BOSTON,
July 31, 2018 /PRNewswire/ -- STAG Industrial, Inc.
(the "Company") (NYSE: STAG), today announced its financial and
operating results for the quarter ended June
30, 2018.
"The second quarter built upon a great start to the year
as the Company demonstrated its commitment to execution" said
Ben Butcher, Chief Executive Officer
of the Company. "The positive momentum behind the team and platform
is readily apparent as seen by the accelerating acquisition volume,
impressive portfolio operating results and a well-positioned
balance sheet."
Second Quarter 2018 Highlights
- Reported $0.09 of net
income per basic and diluted common share for the second quarter of
2018, as compared to $0.01 of net
loss per basic and diluted common share for the second quarter of
2017. Reported $9.3 million of net
income attributable to common stockholders for the second quarter
of 2018 compared to net loss attributable to common stockholders of
$1.1 million for the second quarter
of 2017.
- Achieved $0.45 of Core FFO
per diluted share for the second quarter of 2018, an increase of
9.8% compared to the second quarter of 2017 of $0.41. Generated Core FFO of $47.8 million for the second quarter of 2018
compared to $38.5 million for the
second quarter of 2017, an increase of 24.1%.
- Generated Cash NOI of $67.6
million for the second quarter of 2018, an increase of 16.5%
compared to the second quarter of 2017 of $58.0 million.
- Acquired 15 buildings in the second quarter of 2018,
consisting of 2.7 million square feet, for $185.3 million with a weighted average
Capitalization Rate of 7.1%.
- Sold five buildings in the second quarter of 2018,
consisting of 1.0 million square feet for $31.2 million, resulting in a gain of
$6.3 million.
- Achieved an Occupancy Rate of 95.6% on the total
portfolio and 96.6% on the Operating Portfolio as of June 30, 2018.
- Executed Operating Portfolio leases for 2.6 million
square feet for the second quarter of 2018, resulting in a Cash
Rent Change and Straight-line Rent Change of 8.0% and 14.6%,
respectively.
- Experienced 87.5% Retention for 1.7 million square feet
of leases expiring in the quarter.
- Raised gross proceeds of $176.8
million of equity through the Company's at-the-market
offering ("ATM") program for the second quarter of 2018. Subsequent
to quarter end and through July 31,
2018, raised gross proceeds of $5.7
million through the ATM program.
- Subsequent to quarter end, redeemed all $70 million of the outstanding 6.625% Series B
Preferred Stock on July 11,
2018.
- Subsequent to quarter end, refinanced and upsized the
unsecured revolving credit facility and originated a new five and a
half year, $175 million term
loan.
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 1, 2018 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
2018 KEY FINANCIAL MEASURES
|
|
|
|
Three months ended
June 30,
|
|
|
|
Six months ended
June 30,
|
|
|
|
|
2018
|
|
2017
|
|
% Change
|
|
2018
|
|
2017
|
|
% Change
|
(in $000s, except per share
data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to common stockholders
|
|
$9,264
|
|
$(1,119)
|
|
927.9
|
%
|
|
$30,952
|
|
$(3,481)
|
|
989.2
|
%
|
Net income per common share —
basic
|
|
$0.09
|
|
$(0.01)
|
|
1,000.0
|
%
|
|
$0.31
|
|
$(0.04)
|
|
875.0
|
%
|
Net income per common share —
diluted
|
|
$0.09
|
|
$(0.01)
|
|
1,000.0
|
%
|
|
$0.31
|
|
$(0.04)
|
|
875.0
|
%
|
Cash NOI
|
|
$67,565
|
|
$57,992
|
|
16.5
|
%
|
|
$131,775
|
|
$114,494
|
|
15.1
|
%
|
Adjusted
EBITDAre
|
|
$61,217
|
|
$52,076
|
|
17.6
|
%
|
|
$118,608
|
|
$101,467
|
|
16.9
|
%
|
Core FFO
|
|
$47,789
|
|
$38,498
|
|
24.1
|
%
|
|
$91,834
|
|
$73,882
|
|
24.3
|
%
|
Core FFO per share / unit —
basic
|
|
$0.46
|
|
$0.42
|
|
9.5
|
%
|
|
$0.89
|
|
$0.83
|
|
7.2
|
%
|
Core FFO per share / unit —
diluted
|
|
$0.45
|
|
$0.41
|
|
9.8
|
%
|
|
$0.89
|
|
$0.82
|
|
8.5
|
%
|
AFFO
|
|
$45,371
|
|
$37,506
|
|
21.0
|
%
|
|
$87,905
|
|
$73,771
|
|
19.2
|
%
|
Same Store Cash NOI
(1)
|
|
$53,582
|
|
$53,297
|
|
0.5
|
%
|
|
$101,719
|
|
$101,618
|
|
0.1
|
%
|
|
(1) The Same Store
pool accounted for 79.8% and 76.2% of the total portfolio square
footage for the three and six months ended June 30, 2018,
respectively.
|
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, 2018, the Company
acquired fifteen buildings for $185.3
million with an Occupancy Rate of 95% upon acquisition. The
chart below details the acquisition activity for the
quarter:
SECOND QUARTER
2018 ACQUISITION ACTIVITY
|
|
Market
|
Date
Acquired
|
Square Feet
|
Buildings
|
Purchase
Price ($000s)
|
W.A. Lease
Term (Years)
|
Capitalization
Rate
|
Chicago,
IL
|
4/23/2018
|
169,311
|
2
|
$10,975
|
4.9
|
|
Milwaukee/Madison,
WI
|
4/26/2018
|
53,680
|
1
|
4,316
|
15.0
|
|
Pittsburgh,
PA
|
4/30/2018
|
175,000
|
1
|
15,380
|
20.0
|
|
Detroit,
MI
|
5/9/2018
|
274,500
|
1
|
19,328
|
9.2
|
|
Minneapolis/St Paul,
MN
|
5/15/2018
|
509,910
|
2
|
26,983
|
5.8
|
|
Cincinnati/Dayton,
OH
|
5/23/2018
|
158,500
|
1
|
7,317
|
10.0
|
|
Baton Rouge,
LA
|
5/31/2018
|
279,236
|
1
|
21,379
|
6.5
|
|
Las Vegas,
NV
|
6/12/2018
|
122,472
|
1
|
17,920
|
6.6
|
|
Greenville/Spartanburg, SC
|
6/15/2018
|
131,805
|
1
|
5,621
|
—
|
|
Denver, CO
|
6/18/2018
|
64,750
|
1
|
7,044
|
4.2
|
|
Cincinnati/Dayton,
OH
|
6/25/2018
|
465,136
|
1
|
16,421
|
3.7
|
|
Charlotte,
NC
|
6/29/2018
|
69,200
|
1
|
5,446
|
9.9
|
|
Houston,
TX
|
6/29/2018
|
252,662
|
1
|
27,170
|
10.2
|
|
Total / weighted average
|
|
2,726,162
|
15
|
$185,300
|
7.7
|
7.1%
|
The chart below details the 2018 acquisition activity and
Pipeline through July 31, 2018:
2018 ACQUISITION
ACTIVITY AND PIPELINE DETAIL
|
|
|
Square
Feet
|
Buildings
|
Purchase
Price ($000s)
|
W.A. Lease
Term (Years)
|
Capitalization
Rate
|
Q1
|
1,091,868
|
6
|
$78,821
|
6.2
|
6.7%
|
Q2
|
2,726,162
|
15
|
185,300
|
7.7
|
7.1%
|
2018 closed acquisitions
|
3,818,030
|
21
|
$264,121
|
7.3
|
7.0%
|
|
|
|
|
|
|
As of July 31, 2018
|
|
|
|
|
|
Subsequent to quarter-end
acquisitions
|
105,472
|
1
|
$6,484
|
|
|
|
|
|
|
|
|
Pipeline
|
35.6 million
|
152
|
$2.1 billion
|
|
|
The chart below details the disposition activity for the
six months ended June 30, 2018:
2018 DISPOSITION
ACTIVITY
|
|
|
Square Feet
|
Buildings
|
Sale Price ($000s)
|
Q1
|
650,636
|
2
|
$50,379
|
Q2
|
1,009,021
|
5
|
31,200
|
Total
|
1,659,657
|
7
|
$81,579
|
Subsequent to quarter end and through July 31, 2018, the Company sold two buildings
consisting of 287,291 square feet for $5.9
million.
Operating Portfolio Leasing Activity
The chart below details the leasing activity for leases
signed during the three months ended June 30, 2018:
SECOND QUARTER
2018 LEASING ACTIVITY
|
|
Lease Type
|
Square
Feet
|
W.A.
Lease
Term
(Years)
|
Cash
Base Rent
$/SF
|
SL Base
Rent
$/SF
|
Lease
Commissions
$/SF
|
Tenant
Improvements
$/SF
|
Total
Costs $/SF
|
Cash
Rent
Change
|
SL Rent
Change
|
New leases
|
303,610
|
6.5
|
$4.55
|
$4.71
|
$1.46
|
$0.23
|
$1.69
|
7.4%
|
18.7%
|
Renewal
Leases
|
2,328,792
|
4.1
|
4.07
|
4.17
|
0.51
|
0.26
|
0.77
|
8.1%
|
14.2%
|
Total / weighted average
|
2,632,402
|
4.4
|
$4.12
|
$4.24
|
$0.62
|
$0.26
|
$0.88
|
8.0%
|
14.6%
|
The chart below details the leasing activity for leases
signed during the six months ended June 30, 2018:
2018 LEASING
ACTIVITY
|
|
Lease Type
|
Square
Feet
|
W.A.
Lease
Term
(Years)
|
Cash
Base Rent
$/SF
|
SL Base
Rent
$/SF
|
Lease
Commissions
$/SF
|
Tenant
Improvements
$/SF
|
Total
Costs $/SF
|
Cash
Rent
Change
|
SL Rent
Change
|
New leases
|
1,212,682
|
7.3
|
$3.49
|
$3.63
|
$1.45
|
$0.69
|
$2.14
|
19.5%
|
30.6%
|
Renewal
Leases
|
4,731,327
|
4.7
|
3.93
|
4.06
|
0.37
|
0.25
|
0.62
|
6.6%
|
13.3%
|
Total / weighted average
|
5,944,009
|
5.2
|
$3.84
|
$3.98
|
$0.59
|
$0.34
|
$0.93
|
8.3%
|
15.6%
|
The chart below details the Retention activity for the six
months ended June 30, 2018:
2018
RETENTION
|
|
|
Expiring Square
Footage
|
Retained Square
Footage
|
W.A. Lease Term
(Years)
|
Retention
|
Q1
|
5,579,301
|
4,640,916
|
5.5
|
83.2%
|
Q2
|
1,740,723
|
1,523,971
|
3.8
|
87.5%
|
Total / weighted average
|
7,320,024
|
6,164,887
|
5.1
|
84.2%
|
Liquidity and Capital Market Activity
As of June 30, 2018, the net debt to annualized Run
Rate Adjusted EBITDAre was 4.7x.
On June 13, 2018, the
Company issued $175 million of fixed
rate senior unsecured notes. The transaction consists of
$75 million of 4.10% notes with a
seven-year term maturing on June 13,
2025, and $100 million of
4.27% notes with a ten-year term maturing on June 13, 2028.
Subsequent to quarter end, on July
27, 2018, the Company drew the remaining $75 million of unsecured term loan D.
Subsequent to quarter end, on July
26, 2018, the Company closed on the refinancing of the
unsecured revolving credit facility ("revolver"). The
transaction included extending the maturity date, increasing the
size of the revolver, and reducing the borrowing costs of the
facility. The revolver matures on January 15, 2023, the size was increased to
$500 million, and the credit spread
was reduced to 1.05% at current leverage levels.
Additionally, on July 26,
2018, the Company closed on a new $175 million, five and half year unsecured term
loan. The new term loan bears a current interest rate of
LIBOR plus a spread of 1.20% and matures on January 15, 2024. On July 24, 2018, the Company entered into four
interest rate swaps to fix the interest rate on the new term loan,
which will bear a fixed interest rate of 4.12% inclusive of these
swaps.
Incorporating the above mentioned debt transactions,
Liquidity was $739 million as of
July 31, 2018.
The chart below details the ATM program activity for the
six months ended June 30,
2018:
2018 ATM
ACTIVITY
|
|
ATM
|
Shares
Issued
|
Price per Share
(Weighted Avg)
|
Gross
Proceeds
($000s)
|
Net
Proceeds
($000s)
|
Q1
|
-
|
-
|
-
|
-
|
Q2
|
6,819,580
|
$25.92
|
176,762
|
175,003
|
Total / weighted average
|
6,819,580
|
$25.92
|
$176,762
|
$175,003
|
Subsequent to quarter end, the Company sold 210,000 shares
under its ATM program for gross proceeds of $5.7 million
Conference Call
The Company will host a conference call tomorrow,
Wednesday, August 1, 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
13681369.
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/QuarterlyResults
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 "Quarterly
Results" 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, 2018
|
|
December 31, 2017
|
Assets
|
|
|
|
Rental
Property:
|
|
|
|
Land
|
$
|
342,722
|
|
|
$
|
321,560
|
|
Buildings and
improvements, net of accumulated depreciation of $280,540 and
$249,057, respectively
|
2,073,088
|
|
|
1,932,764
|
|
Deferred leasing
intangibles, net of accumulated amortization of $220,340 and
$280,642, respectively
|
316,221
|
|
|
313,253
|
|
Total
rental property, net
|
2,732,031
|
|
|
2,567,577
|
|
Cash and cash
equivalents
|
11,932
|
|
|
24,562
|
|
Restricted
cash
|
6,124
|
|
|
3,567
|
|
Tenant accounts
receivable, net
|
35,236
|
|
|
33,602
|
|
Prepaid expenses and
other assets
|
28,699
|
|
|
25,364
|
|
Interest rate
swaps
|
15,596
|
|
|
6,079
|
|
Assets held for sale,
net
|
1,509
|
|
|
19,916
|
|
Total assets
|
$
|
2,831,127
|
|
|
$
|
2,680,667
|
|
Liabilities and Equity
|
|
|
|
Liabilities:
|
|
|
|
Unsecured credit
facility
|
$
|
17,000
|
|
|
$
|
271,000
|
|
Unsecured term loans,
net
|
521,745
|
|
|
446,265
|
|
Unsecured notes,
net
|
572,293
|
|
|
398,234
|
|
Mortgage notes,
net
|
57,421
|
|
|
58,282
|
|
Preferred stock
called for redemption
|
70,000
|
|
|
—
|
|
Accounts payable,
accrued expenses and other liabilities
|
45,381
|
|
|
43,216
|
|
Interest rate
swaps
|
—
|
|
|
1,217
|
|
Tenant prepaid rent
and security deposits
|
21,436
|
|
|
19,045
|
|
Dividends and
distributions payable
|
15,396
|
|
|
11,880
|
|
Deferred leasing
intangibles, net of accumulated amortization of $11,835 and
$13,555, respectively
|
20,828
|
|
|
21,221
|
|
Total liabilities
|
1,341,500
|
|
|
1,270,360
|
|
Equity:
|
|
|
|
Preferred stock, par
value $0.01 per share, 15,000,000 shares authorized,
|
|
|
|
Series B, -0- and
2,800,000 shares (liquidation preference of $25.00 per share)
issued and outstanding at June 30, 2018 and December 31, 2017,
respectively
|
—
|
|
|
70,000
|
|
Series C, 3,000,000
shares (liquidation preference of $25.00 per share) issued and
outstanding at June 30, 2018 and December 31,
2017
|
75,000
|
|
|
75,000
|
|
Common stock, par
value $0.01 per share, 150,000,000 shares authorized, 104,238,166
and 97,012,543 shares issued and outstanding at June 30, 2018 and
December 31, 2017, respectively
|
1,042
|
|
|
970
|
|
Additional paid-in
capital
|
1,905,002
|
|
|
1,725,825
|
|
Cumulative dividends
in excess of earnings
|
(559,312)
|
|
|
(516,691)
|
|
Accumulated other
comprehensive income
|
14,492
|
|
|
3,936
|
|
Total stockholders'
equity
|
1,436,224
|
|
|
1,359,040
|
|
Noncontrolling
interest
|
53,403
|
|
|
51,267
|
|
Total equity
|
1,489,627
|
|
|
1,410,307
|
|
Total liabilities and
equity
|
$
|
2,831,127
|
|
|
$
|
2,680,667
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF
OPERATIONS
STAG Industrial, Inc.
(unaudited, in thousands, except per share
data)
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Revenue
|
|
|
|
|
|
|
|
Rental
income
|
$
|
72,140
|
|
|
$
|
61,726
|
|
|
$
|
142,068
|
|
|
$
|
120,948
|
|
Tenant
recoveries
|
12,726
|
|
|
10,401
|
|
|
25,925
|
|
|
20,586
|
|
Other
income
|
608
|
|
|
66
|
|
|
764
|
|
|
139
|
|
Total
revenue
|
85,474
|
|
|
72,193
|
|
|
168,757
|
|
|
141,673
|
|
Expenses
|
|
|
|
|
|
|
|
Property
|
16,124
|
|
|
13,635
|
|
|
33,623
|
|
|
26,911
|
|
General and
administrative
|
7,978
|
|
|
7,939
|
|
|
16,726
|
|
|
16,710
|
|
Property acquisition
costs
|
—
|
|
|
2,558
|
|
|
—
|
|
|
3,298
|
|
Depreciation and
amortization
|
40,901
|
|
|
36,147
|
|
|
80,866
|
|
|
72,100
|
|
Loss on
impairments
|
—
|
|
|
—
|
|
|
2,934
|
|
|
—
|
|
Loss on involuntary
conversion
|
—
|
|
|
—
|
|
|
—
|
|
|
330
|
|
Other
expenses
|
350
|
|
|
1,250
|
|
|
641
|
|
|
1,444
|
|
Total
expenses
|
65,353
|
|
|
61,529
|
|
|
134,790
|
|
|
120,793
|
|
Other income (expense)
|
|
|
|
|
|
|
|
Interest
expense
|
(11,505)
|
|
|
(10,631)
|
|
|
(22,891)
|
|
|
(21,103)
|
|
Loss on
extinguishment of debt
|
—
|
|
|
(2)
|
|
|
—
|
|
|
(2)
|
|
Gain on the sales of
rental property, net
|
6,348
|
|
|
1,337
|
|
|
29,037
|
|
|
1,662
|
|
Total
other income (expense)
|
(5,157)
|
|
|
(9,296)
|
|
|
6,146
|
|
|
(19,443)
|
|
Net income
|
$
|
14,964
|
|
|
$
|
1,368
|
|
|
$
|
40,113
|
|
|
$
|
1,437
|
|
Less: income (loss)
attributable to noncontrolling interest after preferred
stock dividends
|
392
|
|
|
(44)
|
|
|
1,334
|
|
|
(145)
|
|
Net income attributable to STAG Industrial,
Inc.
|
$
|
14,572
|
|
|
$
|
1,412
|
|
|
$
|
38,779
|
|
|
$
|
1,582
|
|
Less: preferred stock
dividends
|
2,578
|
|
|
2,448
|
|
|
5,026
|
|
|
4,897
|
|
Less: redemption of
preferred stock
|
2,661
|
|
|
—
|
|
|
2,661
|
|
|
—
|
|
Less: amount
allocated to participating securities
|
69
|
|
|
83
|
|
|
140
|
|
|
166
|
|
Net income (loss) attributable to common
stockholders
|
$
|
9,264
|
|
|
$
|
(1,119)
|
|
|
$
|
30,952
|
|
|
$
|
(3,481)
|
|
Weighted average
common shares outstanding — basic
|
100,386
|
|
|
88,181
|
|
|
98,713
|
|
|
85,012
|
|
Weighted average
common shares outstanding — diluted
|
100,733
|
|
|
88,181
|
|
|
99,037
|
|
|
85,012
|
|
Net income (loss) per share — basic and
diluted
|
|
|
|
|
|
|
|
Net income (loss) per
share attributable to common stockholders —
basic
|
$
|
0.09
|
|
|
$
|
(0.01)
|
|
|
$
|
0.31
|
|
|
$
|
(0.04)
|
|
Net income (loss) per
share attributable to common stockholders —
diluted
|
$
|
0.09
|
|
|
$
|
(0.01)
|
|
|
$
|
0.31
|
|
|
$
|
(0.04)
|
|
|
|
|
|
|
|
|
|
RECONCILIATIONS OF GAAP TO NON-GAAP
MEASURES
STAG Industrial, Inc.
(unaudited, in thousands)
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
NET OPERATING INCOME
RECONCILIATION
|
|
|
|
|
|
|
|
Net income
|
$
|
14,964
|
|
|
$
|
1,368
|
|
|
$
|
40,113
|
|
|
$
|
1,437
|
|
Asset management fee
income
|
—
|
|
|
(13)
|
|
|
—
|
|
|
(43)
|
|
General and
administrative
|
7,978
|
|
|
7,939
|
|
|
16,726
|
|
|
16,710
|
|
Property acquisition
costs
|
76
|
|
|
2,558
|
|
|
76
|
|
|
3,298
|
|
Depreciation and
amortization
|
40,901
|
|
|
36,147
|
|
|
80,866
|
|
|
72,100
|
|
Interest
expense
|
11,505
|
|
|
10,631
|
|
|
22,891
|
|
|
21,103
|
|
Loss on
impairments
|
—
|
|
|
—
|
|
|
2,934
|
|
|
—
|
|
Loss on involuntary
conversion
|
—
|
|
|
—
|
|
|
—
|
|
|
330
|
|
Loss on
extinguishment of debt
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
Other
expenses
|
274
|
|
|
359
|
|
|
565
|
|
|
553
|
|
Loss on incentive
fee
|
—
|
|
|
891
|
|
|
—
|
|
|
891
|
|
Gain on the sales of
rental property, net
|
(6,348)
|
|
|
(1,337)
|
|
|
(29,037)
|
|
|
(1,662)
|
|
Net operating income
|
$
|
69,350
|
|
|
$
|
58,545
|
|
|
$
|
135,134
|
|
|
$
|
114,719
|
|
|
|
|
|
|
|
|
|
Net operating income
|
$
|
69,350
|
|
|
$
|
58,545
|
|
|
$
|
135,134
|
|
|
$
|
114,719
|
|
Straight-line rent
adjustments, net
|
(2,790)
|
|
|
(1,445)
|
|
|
(5,434)
|
|
|
(2,669)
|
|
Straight-line
termination income adjustments, net
|
156
|
|
|
(367)
|
|
|
19
|
|
|
(111)
|
|
Intangible
amortization in rental income, net
|
849
|
|
|
1,259
|
|
|
2,056
|
|
|
2,555
|
|
Cash net operating income
|
$
|
67,565
|
|
|
$
|
57,992
|
|
|
$
|
131,775
|
|
|
$
|
114,494
|
|
|
|
|
|
|
|
|
|
Cash net operating income
|
$
|
67,565
|
|
|
|
|
|
|
|
Cash NOI from
acquisitions' and dispositions' timing
|
1,308
|
|
|
|
|
|
|
|
Cash termination
income
|
(277)
|
|
|
|
|
|
|
|
Run Rate Cash NOI
|
$
|
68,596
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Store Portfolio NOI
|
|
|
|
|
|
|
|
Total NOI
|
$
|
69,350
|
|
|
$
|
58,545
|
|
|
$
|
135,134
|
|
|
$
|
114,719
|
|
Less NOI
non-same-store properties
|
(14,475)
|
|
|
(4,827)
|
|
|
(31,457)
|
|
|
(12,203)
|
|
Less termination
income
|
(120)
|
|
|
(352)
|
|
|
(258)
|
|
|
(660)
|
|
Same Store NOI
|
$
|
54,755
|
|
|
$
|
53,366
|
|
|
$
|
103,419
|
|
|
$
|
101,856
|
|
Less straight-line
rent adjustments, net
|
(1,740)
|
|
|
(1,065)
|
|
|
(3,008)
|
|
|
(2,019)
|
|
Plus intangible
amortization in rental income, net
|
567
|
|
|
996
|
|
|
1,308
|
|
|
1,781
|
|
Same Store Cash NOI
|
$
|
53,582
|
|
|
$
|
53,297
|
|
|
$
|
101,719
|
|
|
$
|
101,618
|
|
|
|
|
|
|
|
|
|
EBITDA FOR REAL ESTATE (EBITDAre)
RECONCILIATION
|
|
|
|
|
|
|
|
Net income
|
$
|
14,964
|
|
|
$
|
1,368
|
|
|
$
|
40,113
|
|
|
$
|
1,437
|
|
Depreciation and
amortization
|
40,901
|
|
|
36,147
|
|
|
80,866
|
|
|
72,100
|
|
Interest
expense
|
11,505
|
|
|
10,631
|
|
|
22,891
|
|
|
21,103
|
|
Loss on
impairments
|
—
|
|
|
—
|
|
|
2,934
|
|
|
—
|
|
Gain on the sales of
rental property, net
|
(6,348)
|
|
|
(1,337)
|
|
|
(29,037)
|
|
|
(1,662)
|
|
EBITDAre
|
$
|
61,022
|
|
|
$
|
46,809
|
|
|
$
|
117,767
|
|
|
$
|
92,978
|
|
|
|
|
|
|
|
|
|
ADJUSTED EBITDAre
RECONCILIATION
|
|
|
|
|
|
|
|
EBITDAre
|
$
|
61,022
|
|
|
$
|
46,809
|
|
|
$
|
117,767
|
|
|
$
|
92,978
|
|
Straight-line rent
adjustments, net
|
(2,824)
|
|
|
(1,444)
|
|
|
(5,468)
|
|
|
(2,667)
|
|
Intangible
amortization in rental income, net
|
849
|
|
|
1,259
|
|
|
2,056
|
|
|
2,555
|
|
Non-cash compensation
expense
|
2,215
|
|
|
2,388
|
|
|
4,435
|
|
|
4,775
|
|
Termination
income
|
(121)
|
|
|
(387)
|
|
|
(258)
|
|
|
(695)
|
|
Property acquisition
costs
|
76
|
|
|
2,558
|
|
|
76
|
|
|
3,298
|
|
Loss on involuntary
conversion
|
—
|
|
|
—
|
|
|
—
|
|
|
330
|
|
Loss on
extinguishment of debt
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
Loss on incentive
fee
|
—
|
|
|
891
|
|
|
—
|
|
|
891
|
|
Adjusted EBITDAre
|
$
|
61,217
|
|
|
$
|
52,076
|
|
|
$
|
118,608
|
|
|
$
|
101,467
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDAre
|
$
|
61,217
|
|
|
|
|
|
|
|
Adjusted
EBITDAre from acquisitions' and dispositions'
timing
|
1,308
|
|
|
|
|
|
|
|
Run Rate Adjusted
EBITDAre
|
$
|
62,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATIONS OF GAAP TO NON-GAAP
MEASURES
STAG Industrial, Inc.
(unaudited, in thousands, except per share
data)
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
CORE FUNDS FROM OPERATIONS
RECONCILIATION
|
|
|
|
|
|
|
|
Net income
|
$
|
14,964
|
|
|
$
|
1,368
|
|
|
$
|
40,113
|
|
|
$
|
1,437
|
|
Rental property
depreciation and amortization
|
40,826
|
|
|
36,076
|
|
|
80,718
|
|
|
71,955
|
|
Loss on
impairments
|
—
|
|
|
—
|
|
|
2,934
|
|
|
—
|
|
Gain on the sales of
rental property, net
|
(6,348)
|
|
|
(1,337)
|
|
|
(29,037)
|
|
|
(1,662)
|
|
Funds from operations
|
$
|
49,442
|
|
|
$
|
36,107
|
|
|
$
|
94,728
|
|
|
$
|
71,730
|
|
Preferred stock
dividends
|
(2,578)
|
|
|
(2,448)
|
|
|
(5,026)
|
|
|
(4,897)
|
|
Redemption of
preferred stock
|
(2,661)
|
|
|
—
|
|
|
(2,661)
|
|
|
—
|
|
Funds from operations attributable to common
stockholders
and unit holders
|
$
|
44,203
|
|
|
$
|
33,659
|
|
|
$
|
87,041
|
|
|
$
|
66,833
|
|
|
|
|
|
|
|
|
|
Funds from operations attributable to common
stockholders
and unit holders
|
$
|
44,203
|
|
|
$
|
33,659
|
|
|
$
|
87,041
|
|
|
$
|
66,833
|
|
Intangible
amortization in rental income, net
|
849
|
|
|
1,259
|
|
|
2,056
|
|
|
2,555
|
|
Property acquisition
costs
|
76
|
|
|
2,558
|
|
|
76
|
|
|
3,298
|
|
Loss on
extinguishment of debt
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
Loss on involuntary
conversion
|
—
|
|
|
—
|
|
|
—
|
|
|
330
|
|
Loss on incentive
fee
|
—
|
|
|
891
|
|
|
—
|
|
|
891
|
|
(Gain) loss on swap
ineffectiveness
|
—
|
|
|
129
|
|
|
—
|
|
|
(27)
|
|
Redemption of
preferred stock
|
2,661
|
|
|
—
|
|
|
2,661
|
|
|
—
|
|
Core funds from operations
|
$
|
47,789
|
|
|
$
|
38,498
|
|
|
$
|
91,834
|
|
|
$
|
73,882
|
|
|
|
|
|
|
|
|
|
Weighted average common shares, participating
securities,
performance units and other units
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding
|
100,386
|
|
|
88,181
|
|
|
98,713
|
|
|
85,012
|
|
Weighted average
participating securities outstanding
|
196
|
|
|
237
|
|
|
199
|
|
|
239
|
|
Weighted average
units outstanding
|
4,225
|
|
|
3,767
|
|
|
4,245
|
|
|
3,735
|
|
Weighted average common shares, participating
securities,
and other units - basic
|
104,807
|
|
|
92,185
|
|
|
103,157
|
|
|
88,986
|
|
Weighted average
performance units and outperformance plan
|
261
|
|
|
670
|
|
|
280
|
|
|
666
|
|
Dilutive common share
equivalents
|
347
|
|
|
—
|
|
|
324
|
|
|
—
|
|
Weighted average common shares, participating
securities,
performance and other units - diluted
|
105,415
|
|
|
92,855
|
|
|
103,761
|
|
|
89,652
|
|
Core funds from operations per share / unit -
basic
|
$
|
0.46
|
|
|
$
|
0.42
|
|
|
$
|
0.89
|
|
|
$
|
0.83
|
|
Core funds from operations per share / unit -
diluted
|
$
|
0.45
|
|
|
$
|
0.41
|
|
|
$
|
0.89
|
|
|
$
|
0.82
|
|
|
|
|
|
|
|
|
|
ADJUSTED FUNDS FROM OPERATIONS
RECONCILIATION
|
|
|
|
|
|
|
|
Core funds from
operations
|
$
|
47,789
|
|
|
$
|
38,498
|
|
|
$
|
91,834
|
|
|
$
|
73,882
|
|
Non-rental property
depreciation and amortization
|
75
|
|
|
71
|
|
|
148
|
|
|
145
|
|
Straight-line rent
adjustments, net
|
(2,824)
|
|
|
(1,444)
|
|
|
(5,468)
|
|
|
(2,667)
|
|
Straight-line
termination income adjustments, net
|
156
|
|
|
(367)
|
|
|
19
|
|
|
(111)
|
|
Recurring capital
expenditures
|
(1,114)
|
|
|
(410)
|
|
|
(1,771)
|
|
|
(635)
|
|
Renewal lease
commissions and tenant improvements
|
(1,473)
|
|
|
(1,736)
|
|
|
(2,373)
|
|
|
(2,625)
|
|
Non-cash portion of
interest expense
|
547
|
|
|
506
|
|
|
1,081
|
|
|
1,007
|
|
Non-cash compensation
expense
|
2,215
|
|
|
2,388
|
|
|
4,435
|
|
|
4,775
|
|
Adjusted funds from operations
(1)
|
$
|
45,371
|
|
|
$
|
37,506
|
|
|
$
|
87,905
|
|
|
$
|
73,771
|
|
|
|
|
|
|
|
|
|
(1) Excludes
Non-Recurring Capital Expenditures of approximately $6,826, $8,026,
$6,119 and $8,279 and new leasing commissions and tenant
improvements of approximately $868, $2,420, $596 and $1,788 for the
three and six months ended June 30, 2018 and 2017,
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. 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 EBITDAre), and Run Rate Adjusted
EBITDAre: We define EBITDAre in
accordance with the standards established by the National
Association of Real Estate Investment Trusts ("NAREIT").
EBITDAre represents net income (loss) (computed in
accordance with GAAP) before interest expense, tax, depreciation
and amortization, gains or losses on the sale of rental property,
and loss on impairments. Adjusted EBITDAre further excludes
property acquisition costs, termination income, straight-line rent
adjustments, non-cash compensation, intangible amortization in
rental income, gain or loss on involuntary conversion, loss on
extinguishment of debt, loss on incentive fee, and other
non-recurring items.
We define Annualized Adjusted EBITDAre as Adjusted
EBITDAre multiplied by four. We define Run Rate
Adjusted EBITDAre as Adjusted EBITDAre plus
incremental Adjusted EBITDAre adjusted for a full period of
acquisitions and dispositions. Run Rate Adjusted EBITDAre
does not reflect the Company's historical results and does not
predict future results, which may be substantially
different.
EBITDAre, Adjusted EBITDAre, and Run Rate
Adjusted EBITDAre 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, EBITDAre, Adjusted EBITDAre, and
Run Rate Adjusted EBITDAre 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
EBITDAre, Adjusted EBITDAre, and Run Rate Adjusted
EBITDAre 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 GAAP
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,
2017.
Cash Rent Change: We define
Cash Rent Change as the percentage change in the base rent of the
lease executed during the period compared to the base rent of the
Comparable Lease for assets included in the Operating Portfolio.
The calculation compares the first base rent payment due after the
lease commencement date compared to the base rent of the last
monthly payment due prior to the termination of the lease,
excluding holdover rent. Rent under gross or similar type leases
are converted to a net rent based on an estimate of the applicable
recoverable expenses.
Comparable Lease: We define a
Comparable Lease as a lease in the same space with a similar lease
structure as compared to the previous in-place lease, excluding new
leases for space that was not occupied under our
ownership.
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, intangible
amortization in rental income, loss on extinguishment of debt, gain
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.
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.
Market: We define Market as the market
defined by CoStar based on the building address. If the building is
located outside of a CoStar defined market, the city and state is
reflected.
Net operating income (NOI), Cash NOI, and Run Rate Cash
NOI: We define NOI as rental income, including
reimbursements and miscellaneous income, less property expenses and
real estate taxes, which excludes depreciation, amortization, loss
on impairments, general and administrative expenses, interest
expense, interest income, asset management fee income, property
acquisition costs, gain or 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. Non-Recurring
Capital Expenditures funded by parties other than the Company and
Acquisition Capital Expenditures are excluded.
Occupancy Rate: We define
Occupancy Rate as the percentage of total leasable square footage
for which either revenue recognition has commenced in accordance
with GAAP or the lease term has commenced as of the close of the
reporting period, whichever occurs earlier.
Operating Portfolio: We define
the Operating Portfolio as all warehouse and light manufacturing
assets that were acquired stabilized or have achieved
Stabilization. The Operating Portfolio excludes non-core
flex/office assets and assets contained in the Value Add
Portfolio.
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. Recurring Capital Expenditures funded by
parties other than the Company are excluded.
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 for assets included in the Operating
Portfolio.
Same Store: We define Same Store
properties as properties that were in the Operating Portfolio for
the entirety of the comparative periods presented.
Stabilization: We define Stabilization
for assets under redevelopment to occur upon the earlier of
achieving 90% occupancy or twelve months after completion.
Stabilization for assets that were acquired and immediately added
to the Value Add Portfolio occurs under the following:
- If acquired with less than 75% occupancy as of the
acquisition date, Stabilization will occur upon the earlier of
achieving 90% occupancy or twelve months from the acquisition
date;
- If acquired and will be less than 75% occupied due to
known move-outs within two years of the acquisition date,
Stabilization will occur upon the earlier of achieving 90%
occupancy after the known move-outs have occurred or twelve months
after the known move-outs have occurred.
Straight-line Rent Change (SL Rent
Change): We define SL Rent Change as the
percentage change in the average monthly base rent over the term of
the lease, calculated on a straight-line basis, of the lease
executed during the period compared to the Comparable Lease for
assets included in the Operating Portfolio. Rent under gross
or similar type leases are converted to a net rent based on an
estimate of the applicable recoverable expenses, and this
calculation excludes the impact of any holdover rent.
Value Add Portfolio: We define
the Value Add Portfolio as properties that meet any of the
following criteria:
- Less than 75% occupied as of the acquisition
date;
- Will be less than 75% occupied due to known move-outs
within two years of the acquisition date;
- Out of service with significant physical renovation of
the asset
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.