STAG - Earnings call transcript Q1 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the STAG Industrial First Quarter 2021 Earnings Call. [Operator Instructions].

As a reminder, this conference is being recorded. I'd now like to turn the conference over to your host, Mr. Matts Pinard, Senior Vice President of Investor Relations for STAG Industrial. you. Thank

begin. may You

Matts Pinard

to results. conference Welcome first covering quarter XXXX STAG you. call Industrial's the Thank

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

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

I today. As today's Bill any Crooker, represent estimates a Chief STAG now and Officer, hear President the our to will Executive you management's turn to reminder, Ben. from obligation our Industrial Chief will forward-looking as forward-looking no call, of assumes call On Officer. Financial statements update statements. over Ben and Butcher,

Benjamin Butcher

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

our forward first look us about to quarter you are have pleased We join telling and you results. to

this an our has company. reflects mentioning Crooker, his maturation our our Let title the a part as company, STAG's Bill as ongoing me CFO, success been of of and of public to President. a first recent leader action promotion additional by promoting Bill important start

taken years provides their today Bill with created of our available public today's industrial estate market. the of of advantage The and the forward Director area third Dave a largest the public Operating concentration we of real company. of The Empire differentiated cash We to and questions strategy with Inland quantitative entered a of and largest President Investments the our space risk-neutral on basis of that populistic set using arbitrary in mispricing will data. an of to by unconstrained maximization that investment ownership industrial of the using This the focus. advantage will platforms available successfully We and answer CFO, and are the strategies estate. portfolio narrow relied industrial Ten of can are look us the In Bill be have to bulk rules. result opportunity our compared in view specific in future. secondary and markets Estate assets. returns by regularly discuss financial Chief operational call, California flow robust was in Ohio resulted a one a public approach real Steve our ago, STAG have decisions. This STAG investment emphasis individual relative has Real allows excited as focus take to model. during They approach populistic decision model. built analysis our tenure on Operations. we the be a with with the evaluate our of our landscape. opportunity to to execution on Mecke, was King, and market in decision as our rules Officer, STAG. This of similar influence on the for Traditional Also

platform, run, portfolio million foot we our broadened Over of XX-year properties use XXX processes. refined in our across the our almost XXX nationwide. and data, invested spread is square have Our continually

ignore XXX% past have We a great fortunate benefits from investors in importantly, on delivered to supply the with across highlighted we The our several has change and along number and warehouse of industrial sector. team identify chains. permanent our Most value us within our in adoption. potential search Companies acquisition and allowed delay have be our This pace to a are Consistent and in is the can relative has question, returns demand distribution longer industrial for sustained as importance of accelerated fungible we industrial tenant functional continue strength the industrial attractive The for real or large sector of the the of consumer e-commerce, remained consistent way. real the the company estate. evaluate years, resulting fundamentals inquiry to broad-based no estate. and pandemic breadth the of investments. focused strong to behavior demand. e-commerce underlying Without

thesis of acquisition ceremony of our of opportunity our Our years we our the public the The cost a the of XXth, potential a New for who into indeed. as the improved in range to our The With napkin ago, size at discuss capital company. bright are is results. that, years accretive us our pipeline all On will I'll across thank Bill, who Stock it company XX company large employees today. of has broader the maintain commemoration future quarter return I bell for an want closing in continuing helped back over STAG. operational turn to York acquisitions. a thresholds participated to April allowed began first we investment reflects Exchange XX turn what on as our of

William Crooker

the Good the for to of quarter Ben. an compared morning, first as was X.X% XXXX. $X.XX increase FFO of you, quarter, everyone. Thank Core

sheet. earnings of included noncash Cash available us in Note $X.X first This of the diluted the debt closer the our to our our growth outstanding Net increased related the add as shares compared XX.X% retirement balance back run was rate to X.Xx a as to million ratio. with to to previous our implementation targeted XXXX. payout already brought million, As an plan quarter impressive $XX.X adjusted added we distribution discussed back that call, EBITDA totaled to has flow share increase on is of in FFO. re-lever this for core count. cash

relatively reflects last to the X.X%, expected years, return year range in response Acquisition after cap to and volume as and first to totaled past in and normalized year. is progresses. rates the pandemic leverage increase with a million levels with stabilized low leverage guidance straight-line is volume of the quarter operating very X.X% Our cash respectively. low Consistent $XXX.X with

respectively. X.X% feet, X.X During the commenced square million which leasing and and cash quarter, XX.X%, XX totaling straight-line leases generated spreads we of

efforts of grew X.X Cash our feet X.X% square renewal expiring XXX% successful quarter. in the Our of the million included quarter. for the leasing same-store NOI

our we February pre-COVID Moving to market activity, the G to previously $XXX to discussed, Loan Term and million as capital extended the pricing in refinanced XXXX. maturity

equity basis. million was share raised through proceeds average in million to a end, credit of program share $XXX $XX.X million. capacity Subsequent million million unfunded us forward the the the a ATM of gross to on first $XX raised have at additional a April of $XX $XX.XX an program total, to We available also we at revolving today. In raised upsized We our weighted forward $XX.XX. we average quarter quarter. price raised $XXX weighted our proceeds through ATM facility price amount of in of

have preferred any March, and no outstanding. our Preferred longer Series Finally, we retired in C

Page our reporting Our guidance is supplemental of included package. on XX

updated stabilized rates range a have equal to We points the a to to related of guidance our X.X%, basis to cap at decrease X.X% XX acquisition midpoint.

XX%, XX% and to to updated guidance retention range We to increase range related have low the of a our the X%. also end of by to

to guidance it $X.XX $X.XX back now per to to that, over our to an Finally, range a related I we at share core to increase Ben. turn updated have With FFO midpoint. $X.XX, equal will the of

Benjamin Butcher

Thanks, Bill.

questions. great we you to turn returns our Operator As confident results the Thank will for comments, years. you indeed and the deliver for back this for I the continue is our by now to first shareholders your preceding to time bright continue morning. grow to we am STAG. can future it I'll our in coming see quarter as risk-adjusted that

Operator

Instructions]. [Operator

line Sheila comes McGrath Evercore Our from the question first with of ISI.

Sheila McGrath

Ben, the on anniversary. XX-year congratulations

Just the there. at that your or infrastructure wondering Just if looking systems added? at give learned could in anything lessons along just shifted have strategy big some insights you Or picture may on thoughts way? you STAG us you

Benjamin Butcher

Yes. shareholders. It's been our think It's a to hard unequivocally us and Sheila. good for XX it's Thanks, I run, years. been obviously imagine for

valid I is think what applied investment we've the applied learned is successfully that and to can the has market. industrial been and basic thesis be

power about And along way of think, reflected, continually our learned more we've originally recent be grown power can it in be say to the We've the impressive the is of then culture than I employees, today. that around what broader think of I'd range XX learned innovative the across probably team. I can our I've and the That's activity. anticipated. the a of we and we've applied to finally, refined we from, XX of assets some at think is I me watch. among and attitudes interaction IPO And the and were for team the team grown

and a learned the But way So along thanks few all things it's the question. for been good.

Sheila McGrath

pipeline $X.X The identified was billion. one then And as the supplemental in question. other

I so given just think hitting are that large? or that sellers And a now? what's bid that record. making was driving the appreciation, What's

Benjamin Butcher

paid there's the market. a looking are of prices at is to assets sellers think activity Yes. are There's seller that being pent-up is their part the there time good and still pandemic. thinking a this to certainly I that that's the answer lot out of bring from

our more that also we reflective but more acquisition little and in Our transactions, approach. can for people pipeline unsolicited off-market more a it, are component and probably has brokerage with the part, in seasoned fact It's community, just portfolio identifying, of assets. out conjunction they there, to most have the transactions more the it's we acquisition bit friends that

Operator

Korchman question from Emmanuel with line of Our Citi. next comes the

Emmanuel Korchman

of has evolved pricing Difficulty] [Technical in your certain markets?

Benjamin Butcher

Go ahead. sorry. I'm

Emmanuel Korchman

how your you some volumes? transaction just And Do markets. pricing XQ anticipate in heavy has of another evolved Sorry.

Benjamin Butcher

third So, transaction I volumes. That's activities our reflective up that to sometimes embarking to our back up history is sell the processes sort and wrapping are works. how from People market on mean tend at as assets. year things and coming has quarter, and the quarter, the the that fourth summer wraps look of of heaviest been

expectation. to So our that be continues

change seen markets. in We We've the also in mix have markets. rate seen compression cap a the

our of to is rates guidance reflected that that. -- market that of as reflect change, in probably slightly our half probably the mix cap lower compression, and is probably So half

Emmanuel Korchman

more Got any others? positive more rollout And you're than and markets conversations these then recovery potential? tenants about today or have following there specific adapted vaccine And it. that are worried how

Benjamin Butcher

other that the that is a we're something that, may what having so count XXX is, of and like that concentrated risk beauties, lot of assets, issues immune or one tenant XXX obviously, well-diversified I people to the forget of Well, we're face. tenants

seeing the are and cash the We reopening in potentially tenants, vaccination, a in watch etc., in list reduction reduction basis the impact of in tenants.

market appear the healthy So tenants the healthier. and and

Operator

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

Elvis Rodriguez

the quarter, Bill, on promotion. on Congrats and congrats your

Just a question. quick

Equity portfolio today? on your announced for So be that to going Commonwealth Monmouth. they're that the pricing Any versus read-throughs portfolio acquiring

Benjamin Butcher

with is at experience we're terms, been necessarily aspects of flat, portfolio, leases. go heavy to to to from are in their the positive. that's in the our FedEx of which and be that has They not Well, specific assets above years. looked few over with underwriting -- last It leases. somewhat leases familiar market FedEx or Monmouth time long FedEx it young those the I'll Without concentration we've a but lease time tend leases, heavy the and at portfolio well, again,

heard, So public mid- perhaps. in that the everybody Xs, as else the somewhere information, we've upper in has pricing to

more just expect I of the would I that the transaction, off of the certainly part. what speculation my a a that on those given price. those, is flat think that's without of portfolio pretty without the in knowing relatively full assets, knowing profile it's income But probably details -- detail,

Elvis Rodriguez

up Is -- Thanks. And of and anything can acquisition the you And be so portfolios a lower the would larger reflection at gather billion then to basis helpful. pipeline on cap XX have. or or a this you of assets? you pay in just midpoint, amount to a that $X.X follow-up, have share that mentioned points rates portfolios that some you

Benjamin Butcher

and Well, I our been experience mean, it's in real portfolio estate. observations in premiums certainly always exist the that our industrial case

are to XX-year the there long in individual California. Amazon As all is assets not -- Ontario, leases as

of aspect of on there's has of aggregation cap a had As rate decided some as portfolios risk, impact long portfolios. the the those

in of been portfolio points contemporaneous Our to experience, our XXX the individual specifically compression XXX of basis sale has cap rate. cap between with portfolios, rates, that

my pipeline. cap the and giving note within in cap about as ever-increasing mentioned we're I about reflective -- that guidance to expect questioner, is of mix So due prior the rent not to acquire is half rate to pipeline. the prior due necessarily also reflective of of earlier rate to It's but might we you answer cap And that the half it's And bumps. compression the caller, reflective I contractual change. compression rate what

only rent lower maintain not is rent driven bumps, pay which to returns driving cap also, rates the same demand you higher contractual and to but it's time. So obviously it's market still growth, demand has over allows

Operator

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

David Rodgers

currently. a rent and NOI give those? to as the where spread with now how spreads bumps the the you in delta than you would XXX-basis cash versus GAAP. about the guess, couple Bill, be start made and and seems maybe gap of typically think, comments, a of are I to throughout the do current bumps Ben the trending year? the kind about to in-place the see. want And about It's point us trying leases. where I wider same-store spread NOI in same-store cash leasing push The you're see a sense well Can you. we had as Talk

William Crooker

that bumps signing Thanks, years X% up well in the higher pool few seeing, anywhere acquisitions, Dave. contractual rental And in same-store about a higher escalators to we're averaging contractual That's X.XX%. mentioned, our leases X.X% X.XX% We're are range. Ben as now as right the Sure. in escalators ago. the in about same as from

increase to So that our portfolio. in continues

it GAAP straight-line delta same-store number item a roof for the period the the the unique GAAP NOI, between did to cash had We cash basis, accelerated because expect why it. and is same-store NOI and We the prior and call prior of a that we tenant stream NOI. the a was on tenant forward. terms there In period-over-period. a asset in paid We negative negative put move going which you're in income, that straight-lined delta X.X% seeing change cash in quarter, between our don't so small GAAP the for income into same-store which your NOI same-store a a

David Rodgers

just I how at, competition mean, win helpful. the these That's systems? one just competition? imagine maybe have where that, the for deals? And competition. that to the Okay. continue continue then, And do seeing the amount you're that are more kind just on kind confidence on where you you Ben, you of I you'll to total I that all it from. is Is it's looking of of volume mean, but coming of curious

Benjamin Butcher

those the would we the and say have all We and acquire percentage it's Well, to large systems our I has that look certainly deals of of Where on, start lower been that. that little of percentage a rate deals. to hit people just a a bid lower, as number processes the year. little ability we the has a been at of

on we're industrial we've is industrial -- one in that fragmented ownership. sources of embarking been talked the equity seeing that real private have we lot acquisition. always competition very had asset beauties about from market before. of are seen the nature more estate We There's shops a the not But

you And information of so -- lack efficient perfect market. need for and the an that

And acquire at and identify, across being not $X.X in to so so in to looking acquire, broadly but markets by pipeline, many only active continue billion able volume. markets, i.e., the the we're

we guidance our what confident anticipated. but fact yet, year for was asked little been would about question do quarter the below we haven't the to the ability despite bit a meet have the probably first our We feel for very acquisitions

Operator

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

Michael Carroll

it. component in remarks are that? and in some type in the being increase size you or your guess, driven larger by Ben, total I that pipeline And I having some to was how mean, talking earlier really portfolios XQ mean about the portfolio today? there's many prepared I know I XQ. to added of that portfolios pipeline were a between big

Benjamin Butcher

No.

XX% one-off to increase increase. We might not typical largely XX%. XX%, The that right are transactions. comes But portfolios from is entire -- now. the our typically, be So is XX% our

whole sure. portfolio, increase make for So doesn't small the a it up delta but in

Michael Carroll

are bit? portfolio, kind when Are just can Okay. large I I mean, of assets? that portfolios? a How you a Or guess, say little you few those define they

Benjamin Butcher

So or portfolios like $X.X about you are portfolios have not small enough to might at These that we're talking a the that we chance brokers see that Blackstone believe, billion representing pursuing. we think the are something and that we who are have, that win. them

we pipeline thought a into wouldn't chance So go to had our unless prevail. we they

William Crooker

Mike, generally, handful it's just a assets. of

but maybe $XX million, you're $XXX million, to than talking So $XX more million, nothing that. up

Michael Carroll

you towards going it's had the lease that pretty But talk expect a that of the can forward? leasing then the activity, really spreads? to can indicating Can going lease leasing top spreads that's I cash quarter. high shifting cash know in Okay. be? and the a could about we you digits mean, bounce the end obviously we I what about Or Great. forward, I around. just kind volatile that And good number expect of market health spreads is kind mean, of those the the range? is single of XX%,

Benjamin Butcher

are Those happy with spreads. leasing of our the leases operation, We're Yes. quarter. outcome our strong of this very

the mid-single those were digits retention that XXX% We I with. a spreads, that we're number, are and very X across driving for to renewal XX leases, or still leases. leasing was strong X weren't spread happy year, The leases, want do the were the XX% note spreads. the that There new leasing Mike. expecting leases

spreads broad-based the was So affirming year. demand, mid-single leasing digits for our it and we're still

Michael Carroll

geographic that drove with any those spreads? leasing have could there activity was And the Okay. concentration

Benjamin Butcher

as the see, And is X% renewals. said, XX% markets. a and it renewals, I consistent, was in it saw and new pretty across new for leases of you for mix No, broad-based. We as in number XX

Operator

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

John Massocca

Does capital Commonwealth change you cost than capital, the thought maybe earlier? the transaction transaction your of but and all thinking the might a always versus balance be portfolio recycling? sales favorable transaction I like Monmouth more your at Equity indicate the it's know pricing on environment does

Benjamin Butcher

leverage, we're business Well, of answer -- We at this where best continuing I at of to of across forward. for portfolio. like give, spread to raise result seems answer An an remains you get portfolios, the current is is various same common equity larger equity component pricing look to we believe larger which shareholders. going a our important mean, that fixed our this our always capitalization sources operating we cost give we moving given that the

So look again, would CEO we pricing look say, believe pricing should combined rate pricing, we would rate, pricing for is inside at interesting, that's that, the be we management a Monmouth and that and team cap the our be only an at as we more extent implied cap for that talking. our implied perhaps probably to would it's the to -- suggest a the entity, closer assets M&R our the but

John Massocca

size of do cycle? all Is in there's to of broader we factors do Okay. market think acquisitions, are pipeline that interest you And sellers Or about how sit of that the of indicating you then to in kind other is the think due terms maybe rising be interest it of kind concerns that of coming rate are that indicative I pipeline? the for mean, kind driving may where rates? at

Benjamin Butcher

$X may across broadly billion. our trillion and market is pipeline looking be that assets we're -- looking we're Well, of a $X.X

for sale. is it's like not So everything

has but not they're part overall being about everything increases people a still interest are in than the alluding larger what for which is small to, it's worried sale. the relatively rates. like is It's in part market. of prices due to paid. is Perhaps not-- been, again, it think at looking certainly, I pipeline it's Our And you're

probably indicative hand, up too. On rents an of are the interest increase other rates going in inflation, so probably is go to

higher There's balance So but maybe looking activity. on the a higher in hold a to we're to be prices they there, should reflected future. lot perhaps a and and seeing achieve the in certainly more NOI

John Massocca

out duration the of in-place maybe as any market? on terms seen leases buy in assets potential today discounts for you the impact, and change or mean I inflation in then, premiums have And go you in

William Crooker

at material Nothing this point.

Operator

line question the next Mueller comes Mike Our from with of JPMorgan.

Michael Mueller

any be when looking in of XXXX, bumps kind you're speed are of? point to the guess I expiration out at aware schedule there known to this lease

Benjamin Butcher

we that is year a when We're No. diversified issue. out X There's in a last it's million as nothing anomaly. -- a certainly had large very year, portfolio. footers stands particular an Again,

Michael Mueller

when year bucket, it. And CapEx do just your it on guess, of I CapEx expect and then was was at of the be? the what now roofs? last half balance at Got I all to year. how know call kind like you roofs we running that you the But side, right look it's nonrecurring. about everything of just And nonrecurring spend

William Crooker

but in it do -- Yes. good a nonrecurring, But replace roof CAD as It's are large included Generally, we we is say a I QX. last roof mean a number seasonal. call do want it our year-over-year, replacements I the in to deduct. did year

last more tracking warmer see in you those year. So a this a we year, what and in is QX. But climate in which so roof QX QX, replaced we're

So the you that saw the in quarter-over-quarter. that's difference

Operator

Instructions]. [Operator

Our from the of with Capital next One question Chris Securities. Lucas line comes

Christopher Lucas

for did mean, for that how terms include? that Just of anything I in size? me. many ones couple of a was Ben, deals stood the quarter, on out the quick renewals there

Benjamin Butcher

It -- no I the results uniform. in think like are that. fairly something there were Nothing quarter, anomalies. and XX the renewals unusual, broad-based was

Christopher Lucas

of sort looming then the particularly large? to anything Is sense the year, Okay. follow-up just fallout? that's for that -- what's question for remainder And about Mike's of the about your on there is

Benjamin Butcher

significant. Nothing

that As couple or square had last meaningful. the XXX There's in year I of a just leases. not XXX,XXX but couple foot XXX,XXX range, million a discussed, portfolio, square on foot significant

William Crooker

the factor square was million a retention increased in retention QX for footers. the year. driving our we why no for Chris, XXX% Yes, And guidance

Christopher Lucas

relates me, concentrations question last geographic or pipeline, anomalies Sure. that And number? there the is any just for to it as that are then in reflected

Benjamin Butcher

dispersion. and large nothing a in terms diverse obviously It's of so. think geographic don't pipeline, I unusual

Operator

with Jefferies. of question Petersen Jon next the comes Our from line

Jonathan Petersen

XX on and Bill to the years, on promotion. Congrats congrats

a rates that want XX more for acquisitions, me. be Or do of maybe outside say, you compressing few years, years? little you the how opportunities? to of terms on finding cap being one anticipate is of in scope Just STAG over guys next development proactive the next let's With question the

Benjamin Butcher

So yes.

the not to that we capacity. demonstrated So to do up dollars We're year. of asset, we in capacity set have hundreds millions on retain our as develop, we Burlington of development any and of

we would We for and have have But opportunities land for include continuously that we potential the excess for staffed in haven't bank a the land future. that, don't that that. evaluate development, either or immediately

we that much neutral at cash think risk do and obviously as to look to I on those them assets. a continue will continue to, continue evaluate of simply flowing as basis we

of deploy able So find better development, risk-adjusted just cash a we say, not we're capital on accretively I risk-adjusted, flow that should assets across we're basis. a in our on afraid to

Operator

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

Elvis Rodriguez

Just a quick follow-up.

become lower So another Are bigger were Amazon I'm the is you the cap in that trying tenant? have you rates. where a into tie quarter. to tenant able you to market in perhaps added portfolio? just warehouse add bidding just with this Or this another an asset quarter And in that the to your

Benjamin Butcher

you question. Yes, the Elvis, thank for

had to on that we flow were So asset. to in acquiring and met we're that successful from our the came accretion It we us. owning the thresholds, This going and them the forward. basis of derive an was all cash opportunity reacting can opportunities bidding

decision in an pursue that tenancy conscious so an opportunity a Amazon it. much wasn't Amazon to had an as arrived So asset it

of within as opportunities a not portfolio, just goal any level to our specific tenancy having So of themselves. particular again, present they reacting Amazon

Elvis Rodriguez

quick And follow-up. Great. a just

and how you perspective, concentration? where you concentration to being So would this single-tenant be tenant? is upper the Or would your this but a from in not of but feel a tenant, issue mentioned an do obviously, limit your -- great portfolio, type

Benjamin Butcher

Amazon We're attention the starting level. with to obviously current at pay

we'd probably as wouldn't soon. think us big anytime number, be with XX% But pretty there to and I as Amazon a XX%. is I expect of our maybe high get comfortable portfolio

Operator

back the question-and-answer comments. and session. our that concludes final Ladies you. floor for gentlemen, to turn I'll Butcher Mr. Thank any

Benjamin Butcher

celebration a Well, thank again It's you joining time our been us as this achieved all for for morning. anniversary. XX-year we certainly

square market as future, at I've journey. assets. And the in crossed months mentioned positive of script, lot couple cap equity we a is indeed or feet as XXX We are We our milestones move few $X a in around forward. billion bright million the back. the of in times A

and great So joining provide going continuing look to our returns to we to providing, thank you us, forward forward. again shareholders for

Operator

concludes you. conference. today's This Thank

disconnect may You your this lines at Thank time. your participation. you for

STAG Industrial (STAG) 5 May 212021 Q1 Earnings call transcript