BOSTON, Aug. 1, 2017 /PRNewswire/ -- 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 second quarter of
2017.
"The second quarter represented the largest acquisition volume
in STAG's history," said Ben
Butcher, Chief Executive Officer of the Company. "This
acquisition volume, coupled with our 8% per share growth, while
simultaneously deleveraging the balance sheet has positioned the
Company very well heading into the second half of 2017."
Second Quarter 2017 Highlights
- Reported $0.01 of net loss per
basic and diluted share for the second quarter of 2017, as compared
to $0.20 of net loss per basic and
diluted share for the second quarter of 2016, a decrease in net
loss of 95.0%. Reported $1.1 million
of net loss attributable to common stockholders for the second
quarter of 2017 compared to net loss attributable to common
stockholders of $13.3 million for the
second quarter of 2016, a decrease in net loss of 91.6%.
- Achieved $0.41 of Core FFO per
diluted share for the second quarter of 2017, an increase of 7.9%
compared to the second quarter of 2016 of $0.38. Generated Core FFO of $38.1 million compared to $27.2 million for the second quarter of 2016, an
increase of 40.1%.
- Generated Cash NOI of $58.0
million compared to $49.0
million for the second quarter of 2016, an increase of
18.3%. For the six months ended June 30,
2017, Cash NOI increased 16.3% in the aggregate compared to
the same period last year.
- Acquired 21 buildings in the second quarter of 2017, consisting
of 4.6 million square feet, for $285.6
million with a weighted average Capitalization Rate of
7.2%.
- Sold three buildings in the second quarter of 2017, consisting
of 134,900 square feet for $6.5
million.
- Achieved occupancy of 94.0% on the total portfolio and 94.8% on
the Operating Portfolio as of June 30,
2017.
- Executed Operating Portfolio leases for 3.3 million square feet
for the second quarter of 2017. Experienced a cash rent change and
GAAP Rent Change of (2.7)% and 6.4%, respectively, for the
quarter's Operating Portfolio leasing activity.
- Experienced 60.2% Retention for 1.8 million square feet of
leases expiring in the quarter. Experienced a cash rent change and
GAAP Rent Change of (1.3)% and 2.2%, respectively, for these
renewals.
- Raised gross proceeds of $205.8
million of equity through the Company's at-the-market
offering ("ATM") program for the second quarter of 2017. Subsequent
to quarter end and through August 1,
2017, raised gross proceeds of $21.3
million through the ATM program.
- Subsequent to quarter end, originated a new five and a half
year, $150 million term loan and
fully repaid $88 million of secured
debt.
Please refer to the Non-GAAP Financial Measures and Other
Definitions section at the end of this release for definitions of
capitalized terms used in this release.
The Company will host a conference call tomorrow, August 2,
2017 at 10:00 a.m. (Eastern Time), 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.
Key Financial Measures
SECOND QUARTER
2017 KEY FINANCIAL MEASURES
|
|
|
|
Three months
ended
June 30,
|
|
|
|
Six months
ended
June 30,
|
|
|
Metrics
|
|
2017
|
|
2016
|
|
% Change
|
|
2017
|
|
2016
|
|
% Change
|
(in millions,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to common stockholders
|
|
$(1.1)
|
|
$(13.3)
|
|
(91.6)%
|
|
$(3.5)
|
|
$(4.5)
|
|
(22.4)%
|
Net income (loss)
per share — basic
|
|
$(0.01)
|
|
$(0.20)
|
|
(95.0)%
|
|
$(0.04)
|
|
$(0.07)
|
|
(42.9)%
|
Net income (loss)
per share — diluted
|
|
$(0.01)
|
|
$(0.20)
|
|
(95.0)%
|
|
$(0.04)
|
|
$(0.07)
|
|
(42.9)%
|
Cash NOI
|
|
$58.0
|
|
$49.0
|
|
18.3%
|
|
$114.5
|
|
$98.4
|
|
16.3%
|
Adjusted
EBITDA
|
|
$52.1
|
|
$43.1
|
|
20.9%
|
|
$101.5
|
|
$86.4
|
|
17.5%
|
Core FFO
|
|
$38.1
|
|
$27.2
|
|
40.1%
|
|
$73.2
|
|
$54.9
|
|
33.3%
|
Core FFO per share
/ unit — basic
|
|
$0.41
|
|
$0.38
|
|
7.9%
|
|
$0.82
|
|
$0.76
|
|
7.9%
|
Core FFO per share
/ unit — diluted
|
|
$0.41
|
|
$0.38
|
|
7.9%
|
|
$0.82
|
|
$0.76
|
|
7.9%
|
AFFO
|
|
$37.5
|
|
$28.2
|
|
32.8%
|
|
$73.2
|
|
$56.8
|
|
28.8%
|
Definitions of the above mentioned 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 and Disposition Activity
For the three months ended June 30, 2017, the Company
acquired 21 buildings for $285.6
million with an Occupancy Rate of 95% upon acquisition.
Included in the second quarter acquisitions are three built-to-suit
transactions, consisting of 1.3 million square feet for
$81.2 million. The chart below
details the acquisition activity for the quarter:
SECOND QUARTER
2017 ACQUISITION ACTIVITY
|
|
Location
(CBSA)
|
Date
Acquired
|
Square
Feet
|
Buildings
|
Purchase
Price ($MM)
|
Weighted
Average Lease
Term (Years)
|
Capitalization
Rate
|
Chicago-Naperville-Elgin, IL-IN-WI
|
4/11/2017
|
261,075
|
2
|
$13.8
|
5.2
|
|
Gaffney,
SC
|
4/20/2017
|
226,968
|
1
|
7.2
|
15.0
|
|
Dayton, OH
|
5/4/2017
|
569,966
|
1
|
29.7
|
14.8
|
|
Rockford,
IL
|
5/10/2017
|
336,204
|
1
|
22.9
|
7.0
|
|
San Diego-Carlsbad,
CA
|
5/31/2017
|
205,440
|
1
|
19.4
|
2.9
|
|
Kansas City,
MO-KS
|
6/1/2017
|
270,869
|
1
|
16.3
|
4.5
|
|
Philadelphia-Camden-Wilmington,
PA-NJ-DE-MD
|
6/6/2017
|
245,749
|
1
|
16.0
|
9.5
|
|
Cincinnati,
OH-KY-IN
|
6/6/2017
|
224,921
|
1
|
11.5
|
9.2
|
|
Charlotte-Concord-Gastonia, NC-SC
|
6/8/2017
|
275,000
|
1
|
6.7
|
3.0
|
|
Laredo, TX
|
6/13/2017
|
206,810
|
1
|
13.5
|
12.0
|
|
Pittsburgh,
PA
|
6/16/2017
|
297,200
|
1
|
23.7
|
7.5
|
|
Chicago-Naperville-Elgin, IL-IN-WI
|
6/26/2017
|
102,500
|
1
|
5.9
|
4.9
|
|
New Haven-Milford,
CT
|
6/27/2017
|
105,000
|
1
|
8.2
|
5.3
|
|
Dallas-Fort
Worth-Arlington, TX
|
6/28/2017
|
389,546
|
1
|
28.6
|
18.5
|
|
Houston-The
Woodlands-Sugar Land, TX
|
6/29/2017
|
232,800
|
3
|
24.9
|
9.1
|
|
Lebanon,
PA
|
6/29/2017
|
211,358
|
1
|
7.9
|
4.3
|
|
Minneapolis-St.
Paul-Bloomington, MN-WI
|
6/29/2017
|
108,628
|
1
|
10.0
|
9.4
|
|
Detroit-Warren-Dearborn, MI
|
6/30/2017
|
303,760
|
1
|
19.4
|
2.9
|
|
Total / weighted
average
|
|
4,573,794
|
21
|
$285.6
|
9.1
|
7.2%
|
The chart below details the 2017 acquisition activity and
pipeline through August 1, 2017:
2017 ACQUISITION
ACTIVITY AND PIPELINE DETAIL
|
|
|
Square
Feet
|
Buildings
|
Purchase
Price ($MM)
|
Weighted
Average Lease
Term (Years)
|
Capitalization
Rate
|
Q1
|
2,334,622
|
11
|
$99.8
|
6.2
|
8.2%
|
Q2
|
4,573,794
|
21
|
285.6
|
9.1
|
7.2%
|
2017 closed
acquisitions
|
6,908,416
|
32
|
$385.4
|
8.1
|
7.5%
|
|
|
|
|
|
|
Pipeline
|
35.0
million
|
127
|
$1,953.2
|
|
|
The chart below details the disposition activity for the three
and six months ended June 30, 2017:
2017 DISPOSITION
ACTIVITY
|
|
Year
|
Square
Feet
|
Buildings
|
Sale Price
($MM)
|
Q1
|
113,379
|
1
|
$4.1
|
Q2
|
134,900
|
3
|
6.5
|
Total
|
248,279
|
4
|
$10.6
|
Subsequent to quarter end and through August 1, 2017, the Company sold four buildings
consisting of 440,564 square feet for $23.7
million.
Operating Portfolio Leasing Activity
For the three months ended June 30, 2017, the Company
executed 22 leases for approximately 3.3 million square feet. The
chart below details the leasing activity for leases signed during
the quarter for the Operating Portfolio:
SECOND QUARTER
2017 LEASING ACTIVITY
|
|
Lease
Type
|
Square
Feet
|
W.A.
Lease
Term
(Years)
|
Cash
Base Rent
$/SF
|
GAAP
Base Rent
$/SF
|
Lease
Commissions
$/SF
|
Tenant
Improvements
$/SF
|
Total
Costs $/SF
|
Cash
Rent
Change
|
GAAP
Rent
Change
|
New leases
|
390,316
|
3.4
|
$4.13
|
$4.33
|
$0.82
|
$0.26
|
$1.08
|
(7.7)%
|
(2.5)%
|
Renewal
leases
|
2,865,561
|
6.1
|
4.01
|
4.15
|
0.58
|
0.31
|
0.89
|
(2.4)%
|
7.0%
|
Total / weighted
average
|
3,255,877
|
5.8
|
$4.02
|
$4.17
|
$0.61
|
$0.30
|
$0.91
|
(2.7)%
|
6.4%
|
The chart below details the leasing activity for leases signed
during the six months ended June 30, 2017:
2017 LEASING
ACTIVITY
|
|
Lease
Type
|
Square
Feet
|
W.A.
Lease
Term
(Years)
|
Cash
Base Rent
$/SF
|
GAAP
Base Rent
$/SF
|
Lease
Commissions
$/SF
|
Tenant
Improvements
$/SF
|
Total
Costs $/SF
|
Cash
Rent
Change
|
GAAP
Rent
Change
|
New leases
|
1,289,221
|
4.3
|
$4.19
|
$4.35
|
$1.15
|
$0.63
|
$1.77
|
4.3%
|
8.6%
|
Renewal
leases
|
5,541,526
|
5.6
|
3.81
|
3.96
|
0.43
|
0.21
|
0.64
|
0.2%
|
8.1%
|
Total / weighted
average
|
6,830,747
|
5.3
|
$3.88
|
$4.03
|
$0.56
|
$0.29
|
$0.85
|
0.9%
|
8.2%
|
The chart below details the Retention activity for the three and
six months ended June 30, 2017:
2017
RETENTION
|
|
Quarter
|
Expiring
Square
Footage
|
Retained
Square
Footage
|
W.A. Lease
Term (Years)
|
Retention
|
Cash Rent
Change
|
GAAP Rent
Change
|
Q1
|
1,185,453
|
607,608
|
3.4
|
51.3%
|
13.4%
|
23.6%
|
Q2
|
1,804,836
|
1,085,796
|
6.0
|
60.2%
|
(1.3)%
|
2.2%
|
Total / weighted
average
|
2,990,289
|
1,693,404
|
5.1
|
56.6%
|
4.5%
|
10.3%
|
The Occupancy Rate of the Operating Portfolio as of
June 30, 2017 was 94.8%.
Liquidity and Capital Market Activity
As of June 30, 2017, the Company had Liquidity of
$321 million and the net debt to
annualized Adjusted Run Rate EBITDA was 5.0x.
On May 31, 2017, the Company acquired one industrial
building consisting of 205,440 square feet for $19.4 million, with a portion of the
consideration for the transaction funded through the issuance of
687,827 OP Units with a fair value of $18.6
million.
On July 28, 2017, the Company
closed on a new $150 million, five
and a half year unsecured term loan. The new term loan bears a
current interest rate of LIBOR plus a spread of 1.3%, and matures
on January 4, 2023. On July 20, 2017, the Company entered into five
interest rate swaps to fix the interest rate on the new term loan,
which will bear a current fixed interest rate of 3.15% inclusive of
these swaps.
On August 1, 2017, the Company
fully repaid all three tranches of the $88
million Connecticut General Life Insurance Company secured
debt facility, which bore a weighted average interest rate of
6.1%.
The chart below details the ATM program activity for the three
and six months ended June 30, 2017:
2017 ATM
ACTIVITY
|
|
ATM
|
Shares
Issued
|
Price per
Share
(Weighted Avg)
|
Gross
Proceeds
$(MM)
|
Net
Proceeds
$(MM)
|
Q1
|
2,843,907
|
$24.10
|
$68.5
|
$67.6
|
Q2
|
7,912,636
|
$26.01
|
205.8
|
203.3
|
Total / weighted
average
|
10,756,543
|
$25.51
|
$274.3
|
$270.9
|
Subsequent to June 30, 2017, the Company sold 783,718
shares under its ATM program for gross proceeds of $21.3 million.
Dividends
Subsequent to quarter end, on July 31, 2017, the Company's
Board of Directors declared a monthly common stock dividend of
$0.1175 per share for the months of
October, November and December 2017. The chart below details
the common dividends declared during and subsequent to the second
quarter:
THIRD & FOURTH
QUARTER 2017 COMMON DIVIDENDS
|
|
Month
|
|
Record Date
|
|
Payment Date
|
|
Dividend
|
July 2017
|
|
July 31,
2017
|
|
August 15,
2017
|
|
$0.117500
|
August
2017
|
|
August 31,
2017
|
|
September 15,
2017
|
|
$0.117500
|
September
2017
|
|
September 29,
2017
|
|
October 16,
2017
|
|
$0.117500
|
October
2017
|
|
October 31,
2017
|
|
November 15,
2017
|
|
$0.117500
|
November
2017
|
|
November 30,
2017
|
|
December 15,
2017
|
|
$0.117500
|
December
2017
|
|
December 29,
2017
|
|
January 16,
2018
|
|
$0.117500
|
Subsequent to quarter end, on July 31, 2017, the Company's
Board of Directors declared the following third quarter preferred
stock dividends:
THIRD QUARTER 2017
PREFERRED DIVIDENDS DECLARED
|
|
Series
|
Record
Date
|
Payment
Date
|
Quarterly
Dividend
|
Series B - 6.625%
Cumulative Redeemable Preferred Stock (NYSE: STAG Pr B)
|
September 15,
2017
|
September 29,
2017
|
$0.4140625
|
Series C - 6.875%
Cumulative Redeemable Preferred Stock (NYSE: STAG Pr C)
|
September 15,
2017
|
September 29,
2017
|
$0.4296875
|
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, Wednesday, August 2, 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
(844) 512-2921, or for international callers, (412) 317-6671.
The passcode for the replay is 13665626.
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 Schedule
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.
CONSOLIDATED
BALANCE SHEETS
|
STAG
Industrial, Inc.
|
(unaudited, in
thousands, except share data)
|
|
|
June 30,
2017
|
|
December 31,
2016
|
Assets
|
|
|
|
Rental
Property:
|
|
|
|
Land
|
$
|
310,753
|
|
|
$
|
272,162
|
|
Buildings and
improvements, net of accumulated depreciation of $217,317 and
$187,413, respectively
|
1,800,400
|
|
|
1,550,141
|
|
Deferred leasing
intangibles, net of accumulated amortization of $257,790 and
$237,456, respectively
|
322,503
|
|
|
294,533
|
|
Total rental
property, net
|
2,433,656
|
|
|
2,116,836
|
|
Cash and cash
equivalents
|
7,676
|
|
|
12,192
|
|
Restricted
cash
|
8,783
|
|
|
9,613
|
|
Tenant accounts
receivable, net
|
26,695
|
|
|
25,223
|
|
Prepaid expenses and
other assets
|
24,611
|
|
|
20,821
|
|
Interest rate
swaps
|
1,701
|
|
|
1,471
|
|
Assets held for sale,
net
|
3,561
|
|
|
—
|
|
Total
assets
|
$
|
2,506,683
|
|
|
$
|
2,186,156
|
|
Liabilities and
Equity
|
|
|
|
Liabilities:
|
|
|
|
Unsecured credit
facility
|
$
|
130,000
|
|
|
$
|
28,000
|
|
Unsecured term loans,
net
|
446,954
|
|
|
446,608
|
|
Unsecured notes,
net
|
398,101
|
|
|
397,966
|
|
Mortgage notes,
net
|
146,641
|
|
|
163,565
|
|
Accounts payable,
accrued expenses and other liabilities
|
37,547
|
|
|
35,389
|
|
Interest rate
swaps
|
2,955
|
|
|
2,438
|
|
Tenant prepaid rent
and security deposits
|
19,305
|
|
|
15,195
|
|
Dividends and
distributions payable
|
11,153
|
|
|
9,728
|
|
Deferred leasing
intangibles, net of accumulated amortization of $12,278 and
$10,450, respectively
|
21,897
|
|
|
20,341
|
|
Total
liabilities
|
1,214,553
|
|
|
1,119,230
|
|
Equity:
|
|
|
|
Preferred stock, par
value $0.01 per share, 15,000,000 shares authorized,
|
|
|
|
Series B, 2,800,000
shares (liquidation preference of $25.00 per share) issued and
outstanding at June 30, 2017 and December 31,
2016
|
70,000
|
|
|
70,000
|
|
Series C, 3,000,000
shares (liquidation preference of $25.00 per share) issued and
outstanding at June 30, 2017 and December 31,
2016
|
75,000
|
|
|
75,000
|
|
Common stock, par
value $0.01 per share, 150,000,000 shares authorized, 91,446,154
and 80,352,304 shares issued and outstanding at June 30, 2017 and
December 31, 2016, respectively
|
914
|
|
|
804
|
|
Additional paid-in
capital
|
1,572,943
|
|
|
1,293,706
|
|
Common stock
dividends in excess of earnings
|
(474,756)
|
|
|
(410,978)
|
|
Accumulated other
comprehensive loss
|
(1,781)
|
|
|
(1,496)
|
|
Total stockholders'
equity
|
1,242,320
|
|
|
1,027,036
|
|
Noncontrolling
interest
|
49,810
|
|
|
39,890
|
|
Total
equity
|
1,292,130
|
|
|
1,066,926
|
|
Total liabilities
and equity
|
$
|
2,506,683
|
|
|
$
|
2,186,156
|
|
|
|
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
STAG
Industrial, Inc.
|
(unaudited, in
thousands, except share data)
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2017
|
|
2016(1)
|
|
2017
|
|
2016(1)
|
Revenue
|
|
|
|
|
|
|
|
Rental
income
|
$
|
61,726
|
|
|
$
|
51,715
|
|
|
$
|
120,948
|
|
|
$
|
103,064
|
|
Tenant
recoveries
|
10,401
|
|
|
8,454
|
|
|
20,586
|
|
|
17,896
|
|
Other
income
|
66
|
|
|
73
|
|
|
139
|
|
|
154
|
|
Total
revenue
|
72,193
|
|
|
60,242
|
|
|
141,673
|
|
|
121,114
|
|
Expenses
|
|
|
|
|
|
|
|
Property
|
13,635
|
|
|
11,759
|
|
|
26,911
|
|
|
24,414
|
|
General and
administrative
|
7,939
|
|
|
7,751
|
|
|
16,710
|
|
|
18,770
|
|
Property acquisition
costs
|
2,558
|
|
|
583
|
|
|
3,298
|
|
|
1,135
|
|
Depreciation and
amortization
|
36,147
|
|
|
30,487
|
|
|
72,100
|
|
|
60,236
|
|
Loss on
impairments
|
—
|
|
|
11,231
|
|
|
—
|
|
|
11,231
|
|
Loss on involuntary
conversion
|
—
|
|
|
—
|
|
|
330
|
|
|
—
|
|
Other
expenses
|
1,250
|
|
|
318
|
|
|
1,444
|
|
|
578
|
|
Total
expenses
|
61,529
|
|
|
62,129
|
|
|
120,793
|
|
|
116,364
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
Interest
income
|
3
|
|
|
2
|
|
|
8
|
|
|
5
|
|
Interest
expense
|
(10,634)
|
|
|
(10,490)
|
|
|
(21,111)
|
|
|
(21,337)
|
|
Loss on
extinguishment of debt
|
(2)
|
|
|
(839)
|
|
|
(2)
|
|
|
(1,973)
|
|
Gain on the sales of
rental property, net
|
1,337
|
|
|
3,273
|
|
|
1,662
|
|
|
20,946
|
|
Total other income
(expense)
|
(9,296)
|
|
|
(8,054)
|
|
|
(19,443)
|
|
|
(2,359)
|
|
Net income
(loss)
|
$
|
1,368
|
|
|
$
|
(9,941)
|
|
|
$
|
1,437
|
|
|
$
|
2,391
|
|
Less: loss
attributable to noncontrolling interest after preferred stock
dividends
|
(44)
|
|
|
(718)
|
|
|
(145)
|
|
|
(232)
|
|
Net income (loss)
attributable to STAG Industrial, Inc.
|
$
|
1,412
|
|
|
$
|
(9,223)
|
|
|
$
|
1,582
|
|
|
$
|
2,623
|
|
Less: preferred stock
dividends
|
2,448
|
|
|
4,001
|
|
|
4,897
|
|
|
6,913
|
|
Less: amount
allocated to participating securities
|
83
|
|
|
95
|
|
|
166
|
|
|
195
|
|
Net loss
attributable to common stockholders
|
$
|
(1,119)
|
|
|
$
|
(13,319)
|
|
|
$
|
(3,481)
|
|
|
$
|
(4,485)
|
|
Weighted average
common shares outstanding — basic and diluted
|
|
88,181,117
|
|
|
|
67,910,361
|
|
|
|
85,012,106
|
|
|
|
67,899,789
|
|
Net loss per share
— basic and diluted
|
|
|
|
|
|
|
|
Net loss per share
— basic and diluted
|
$
|
(0.01)
|
|
|
$
|
(0.20)
|
|
|
$
|
(0.04)
|
|
|
$
|
(0.07)
|
|
|
|
|
|
|
|
|
|
|
(1) In the fourth
quarter of 2016, the Company revised the prior period rental
property depreciation and amortization expense amounts and
accumulated building and improvements depreciation amounts. Refer
to the Company's Annual Report on Form 10-K for the year ended
December 31, 2016, for a detailed discussion of the
revision.
|
RECONCILIATIONS OF
GAAP TO NON-GAAP MEASURES
|
STAG
Industrial, Inc.
|
(unaudited, in
thousands)
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2017
|
|
2016(1)
|
|
2017
|
|
2016(1)
|
NET OPERATING
INCOME RECONCILIATION
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
1,368
|
|
|
$
|
(9,941)
|
|
|
$
|
1,437
|
|
|
$
|
2,391
|
|
Asset management fee
income
|
(13)
|
|
|
(65)
|
|
|
(43)
|
|
|
(106)
|
|
General and
administrative
|
7,939
|
|
|
7,751
|
|
|
16,710
|
|
|
18,770
|
|
Property acquisition
costs
|
2,558
|
|
|
583
|
|
|
3,298
|
|
|
1,135
|
|
Depreciation and
amortization
|
36,147
|
|
|
30,487
|
|
|
72,100
|
|
|
60,236
|
|
Interest
income
|
(3)
|
|
|
(2)
|
|
|
(8)
|
|
|
(5)
|
|
Interest
expense
|
10,634
|
|
|
10,490
|
|
|
21,111
|
|
|
21,337
|
|
Loss on
impairments
|
—
|
|
|
11,231
|
|
|
—
|
|
|
11,231
|
|
Loss on involuntary
conversion
|
—
|
|
|
—
|
|
|
330
|
|
|
—
|
|
Loss on
extinguishment of debt
|
2
|
|
|
839
|
|
|
2
|
|
|
1,973
|
|
Other
expenses
|
359
|
|
|
318
|
|
|
553
|
|
|
578
|
|
Loss on incentive
fee
|
891
|
|
|
—
|
|
|
891
|
|
|
—
|
|
Gain on the sales of
rental property, net
|
(1,337)
|
|
|
(3,273)
|
|
|
(1,662)
|
|
|
(20,946)
|
|
Net operating
income
|
$
|
58,545
|
|
|
$
|
48,418
|
|
|
$
|
114,719
|
|
|
$
|
96,594
|
|
|
|
|
|
|
|
|
|
Net operating
income
|
$
|
58,545
|
|
|
$
|
48,418
|
|
|
$
|
114,719
|
|
|
$
|
96,594
|
|
Straight-line rent
adjustments, net
|
(1,445)
|
|
|
(845)
|
|
|
(2,669)
|
|
|
(1,243)
|
|
Straight-line
termination income adjustments, net
|
(367)
|
|
|
(54)
|
|
|
(111)
|
|
|
(107)
|
|
Intangible
amortization in rental income, net
|
1,259
|
|
|
1,521
|
|
|
2,555
|
|
|
3,187
|
|
Cash net operating
income
|
$
|
57,992
|
|
|
$
|
49,040
|
|
|
$
|
114,494
|
|
|
$
|
98,431
|
|
|
|
|
|
|
|
|
|
Cash net operating
income
|
$
|
57,992
|
|
|
|
|
|
|
|
Cash NOI from
acquisitions' and dispositions' timing
|
3,390
|
|
|
|
|
|
|
|
Cash termination
income
|
(20)
|
|
|
|
|
|
|
|
Run Rate Cash
NOI
|
$
|
61,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED EBITDA
RECONCILIATION
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
1,368
|
|
|
$
|
(9,941)
|
|
|
$
|
1,437
|
|
|
$
|
2,391
|
|
Intangible
amortization in rental income, net
|
1,259
|
|
|
1,521
|
|
|
2,555
|
|
|
3,187
|
|
Straight-line rent
adjustments, net
|
(1,444)
|
|
|
(815)
|
|
|
(2,667)
|
|
|
(1,185)
|
|
Non-cash compensation
expense
|
2,388
|
|
|
2,044
|
|
|
4,775
|
|
|
4,085
|
|
Termination
income
|
(387)
|
|
|
(74)
|
|
|
(695)
|
|
|
(128)
|
|
Property acquisition
costs
|
2,558
|
|
|
583
|
|
|
3,298
|
|
|
1,135
|
|
Depreciation and
amortization
|
36,147
|
|
|
30,487
|
|
|
72,100
|
|
|
60,236
|
|
Interest
income
|
(3)
|
|
|
(2)
|
|
|
(8)
|
|
|
(5)
|
|
Interest
expense
|
10,634
|
|
|
10,490
|
|
|
21,111
|
|
|
21,337
|
|
Severance
costs
|
—
|
|
|
—
|
|
|
—
|
|
|
3,063
|
|
Loss on
impairments
|
—
|
|
|
11,231
|
|
|
—
|
|
|
11,231
|
|
Loss on involuntary
conversion
|
—
|
|
|
—
|
|
|
330
|
|
|
—
|
|
Loss on
extinguishment of debt
|
2
|
|
|
839
|
|
|
2
|
|
|
1,973
|
|
Loss on incentive
fee
|
891
|
|
|
—
|
|
|
891
|
|
|
—
|
|
Gain on the sales of
rental property, net
|
(1,337)
|
|
|
(3,273)
|
|
|
(1,662)
|
|
|
(20,946)
|
|
Adjusted
EBITDA
|
$
|
52,076
|
|
|
$
|
43,090
|
|
|
$
|
101,467
|
|
|
$
|
86,374
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
52,076
|
|
|
|
|
|
|
|
Adjusted EBITDA from
acquisitions' and dispositions' timing
|
3,390
|
|
|
|
|
|
|
|
Run Rate Adjusted
EBITDA
|
$
|
55,466
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) In the fourth
quarter of 2016, the Company revised the prior period rental
property depreciation and amortization expense amounts and
accumulated building and improvements depreciation amounts. Refer
to the Company's Annual Report on Form 10-K for the year ended
December 31, 2016, for a detailed discussion of the
revision.
|
RECONCILIATIONS OF
GAAP TO NON-GAAP MEASURES
|
STAG
Industrial, Inc.
|
(unaudited, in
thousands, except share data)
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2017
|
|
2016(1)
|
|
2017
|
|
2016(1)
|
CORE FUNDS FROM
OPERATIONS RECONCILIATION
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
1,368
|
|
|
$
|
(9,941)
|
|
|
$
|
1,437
|
|
|
$
|
2,391
|
|
Rental property
depreciation and amortization
|
36,076
|
|
|
30,421
|
|
|
71,955
|
|
|
60,121
|
|
Loss on
impairments
|
—
|
|
|
11,231
|
|
|
—
|
|
|
11,231
|
|
Gain on the sales of
rental property, net
|
(1,337)
|
|
|
(3,273)
|
|
|
(1,662)
|
|
|
(20,946)
|
|
Funds from
operations
|
$
|
36,107
|
|
|
$
|
28,438
|
|
|
$
|
71,730
|
|
|
$
|
52,797
|
|
Preferred stock
dividends
|
(2,448)
|
|
|
(4,001)
|
|
|
(4,897)
|
|
|
(6,913)
|
|
Other
expenses
|
—
|
|
|
(95)
|
|
|
—
|
|
|
(195)
|
|
Funds from
operations attributable to common stockholders and unit
holders
|
$
|
33,659
|
|
|
$
|
24,342
|
|
|
$
|
66,833
|
|
|
$
|
45,689
|
|
|
|
|
|
|
|
|
|
Funds from
operations attributable to common stockholders and unit
holders
|
$
|
33,659
|
|
|
$
|
24,342
|
|
|
$
|
66,833
|
|
|
$
|
45,689
|
|
Intangible
amortization in rental income, net
|
1,259
|
|
|
1,521
|
|
|
2,555
|
|
|
3,187
|
|
Termination
income
|
(387)
|
|
|
(74)
|
|
|
(695)
|
|
|
(128)
|
|
Property acquisition
costs
|
2,558
|
|
|
583
|
|
|
3,298
|
|
|
1,135
|
|
Loss on
extinguishment of debt
|
2
|
|
|
839
|
|
|
2
|
|
|
1,973
|
|
Severance
costs
|
—
|
|
|
—
|
|
|
—
|
|
|
3,063
|
|
Loss on involuntary
conversion
|
—
|
|
|
—
|
|
|
330
|
|
|
—
|
|
Loss on incentive
fee
|
891
|
|
|
—
|
|
|
891
|
|
|
—
|
|
(Gain) loss on swap
ineffectiveness
|
129
|
|
|
—
|
|
|
(27)
|
|
|
—
|
|
Core funds from
operations
|
$
|
38,111
|
|
|
$
|
27,211
|
|
|
$
|
73,187
|
|
|
$
|
54,919
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares, participating securities,
performance units and other units
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding
|
88,181,117
|
|
|
67,910,361
|
|
|
85,012,106
|
|
|
67,899,789
|
|
Weighted average
participating securities outstanding
|
237,382
|
|
|
275,426
|
|
|
238,598
|
|
|
280,442
|
|
Weighted average
units outstanding
|
3,766,671
|
|
|
3,702,373
|
|
|
3,734,632
|
|
|
3,691,289
|
|
Weighted average
common shares, participating securities, and other
units - basic
|
92,185,170
|
|
|
71,888,160
|
|
|
88,985,336
|
|
|
71,871,520
|
|
Weighted average
performance units and outperformance plan
|
670,419
|
|
|
258,904
|
|
|
666,213
|
|
|
163,593
|
|
Weighted average
common shares, participating securities,
performance and other units - diluted
|
92,855,589
|
|
|
72,147,064
|
|
|
89,651,549
|
|
|
72,035,113
|
|
Core funds from
operations per share / unit - basic
|
$
|
0.41
|
|
|
$
|
0.38
|
|
|
$
|
0.82
|
|
|
$
|
0.76
|
|
Core funds from
operations per share / unit - diluted
|
$
|
0.41
|
|
|
$
|
0.38
|
|
|
$
|
0.82
|
|
|
$
|
0.76
|
|
|
|
|
|
|
|
|
|
ADJUSTED FUNDS
FROM OPERATIONS RECONCILIATION
|
|
|
|
|
|
|
|
Core funds from
operations
|
$
|
38,111
|
|
|
$
|
27,211
|
|
|
$
|
73,187
|
|
|
$
|
54,919
|
|
Non-rental property
depreciation and amortization
|
71
|
|
|
66
|
|
|
145
|
|
|
115
|
|
Straight-line rent
adjustments, net
|
(1,444)
|
|
|
(815)
|
|
|
(2,667)
|
|
|
(1,185)
|
|
Recurring capital
expenditures
|
(410)
|
|
|
(284)
|
|
|
(635)
|
|
|
(753)
|
|
Renewal lease
commissions and tenant improvements
|
(1,736)
|
|
|
(406)
|
|
|
(2,625)
|
|
|
(1,137)
|
|
Non-cash portion of
interest expense
|
506
|
|
|
401
|
|
|
1,007
|
|
|
780
|
|
Non-cash compensation
expense
|
2,388
|
|
|
2,044
|
|
|
4,775
|
|
|
4,085
|
|
Adjusted funds
from operations (2)
|
$
|
37,486
|
|
|
$
|
28,217
|
|
|
$
|
73,187
|
|
|
$
|
56,824
|
|
|
|
|
|
|
|
|
|
|
(1) In the fourth
quarter of 2016, the Company revised the prior period rental
property depreciation and amortization expense amounts and
accumulated building and improvements depreciation amounts. Refer
to the Company's Annual Report on Form 10-K for the year ended
December 31, 2016, for a detailed discussion of the
revision.
|
(2) Excludes
Non-Recurring Capital Expenditures of approximately $6,119, $8,781,
$2,436 and $4,693 and new leasing commissions and tenant
improvements of approximately $596, $1,788, $167 and $857 for the
three and six months ended June 30, 2017 and
June 30, 2016, respectively.
|
Non-GAAP Financial Measures and Other Definitions
Acquisition Capital Expenditures: We define Acquisition
Capital Expenditures as Recurring and Non-Recurring Capital
Expenditures identified at the time of acquisition and underwritten
to occur in the first 12 months. Acquisition Capital Expenditures
also include new lease commissions and tenant improvements for
space that was not occupied under the Company's ownership.
Adjusted Earnings before Interest, Taxes, Depreciation, and
Amortization (Adjusted EBITDA), and Run Rate 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 the sales of
rental property, termination income, straight-line rent
adjustments, non-cash compensation, intangible amortization in
rental income, loss on impairments, loss on involuntary conversion,
loss on extinguishment of debt, loss on incentive fee, and other
non-recurring items.
We define Run Rate Adjusted EBITDA as Adjusted EBITDA plus
incremental Adjusted EBITDA 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.
Run Rate Adjusted EBITDA does not reflect the Company's historical
results and does not predict future results, which may be
substantially different.
Adjusted EBITDA and Run Rate EBITDA should not be considered as
an alternative to net income (determined in accordance with GAAP)
as an indication of our performance, and we believe that to
understand our performance further, Adjusted EBITDA and Run Rate
Adjusted EBITDA should be compared with our reported net income or
net loss in accordance with GAAP, as presented in our consolidated
financial statements. We believe that Adjusted EBITDA and Run
Rate Adjusted EBITDA are helpful to investors as supplemental
measures of the operating performance of a real estate company
because they are direct measures of the actual operating results of
our properties. We also use these measures in ratios to compare our
performance to that of our industry peers.
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 cash net operating
income 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
expenditures, general and administrative costs, reserves, tenant
improvements and leasing commissions, credit loss, or vacancy loss,
by (ii) the purchase price plus estimated Acquisition Capital
Expenditures. 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, 2016.
Comparable Lease: We define a Comparable Lease as a lease
with a similar lease structure as compared to the previous in-place
lease, excluding new leases for space that was not occupied under
our ownership, leases on space with downtime in excess of two
years, leases with materially different lease structures, leases
associated with known vacates at the time of acquisition, and
leases with credit-related modifications.
Core Based Statistical Area (CBSA): We define Core Based
Statistical Area ("CBSA") as a U.S.
geographic area defined by the Office of Management and
Budget that consists of one or more counties (or equivalents)
anchored by an urban center of at least 10,000 people plus adjacent
counties that are socioeconomically tied to the urban center by
commuting.
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, loss on involuntary conversion, gain (loss) on swap
ineffectiveness, loss on incentive fee, 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.
None of FFO, Core FFO or AFFO should be considered as an
alternative to net income (determined in accordance with GAAP) as
an indication of our performance, and we believe that to understand
our performance further, these measurements should be compared with
our reported net income or net loss in accordance with GAAP, as
presented in our consolidated financial statements. We use
FFO as a supplemental performance measure because it is a widely
recognized measure of the performance of REITs. FFO may be
used by investors as a basis to compare our operating performance
with that of other REITs. We and investors may use Core FFO
and AFFO similarly as FFO.
However, because FFO, Core FFO and AFFO exclude, among other
items, depreciation and amortization and capture neither the
changes in the value of our buildings that result from use or
market conditions nor the level of capital expenditures and leasing
commissions necessary to maintain the operating performance of our
buildings, all of which have real economic effects and could
materially impact our results from operations, the utility of these
measures as measures of our performance is limited. In addition,
other REITs may not calculate FFO in accordance with the NAREIT
definition as we do, and, accordingly, our FFO may not be
comparable to such other REITs' FFO. Similarly, our calculations of
Core FFO and AFFO may not be comparable to similarly titled
measures disclosed by other REITs.
GAAP: U.S. generally accepted accounting principles.
GAAP Rent Change: We define GAAP Rent Change as the
percentage change in the average base rent over the contractual
lease term (excluding above/below market lease amortization) of the
Comparable Lease.
Liquidity: We define Liquidity as the amount of aggregate
undrawn nominal commitments the Company could immediately borrow
under the Company's unsecured debt instruments, consistent with the
financial covenants, plus unrestricted cash balances.
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 involuntary conversion, loss on
extinguishment of debt, gain on sales of rental property, loss on
incentive fee, 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 and dispositions, less cash
termination income. Run Rate Cash NOI does not reflect
the Company's historical results and does not predict future
results, which may be substantially different.
We consider NOI, Cash NOI and Run Rate Cash NOI to be
appropriate supplemental performance measures to net income because
we believe they help us and investors understand the core
operations of our buildings. None of these measures should be
considered as an alternative to net income (determined in
accordance with GAAP) as an indication of our performance, and we
believe that to understand our performance further, these
measurements should be compared with our reported net income or net
loss in accordance with GAAP, as presented in our consolidated
financial statements. Further, our calculations of NOI, Cash
NOI and Run Rate NOI may not be comparable to similarly titled
measures disclosed by other REITs.
Non-Recurring Capital Expenditures: We define
Non-Recurring Capital Expenditures as capital items for upgrades or
items that previously did not exist at a building or capital items
which have a longer useful life, such as roof
replacements.
Occupancy Rate: We define Occupancy Rate as the
percentage of total leasable square footage for which the lease
term has commenced as of the close of the reporting period.
Operating Portfolio: We define our Operating Portfolio as
including all warehouse and light manufacturing assets and
excluding non-core flex/office assets and assets under
redevelopment. Our Operating Portfolio also excludes billboard,
parking lot and cell tower leases.
Pipeline: We define Pipeline as 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.
Recurring Capital Expenditures: We define Recurring
Capital Expenditures as capital items required to sustain existing
systems and capital items which generally have a shorter useful
life.
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.
Retention: We define Retention as the percentage
determined by taking Renewal Lease square footage commencing in the
period divided by square footage of leases expiring in the
period. Neither the Renewal Leases nor leases expiring include
Temporary Leases or License Agreements. Retention excludes leases
associated with known vacates at the time of acquisition, leases
with credit-related modifications, and early terminations.
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.
Weighted Average Lease Term: We define Weighted Average
Lease Term as the contractual lease term in years as of the lease
start date weighted by square footage. Weighted Average Lease Term
related to acquired assets reflects the remaining lease term in
years as of the acquisition date weighted by square footage.
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SOURCE STAG Industrial, Inc.