STAG Industrial, Inc. Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Core FFO per share: $0.65, up 3.2% year-over-year.

Leverage: Net debt to annualized run rate adjusted EBITDA at 5.2x (5.1x when including $70 million of forward equity proceeds).

Liquidity: $614 million at quarter end.

Same-store cash NOI: Grew 3.4% for the quarter and 3.9% year-to-date.

Retention rate: 75.7%.

Acquisition volume: $287.1 million in Q2, with cash and straight-line cap rates at 6.1% and 6.8%, respectively.

Leasing activity: 36 leases across 5.6 million square feet with cash and straight-line leasing spreads of 19.8% and 33.7%.

2Strategic Updates and Business Highlights

Market Fundamentals: Industrial fundamentals are stabilizing, with vacancy rates peaking and net absorption at 69 million square feet in Q2, the best start since 2022.

Acquisition Strategy: Increased acquisition opportunities, with guidance raised to $400 million-$700 million for the year.

Development Projects: 9 buildings (2.3 million square feet) in various stages of development with expected stabilized yields of 7.1%. Notable projects include a 343,000 square foot build-to-suit in Texas and a 184,000 square foot project in Arizona.

Data Center Demand: Strong demand for warehouse space from data center-related tenants, with 2.3 million square feet leased since last year.

3Forward Guidance and Outlook

Core FFO Guidance: Increased to a range of $2.61 to $2.65 per share.

Credit Loss Guidance: Reduced from 50 basis points to 30 basis points.

Average Same-Store Occupancy Guidance: Increased to 96.25%-97.25%.

Cash Same-Store Growth Guidance: Increased to 3%-3.5%.

Leasing Plan for 2027: 35% of the leasing plan already executed, ahead of historical averages.

4Bad News, Challenges, or Points of Concern

Acquisition Environment: While acquisition activity is strong, there are concerns about the macroeconomic environment and potential volatility in interest rates, which could impact future acquisitions.

Leasing Metrics: Some leasing metrics were softer compared to Q1, with a notable decline in leasing spreads for new leases.

Market Variability: Certain markets, particularly port markets like Savannah and Charleston, are experiencing slower demand, which may affect overall portfolio performance.

5Notable Q&A Insights

Acquisition Strategy: Management indicated a cautious approach to acquisitions, with no significant contracts or letters of intent currently in place. They expect Q4 to be their largest acquisition quarter.

Development Focus: The company is optimistic about ramping up development activity, citing strong yields and internal sourcing of projects.

Tenant Demand: Demand for larger spaces remains strong, but there is emerging interest in smaller spaces (under 70,000 square feet).

Disposition Strategy: Dispositions will focus on non-core assets, with expectations of more sales in the second half of the year, although timing may not align perfectly with acquisitions. Overall, STAG Industrial reported a solid quarter with positive growth metrics and a constructive outlook, despite some challenges in specific markets and leasing metrics.