real Estate Cost Basis | | 45.0% | | 37.0% |
Total Debt to Enterprise Value | | 40.3% | | 28.0% |
Net Debt to Annualized Run Rate Adjusted EBITDA | | 5.6x | | 4.9x |
Fixed Charge Coverage Ratio | | 3.1x | | 3.1x |
Interest Coverage Ratio | | 4.4x | | 5.0x |
During the three months ended December 31, 2015, the Company did not issue any shares of common stock under its ATM program. The Company has one ATM program with a total of $107 million of additional issuance capacity. The chart below details the ATM activity:
2015 ATM ACTIVITY
ATM | | Shares Issued | | Price per Share
(Weighted Avg) | | Gross Proceeds
(MM) | | Net Proceeds
(MM) |
Q1 | | 417,115 | | $24.29 | | $10,133 | | $9,981 |
Q2 | | 2,888,282 | | $21.36 | | 61,694 | | 60,768 |
Q3(1) | | 151,006 | | $20.30 | | 3,065 | | 3,019 |
Q4 | | — | | NA | | — | | — |
Total / Weighted Average | | 3,456,403 | | $21.67 | | $74,892 | | $73,768 |
(1) Last shares sold June 30, 2015 and closed July 6, 2015
For the year ended December 31, 2015, the Company raised $97.8 million of equity consisting of $74.9 million in gross proceeds raised through the ATM programs and $22.9 million of common units in the Operating Partnership privately placed in connection with an acquisition.
Dividends
On October 22, 2015 the Board of Directors declared a monthly common stock dividend of $0.115833 per share commencing with the January 2016, equating to an annual dividend rate of $1.39.
Subsequent to quarter end, on February 22, 2016, the Company’s Board of Directors declared a monthly common stock dividend of $0.115833 per share for the months of April, May, and June 2016. The chart below details the common dividends declared:
Q1 2016 & Q2 2016 COMMON DIVIDENDS DECLARED
Month | | Record Date | | Payment Date | | Dividend |
January 2016 | | January 29, 2016 | | February 16, 2016 | | $0.115833 |
February 2016 | | February 29, 2016 | | March 15, 2016 | | $0.115833 |
March 2016 | | March 31, 2016 | | April 15, 2016 | | $0.115833 |
April 2016 | | April 29, 2016 | | May 16, 2016 | | $0.115833 |
May 2016 | | May 31, 2016 | | June 15, 2016 | | $0.115833 |
June 2016 | | June 30, 2016 | | July 15, 2016 | | $0.115833 |
Subsequent to quarter end, on February 22, 2016, the Company’s Board of Directors declared the first quarter preferred stock dividends for its 9.0% Series A Cumulative Redeemable Preferred Stock (NYSE: STAG Pr A) (“Series A Preferred”) and its 6.625% Series B Cumulative Redeemable Preferred Stock (NYSE: STAG Pr B) (“Series B Preferred”). The quarterly dividend for the Series A Preferred is $0.5625 per share, which equates to $2.25 per share on an annualized basis, and the quarterly dividend for the Series B Preferred is $0.4140625 per
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share, which equates to $1.65625 per share on an annualized basis. The record date for the preferred stock dividends is March 15, 2016, and the dividends are payable March 31, 2016.
The Company’s dividend policy is set by the Board of Directors, which considers, among other factors, REIT distribution requirements and recurring, distributable, cash income.
Conference Call
The Company will host a conference call tomorrow, Friday, February 26, at 10:00 a.m. (Eastern Time) to discuss the quarter’s results. The call can be accessed live over the phone toll-free by dialing (877) 407-4018, or for international callers, (201) 689-8471. A replay will be available shortly after the call and can be accessed by dialing (877) 870-5176, or for international callers, (858) 384-5517. The passcode for the replay is 13628453.
Interested parties may also listen to a simultaneous webcast of the conference call by visiting the Investor Relations section of the Company’s website at www.stagindustrial.com, or by clicking on the following link:
http://ir.stagindustrial.com/corporateprofile.aspx?iid=4263385
Supplemental Schedules
The Company has provided a supplemental information package to provide additional disclosure and financial information on its website (www.stagindustrial.com) under the “Presentations” tab in the Investor Relations section.
Additional information is also available on the Company’s website at www.stagindustrial.com.
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CONSOLIDATED BALANCE SHEETS
STAG Industrial, Inc.
(unaudited, $000s, except share data)
| | | | |
| | December 31, 2015 | | December 31, 2014 |
| | | | |
Assets | | | | |
Rental Property: | | | | |
Land | | $ | 228,919 | | $ | 191,238 |
Buildings and improvements, net of accumulated depreciation of $150,395 and $105,789, respectively | | 1,332,298 | | 1,118,938 |
Deferred leasing intangibles, net of accumulated amortization of $200,758 and $146,026, respectively | | 276,272 | | 247,904 |
Total rental property, net | | 1,837,489 | | 1,558,080 |
Cash and cash equivalents | | 12,011 | | 23,878 |
Restricted cash | | 8,395 | | 6,906 |
Tenant accounts receivable, net | | 21,478 | | 16,833 |
Prepaid expenses and other assets | | 24,996 | | 22,661 |
Interest rate swaps | | 1,867 | | 959 |
Total assets | | $ | 1,906,236 | | $ | 1,629,317 |
Liabilities and Equity | | | | |
Liabilities: | | | | |
Unsecured credit facility | | $ | 56,000 | | $ | 131,000 |
Unsecured term loans | | 300,000 | | 150,000 |
Unsecured notes | | 400,000 | | 180,000 |
Mortgage notes | | 231,180 | | 225,347 |
Accounts payable, accrued expenses and other liabilities | | 25,662 | | 21,558 |
Interest rate swaps | | 3,766 | | 873 |
Tenant prepaid rent and security deposits | | 14,628 | | 11,480 |
Dividends and distributions payable | | 8,234 | | 7,355 |
Deferred leasing intangibles, net of accumulated amortization of $8,536 and $6,565, respectively | | 11,387 | | 10,180 |
Total liabilities | | 1,050,857 | | 737,793 |
Equity: | | | | |
Preferred stock, par value $0.01 per share, 10,000,000 shares authorized, | | | | |
Series A, 2,760,000 shares (liquidation preference of $25.00 per share) issued and outstanding at December 31, 2015 and December 31, 2014 | | 69,000 | | 69,000 |
Series B, 2,800,000 shares (liquidation preference of $25.00 per share) issued and outstanding at December 31, 2015 and December 31, 2014 | | 70,000 | | 70,000 |
Common stock, par value $0.01 per share, 100,000,000 shares authorized, 68,077,333 and 64,434,825 shares issued and outstanding at December 31, 2015 and December 31, 2014, respectively | | 681 | | 644 |
Additional paid-in capital | | 1,017,394 | | 928,242 |
Common stock dividends in excess of earnings | | (334,623) | | (203,241) |
Accumulated other comprehensive loss | | (2,350) | | (489) |
Total stockholders’ equity | | 820,102 | | 864,156 |
Noncontrolling interest | | 35,277 | | 27,368 |
Total equity | | 855,379 | | 891,524 |
Total liabilities and equity | | $ | 1,906,236 | | $ | 1,629,317 |
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CONSOLIDATED STATEMENTS OF OPERATIONS
STAG Industrial, Inc.
(unaudited, $000s, except share data)
| | | | | | | | | | | | |
| | Three months ended December 31, | | | Year ended December 31, | |
| | 2015 | | | 2014 | | | 2015 | | | 2014 | |
| | | | | | | | | | | | |
Revenue | | | | | | | | | | | | |
Rental income | | $ | 50,262 | | | $ | 43,375 | | | $ | 186,463 | | | $ | 149,470 | |
Tenant recoveries | | 8,531 | | | 6,513 | | | 31,666 | | | 23,607 | |
Other income | | 94 | | | 145 | | | 504 | | | 739 | |
Total revenue | | 58,887 | | | 50,033 | | | 218,633 | | | 173,816 | |
Expenses | | | | | | | | | | | | |
Property | | 11,362 | | | 9,103 | | | 42,627 | | | 33,388 | |
General and administrative | | 7,296 | | | 6,934 | | | 28,750 | | | 26,396 | |
Property acquisition costs | | 2,246 | | | 953 | | | 4,757 | | | 4,390 | |
Depreciation and amortization | | 30,503 | | | 25,451 | | | 112,545 | | | 88,057 | |
Loss on impairments | | 20,894 | | | 2,840 | | | 29,272 | | | 2,840 | |
Other expenses | | 157 | | | 192 | | | 1,048 | | | 803 | |
Total expenses | | 72,458 | | | 45,473 | | | 218,999 | | | 155,874 | |
Other income (expense) | | | | | | | | | | | | |
Interest income | | 2 | | | 4 | | | 9 | | | 15 | |
Interest expense | | (9,838 | ) | | (7,168 | ) | | (36,098 | ) | | (25,109 | ) |
Loss on extinguishment of debt | | — | | | (686 | ) | | — | | | (686 | ) |
Gain on sales of rental property | | 3,273 | | | 646 | | | 4,986 | | | 2,799 | |
Total other income (expense) | | (6,563 | ) | | (7,204 | ) | | (31,103 | ) | | (22,981 | ) |
Net loss from continuing operations | | $ | (20,134 | ) | | $ | (2,644 | ) | | $ | (31,469 | ) | | $ | (5,039 | ) |
Net loss | | $ | (20,134 | ) | | $ | (2,644 | ) | | $ | (31,469 | ) | | $ | (5,039 | ) |
Less: loss attributable to noncontrolling interest after preferred stock dividends | | (1,113 | ) | | (199 | ) | | (2,066 | ) | | (1,014 | ) |
Net loss attributable to STAG Industrial, Inc. | | $ | (19,021 | ) | | $ | (2,445 | ) | | $ | (29,403 | ) | | $ | (4,025 | ) |
Less: preferred stock dividends | | 2,712 | | | 2,712 | | | 10,848 | | | 10,848 | |
Less: amount allocated to unvested restricted stockholders | | 94 | | | 87 | | | 385 | | | 345 | |
Net loss attributable to common stockholders | | $ | (21,827 | ) | | $ | (5,244 | ) | | $ | (40,636 | ) | | $ | (15,218 | ) |
Weighted average common shares outstanding — basic and diluted | | 67,805,519 | | | 62,788,210 | | | 66,307,972 | | | 54,086,345 | |
Loss per share — basic and diluted | | | | | | | | | | | | |
Loss from continuing operations attributable to common stockholders | | $ | (0.32 | ) | | $ | (0.08 | ) | | $ | (0.61 | ) | | $ | (0.28 | ) |
Loss per share — basic and diluted | | $ | (0.32 | ) | | $ | (0.08 | ) | | $ | (0.61 | ) | | $ | (0.28 | ) |
| | | | | | | | | | | | |
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STAG Industrial, Inc.
(unaudited, $000s, except share data)
| | Three months ended December 31, | | | Year ended December 31, | |
| | 2015 | | | 2014 | | | 2015 | | | 2014 | |
NET OPERATING INCOME RECONCILIATION | | | | | | | | | | | | |
Net income (loss) | | $ | (20,134 | ) | | $ | (2,644 | ) | | $ | (31,469 | ) | | $ | (5,039 | ) |
Asset management fee income | | (77 | ) | | (135 | ) | | (379 | ) | | (598 | ) |
General and administrative | | 7,296 | | | 6,934 | | | 28,750 | | | 26,396 | |
Property acquisition costs | | 2,246 | | | 953 | | | 4,757 | | | 4,390 | |
Depreciation and amortization | | 30,503 | | | 25,451 | | | 112,545 | | | 88,057 | |
Interest income | | (2 | ) | | (4 | ) | | (9 | ) | | (15 | ) |
Interest expense | | 9,838 | | | 7,168 | | | 36,098 | | | 25,109 | |
Loss on impairments | | 20,894 | | | 2,840 | | | 29,272 | | | 2,840 | |
Loss on extinguishment of debt | | — | | | 686 | | | — | | | 686 | |
Other expenses | | 157 | | | 192 | | | 1,048 | | | 803 | |
Gain on sales of rental property | | (3,273 | ) | | (646 | ) | | (4,986 | ) | | (2,799 | ) |
Corporate sub lease rental income | | — | | | (17 | ) | | (187 | ) | | (17 | ) |
NET OPERATING INCOME | | $ | 47,448 | | | $ | 40,778 | | | $ | 175,440 | | | $ | 139,813 | |
| | | | | | | | | | | | |
Net operating income | | $ | 47,448 | | | $ | 40,778 | | | $ | 175,440 | | | $ | 139,813 | |
Straight-line rent adjustments, net | | (809 | ) | | (1,030 | ) | | (3,115 | ) | | (3,673 | ) |
Intangible amortization in rental income, net | | 2,195 | | | 1,653 | | | 8,526 | | | 6,253 | |
CASH NET OPERATING INCOME | | $ | 48,834 | | | $ | 41,401 | | | $ | 180,851 | | | $ | 142,393 | |
| | | | | | | | | | | | |
Cash net operating income | | $ | 48,834 | | | | | | | | | | |
Net Cash NOI from acquisitions’ and dispositions’ timing | | 1,941 | | | | | | | | | | |
Cash termination income | | (1,478 | ) | | | | | | | | | |
RUN RATE CASH NOI | | $ | 49,297 | | | | | | | | | | |
| | | | | | | | | | | | |
ADJUSTED EBITDA RECONCILIATION | | | | | | | | | | | | |
Net loss | | $ | (20,134 | ) | | $ | (2,644 | ) | | $ | (31,469 | ) | | $ | (5,039 | ) |
Intangible amortization in rental income, net | | 2,195 | | | 1,653 | | | 8,526 | | | 6,253 | |
Straight-line rent adjustments, net | | (995 | ) | | (941 | ) | | (3,405 | ) | | (3,255 | ) |
Non-cash compensation expense | | 1,911 | | | 1,976 | | | 7,578 | | | 5,168 | |
Termination income | | (1,299 | ) | | (2,484 | ) | | (2,986 | ) | | (2,519 | ) |
Property acquisition costs | | 2,246 | | | 953 | | | 4,757 | | | 4,390 | |
Depreciation and amortization | | 30,503 | | | 25,451 | | | 112,545 | | | 88,057 | |
Interest income | | (2 | ) | | (4 | ) | | (9 | ) | | (15 | ) |
Interest expense | | 9,838 | | | 7,168 | | | 36,098 | | | 25,109 | |
Non-recurring other expenses | | — | | | — | | | 167 | | | — | |
Loss on impairments | | 20,894 | | | 2,840 | | | 29,272 | | | 2,840 | |
Loss on extinguishment of debt | | — | | | 686 | | | — | | | 686 | |
Gain on sales of rental property | | (3,273 | ) | | (646 | ) | | (4,986 | ) | | (2,799 | ) |
Consultant services | | — | | | — | | | — | | | 2,839 | |
ADJUSTED EBITDA | | $ | 41,884 | | | $ | 34,008 | | | $ | 156,088 | | | $ | 121,715 | |
| | | | | | | | | | | | |
Adjusted EBITDA | | $ | 41,884 | | | | | | | | | | |
Net Adjusted EBITDA from acquisitions’ and dispositions’ timing | | 1,941 | | | | | | | | | | |
RUN RATE ADJUSTED EBITDA | | $ | 43,825 | | | | | | | | | | |
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RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
STAG Industrial, Inc.
(unaudited, $000s, except share data)
| | Three months ended December 31, | | | Year ended December 31, | |
| | 2015 | | | 2014 | | | 2015 | | | 2014 | |
CORE FUNDS FROM OPERATIONS RECONCILIATION | | | | | | | | | | | | |
Net loss | | $ | (20,134 | ) | | $ | (2,644 | ) | | $ | (31,469 | ) | | $ | (5,039 | ) |
Rental property depreciation and amortization | | 30,456 | | | 25,412 | | | 112,365 | | | 87,856 | |
Loss on impairments | | 20,894 | | | 2,840 | | | 29,272 | | | 2,840 | |
Gain on sales of rental property | | (3,273 | ) | | (646 | ) | | (4,986 | ) | | (2,799 | ) |
Funds from operations | | $ | 27,943 | | | $ | 24,962 | | | $ | 105,182 | | | $ | 82,858 | |
Preferred stock dividends | | (2,712 | ) | | (2,712 | ) | | (10,848 | ) | | (10,848 | ) |
Amount allocated to unvested restricted stockholders | | (94 | ) | | (87 | ) | | (385 | ) | | (345 | ) |
Funds from operations attributable to common stockholders and unit holders | | $ | 25,137 | | | $ | 22,163 | | | $ | 93,949 | | | $ | 71,665 | |
| | | | | | | | | | | | |
Funds from operations attributable to common stockholders and unit holders | | $ | 25,137 | | | $ | 22,163 | | | $ | 93,949 | | | $ | 71,665 | |
Intangible amortization in rental income, net | | 2,195 | | | 1,653 | | | 8,526 | | | 6,253 | |
Termination income | | (1,299 | ) | | (2,484 | ) | | (2,986 | ) | | (2,519 | ) |
Property acquisition costs | | 2,246 | | | 953 | | | 4,757 | | | 4,390 | |
Loss on extinguishment of debt | | — | | | 686 | | | — | | | 686 | |
Consultant services | | — | | | — | | | — | | | 2,839 | |
Non-recurring other expenses | | — | | | 929 | | | 167 | | | 929 | |
CORE FUNDS FROM OPERATIONS | | $ | 28,279 | | | $ | 23,900 | | | $ | 104,413 | | | $ | 84,243 | |
| | | | | | | | | | | | |
Weighted average shares and units outstanding | | | | | | | | | | | | |
Weighted average common shares | | 67,805,519 | | | 62,778,210 | | | 66,307,972 | | | 54,086,345 | |
Weighted average restricted shares | | 271,400 | | | 264,041 | | | 280,839 | | | 268,894 | |
Weighted average units | | 3,486,150 | | | 2,427,440 | | | 3,417,964 | | | 3,706,932 | |
Weighted average shares and units outstanding - basic and diluted | | 71,563,069 | | | 65,469,691 | | | 70,006,775 | | | 58,062,171 | |
CORE FUNDS FROM OPERATIONS PER SHARE / UNIT - BASIC AND DILUTED | | $ | 0.40 | | | $ | 0.37 | | | $ | 1.49 | | | $ | 1.45 | |
| | | | | | | | | | | | |
ADJUSTED FUNDS FROM OPERATIONS RECONCILIAITON | | | | | | | | | | | | |
Core funds from operations | | $ | 28,279 | | | $ | 23,900 | | | $ | 104,413 | | | $ | 84,243 | |
Add: non-rental property depreciation and amortization | | 47 | | | 39 | | | 180 | | | 201 | |
Straight-line rent adjustments, net | | (995 | ) | | (941 | ) | | (3,405 | ) | | (3,255 | ) |
Recurring capital expenditures | | (547 | ) | | (26 | ) | | (1,136 | ) | | (1,316 | ) |
Lease renewal commissions and tenant improvements | | (229 | ) | | (1,731 | ) | | (1,595 | ) | | (2,486 | ) |
Non-cash portion of interest expense | | 355 | | | 328 | | | 1,262 | | | 1,337 | |
Non-cash compensation expense | | 1,911 | | | 1,047 | | | 7,578 | | | 4,239 | |
ADJUSTED FUNDS FROM OPERATIONS | | $ | 28,821 | | | $ | 22,616 | | | $ | 107,297 | | | $ | 82,963 | |
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Non-GAAP Financial Measures and Other Definitions
Adjusted Earnings before Interest, Taxes, Depreciation, and Amortization (Adjusted EBITDA): We define Adjusted EBITDA as net income (loss) (computed in accordance with GAAP) before interest, tax, depreciation and amortization, property acquisition costs, gain on sales of rental property, termination income, straight-line rent adjustments, non-cash compensation, intangible amortization in rental income, loss on impairments, loss on extinguishment of debt and other non-recurring items.
Annualized Adjusted EBITDA: We define Annualized Adjusted EBITDA as Adjusted EBITDA multiplied by four.
Annualized Adjusted Run Rate EBITDA: We define Annualized Adjusted Run Rate EBITDA as Annualized Adjusted EBITDA plus incremental Adjusted EBITDA on an annualized basis related to acquisitions acquired in each quarter for which a full quarter’s results were not reflected less Adjusted EBITDA related to the quarter’s dispositions.
Annualized Base Rental Revenue: We define Annualized Base Rental Revenue as the monthly base cash rent for the applicable property or properties (which is different from rent calculated in accordance with GAAP for purposes of our financial statements), multiplied by 12. If a tenant is in a free rent period the annualized rent is calculated based on the first contractual monthly base rent amount multiplied by 12.
Capitalization Rate: We define Capitalization Rate as the estimated weighted average cash capitalization rate, calculated by dividing (i) the Company’s estimate of year one net cash flow from the applicable property’s operations stabilized for occupancy (post-lease-up for vacant properties), which does not include termination income, miscellaneous other income, capital expenditure, general and administrative costs, reserves, tenant improvements and leasing commissions, credit loss, or vacancy loss, by (ii) the acquisition price, as defined by GAAP. These capitalization rate estimates are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control, including those risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2014.
Debt Capacity: We define Debt Capacity as the aggregate undrawn nominal commitments under the Company’s debt instruments.
Fixed Charge Coverage Ratio: We define the Fixed Charge Coverage Ratio as Adjusted EBITDA divided by cash interest expense, preferred dividends and principal payments.
Funds from Operations (FFO), Core FFO, and Adjusted FFO (AFFO): We define FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (“NAREIT”). FFO represents net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, impairment write-downs of depreciable real estate, real estate related depreciation and amortization (excluding amortization of deferred financing costs and fair market value of debt adjustment) and after adjustments for unconsolidated partnerships and joint ventures. Core FFO and AFFO exclude property acquisition costs, lease termination income, intangible amortization in rental income, loss on extinguishment of debt, consulting services fees and non-recurring other expenses. AFFO also excludes non-rental property depreciation and amortization, straight-line rent adjustments, non-cash portion of interest expense, non-cash compensation expense and deducts recurring capital expenditures and lease renewal commissions and tenant improvements.
GAAP: U.S. generally accepted accounting principles.
GAAP Rent Change: GAAP basis rent is a ratio of the change in base rent (including straight-line rent adjustments as required by GAAP) of the comparable lease. Prior to the third quarter of 2015, GAAP rent change did not include the deferred rent associated with early lease renewals. The Company changed the definition of GAAP Rent Change to include the deferred rent associated with early lease renewals effective the third quarter of 2015 for the current and prior periods presented. The definition change is not considered significant.
Immediate Availability: We define Immediate Availability as the amount of Debt Capacity the Company could borrow consistent with the financial covenants in its debt instruments.
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Interest Coverage Ratio: We define the Interest Coverage Ratio as Adjusted EBITDA divided by interest expense less the non-cash portion of interest expense.
Net operating income (NOI), Cash NOI, and Run Rate Cash NOI: We define NOI as rental income, including reimbursements, less property expenses and real estate taxes, which excludes depreciation, amortization, loss on impairments, general and administrative expenses, interest expense, interest income, corporate sub-lease rental income, asset management fee income, property acquisition costs, loss on extinguishment of debt, gain on sales of rental property, and other expenses.
We define Cash NOI as NOI less straight-line rent adjustments and less intangible amortization in rental income.
We define Run Rate Cash NOI as Cash NOI plus Cash NOI adjusted for a full period of acquisitions, less termination income, and less Cash NOI from dispositions.
Pipeline: The pipeline is a point in time measure that includes all of the transactions under consideration by the Company’s acquisitions group that have passed the initial screening process. The pipeline also includes transactions under contract and transactions with non-binding LOIs.
Renewal Lease: We define a Renewal Lease as a lease signed by an existing tenant to extend the term for twelve months or more, including (i) a renewal of the same space as the current lease at lease expiration, (ii) a renewal of only a portion of the current space at lease expiration and (iii) an early renewal or workout, which ultimately does extend the original term for twelve months or more, but the renewal term commences before the lease expiration of their current lease.
Real Estate Cost Basis: 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.
Retention: We define Retention as the percentage determined by taking Renewal Lease square footage commencing in the period divided by square feet of leases expiring in the period. Neither the Renewal Leases nor leases expiring include Temporary Leases or License Agreements.
Temporary Leases/License Agreements: We define a Temporary Lease or a License Agreement as any lease that is signed for an initial term of less than twelve months; this includes short-term new leases and short-term renewal leases.
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Forward-Looking Statements
This press release, together with other statements and information publicly disseminated by the Company, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe the Company’s future plans, strategies and expectations, are generally identifiable by use of the words “believe,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “should,” “project” or similar expressions. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond the Company’s control and which could materially affect actual results, performances or achievements. Factors that may cause actual results to differ materially from current expectations include, but are not limited to, the risk factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. Accordingly, there is no assurance that the Company’s expectations will be realized. Except as otherwise required by the federal securities laws, the Company disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
Source: STAG Industrial, Inc.
Contact:
STAG Industrial, Inc.
Matts Pinard, Vice President
617-226-4987
InvestorRelations@stagindustrial.com
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