BOSTON, Feb. 15, 2018
/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 fourth
quarter of 2017.
"The fourth quarter was another successful quarter for STAG and
a great way to close 2017," said Ben
Butcher, Chief Executive Officer of the Company. "Continued
strength in the industrial sector, record acquisition volume,
robust portfolio operating metrics, and a defensively positioned
balance sheet sets STAG up well for another strong year ahead."
Fourth Quarter and Full Year 2017 Highlights
- Reported $0.06 of net income per
basic and diluted share for the fourth quarter of 2017, as compared
to $0.38 of net income per basic and
diluted share for the fourth quarter of 2016. Reported $6.1 million of net income attributable to common
stockholders for the fourth quarter of 2017 compared to net income
attributable to common stockholders of $28.6
million for the fourth quarter of 2016. For the year ended
2017, net income attributable to common stockholders was
$21.1 million as compared to net
income of $20.2 million in 2016.
- Achieved $0.44 of Core FFO per
diluted share for the fourth quarter of 2017, an increase of 4.8%
compared to the fourth quarter of 2016 of $0.42. Generated Core FFO of $44.0 million compared to $33.1 million for the fourth quarter of 2016, an
increase of 32.9%. For the year ended December 31, 2017, Core FFO increased 34.6% in
the aggregate compared to the same period last year and Core FFO
per diluted share increased 7.0% compared to the same period last
year.
- Generated Cash NOI of $64.0
million for the fourth quarter of 2017, an increase of 16.1%
compared to the fourth quarter of 2016 of $55.1 million. For the year ended December 31, 2017, Cash NOI increased 17.0% in
the aggregate compared to the same period last year.
- Acquired 11 buildings in the fourth quarter of 2017, consisting
of 1.9 million square feet, for $107.4
million with a weighted average Capitalization Rate of
7.3%.
- Sold two buildings in the fourth quarter of 2017, consisting of
880,558 square feet for $22.1
million.
- Achieved an Occupancy Rate of 95.3% on the total portfolio and
95.7% on the Operating Portfolio as of December 31, 2017.
- Executed Operating Portfolio leases for 2.4 million square feet
for the fourth quarter of 2017, resulting in a cash rent change and
GAAP Rent Change of 2.3% and 12.2%, respectively.
- Experienced 52.7% Retention, resulting in a cash rent change
and GAAP Rent Change of (0.7)% and 7.6%, respectively. For the year
ended December 31, 2017, experienced
59.1% Retention, resulting in a cash rent change and GAAP Rent
Change of 4.4% and 11.1% respectively.
- Raised gross proceeds of $87.9
million of equity through the Company's at-the-market
offering ("ATM") program for the fourth quarter of 2017.
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,
February 16, 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
FOURTH QUARTER
2017 KEY FINANCIAL MEASURES
|
|
|
|
Three months
ended
December 31,
|
|
|
|
Year ended
December 31,
|
|
|
Metrics
|
|
2017
|
|
2016
|
|
% Change
|
|
2017
|
|
2016
|
|
% Change
|
(in $000s, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$6,124
|
|
$28,608
|
|
(78.6)%
|
|
$21,131
|
|
$20,238
|
|
4.4%
|
Net income per
share — basic
|
|
$0.06
|
|
$0.38
|
|
(84.2)%
|
|
$0.24
|
|
$0.29
|
|
(17.2)%
|
Net income per
share — diluted
|
|
$0.06
|
|
$0.38
|
|
(84.2)%
|
|
$0.23
|
|
$0.29
|
|
(20.7)%
|
Cash NOI
|
|
$63,970
|
|
$55,107
|
|
16.1%
|
|
$240,440
|
|
$205,465
|
|
17.0%
|
Adjusted
EBITDA
|
|
$57,659
|
|
$48,944
|
|
17.8%
|
|
$214,854
|
|
$181,468
|
|
18.4%
|
Core FFO
|
|
$44,049
|
|
$33,141
|
|
32.9%
|
|
$159,265
|
|
$118,344
|
|
34.6%
|
Core FFO per share
/ unit — basic
|
|
$0.44
|
|
$0.42
|
|
4.8%
|
|
$1.70
|
|
$1.59
|
|
6.9%
|
Core FFO per share
/ unit — diluted
|
|
$0.44
|
|
$0.42
|
|
4.8%
|
|
$1.69
|
|
$1.58
|
|
7.0%
|
AFFO
|
|
$42,540
|
|
$33,913
|
|
25.4%
|
|
$156,682
|
|
$121,709
|
|
28.7%
|
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 December 31, 2017, the Company
acquired 11 buildings for $107.4
million with an Occupancy Rate of 92% upon acquisition. The
chart below details the acquisition activity for the quarter:
FOURTH QUARTER
2017 ACQUISITION ACTIVITY
|
|
Location
(CBSA)
|
Date
Acquired
|
Square
Feet
|
Buildings
|
Purchase
Price ($000s)
|
W.A. Lease
Term (Years)
|
Capitalization
Rate
|
Omaha-Council Bluffs,
NE-IA
|
10/23/2017
|
90,000
|
1
|
$6,600
|
10.0
|
|
Columbus,
OH
|
11/2/2017
|
237,500
|
1
|
8,717
|
9.5
|
|
Greenville-Anderson-Mauldin, SC
|
11/22/2017
|
264,385
|
1
|
18,200
|
9.6
|
|
Columbia,
SC
|
11/29/2017
|
200,000
|
1
|
10,000
|
6.3
|
|
Phoenix-Mesa-Scottsdale, AZ
|
12/11/2017
|
186,643
|
1
|
16,500
|
12.0
|
|
El Paso,
TX
|
12/18/2017
|
498,382
|
2
|
16,850
|
3.3
|
|
Houston-The
Woodlands-Sugar Land, TX
|
12/18/2017
|
68,300
|
1
|
8,100
|
9.5
|
|
Providence-Warwick,
RI-MA
|
12/27/2017
|
86,000
|
1
|
8,125
|
9.9
|
|
Madison,
WI
|
12/28/2017
|
283,000
|
2
|
14,300
|
5.2
|
|
Total / weighted
average
|
|
1,914,210
|
11
|
$107,392
|
7.3
|
7.3%
|
The chart below details the 2017 acquisition activity and
Pipeline through February 15, 2018:
2017 ACQUISITION
ACTIVITY AND PIPELINE DETAIL
|
|
|
Square
Feet
|
Buildings
|
Purchase
Price ($000s)
|
W.A. Lease
Term (Years)
|
Capitalization
Rate
|
Q1
|
2,334,622
|
11
|
$99,786
|
6.2
|
8.2%
|
Q2
|
4,573,794
|
21
|
285,607
|
9.1
|
7.2%
|
Q3
|
2,295,030
|
10
|
119,726
|
5.9
|
7.5%
|
Q4
|
1,914,210
|
11
|
107,392
|
7.3
|
7.3%
|
2017 closed
acquisitions
|
11,117,656
|
53
|
$612,511
|
7.5
|
7.4%
|
|
|
|
|
|
|
As of February 15,
2018
|
|
|
|
|
|
Subsequent to
quarter-end acquisitions
|
599,334
|
3
|
$42,219
|
|
|
|
|
|
|
|
|
Pipeline
|
32.4
million
|
144
|
$1.9
billion
|
|
|
The chart below details the disposition activity for the twelve
months ended December 31, 2017:
2017 DISPOSITION
ACTIVITY
|
|
|
Square
Feet
|
Buildings
|
Sale Price
($000s)
|
Q1
|
113,379
|
1
|
$4,100
|
Q2
|
134,900
|
3
|
6,500
|
Q3
|
791,064
|
5
|
34,742
|
Q4
|
880,558
|
2
|
22,055
|
Total
|
1,919,901
|
11
|
$67,397
|
Subsequent to quarter end and through February 15, 2018,
the Company sold one building consisting of 491,025 square feet for
$31.9 million.
Operating Portfolio Leasing Activity
The chart below details the leasing activity for leases signed
during the quarter:
FOURTH 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
|
1,265,025
|
4.8
|
$3.90
|
$4.24
|
$0.86
|
$0.28
|
$1.14
|
4.7%
|
13.4%
|
Renewal
Leases
|
1,101,882
|
5.2
|
4.10
|
4.31
|
0.36
|
0.46
|
0.82
|
0.7%
|
11.3%
|
Total / weighted
average
|
2,366,907
|
5.0
|
$3.99
|
$4.27
|
$0.62
|
$0.37
|
$0.99
|
2.3%
|
12.2%
|
The chart below details the leasing activity for leases signed
during the twelve months ended December 31, 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
|
2,554,246
|
4.5
|
$4.04
|
$4.29
|
$1.00
|
$0.46
|
$1.46
|
4.5%
|
10.6%
|
Renewal
Leases
|
8,644,161
|
5.3
|
3.89
|
4.04
|
0.37
|
0.29
|
0.66
|
2.5%
|
10.9%
|
Total / weighted
average
|
11,198,407
|
5.2
|
$3.92
|
$4.10
|
$0.51
|
$0.33
|
$0.84
|
2.9%
|
10.8%
|
The chart below details the Retention activity for the twelve
months ended December 31, 2017:
2017
RETENTION
|
|
|
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%
|
Q3
|
1,263,911
|
896,695
|
4.0
|
70.9%
|
8.5%
|
15.3%
|
Q4
|
1,228,294
|
647,724
|
5.0
|
52.7%
|
(0.7)%
|
7.6%
|
Total / weighted
average
|
5,482,494
|
3,237,823
|
4.8
|
59.1%
|
4.4%
|
11.1%
|
Liquidity and Capital Market Activity
As of December 31, 2017, the Company had Liquidity of
$348 million and net debt to
annualized Adjusted Run Rate EBITDA was 4.9x.
The chart below details the ATM program activity for the twelve
months ended December 31, 2017:
2017 ATM
ACTIVITY
|
|
|
Shares
Issued
|
Price per
Share
(W.A.)
|
Gross
Proceeds
($000s)
|
Net
Proceeds
($000s)
|
Q1
|
2,843,907
|
$24.10
|
$68,543
|
$67,602
|
Q2
|
7,912,636
|
$26.01
|
205,842
|
203,327
|
Q3
|
2,409,453
|
$27.08
|
65,239
|
64,424
|
Q4
|
3,096,379
|
$28.39
|
87,918
|
86,819
|
Total / weighted
average
|
16,262,375
|
$26.29
|
$427,542
|
$422,172
|
Subsequent to quarter end, on February 14, 2018, the
Company's Board of Directors declared the following first quarter
preferred stock dividends:
FIRST QUARTER 2018
PREFERRED DIVIDENDS DECLARED
|
|
Series
|
Record
Date
|
Payment
Date
|
Quarterly
Dividend
|
Series B - 6.625%
Cumulative Redeemable Preferred Stock (NYSE: STAG Pr B)
|
March 15,
2018
|
April 2,
2018
|
$0.4140625
|
Series C - 6.875%
Cumulative Redeemable Preferred Stock (NYSE: STAG Pr C)
|
March 15,
2018
|
April 2,
2018
|
$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, Friday, February 16, 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 13675090.
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)
|
|
|
December 31,
2017
|
|
December 31,
2016
|
Assets
|
|
|
|
Rental
Property:
|
|
|
|
Land
|
$
|
321,560
|
|
|
$
|
272,162
|
|
Buildings and
improvements, net of accumulated depreciation of $249,057 and
$187,413,
respectively
|
1,932,764
|
|
|
1,550,141
|
|
Deferred leasing
intangibles, net of accumulated amortization of $280,642 and
$237,456,
respectively
|
313,253
|
|
|
294,533
|
|
Total rental
property, net
|
2,567,577
|
|
|
2,116,836
|
|
Cash and cash
equivalents
|
24,562
|
|
|
12,192
|
|
Restricted
cash
|
3,567
|
|
|
9,613
|
|
Tenant accounts
receivable, net
|
33,602
|
|
|
25,223
|
|
Prepaid expenses and
other assets
|
25,364
|
|
|
20,821
|
|
Interest rate
swaps
|
6,079
|
|
|
1,471
|
|
Assets held for sale,
net
|
19,916
|
|
|
—
|
|
Total
assets
|
$
|
2,680,667
|
|
|
$
|
2,186,156
|
|
Liabilities and
Equity
|
|
|
|
Liabilities:
|
|
|
|
Unsecured credit
facility
|
$
|
271,000
|
|
|
$
|
28,000
|
|
Unsecured term loans,
net
|
446,265
|
|
|
446,608
|
|
Unsecured notes,
net
|
398,234
|
|
|
397,966
|
|
Mortgage notes,
net
|
58,282
|
|
|
163,565
|
|
Accounts payable,
accrued expenses and other liabilities
|
43,216
|
|
|
35,389
|
|
Interest rate
swaps
|
1,217
|
|
|
2,438
|
|
Tenant prepaid rent
and security deposits
|
19,045
|
|
|
15,195
|
|
Dividends and
distributions payable
|
11,880
|
|
|
9,728
|
|
Deferred leasing
intangibles, net of accumulated amortization of $13,555 and
$10,450,
respectively
|
21,221
|
|
|
20,341
|
|
Total
liabilities
|
1,270,360
|
|
|
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 December 31, 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 December 31, 2017 and December 31,
2016
|
75,000
|
|
|
75,000
|
|
Common stock, par
value $0.01 per share, 150,000,000 shares authorized, 97,012,543
and
80,352,304 shares issued and outstanding at December 31, 2017 and
December 31, 2016,
respectively
|
970
|
|
|
804
|
|
Additional paid-in
capital
|
1,725,825
|
|
|
1,293,706
|
|
Common stock
dividends in excess of earnings
|
(516,691)
|
|
|
(410,978)
|
|
Accumulated other
comprehensive income (loss)
|
3,936
|
|
|
(1,496)
|
|
Total stockholders'
equity
|
1,359,040
|
|
|
1,027,036
|
|
Noncontrolling
interest
|
51,267
|
|
|
39,890
|
|
Total
equity
|
1,410,307
|
|
|
1,066,926
|
|
Total
liabilities and equity
|
$
|
2,680,667
|
|
|
$
|
2,186,156
|
|
|
|
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
STAG
Industrial, Inc.
|
(unaudited, in
thousands, except share data)
|
|
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenue
|
|
|
|
|
|
|
|
Rental
income
|
$
|
69,210
|
|
|
$
|
56,166
|
|
|
$
|
255,831
|
|
|
$
|
212,741
|
|
Tenant
recoveries
|
12,053
|
|
|
10,300
|
|
|
45,005
|
|
|
37,107
|
|
Other
income
|
7
|
|
|
68
|
|
|
251
|
|
|
395
|
|
Total
revenue
|
81,270
|
|
|
66,534
|
|
|
301,087
|
|
|
250,243
|
|
Expenses
|
|
|
|
|
|
|
|
Property
|
15,389
|
|
|
13,232
|
|
|
57,701
|
|
|
48,904
|
|
General and
administrative
|
8,259
|
|
|
7,022
|
|
|
33,349
|
|
|
33,395
|
|
Property acquisition
costs
|
702
|
|
|
1,454
|
|
|
5,386
|
|
|
4,567
|
|
Depreciation and
amortization
|
40,595
|
|
|
33,719
|
|
|
150,881
|
|
|
125,444
|
|
Loss on
impairments
|
1,879
|
|
|
5,614
|
|
|
1,879
|
|
|
16,845
|
|
Gain on involuntary
conversion
|
(655)
|
|
|
—
|
|
|
(325)
|
|
|
—
|
|
Other
expenses
|
284
|
|
|
292
|
|
|
1,786
|
|
|
1,149
|
|
Total
expenses
|
66,453
|
|
|
61,333
|
|
|
250,657
|
|
|
230,304
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
Interest
income
|
2
|
|
|
2
|
|
|
12
|
|
|
10
|
|
Interest
expense
|
(10,912)
|
|
|
(11,082)
|
|
|
(42,469)
|
|
|
(42,923)
|
|
Loss on
extinguishment of debt
|
—
|
|
|
(1,288)
|
|
|
(15)
|
|
|
(3,261)
|
|
Gain on the sales of
rental property, net
|
5,017
|
|
|
40,234
|
|
|
24,242
|
|
|
61,823
|
|
Total other
income (expense)
|
(5,893)
|
|
|
27,866
|
|
|
(18,230)
|
|
|
15,649
|
|
Net
income
|
$
|
8,924
|
|
|
$
|
33,067
|
|
|
$
|
32,200
|
|
|
$
|
35,588
|
|
Less: income
attributable to noncontrolling interest after preferred
stock dividends
|
267
|
|
|
1,376
|
|
|
941
|
|
|
1,069
|
|
Net income
attributable to STAG Industrial, Inc.
|
$
|
8,657
|
|
|
$
|
31,691
|
|
|
$
|
31,259
|
|
|
$
|
34,519
|
|
Less: preferred stock
dividends
|
2,449
|
|
|
2,983
|
|
|
9,794
|
|
|
13,897
|
|
Less: amount
allocated to participating securities
|
84
|
|
|
100
|
|
|
334
|
|
|
384
|
|
Net income
attributable to common stockholders
|
$
|
6,124
|
|
|
$
|
28,608
|
|
|
$
|
21,131
|
|
|
$
|
20,238
|
|
Weighted average
common shares outstanding — basic
|
|
95,192,218
|
|
|
|
75,558,806
|
|
|
|
89,537,714
|
|
|
|
70,637,185
|
|
Weighted average
common shares outstanding — diluted
|
|
95,764,261
|
|
|
|
75,865,780
|
|
|
|
90,003,559
|
|
|
|
70,852,548
|
|
Net income per
share — basic and diluted
|
|
|
|
|
|
|
|
Net income per share
attributable to common stockholders —
basic
|
$
|
0.06
|
|
|
$
|
0.38
|
|
|
$
|
0.24
|
|
|
$
|
0.29
|
|
Net income per share
attributable to common stockholders —
diluted
|
$
|
0.06
|
|
|
$
|
0.38
|
|
|
$
|
0.23
|
|
|
$
|
0.29
|
|
|
|
|
|
|
|
|
|
RECONCILIATIONS OF
GAAP TO NON-GAAP MEASURES
STAG Industrial, Inc.
(unaudited, in thousands)
|
|
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
NET OPERATING
INCOME RECONCILIATION
|
|
|
|
|
|
|
|
Net
income
|
$
|
8,924
|
|
|
$
|
33,067
|
|
|
$
|
32,200
|
|
|
$
|
35,588
|
|
Asset management fee
income
|
—
|
|
|
(44)
|
|
|
(52)
|
|
|
(210)
|
|
General and
administrative
|
8,259
|
|
|
7,022
|
|
|
33,349
|
|
|
33,395
|
|
Property acquisition
costs
|
702
|
|
|
1,454
|
|
|
5,386
|
|
|
4,567
|
|
Depreciation and
amortization
|
40,595
|
|
|
33,719
|
|
|
150,881
|
|
|
125,444
|
|
Interest
income
|
(2)
|
|
|
(2)
|
|
|
(12)
|
|
|
(10)
|
|
Interest
expense
|
10,912
|
|
|
11,082
|
|
|
42,469
|
|
|
42,923
|
|
Loss on
impairments
|
1,879
|
|
|
5,614
|
|
|
1,879
|
|
|
16,845
|
|
Gain on involuntary
conversion
|
(655)
|
|
|
—
|
|
|
(325)
|
|
|
—
|
|
Loss on
extinguishment of debt
|
—
|
|
|
1,288
|
|
|
15
|
|
|
3,261
|
|
Other
expenses
|
284
|
|
|
292
|
|
|
1,097
|
|
|
1,149
|
|
Loss on incentive
fee
|
—
|
|
|
—
|
|
|
689
|
|
|
—
|
|
Gain on the sales of
rental property, net
|
(5,017)
|
|
|
(40,234)
|
|
|
(24,242)
|
|
|
(61,823)
|
|
Net operating
income
|
$
|
65,881
|
|
|
$
|
53,258
|
|
|
$
|
243,334
|
|
|
$
|
201,129
|
|
|
|
|
|
|
|
|
|
Net operating
income
|
$
|
65,881
|
|
|
$
|
53,258
|
|
|
$
|
243,334
|
|
|
$
|
201,129
|
|
Straight-line rent
adjustments, net
|
(2,313)
|
|
|
(470)
|
|
|
(6,691)
|
|
|
(2,555)
|
|
Straight-line
termination income adjustments, net
|
(308)
|
|
|
857
|
|
|
(786)
|
|
|
678
|
|
Intangible
amortization in rental income, net
|
710
|
|
|
1,462
|
|
|
4,583
|
|
|
6,213
|
|
Cash net operating
income
|
$
|
63,970
|
|
|
$
|
55,107
|
|
|
$
|
240,440
|
|
|
$
|
205,465
|
|
|
|
|
|
|
|
|
|
Cash net operating
income
|
$
|
63,970
|
|
|
|
|
|
|
|
Cash NOI from
acquisitions' and dispositions' timing
|
829
|
|
|
|
|
|
|
|
Cash termination
income
|
(157)
|
|
|
|
|
|
|
|
Run Rate Cash
NOI
|
$
|
64,642
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED EBITDA
RECONCILIATION
|
|
|
|
|
|
|
|
Net
income
|
$
|
8,924
|
|
|
$
|
33,067
|
|
|
$
|
32,200
|
|
|
$
|
35,588
|
|
Intangible
amortization in rental income, net
|
710
|
|
|
1,462
|
|
|
4,583
|
|
|
6,213
|
|
Straight-line rent
adjustments, net
|
(2,312)
|
|
|
(470)
|
|
|
(6,689)
|
|
|
(2,496)
|
|
Non-cash compensation
expense
|
2,388
|
|
|
2,036
|
|
|
9,547
|
|
|
8,164
|
|
Termination
income
|
(465)
|
|
|
(72)
|
|
|
(1,527)
|
|
|
(271)
|
|
Property acquisition
costs
|
702
|
|
|
1,454
|
|
|
5,386
|
|
|
4,567
|
|
Depreciation and
amortization
|
40,595
|
|
|
33,719
|
|
|
150,881
|
|
|
125,444
|
|
Interest
income
|
(2)
|
|
|
(2)
|
|
|
(12)
|
|
|
(10)
|
|
Interest
expense
|
10,912
|
|
|
11,082
|
|
|
42,469
|
|
|
42,923
|
|
Severance
costs
|
—
|
|
|
—
|
|
|
—
|
|
|
3,063
|
|
Loss on
impairments
|
1,879
|
|
|
5,614
|
|
|
1,879
|
|
|
16,845
|
|
Gain on involuntary
conversion
|
(655)
|
|
|
—
|
|
|
(325)
|
|
|
—
|
|
Loss on
extinguishment of debt
|
—
|
|
|
1,288
|
|
|
15
|
|
|
3,261
|
|
Loss on incentive
fee
|
—
|
|
|
—
|
|
|
689
|
|
|
—
|
|
Gain on the sales of
rental property, net
|
(5,017)
|
|
|
(40,234)
|
|
|
(24,242)
|
|
|
(61,823)
|
|
Adjusted
EBITDA
|
$
|
57,659
|
|
|
$
|
48,944
|
|
|
$
|
214,854
|
|
|
$
|
181,468
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
57,659
|
|
|
|
|
|
|
|
Adjusted EBITDA from
acquisitions' and dispositions' timing
|
829
|
|
|
|
|
|
|
|
Run Rate Adjusted
EBITDA
|
$
|
58,488
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATIONS OF
GAAP TO NON-GAAP MEASURES
STAG Industrial, Inc.
(unaudited, in thousands, except share data)
|
|
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
CORE FUNDS FROM
OPERATIONS RECONCILIATION
|
|
|
|
|
|
|
|
Net
income
|
$
|
8,924
|
|
|
$
|
33,067
|
|
|
$
|
32,200
|
|
|
$
|
35,588
|
|
Rental property
depreciation and amortization
|
40,522
|
|
|
33,645
|
|
|
150,591
|
|
|
125,182
|
|
Loss on
impairments
|
1,879
|
|
|
5,614
|
|
|
1,879
|
|
|
16,845
|
|
Gain on the sales of
rental property, net
|
(5,017)
|
|
|
(40,234)
|
|
|
(24,242)
|
|
|
(61,823)
|
|
Funds from
operations
|
$
|
46,308
|
|
|
$
|
32,092
|
|
|
$
|
160,428
|
|
|
$
|
115,792
|
|
Preferred stock
dividends
|
(2,449)
|
|
|
(2,983)
|
|
|
(9,794)
|
|
|
(13,897)
|
|
Other
expenses
|
—
|
|
|
(100)
|
|
|
—
|
|
|
(384)
|
|
Funds from
operations attributable to common stockholders
and unit holders
|
$
|
43,859
|
|
|
$
|
29,009
|
|
|
$
|
150,634
|
|
|
$
|
101,511
|
|
|
|
|
|
|
|
|
|
Funds from
operations attributable to common stockholders
and unit holders
|
$
|
43,859
|
|
|
$
|
29,009
|
|
|
$
|
150,634
|
|
|
$
|
101,511
|
|
Intangible
amortization in rental income, net
|
710
|
|
|
1,462
|
|
|
4,583
|
|
|
6,213
|
|
Termination
income
|
(465)
|
|
|
(72)
|
|
|
(1,527)
|
|
|
(271)
|
|
Property acquisition
costs
|
702
|
|
|
1,454
|
|
|
5,386
|
|
|
4,567
|
|
Loss on
extinguishment of debt
|
—
|
|
|
1,288
|
|
|
15
|
|
|
3,261
|
|
Severance
costs
|
—
|
|
|
—
|
|
|
—
|
|
|
3,063
|
|
Gain on involuntary
conversion
|
(655)
|
|
|
—
|
|
|
(325)
|
|
|
—
|
|
Loss on incentive
fee
|
—
|
|
|
—
|
|
|
689
|
|
|
—
|
|
Gain on swap
ineffectiveness
|
(102)
|
|
|
—
|
|
|
(190)
|
|
|
—
|
|
Core funds from
operations
|
$
|
44,049
|
|
|
$
|
33,141
|
|
|
$
|
159,265
|
|
|
$
|
118,344
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares, participating securities,
performance units and other units
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding
|
95,192,218
|
|
|
75,558,806
|
|
|
89,537,714
|
|
|
70,637,185
|
|
Weighted average
participating securities outstanding
|
237,207
|
|
|
152,990
|
|
|
237,896
|
|
|
184,115
|
|
Weighted average
units outstanding
|
4,111,270
|
|
|
3,633,881
|
|
|
3,934,290
|
|
|
3,675,144
|
|
Weighted average
common shares, participating securities,
and other units - basic
|
99,540,695
|
|
|
79,345,677
|
|
|
93,709,900
|
|
|
74,496,444
|
|
Weighted average
performance units and outperformance plan
|
121,803
|
|
|
88,759
|
|
|
225,862
|
|
|
102,680
|
|
Dilutive common share
equivalents
|
572,043
|
|
|
306,974
|
|
|
465,845
|
|
|
215,363
|
|
Weighted average
common shares, participating securities,
performance and other units - diluted
|
|
100,234,541
|
|
|
|
79,741,410
|
|
|
|
94,401,607
|
|
|
|
74,814,487
|
|
Core funds from
operations per share / unit - basic
|
$
|
0.44
|
|
|
$
|
0.42
|
|
|
$
|
1.70
|
|
|
$
|
1.59
|
|
Core funds from
operations per share / unit - diluted
|
$
|
0.44
|
|
|
$
|
0.42
|
|
|
$
|
1.69
|
|
|
$
|
1.58
|
|
|
|
|
|
|
|
|
|
ADJUSTED FUNDS
FROM OPERATIONS RECONCILIATION
|
|
|
|
|
|
|
|
Core funds from
operations
|
$
|
44,049
|
|
|
$
|
33,141
|
|
|
$
|
159,265
|
|
|
$
|
118,344
|
|
Non-rental property
depreciation and amortization
|
73
|
|
|
74
|
|
|
290
|
|
|
262
|
|
Straight-line rent
adjustments, net
|
(2,312)
|
|
|
(470)
|
|
|
(6,689)
|
|
|
(2,496)
|
|
Recurring capital
expenditures
|
(1,735)
|
|
|
(1,117)
|
|
|
(3,264)
|
|
|
(2,176)
|
|
Renewal lease
commissions and tenant improvements
|
(457)
|
|
|
(175)
|
|
|
(4,554)
|
|
|
(2,021)
|
|
Non-cash portion of
interest expense
|
534
|
|
|
424
|
|
|
2,087
|
|
|
1,632
|
|
Non-cash compensation
expense
|
2,388
|
|
|
2,036
|
|
|
9,547
|
|
|
8,164
|
|
Adjusted funds
from operations (1)
|
$
|
42,540
|
|
|
$
|
33,913
|
|
|
$
|
156,682
|
|
|
$
|
121,709
|
|
|
|
|
|
|
|
|
|
(1) Excludes
Non-Recurring Capital Expenditures of approximately $3,512,
$16,072, $6,141 and $13,361 and new leasing commissions and tenant
improvements of approximately $1,333, $4,952, $890 and $1,975 for
the three months and year ended December 31, 2017
and December 31, 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, gain 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 adjusted for a full period of
acquisitions and 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 Adjusted 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 NOI 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, 2017.
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, 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.
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, gain 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 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
including all warehouse and light manufacturing assets and
excluding non-core flex/office assets and assets under
redevelopment or classified as held for sale. The Operating
Portfolio also excludes billboard, parking lot and cellular 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. 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. 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, early terminations or assets
classified as held for sale.
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.