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STAG Industrial, Inc. (STAG)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered solid operational metrics: revenue of $205.6M and diluted EPS of $0.49; Core FFO/share was $0.61, up 3.4% YoY, with Cash NOI up 8.1% YoY .
  • Results beat Wall Street consensus: revenue beat by ~$3.6M ($201.99M est) and EPS beat by ~$0.29 ($0.195 est). Strong leasing spreads and a sizable gain on sale were key drivers. Values retrieved from S&P Global.*
  • Leasing momentum was robust: 5.0M sq ft commenced with cash rent change of 27.3% and retention of 85.3%; 78.5% of expected 2025 leasing addressed at a 25.1% cash spread by April 28 .
  • Balance sheet/capital markets supportive: Net Debt/Annualized Run-Rate Adjusted EBITDAre 5.2x and liquidity $493.1M; entered a $550M private notes agreement at 5.65% WA rate; Moody’s upgraded to Baa2 (stable) in May, strengthening debt access/costs .
  • Management maintained FY25 guidance (same-store cash NOI growth, retention, spreads, occupancy, core FFO, acquisitions/dispositions) and kept credit-loss guidance at 75 bps amid tariff-related uncertainty. This consistency plus the rating upgrade are likely stock catalysts near-term .

What Went Well and What Went Wrong

What Went Well

  • Strong leasing and spreads: “We have already leased 78.5% of the operating portfolio square feet we currently expect to lease in 2025 and achieving cash leasing spreads of 25.1%” (CEO) ; Q1 commenced 5.0M sq ft with 27.3% cash rent change and 85.3% retention .
  • Portfolio optimization: Sold one building (337k sq ft) for $67.0M at a 4.9% cash cap rate, realizing a net gain of $49.9M, and redeployed into higher-yield assets acquired at ~6.8–7.0% cap rates .
  • Balance sheet strength and external validation: Net Debt/Annualized Run-Rate Adjusted EBITDAre 5.2x; subsequent $550M notes at 5.65% WA rate; Moody’s upgrade to Baa2 supports lower debt costs and broader investor base (CFO) .

What Went Wrong

  • Macro/tariffs lengthening lease decisions: “With the threat and implementation of tariffs… tenants [prioritize] diversification of supply chains… [we’ve] witnessed some lengthening in lease gestation periods” (CEO) .
  • Weaker pockets of demand: Management cited softness in Atlanta, San Diego and Indianapolis, and longer conversion times from tours to LOIs despite healthy demand .
  • Credit-loss risk held steady: Maintaining 2025 credit-loss guidance of 75 bps given American Tire Distributors process; while current on rent, uncertainty persists and could create backfill needs market-by-market .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Total Revenue ($USD Millions)$190.739 $199.325 $205.574
Net Income ($USD Millions)$41.856 $50.954 $91.398
Diluted EPS ($USD)$0.23 $0.28 $0.49
Core FFO per Share/Unit — Diluted ($USD)$0.60 $0.61 $0.61
Adjusted EBITDAre ($USD Millions)$130.950 $145.216 $146.413

KPIs

KPIQ3 2024Q4 2024Q1 2025
Occupancy Rate (Operating Portfolio)97.8% 97.3% 96.8%
Leasing Commenced (Operating Portfolio, sq ft)3.3M 2.4M 5.0M
Cash Rent Change (Operating Portfolio)24.6% 19.4% 27.3%
Retention62.5% 76.9% 85.3%
Cash NOI ($USD Millions)$148.415 $155.470 $157.197
Same Store Cash NOI ($USD Millions)$138.173 $139.210 $144.620
Cash Available for Distribution (CAD) ($USD Millions)$87.965 $88.597 $106.486
Net Debt / Annualized Run-Rate Adjusted EBITDAre (x)5.1x 5.2x 5.2x
Liquidity ($USD Millions)$810.0 $623.1 $493.1

Estimates vs Actuals

MetricQ3 2024Q4 2024Q1 2025
Revenue Consensus Mean ($USD Millions)$188.916*$193.681*$201.990*
Revenue Actual ($USD Millions)$190.739 $199.325 $205.574
Primary EPS Consensus Mean ($USD)$0.167*$0.198*$0.195*
Diluted EPS Actual ($USD)$0.23 $0.28 $0.49
Revenue — # of Estimates4*5*3*
Primary EPS — # of Estimates3*4*2*

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Same-Store Cash NOI GrowthFY 20253.5%–4.0% 3.5%–4.0% Maintained
RetentionFY 202570%–75% 70%–75% Maintained
Cash Leasing SpreadsFY 2025~25% ~25% Maintained
Same-Store Occupancy ChangeFY 2025-100 bps -100 bps Maintained
Acquisitions Volume (Cap Rate)FY 2025$350–$650M; 6.25%–6.75% $350–$650M; 6.25%–6.75% Maintained
Dispositions VolumeFY 2025$100–$200M $100–$200M Maintained
G&AFY 2025$52–$54M $52–$54M Maintained
Core FFO per ShareFY 2025$2.46–$2.50 $2.46–$2.50 Maintained
Credit LossFY 202575 bps 75 bps Maintained

Dividend and Capital Markets Updates

  • Monthly dividend maintained at $0.124167 per share for Q2 2025 (April–June declarations) .
  • Entered note purchase agreement for $550M senior unsecured notes at 5.65% WA rate; anticipated closing June 25, 2025 .
  • Moody’s upgraded corporate credit rating to Baa2 (stable) on May 12, 2025 .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Tariffs/macro uncertaintyNoted tenant delays around election; tariff uncertainty emerging Lease gestation periods lengthening; tenants diversifying supply chains; net positive given STAG’s footprint (CEO) Slightly negative near-term; supportive long-term
Demand by marketStrong in Midwest and Sunbelt; softness in some Northeast/Southeast pockets Strength in Milwaukee, Chicago, Minneapolis, Detroit, Nashville; weakness in Atlanta, San Diego, Indianapolis Mixed
Leasing momentum99.5% of 2024 leasing addressed with high cash spreads 5.0M sq ft commenced; 1.0M sq ft new leases commencing in Q2 with 0 downtime in a 500k sq ft Savannah lease Positive
Capital allocationAccretive recycling; acquisitions regained momentum in late 2024 Notes issuance, recycling proceeds from Nashua sale into ~7% cap acquisitions; strong private placement demand Positive
Credit/watch listATD bankruptcy monitored, leases current; ~50 bps base credit loss guidance 75 bps credit loss guidance maintained; ATD current on rent; watch list not materially expanded Stable with risk
DevelopmentLaddered pipeline across markets; expected lease-ups mid/late 2025 Active tours; some potential lease-up slippage in yields/timing given macro Cautious

Management Commentary

  • CEO on leasing and tariffs: “We have already leased 78.5%… achieving cash leasing spreads of 25.1%… With the threat and implementation of tariffs… [tenants’] key priority… diversification of their supply chains… We view this as a net positive to our portfolio” .
  • CFO on guidance and capital markets: “We’re maintaining our 2025 credit loss guidance of 75 basis points and… maintaining all other guidance… We just raised north of $0.5 billion of long-term debt at 5.65%… retaining capital… and accretive recycling” .
  • CEO on acquisitions/dispositions: “We sold 1 building… at a 4.9% cash cap rate… and redeployed… into assets… at stabilized cap rates close to 7%” .
  • Development update: “Approximately 2.5 million square feet… 50% under construction (16% pre-leased)… remaining 50% delivered, currently 51% leased… new lease of 102k sq ft at Wellford, SC” .

Q&A Highlights

  • Early renewals and demand: Tenants are renewing early and making decisions despite uncertainty; new leasing in Q2 off to a strong start (1.0M sq ft), with a 500k sq ft Savannah lease done with 0 downtime and ~25% cash spread .
  • Market color: Strength in Midwest/Sunbelt; softness in Atlanta, San Diego, Indianapolis; tours slightly down but higher conversion probability .
  • Transaction market: Some portfolios pulled due to volatility; STAG willing to “wait it out” and pounce when pricing dislocates .
  • Concessions: Holding for best net effective rent; free rent may tick up; TI decisions market-specific and often enhancing building functionality .
  • Credit: ATD current on rent; 75 bps credit-loss guidance includes ~25 bps for ATD; watch list dominated by low-margin, highly levered tenants .

Estimates Context

  • Q1 2025 beat: Revenue $205.6M vs $202.0M consensus; EPS $0.49 vs $0.195 consensus—driven by robust leasing spreads, retention, and $49.9M gain on sale . Values retrieved from S&P Global.*
  • Prior quarters also exceeded consensus revenue and EPS modestly, supporting estimate stability into FY25. Values retrieved from S&P Global.*
  • Implications: Street likely to lift FY25/26 revenue and FFO trajectories marginally, while maintaining conservative credit-loss assumptions and factoring tariff-related timing effects. Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Operational momentum intact: Leasing spreads (27.3% cash; 42.1% SL) and high retention underpin same-store growth; ~79% of 2025 leasing addressed early .
  • Evidence of accretive capital recycling: 4.9% cap sale proceeds redeployed into ~6.8–7.0% cap acquisitions, supporting NOI and AFFO growth .
  • Balance sheet optionality rising: $550M notes at 5.65% WA and Moody’s Baa2 upgrade likely reduce cost of debt and broaden funding access .
  • Guidance consistency is reassuring: FY25 ranges maintained despite macro noise; expect modest same-store growth with disciplined acquisitions back-half weighted .
  • Watch tariff headlines, not fundamentals: Tariffs elongate leasing cycles, but supply-chain diversification is a tailwind for STAG’s footprint over time (CEO tone constructive) .
  • Credit risk contained: ATD exposure ~1% ABR; current on rent; 75 bps credit-loss guidance maintained; backfill demand expected to be manageable if needed .
  • Near-term trading: Rating upgrade, debt execution, and beats vs consensus are potential catalysts; monitor June notes closing and Q2 leasing update trajectory .

Notes:

  • Sustainability report published April 24, 2025, aligning ESG with business goals; informational, not a driver of quarter metrics .
  • Q2 dividend declarations maintained at $0.124167/month; stable payout policy .