STAG - Earnings call transcript Q4 2020

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Operator

Greetings. Welcome to STWAG Industrial’s Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. the to turn President, Pinard, now Relations. Investor will conference Matts over Vice I ahead. go Please

Matts Pinard

Welcome you. quarter fourth Industrial’s XXXX Thank STAG results. to conference call covering

Reform have Private the information will as to of unaudited the website your Act Investor addition the questions On release contain Securities remarks under yesterday, In defined today’s and section. call, to press at stagindustrial.com statements quarterly prepared in on presentation we supplemental Litigation Relations the Company’s the Company’s forward-looking XXXX. distributed posted answers

SEC Forward-looking matters uncertainties are well in from industry collections, to that guidance, Company’s as the and review of forward-looking of detailed trends subject all may today. acquisition encourage website. other Company’s economic volumes, differ and G&A, contained available forecast forward-looking reconciliations disposition discussed We in other statements the leasing to listeners supplemental filings core retention the that prospects, address statements as NOI, of and risks FFO, informational statements to on the to include our the rent package cause of non-GAAP and actual discussions and the those contained same-store definitions Examples results measures related and rates more matters. with

to of Ben. Officer; I Real Dave Operations. Butcher, available Officer. the estimates Estate Chief turn Chief to questions with As be Steve forward-looking here our obligation Ben STAG to to Chief will the Executive focus. reminder, over our King, statements. you Crooker, as update They us are Officer; areas Bill Financial On statements a of Director now our our represent specific Industrial forward-looking from management’s and hear any will today. and of call Mecke, will assumes Operating no Also today’s call, answer

Ben Butcher

to quarter Thank the Good call STAG Industrial. welcome and you, earnings for fourth morning, everybody, Matts.

Company, our challenging forward political and in and social pandemic, Through our I Despite country significant you want ravages a whole. for global quarter fourth world as done on unrest meet NOI. to the were to to was We XXXX a us facing climate, these are join able have the the you share navigate financial thank year and efforts, to a per team up our results. pleased work look exceed excellent telling the have we’re they able a we for our about of cash and and guidance challenges. to efficiently core our pre-pandemic their original for contentious same-store to FFO year. successfully

largest history. our quarter We Company’s also with the in the finished acquisition year

up Online begin emergence we Not new heightened move development estate, demand has finally are future. both. optimism for to we be be for for grow. of continue and levels virus new the positive Tempering E-commerce albeit forward we vaccines. optimism the there In a enjoy incremental surprisingly, to after to strong corner can a this distribution continue variants years that vacancy, we that of supply at has reasons will significant overcome expected effective fundamentals. for the to reasonably whole, has with demand As and multiple, XXXX, driver tenant shopping as continues forward normal. and caught continue many our falling as country the of demand of a an to initial foreseeable highly been These and be towards move as will industrial world, real two made mutations. Highlighting normal.

pandemic These and markets be a significantly market-by-market prospects and fully been estate of part the market-specific in the more expected the generally understand efforts we be on sector, has of for in particular. real capital impact paused March, In our in rent integral external its order tends acquisition the supply evaluations dampen both to on in to industrial need STAG an larger not years, periodically. updated are and process. is to growth. Supply-demand the concentrated case excess markets in underwriting basis As the recent evaluations scope to done

months, try the observed new next and tenant seller we sense couple behavior of a to and get Over market of the equilibrium.

time, the support data During long-term team identified and this efforts. projects acquisition also that modeling internal will completed and utilization to in our

for in the in acquisition we that of half the to of pricing largest quarter, volume and the assets million and aggregate second in year program. return latter market. acquisitions our buildings were fourth the in price sellers Towards quarter an of clear The levels return and conditions fundamentals supportive $XXX.X half pace acquisition became history. our as the full acquired of gained to represent it the a XX STAG market confidence of industrial The quarterly accelerated back

For the dispositions, large was in by XXXX attractive sold sales aggregate granular XXXX, and proceeds then an cap opportunities see of rate pace from at disposition we Company’s continuing the largest with with industrial million. buildings The Seven $XXX year million during resulted and Jersey. that of the for were of volume billion were year funds California in guidance X.X%. highlighted we gross redeployed by $XXX.X fungible these dispositions current accretively is today. supported New These our assets. billion. see in also proceeds a $X.X range reflects guidance acquisition pipeline to that large acquisition This our strong $X.X

no rental Maryland during least a peers. The public last the sold for X our Hampstead and this tenant building discussing to performed outcomes. granted vacates, have the backfilled time Burlington the a was billings well and year. known cash Hampstead, X.X% New of Burlington, great of returns, credit large strong a The X occurred. have was Jersey. outsized significant more is pandemic $XX.X This the repayment The leased as loss million economic pandemic million of a building of zero to proceeding handful level by was amount expected square-foot year, and Solo Cup portfolio been the lease concluded to lease the year. and successfully building XXXX Our building downtime large experience square-foot in demonstration the We heightened at the produced cap GSA associated two We a nominal Both level we was the year we gain credit with collected of XX.X% deferrals maturities maturities. rental portfolio we over in in schedule normalized expiration spent resilience million to to scheduled. of with at onset line at to annual The of downturn. occur lease exceedingly rate. resolved with returned tenant in of a leased This

were cash our concerns guidance. same-store As increase credit able year, moderated through we to the

our and and by reflects quarter fourth a over our sheet conditions. defensive the turn of and and more demand is concerns all cash guidance ample remains is credit benefit liquidity. In business and that vibrant, discuss the to We balance Bill will to from FFO of more XXXX our I’ll operational guidance combination solid but that, core normal in accretion With return will guidance particular, guidance. our supported range the across takeaway reflected continue a tenant who our widespread annual of our share same-store a X%. XXXX results discuss to X% XXXX implies to per in Bill, detail, normal it declining This portfolio. guidance

Bill Crooker

This the for morning, with straight-line XXXX of at forward our cash to and X.X Leverage when equity at year with our respectively. the prior Disposition remained Jersey, at to X.X% range XXXX respectively. and The and X.X%, pre-COVID $XXX.X guidance, XXXX compared guidance of base adjusted in New revised X.X% times end of X.X% year, cap straight-line billings leasing the the end EBITDA X.X% Thank for during volume proceeds which rate are outstanding February. at with cash which XXXX increase you, year, cash the for Burlington, and rates This X.X% in low of Cash full year, last X.X% in of our $XXX.X Acquisition acquisition of X.X% for have for $XXX.X increase in was to $X.XX original our rate midpoint end volume an fourth for million to volume and of given in cap quarter collected cap acquisition for included. run Good were range experience of X.X% factoring did to and sale stabilized a $XXX.X year January for quarter the high cap our Ben. We of quarter-end our consistent XXXX million an for FFO X.X%. quarter cash February. February. totaled our for full today, quarter, spreads exceeded brings XXXX, GSA our and X.X%. straight-line the the guidance our to our our and and equal a Core fourth net everyone. X% totaled and midpoint rent of and not to base disposition the with deferral We X.X%, million with cash fourth given above guidance, Retention stabilized asset any $X.XX cap rate and of times million. compares quarter grew XX%, XX.X% as proceeds pre-COVID in X.X debt collected equal of brings the of rental Cash were by the those fourth highlighted dispositions of same-store quarter rates XX.X% original of the original last for given of the December, the and NOI rate, $XXX.X the XXXX. respectively. XX.X% and high million pre-COVID the to XX.X% new receive quarter. XX.X% volume rental was guidance provided billings

activity. settled to XXrd, completed million On the of transaction received which $XX.XX forward equity resulted aggregate offering this to net which share, net we acquisitions. In Moving December market fourth forward of fourth we million. at and $XXX $XXX.X proceeds component capital per used in were fund equity the partially in the proceeds, quarter quarter, a

quarter equity equity total, fund Additionally, $XXX.X fully forward we received settled equity to were received we XXrd, proceeds also of December the XXXX the million two $XXX.X January our forward net XXXX used component In transactions. million from acquisitions. and which proceeds, fourth net in transaction in on

an to additional our credit year-end, to scheduled The by loan $XXX.X basis points $XXX million year, April fund have upsized the we option facility is pre-COVID proceeds million subject of five we the with February loan we years to conjunction G, feature were capacity our of term change Subsequent refinanced to in maturity XXXX. maturity $XXX extended of acquisitions. of notional document. million available of date which G, future able the additional extension revolver also This one-year represents million option. by the date. to $XXX and a in net of quarter-end, current an We February refinancing this accordion As within exercising to mature Xth, an on no increase the our to our reduce basis credit loan to term spread spread revolving of XXX to XX the In refinance points. at

these the of liquidity debt $XXX our including available result proceeds us, a equity forward to million. and As stands transactions at

Our of warranted. Components our which section initial in we’ll XX of our can health page initial to of XXXX guidance the website. related guidance follows. We the continued be found continue on as is are update uncertainty the economy, the to our available supplemental the of Relations and as package, Investor XXXX acknowledge market

midpoint Our guidance is of with $X the a XXXX $X.XX. core range per of per share FFO $X.XX in share to

$XXX billion X.XX% with cash be capitalization We to XXXX, of an million acquisition to volume rate between for the and X.XX%. $X.X expected expect

rates. basis be points We cap than higher expect cap XX cash straight-line to rates

expect also to XXXX. and be $XXX $XXX volume for We million million between disposition

XXXX cash between this range $X.X year. to the $XX million excludes growth for NOI the retirement expected related expect the and XXXX for of to be and Note a our expense We X% between onetime to annual $XX X% is plan. G&A that pools be adoption same-store of the year. million million

net and be Ben. expect it will run X.X times. I that, times back EBITDA to to With rate We over to debt now X.XX turn adjusted between

Ben Butcher

operator internal acquisition our Thank growth, be significant the Bill. many support continue strength We business. see sheet head will efforts, into is I’ll of you behind this momentum back it to Thanks, morning. for the and There turn our well-positioned to to now our about our time is we questions. balance optimistic portfolio the reasons to XXXX. for your drive business as

Operator

with you. comes the Instructions] first McGrath our And ISI. line Sheila Thank [Operator question of Evercore from

Sheila McGrath

previously I was you if the of California could in active. activity about How and mix markets? lower where that the been acquisitions in the those are Yes. Good markets some Ben, Was Florida not quarter, you’ve that the quarter? acquisition talk a of cap driver in morning. rate wondering slightly competitive

Ben Butcher

turn I’ll to detail. over a it you’re answer assessment, little your the in I that think correct -- to but Bill more for

Bill Crooker

mix of to of was buildings a fourth Florida those, three years that’s well. Sheila. lease was not a The assets. that acquire Hey into were in the to lease That fit were eight would market. example it term. years portfolio Yes. years, it mean, in. the were well something didn’t of think, you we previously markets I order And, if as of We with we what was of do. over portfolio transaction. is said, was some much been a below eight I have And, competitive South and of the break we able we term And sale of have a leaseback benefit one more the the able quarter little submarkets market

markets There we examples California for a investing was to rate quarter. in. rate. it the little and projecting are for example. cap markets And lower operate X% find It is able one was bit We’re of the across as year, to XXXX. driver that’s we’re But, just the a the in, similar what this we’re in relative a this value cap

Ben Butcher

Yes.

I a bit There’s compression, rate. little we look half and cap mix. in and rate compression the rate half cap probably cap think, reduction at of

Sheila McGrath

sales Okay, two And you then, opportunistic perfect. did mention fourth in quarter.

you’ve detail gone Jersey sale the saying I quarter? in think, sorry, other it. the What sale. over was I South the I’m missed if in you

Ben Butcher

disposition to Memphis, of that in commitment It cap had -- a sale, building. include sale it. building, the aggregate X.X% we’ve building returns result script. a tenant from the large consistent sale a significant probably decided rate it the and looking reduced Obviously, didn’t was of and great with It at for debt who to the with we a it probably lease was rather tenant overall again, the the to gotten in a us a for would continue they cost own leasing that to and consistent was

Operator

The Korchman Citi. with Emmanuel next question line of is from the

Unknown Analyst

to on for I was This wondering sources just need your Chris Hey. equity the of if throughout tap discuss funding [ph] is could you Manny potential here. some year. and

Ben Butcher

Yes. that a access both have have prior and I’m capital. and accessing to types little I’ll more that pretty deploying turn that we Bill of demonstrated years well say good capital over can of in But, going are that we capital, different stewards, the detail. for to shown as we

Bill Crooker

to match what equity and by was to leverage normalized will be sheet conditions and we XXXX, range to macro mean, past defensive, our X.XX best will that the in In operating we given I be look to and times. Chris. mix the It reverting to been through And be the a been Thanks, several years. XXXX, over as transactions raises. have market. ATM, can, larger leverage of the balance at very-low the of times fund that back and equity X.X we’ve partially on we’re we’ll acquisitions more a supplemented able execute we’ve forward done ATMs of

Unknown Analyst

a what just between you’re follow-up. larger two? your trends the and And of some between smaller And it. bifurcation quick those discuss tenants? Got Okay. seeing Could you

Ben Butcher

that health of certainly isn’t our the It for generally boxes. the size smaller been across But, is demand the thing. And strong XXX,XXX of throughout And probably you XX struggling were portfolio. downtime markets to so tenant building pre-pandemic markets in have lot basically the up sizes. we’ve Cup, and this active become are a in tenant big us, tenant leased with have The There for in perhaps seen towards reflection of those a more -- healthier. trend sort Lehigh the much months e-commerce been boxes South very the square for seen much challenged some has Again, very been buildings such increased demand and the were off were of the have shopping, that during probably increase because Indeed, certainly return which pandemic. health that big the has a smaller the drop XX have seen projected pandemic tenants we markets, larger again, big there throughout demand in XXXX, to with no boxes. The large cetera, where you’ve buildings -- sophisticated to larger has and feet newer needs tenants some of et in in we’ve our had Dallas, online surge of been of for little over demand. which find downtime. suite big have demand, as a Valley, same pre that a Solo suite

Operator

Our with the line Finn of next question Brendan Fargo. is Wells from

Brendan Finn

year? cap further and cap rate markets in about talk trends. primary tertiary this your And in relative expecting Are cap you have your trended rate those then, to wanted markets? compression I how to rates guys secondary

Ben Butcher

not previously. markets, Well, active talked about we’ve we’re in tertiary as

also sized in point for markets, just necessarily said X, focusing to further rates. are XX-year the share. cap capture have forward, rates rather rates X move us measure, levered time We higher to the focus attractive and essence Having IRR what investment. will cap up the comment, capture on per certainly, do in as markets. -- you to on We and and that don’t than higher in would core on the the investor XX-year portfolio of We markets CAD try and cap perhaps sometimes asset the compressed, more that, going so focus

see And on capital It’s even returns and us markets. from so, aren’t or we because for just difference -- top demand in, between is contractual forward. the derived and enough, good parameters not investing our cetera, XX rent the based underwrite too markets et the deal, that and We the X returns say, ability, great. capital maybe deploy to could other for forward. there. the market our assets costs The generally of market continue going going the insufficient view rent, be to our growth top the those to on market ability Obviously, every

been be continues derived from on owning to that asset. cash Our has and the focus to be flow

we’re looking of the market So, assessments transactions at so not that in. context secondary is versus primary making individual much in the on they’re really

Bill Crooker

rates X% higher basis the are basis, component. those another when And XX the factor you cash XX on points or straight-line cap for in XXXX -- to average,

the seeing I XXXX bumps and as on and guidance cap the straight-line X% X.X%, seen as to which that’s leases would is some basis term in midpoint of minimum the points we’re of due acquiring, we’re are, Our say, another rates. X.X%. we’ve And for largely XX high the longer some

are lot that bumps a over the been last So, months. XX some higher we’ve these transactions in of XX acquiring to

Brendan Finn

this, terms Great. missed terms sense. what value-add of I is this And then, makes Yes. of acquisitions split if in I versus acquisitions but you’re That acquisitions? apologize targeting in stabilized year, the

Ben Butcher

We’re looking at.

Bill Crooker

Ben. Sorry,

Ben Butcher

ahead, no. Bill. No, Go

Bill Crooker

So, deals XX%. up We the usually percentage as the lot billion is market didn’t just it’s This to pipeline, years. year, $X.X value-add value-add conditions. And we’re lot come the of we’ve over as see just was more a deals seen our to in lower. and many underwriting now, certainly given the similar market, value-add it a a

Ben Butcher

And those value-add deals obviously stabilized thresholds as deals have to meet our just return would.

Operator

next Rodriguez with of Elvis the is America. Our of from line question Bank

Elvis Rodriguez

exposure diversification, with quarter, another And tenant Just from you on there? to your a Perhaps to comfortable taking a in X.X% you noticing detail lease could are the what in Amazon X.X% term? more share that sort XQ. of single you bit ABR this little longer portfolio added

Ben Butcher

Tenant indeed, overall environment, is in to positioned one a close if be you’re -- structure important. the going position bad we’re, Amazon’s because with are Amazon pick close in to. today’s by pick to, demand Amazon not you’re be a relations credit the to going of to And within probably a market, If tenants. to

tenant very are of very going our and is fact to credit a with are them. important cognitive important have going be -- X.X% us. exposure. or this Company relationship with obviously to with, is to a Amazon that that they we interested credit that forward. obviously comfortable they’re in If building at they’re we a I we’re doing interested building we highest think business an the So, the Again, look is in,

that credit with comfortable very exposure. We’re

think with credit. we than with higher somewhat I that probably go even that or could more that particular Amazon X%

generally wide credit think, have indeed diversification have -- I exposure. on very speaking, tenant diversification we made and individual focused on

Elvis Rodriguez

[Multiple Can through weighted Speakers]. you go that average

Go Sorry. ahead.

Bill Crooker

diversification terms. lease different within just on to the we our that Elvis, There’s adding various various It’s for exposure, uses have facilities. that, across markets.

at that diversified. further Amazon X.X% exposure to is So,

Elvis Rodriguez

mentioned, the average As able what weighted those you you share is of are lease leases? to term

Bill Crooker

exact leases to It’s probably for a in term range, is which have XX lease was we closer sweet year the some we the years, number, good -- X-year having bought Elvis, without that us. this longer the spot and

big leases, able it type really value when asset, was we Columbus, We’re to X Ohio some market, the bidding with in term, of some evaluating terms, did lease and it It’s achieve investors. this long-term these with leaded longer in good term on the start market. years out gets investors relative assets that of market. lease distribution But a competitive. you and out double-digit And some

rental So, good were return, attractive strong And we like feel a escalators. get very pretty a this to able investment. at overall, we

Elvis Rodriguez

or think pushed your pandemic year we But, half of activity about in we Ben should the year? of Steve, year? pipeline And should cadence the of year. this be think it of last acquisition some back the the I acquisitions? the the obviously throughout Will how know cadence the about back-weighted how

Ben Butcher

Yes.

I in least So, to always has I’m four mean, Elvis, five quarter. The cadence think, the are been at of trying fourth volume, think quarter you. I thank of top, quarters fourth them heavy. our top

that. way Bill, is volumes the and starting probably you I view quarter if fourth know you third largest. fourth a So, occasionally, add first that’s and the almost second heavier quarter It the the the think And year quarter. bad anything quarter lightest third year, quarters. slow, similar always wasn’t the pandemic, have to the don’t sort is of and last because have usually but quarter probably would look second always then to the I be the of to to -- not quarter of

Bill Crooker

Yes.

cadence, XXXX hey, not good the I use right, at look look that’s and typically, it’s probably with cadence those years, XXXX, estimate XXXX, and a happened. for think, look just if I mean, I think, terms at last the is, case at But, everything cadence that the of in given the of that’s pretty ‘XX. answer year you Ben.

Operator

The Carroll RBC Markets. with Capital next question Michael comes from the of line

Michael Carroll

little to competitive want you products the the these institutional Has a some about the XX guess, the different? buyers talk for. past I landscape picked for that bit are that I Ben, from capital of the looking interest industrial changed, have assets guys of the targeting, that of sources seeing other over you months, are up? you’re is And, mix

Ben Butcher

continue continues not we mean, be where to industrial is are where capital into I find the returns there in flowing widened. players all probably real who involved estate or the places be has industrial estate and real interested in The best capital real -- industrial that estate are to flowing.

a years I there’s more a to the XX of to of of lot if that that a term, opposed perhaps you -- question the -- real think, estate people a get Bill bit financial in transaction. who fact as more a transaction alluded as about the last view little

get capital to the Those passive pursuing would CTL, -- to unattractive. bid tend and find credit term, down you’ll capital location. to on we going of good levels good cap be that credit, lots tenant So, less and/or sophisticated things lease, long rates see the those, back we’ll

end less risky the So, capital I been increase towards the think continuum. of that weighted the in has

term, market hit way as rents lease where to rate. can strong last see those were and we always relative i.e., good medium relative to good with find deeply we find where being brought XX% in secondary markets of lots value. done, continue under not we’re We to market transactions year, broadly above looking values we’ve And relative to market,

of XX% deals to we was pay more. bought reason that someone So, In thoroughly the less than case, willing else underwrote, virtually was we the actually them. of every

are rate. not be we new the see still little we of successful changed set. yes, from in -- will opportunity maybe there’s a competition that Well, large or opportunity a better sources, the sort bit seeing So, is has XX% more hit what set, that we but

Michael Carroll

is And then, larger they premium is coming source seeing that I so, Are those a if interested And those deals? on bigger guess? you transactions, type capital in portfolio more are in?

Ben Butcher

has -- one it always is that truisms real mean, of industrial a There been in the of estate comes small I chunks.

if And ahead $X and a somebody time to of to spending buy it’s -- you’re to $X billions looking looking dollars, million so, the justify going hard asset. or deploy billion

those comes case spending assets. the so, can case as it’s always that to million are that $XXX that that another portfolios. if willing you $XXX million are the time again, focus to spend million, in been spend million, to been who rationalize time million, another to And get those yet And it afford on time on $XXX the more people is you actually or get tier million, assets, to $XXX yet $XX up assets. has the to There’s time $XX afford can -- there or wanting to the always the and spend

the the down. goes So, potential a the of up, yes, as is return size required transaction by there the -- investors returns goes

Michael Carroll

or the market? the I be past five I increased think, to in try there point capitalize is portfolio out willing another that guess, just where years to and the two done you’ve to so, side disposition bring And, portfolio the on to that, there interest. a premium you’d that’s on

Ben Butcher

Yes.

sense or operating for comes we’re of anti-scaling Obviously, factor a we attractive assessment sources the couple derived our play. raise industrial capital and highly common which raising? run So, I equity the the we’re to into sale it of make in of to fact and from a our redeploy subtracts that. assets between and more various equity is mean, is of very, market one on sell things where more that versus adding is cognizant was to Does sales. that numbers exists I that that sort valued asset very portfolio that there’s very leverage on the mean, which a shareholders, is see portfolio, the into the

looking equity our common selling to sense are we equity at assets. makes it at current price more raise So, whether versus

is mind in done days, in common time. raising takes keep to thing can matter selling some a assets other of The be equity

it clear less still sense sense those Some the you it of made whether clear had executed started a the sell sales, at at exercise, was equity less portfolio was sales sales. to, two to. pure because sense those it We made from alluded the the math sell time the we to It at pricing, whether we It time to committed made still the in is actually accretive. recovery our asset. common assets of time

look I equity, do think portfolio of raising continue of it. at or best esoteric the raising those, long-term all whether in the interest shareholder accretion. some we more continue at sales the of market is sources to think look of these appreciated funds. We’ll equity but it ways we to But will we’ll be to what common again, or

Operator

Baird. next of with question the line comes Dave Our from Rodgers

Dave Rodgers

trend on question of big a year, the Ben, maybe unfolded quarter? I last leases been maybe about of kind that wanted a as as when Are And of in second that And activity has or seeing leasing? you’re of reverse you more the How type to least in logistics. fourth saw? that one is that more just then, question. talk market term is this you the kind of doing part pandemic shorter at inquiries

Ben Butcher

Dave years, five to shopping got and -- happened was forward pulled just Well, for our over the got the I’m on adoption it view during leasing sec. -- about multiple pandemic, it maybe turn forward. -- years. what pulled going to online online The shopping to talk to there of But, short-term a

sold. goods of kind So, it jumped to low-teens-percent sold of of from percent mid-XXs goods

have believe catch logistics don’t of normal. yet. And so, caught to both to has up sort reverse infrastructure, on logistics And struggling I that the up they and new been

that to for market I the would and reverse driver a both, be, time think, demand on come. you in on factor Dave, will comment short-term outgoing So, continue some leasing? to the

Dave King

sort And Short-term do. usually Sure. leasing a into small percentage been of long has of through a proof-of-concept for term it a we our time. longer our efforts leasing that deals. often, is leasing business fairly the leads part of a and It

deal. take expanding or that are short-term turns long tenants term that into So, then consolidating a space

it but positive as part a tends to of our remain So, we a opportunity, business. view an it small and

Dave Rodgers

maybe to And then, jump in. free sticking feel Ben, you, Dave, with

your getting the of racking, inventory kind utilization would or warehouse-oriented space more your of in into that be space course, floor If them maybe so you more talk space you the Any for building, the buildings are look or as, levels using customers? year seeing utilization? respects? comments i.e., last of are kind racking about with the the And, can you broader seen at guys within in differently, those any you’ve you of where

Dave King

unracked of don’t the utilization just think, capacity buildings up. amount tremendous I a anecdotally, or is throughput. We have

and is get but on our utilization racking our given don’t common months. tenants, that to travel, So, certainly at And on is restrictions the see folks XX facilities. in up capacity check quite we have we those last personally, in

Dave Rodgers

or succession retirement I and in change you question. year that an the in near it costs, Last that’s think imply mentioned retirement that sounds the any know I I to like. Great. Ben, plan or future? ahead, take know does you guys were accounting in thing But, forced

Ben Butcher

all analysts we’re the of executive Company. as new think, potential officers I evaluating in our

Dave Rodgers

ask better even. would pay I

Ben Butcher

of We with it’s experience, in including we were not maybe company. didn’t policy think a retirement company makes but -- sense that the certainly a the predecessor as did XX building we initially, employees the No. years’ business. have have as It’s about multiple we prepublic place. something That’s business, that with the simply maturation something experience

so time to come place. So, the times few happens it’s past, of maturation it the time, is has reflected but in topic the into Board in sort makes accounting Company. to put than obviously of put unrelated the a up at some been anything just made other that it that it’s something And It’s that a it was place. into sense, -- gets sense at numbers

Operator

from is Ladenburg line question next with Our the of Massocca John Thalmann.

John Massocca

So, fixed thinking of and NOI expectations? sort your how much bumps of of come expectations, from from kind same-store leasing expectations how growth rent much

Ben Butcher

do want you to address Bill, that?

Bill Crooker

a mean, bumps. I is Yes. lease Sure. big part

Our lease been have bumps increasing annually.

We average, bumps pool. X.XX% about our have, I on in same-store think,

it, for been driving and big other is have then, the which have averaging, then has been the the a average rents, occupancy, rollover are improving. force years. just escalators us And occupancy been downtimes positive the NOI and mid-single-digits impacts same-store there, So, call -- over to which

as Solo this the You an lease year. earlier Cup saw of example that

as we’re a previous So, discussed it rent every our as there’s is calls. a in XXXX we’ve getting same-store bump in that year, some well, free mix and in NOI cash

is are of So, it, but big it John. escalators a a mix, part

John Massocca

splitting there’s deferrals [Technical there points kind I deferrals, no deferrals remember about in January. any speaking that through flowing of basis of then, remember of payment And can’t you saying Okay. is And end if in that? ongoing collection were January to the are include the but new month you Difficulty] kind said any rent does I as ongoing there the that hairs here, of portfolio? XX XX

Bill Crooker

back a more a There’s bit to year some by paid need John. We deferrals our few and tenants deferrals, little structure time. to tried be ongoing just

is of of All that to the it, And of end being that are representation remaining you still the in those I paid a what due lot are time in pay outstanding the on of completed there outstanding of of collections subsequent number. month payers, XXXX some, the XX.X%, deferrals better schedule. collections some is Overall, or a time. in our are call think month will ahead end and saw be

John Massocca

of I though January are of when couple XQ. are about for the and think even reported October there -- some in of reported got terms in a numbers collection January here mean, of instance, you… kind the extra flowing like, fairly those collections for I terms of what’s collections versus through copasetic, As maybe weeks you’ve

Ben Butcher

Yes.

John Massocca

Yes.

balance And sheet. the last one one then, Okay. on

you’re new balance maybe how to callable shares, As preferred holding here, on any of mean are I of plans evaluating mind we about for debt stack How versus the the that? preferred versus just your kind think sheet. kind up in existing does, preferred and that’s there

Ben Butcher

paper evaluating. It’s next callable piece or in month That so. something the we’re of is

of as accretive were the options We’re both with redeemed, book. a variety with looking redemptions at equity preferred the And equity. were our preferreds prior those redeemed

common certainly, And, we something be make looking that at the decision, also with we when other we’re will potentially redeeming equity that options. So, and a it announce publicly.

John Massocca

Do maybe fairly long debt attractive? you feel like you have the that duration or ability issue is to

Ben Butcher

today Long call us for market duration is, XXX. placement it, private debt in

So, in deleveraging lot our still in accretive, forward of redeem that’s event be were a that to with eyes we with If outstanding still we of that’s accretive our the the very preferred shareholders. equity, if redeemed, would that.

a the a of we’ll lot we decision, make market here. make And now. sure there’s to let So, options once again,

Operator

Our James. next question Crow is from the Bill Raymond line of with

Bill Crow

had now $XX pretty you, going gone a from million Bill, G&A topic million, kind haven’t for million step-up. $XX But, to for to a of $XX back maybe years. to into we significant has couple of delve to

just the I anything it. of driving you about If get could portfolio talk growth simply there underlying reasons. that’s else that? part besides the Is size

Bill Crooker

as the person. the platform analyst, I investments and capital some to that in in facing Bill. growth platform, and improve well and of new which continue make in added couple some year, we our the and person to mean, acquisition, continue we the business, got folks then when management but the investment side of as a acquisition including includes on, the past We to this office growth the size, new portfolio a accounting it’s technology hires you’ve our asset there also outward members down Dallas

don’t the in investments And we’re We and want the future of So, behind platform. are long-term investments curve believe terms to it’s growth. in for anticipating shareholders. the of what interest certainly best making in the these the get portfolio growth we in

Ben Butcher

something the just Yes. XX be scaling mean, I to de for is I X that. lines. Bill, that. there would believe minimis, think every relatively in if of -- And I might size increase of adding those I the G&A or the an portfolio. in add asset assets -- management like One add to I’d

more that as et have vehicles Bill well-defined and growth a acquisition we -- think very have and out, investment. return pointed in intelligent we totals, healthy accounting, totals, transactions efficient acquisition But are investing Some more are on cetera. return larger processing of

not -- a -- scalable over that investments very and are they’re We’ve just So, business. above make over chosen scalable we G&A additional to still in requirement.

Bill Crow

start look growth you built to would as we to scale? the see beyond as you that rate start So, decline XXXX,

Ben Butcher

unless in has Well, that good see investment further on really return G&A yes, investment. we

opportunities a more efficient, become and industrial of our continuing efficacious, more real more identify there estate. may So, be to purchaser and owner prolific

to our of pieces then are we pieces because return things business the there business those there are have grow investment. that want again grow on choose we strong have and to be growth, of again, So, very better, portfolio with that and to

Bill Crooker

and years. we’ve drive that number down, to do NOI G&A trying still over continued as to We’re of a that percentage the

Operator

Capital Lucas Securities. Chris Next question is with comes from One the line of

Chris Lucas

three-year the to shorter or play, Can probably of you about on for ones and bit leases a role that above portfolio the But, competitive might looking you digits. terms sweet acquisitions lease provide maturity, of of sense is a larger you the in the for as of Ben, maturity some then little XX-year them. couple year? what the from upper over a Just duration me. like you’re maybe talked either bigger sort spot quick to acquire single how and a guys few you did had sub sort left level that in

Ben Butcher

sure that in is getting overlay well, we risk the little be historically, sure make terms that was as we’ve overpaid And as we we or for think the ever lease of zero longest that these with these we’re the XX term all we’re a what as overstatement, believe -- been as are to taking. make at for getting I -- willing -- long have paid in we we’re Well, been short -- paid on look risk would established but a is have of risk things and acquisitions sense It we’re to and probably getting for bought kind the basis, years. taking. an probabilistic

a Current less because on capital shorter Potential that’s is Less we’re is short-term leases retention a that of of item. big affect spending there those period potential actually cost big item. there lot important. important about tenant market is So, lease, credit, on number tenant when default the for a rent rent versus impact on a a contracted only -- only short is time a is we item. three-year thinking two-year obviously but of a or leases, the cash going things, a of the obviously look But, will everything time lease forward. big at flows

low deviation aggregated expirations that on between correlation make we of the are determination quite solace XX-year that i.e., makes be standard our look that in put take So, that to but that a a maybe with solace a points, returns into building on decision produce we going cash again, hole would will that fact have than decision lot from basis, the aggregated owning it the We we’re asset probabilistic that a larger whether on predictable. flows cash sense and to flows point, of or lease the credit, take that be early at will derived BB portfolio. and have them. it we think And assets can -- as to asset, more

assets in terms of part shorter So, of still strategy. is buying those overall riskier the lease expiration portfolio

Chris Lucas

of technology? G&A there keeps I that lever Okay. this to is just sort and of just the to investing I’m or G&A years, split And just questions. as the the platform, When technology components to historically, curious onetime growth sort when future people of that the something of what’s sort recurring? year back investments of that you the or in between kind is essentially off guess, in going of just that about then, cost about in you incremental And sort think talk

Ben Butcher

as Well, yes, investments piece software that various the an continuing cost upfront well cost. technology or has proptech -- as have may

more of most we’re people. think, the talking investments are about doing that I

what just we’re are These data area. doing analyst. that us at make we’re hired better at will looking things the So, a -- data we in

the So, the NOI. at cost NOI of the we are with average that G&A about average XX% an are growing cost X% historically on basis. something of or in base, scalable plus we to have of order X.X% are portfolio Obviously, costs associated thought the

is that X.X% in to of NOI. scalability X% the So,

portion have the X.X% need-to-scale to and as living to some it. over well in above kind as of staff component X% going cost that, they’re Now, But, year is truly is of of range. maturation G&A each to

Chris Lucas

question quarter? acquired XX in And lease, an top just were this from Okay. then, a Costco up both last shows as the leases that tenant Was or me. quarter. incremental

Ben Butcher

strong bumps, X, incremental acquisition good an run acquisition returns, lease and X-year an long feel again, term. was that we it about and that really quarter, rental Yes, the this into fits

a on, a it winning we So, part if call anything probably that double market broker said But, it’s as X top or of probably X, outbid in, a relationships in, it, digits, earlier, and sits great key was top in bid have on. market, get a transaction. we’d that we that I a get

Operator

with Instructions] Citi. line Emmanuel [Operator next The Korchman question is the of from coming

Emmanuel Korchman

Hey, at chasing Ben, frankly go in lot they’re announced back I they to industrial guys. is those guess, are Amazon. not quarter that capital or it they a selling it’s and It’s your now They’re it the into the here. to capital sort going I similar expanding you’re markets what, not all-time hate there of stuff you’re of the assets program Duke, where is highs. good. markets. Manny and doing capital, Why been, need proceeds where will, they’re sort primary you a is the there markets, The on then that earlier comments tertiary at has space out highs, pricing tertiary get of of use but this there there, because you assets those guys accelerate a the those this not not targeting? if and because disposition better buying, look secondary cost of doing

types Thanks. can they that so, assets? And other of rotate into

Ben Butcher

Yes.

of But of overlay a willing disposing is to an are more from And derive individual received cash expected an if are the pricing little of the disposing it, worth to to still trying return Manny, a think, that continuing us selling it’s is answer tertiary I funds we sell assets. that the mean, flow to assets. someone own else we’re our asset of our look that from of mantra we again, to I that, that So, an we with bit on we we than and is, with asset assess, is given little versus pay, likely at to not it to requirements, the bit is pricing market tertiary overlay good, basis.

we’re in rational So, we think being this.

all overlay our sort exit of made decision not -- corporate have the of an to We tertiary markets.

intelligently from least the think situation and those We to the we that we disposing at to derive that of derive, allows are continuing own think we when opportunistically us via building.

Operator

of time, over Ben end question-and-answer our turn I’ll to this reached we’ve call session. the And At closing the for remarks. Butcher

Ben Butcher

the And remotely, year Company. Thank that the us assets forward to and of for of was performance morning. Obviously, It you, a is maintained culture with XXXX for a the through operating year we continue by as opportunity you great look pandemic be team to of to less the thank acquirer I operator. that year. how joining a think this travel. learning gratifying the And Company manager through great all very good

remains from existing We’re perspective. prevalent Opportunity sheet in a tenant and extremely assets. positioned for for the the strong demand our well is -- balance very market

for you a So, great ride. we’re looking Have to great a XXXX. day. on joining we forward us the thank And

Operator

conclude you today’s will conference. for Thank your This participation.

You may disconnect time. lines this your at now

STAG Industrial (STAG) 11 Feb 212020 Q4 Earnings call transcript