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01/11 03:35
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals strong financial performance with increased Core FFO per share and same-store NOI growth. Positive guidance revisions and a robust cash position are complemented by strategic acquisitions and retained cash flow. Despite bankruptcy risk from American Tire Distributors, overall sentiment remains positive. The Q&A highlighted confidence in acquisition strategies and market conditions, with management addressing concerns adequately. The sentiment is adjusted to positive due to optimistic guidance and strong financial metrics, outweighing minor risks and uncertainties.
Core FFO per share $0.60 for the quarter, an increase of 1.7% year-over-year.
Cash available for distribution $88 million for the third quarter.
Net debt to annualized run rate adjusted EBITDA 5.1x.
Liquidity $974 million at quarter-end.
Cash leasing spreads 24.6% for the quarter.
Same-store cash NOI growth 4.4% for the quarter and 6.1% year-to-date.
Annual same-store cash NOI guidance Increased to a range of 5.25% to 5.5%.
Acquisition volume $130 million for the third quarter.
Acquisition cost of five property portfolio $78.1 million with a cash cap rate of 6.9%.
Forward equity proceeds $164 million available to fund at our discretion.
Average share price under ATM program $39.89, resulting in gross proceeds of $93 million.
Average occupancy loss guidance 25 basis points for the year.
Credit loss through September 30 $1.4 million, which is about 23 basis points.
New Development Projects: As of September 30, STAG Industrial has over 2.1 million square feet of activity across nine buildings in the U.S. A planned 76,000 square foot building is set for delivery in Q3 2025, and a 284,000 square foot distribution facility is expected in Q4 2025.
Acquisition Volume: In Q3 2024, STAG Industrial's acquisition volume totaled $130 million, with a notable increase in activity post-Labor Day. The company has raised its acquisition guidance to a range of $500 million to $700 million for the year.
Market Rent Growth: Market rent growth for STAG's portfolio stands at 3.2% through September 30, with expectations of approximately 4% for the full year.
Leasing Activity: STAG has leased 38% of the square feet expected for 2025, achieving cash leasing spreads of 24.1%. The company has commenced 20 leases totaling 3.3 million square feet in Q3 2024.
Same-Store Cash NOI Growth: Same-store cash NOI growth was 4.4% for Q3 2024 and 6.1% year-to-date, with guidance increased to 5.25% to 5.5% for the year.
Strategic Focus on Tier 1 Markets: STAG Industrial continues to focus on CBRE Tier 1 markets for acquisitions and development, with a pipeline exceeding $4 billion.
American Tire Distributors Bankruptcy: American Tire Distributors filed for Chapter 11 bankruptcy, representing 1% of STAG's annualized base rent (approximately $6.1 million). Although all leases are current, the situation is being closely monitored.
Leasing Market Activity: The leasing market is active, but there is uncertainty due to potential delays in decision-making related to the upcoming elections, particularly among larger tenants.
Credit Losses: STAG experienced $1.4 million in credit loss through September 30, 2024, primarily from highly leveraged low-margin businesses. Guidance for credit loss remains at 50 basis points for the year.
Acquisition Market Dynamics: The acquisition market has regained momentum, but the pace of acquisitions may be influenced by interest rates and seller expectations. The pipeline is dynamic and can change based on market conditions.
Development Risks: There is a risk associated with the development pipeline, particularly regarding the leasing of new projects. The company is focused on sites that are permitted and has a cautious approach to new land acquisitions.
Economic Factors: Economic uncertainties, including election-related delays in decision-making, may impact the leasing market, although the acquisition market appears less affected.
Acquisition Volume Q3 2024: Acquisition volume for the third quarter totaled $130 million, consisting of six buildings with cash and straight line cap rates of 6.7% and 7.2% respectively.
Development Projects: As of September 30, over 2.1 million square feet of activity across nine buildings in the U.S. with a planned 76,000 square foot building estimated for delivery in Q3 2025.
Leasing Activity: Leased 38% of the square feet expected to lease in 2025, achieving cash leasing spreads of 24.1%.
Market Rent Growth: Market rent growth for the portfolio stands at 3.2% through September 30, on track for full-year growth of approximately 4%.
Core FFO Guidance: Revised to a range of $2.38 to $2.40 per share, an increase of 1 penny at the midpoint.
Same-Store Cash NOI Growth: Increased to a range of 5.25% to 5.5% for the year.
Acquisition Volume Guidance: Narrowed to a range of $500 million to $700 million.
G&A Expectations: Decreased to a range of $49 million to $50 million, a decrease of $500,000 at the midpoint.
Cash Available for Distribution: $88 million for the third quarter.
Retained Cash Flow After Dividends: Approximately $75 million retained after dividends paid through September 30.
Forward Equity Proceeds: $164 million of forward equity proceeds available to fund at our discretion.
ATM Program Shares Issued: 2.3 million shares issued at a gross average share price of $39.89, resulting in gross proceeds of $93 million.
Core FFO Guidance Revision: Revised to a range of $2.38 to $2.40 per share, an increase of 1 penny at the midpoint.
Acquisition Volume Guidance: Increased and narrowed to a range of $500 million to $700 million.
Acquisition Activity: Acquisition volume for the third quarter totaled $130 million.
Acquisition Cost of Portfolio: Total acquisition cost was $78.1 million for a five-property portfolio.
Acquisition Cash Cap Rate: Cash cap rate of 6.9% for the acquired portfolio.
Subsequent Acquisitions: Acquired two buildings for $66.6 million at a 6.3 cash cap rate.
The earnings call highlights increased guidance for cash NOI growth, core FFO per share, and retention, alongside decreased credit loss guidance, indicating strong financial health. The company is optimistic about developments and acquisitions, with stable market conditions and improving demand. Despite some cautious guidance for Q4 due to speculative credit loss, the overall sentiment is positive, supported by strategic development activities and strong leasing trends. The lack of specific 2026 occupancy guidance is a minor concern but does not outweigh the positive aspects.
The earnings call summary shows strong financial performance with record leasing activity, increased cash available for distribution, and a credit rating upgrade. The Q&A highlights optimistic market trends, robust acquisition activity, and strategic financial planning. Despite some uncertainty in specific markets and vague management responses, the overall sentiment is positive, especially with strong tenant retention and a solid liquidity position. The lack of market cap data suggests a cautious approach, but the indicators point towards a positive stock price movement in the short term.
The earnings call presents mixed signals: positive financial metrics like increased FFO per share and cash available for distribution, but concerns over economic growth, lease gestation periods, and acquisition risks. The Q&A highlights healthy leasing activity but also notes market-specific weaknesses and management's evasive responses on certain issues. The absence of a share repurchase program and unclear rent spread guidance further contribute to a neutral outlook.
The earnings call reveals strong financial performance with increased Core FFO per share and same-store NOI growth. Positive guidance revisions and a robust cash position are complemented by strategic acquisitions and retained cash flow. Despite bankruptcy risk from American Tire Distributors, overall sentiment remains positive. The Q&A highlighted confidence in acquisition strategies and market conditions, with management addressing concerns adequately. The sentiment is adjusted to positive due to optimistic guidance and strong financial metrics, outweighing minor risks and uncertainties.
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