Stag Industrial Q2 Earnings Call Highlights

Key Points

• STAG raised its 2026 outlook, increasing Core FFO guidance to $2.61–$2.65 per share, same-store cash NOI growth guidance to 3%–3.5%, acquisition guidance to $400 million–$700 million, and average occupancy guidance to 96.25%–97.25%.
• Industrial market conditions improved, with first-half national net absorption reaching 111 million square feet and the construction pipeline down roughly half from its 2022 peak. STAG reported 19.8% cash leasing spreads, 75.7% tenant retention, and strong demand from e-commerce, manufacturing, and data center-related users.
• STAG acquired seven Class A industrial buildings for $287.1 million and continues to pursue development projects with expected stabilized yields above 7%. The company ended the quarter with net debt to adjusted EBITDA of 5.2 times and $614 million of liquidity.

Stag Industrial NYSE: STAG said industrial real estate fundamentals continued to stabilize during the second quarter of 2026, citing stronger absorption, a reduced development pipeline and demand from e-commerce, manufacturing and data center-related users.

Chief Executive Officer Bill Crooker said national net absorption reached 69 million square feet in the second quarter and 111 million square feet during the first half, which he described as the strongest start to a year since 2022. He said the construction pipeline has declined by roughly half from its 2022 peak, with projects under construction representing about 2% of total industrial stock and approximately 55% of that supply pre-leased.

“We believe the improvement in both the supply and demand picture is real and durable,” Crooker said, adding that the company expects the environment to support improved rent growth heading into 2027.

Second-Quarter Results and Leasing

Core funds from operations, or Core FFO, totaled $0.65 per share in the quarter, up 3.2% from a year earlier, Chief Financial Officer Matts Pinard said. Same-store cash net operating income increased 3.4% in the second quarter and 3.9% year to date.

During the quarter, STAG commenced 36 leases covering 5.6 million square feet. Cash leasing spreads were 19.8%, while straight-line leasing spreads were 33.7%. Quarterly tenant retention was 75.7%.

Pinard said 92% of the company’s forecasted 2026 leasing activity had been addressed as of the call date, at levels consistent with its original outlook. Crooker said STAG continues to expect annual leasing spreads of 18% to 20%, likely toward the upper end of that range.

Management said first-quarter leasing spreads had benefited from two leases that rolled up by nearly 60% after long-term agreements with low annual rent escalations expired. In the second quarter, one lease rolled closer to market rates because it had been a shorter-term lease with higher escalators.

For 2027, Crooker said approximately 35% of the company’s leasing plan had already been addressed, compared with a historical range of roughly 26% to 28% at this point in the year. He attributed the progress to demand in STAG’s markets and tenants’ willingness to renew early.

Acquisitions, Development and Dispositions

STAG acquired seven buildings for $287.1 million during the second quarter. The acquisitions carried cash and straight-line capitalization rates of 6.1% and 6.8%, respectively. Crooker said the properties were Class A assets in markets where the company expects to maintain a long-term presence, with lease escalators of about 3.3% and rents generally at or slightly below market levels.

The company had nine development buildings totaling 2.3 million square feet that were not yet in service at quarter-end, with expected stabilized yields of 7.1%.

• In April, STAG closed on a 343,000-square-foot build-to-suit project in Rockwall, Texas, northeast of Dallas. Construction began in the second quarter, with delivery expected in the second quarter of 2027 and an anticipated yield of 7.5%.
• The company also acquired a 184,000-square-foot development site in Chandler, Arizona, southeast of Phoenix. STAG expects to break ground in late third-quarter 2026 and deliver the project in the third quarter of 2027.
• STAG leased 35,000 square feet, or 25%, of its Tampa development to a fueling solutions provider, with the lease beginning Aug. 1.
• Near quarter-end, the company leased 47,000 square feet, or 62%, of a Reno development to an e-commerce company, with the lease beginning Sept. 1.

Crooker said development remains an attractive use of capital because expected yields are above 7%, though expanding the platform will take time. He said STAG has about $290 million of projects in construction or other non-stabilized development stages and would like to increase that amount by several hundred million dollars over time.

The company expects additional dispositions during the second half, with sales likely weighted more toward non-core assets. Crooker said STAG sold three assets during the first half: two non-core properties at about an 8% capitalization rate and one opportunistic sale at a 5.7% capitalization rate.

Market Demand and Regional Trends

STAG has leased 2.3 million square feet to data center-related tenants since the beginning of 2025. Crooker said the demand has been concentrated across parts of the Midwest, Southeast and Texas, including Michigan, Wisconsin, South Carolina and Houston.

Most of the data center-related leasing is tied to supporting existing data centers, such as storing generators and spare parts, rather than constructing new facilities, he said. The weighted average lease term for those tenants is six to seven years, and the leases were renewed or signed at rent increases of about 33%, according to Crooker.

Management said the Midwest, Southeast and Texas have been strong markets, while certain port-oriented markets, including Savannah and Charleston, have been slower. El Paso and Reno also have been softer, with Crooker citing U.S.-Mexico relations in El Paso and weaker traditional logistics demand in Reno.

Chief Operating Officer Steve Kimball said activity has remained strong for large bulk industrial space, while demand has broadened to smaller units of 70,000 square feet or less. He said leasing activity for properties between 150,000 and 300,000 square feet had been slower but appeared to be improving.

Balance Sheet and Updated Outlook

STAG ended the quarter with net debt to annualized run-rate adjusted EBITDA of 5.2 times, or 5.1 times including $70 million of unsettled forward equity proceeds. Liquidity totaled $614 million.

The company issued 3.4 million shares on a forward basis through its at-the-market program at an average gross price of $39 per share, generating $131 million of gross proceeds. It settled $59.8 million of forward ATM proceeds during the first half and plans to use the remaining $70 million to reduce revolver borrowings and fund acquisitions and development.

After quarter-end, STAG repaid a $50 million private placement note that matured July 1. On July 16, the company refinanced two term loans totaling $350 million into a single loan maturing in January 2032. The debt carries a fixed rate of 3.53% through March 2027 and 4.79% thereafter through maturity. The refinancing also reduced pricing on the company’s revolver and outstanding term loans by 5 basis points.

STAG raised its 2026 Core FFO guidance to $2.61 to $2.65 per share, increasing the midpoint by $0.01. The company also raised expected cash same-store NOI growth to 3% to 3.5%, increased acquisition guidance to $400 million to $700 million, and lifted average same-store occupancy guidance by 25 basis points to 96.25% to 97.25%.

About Stag Industrial (NYSE:STAG)

Stag Industrial, Inc is a real estate investment trust (REIT) that specializes in the acquisition, ownership and operation of single-tenant industrial properties throughout the United States. The company's portfolio is focused on free-standing warehouses, distribution centers and light manufacturing facilities designed to meet the logistical needs of a diverse tenant base. By concentrating on properties with straightforward layouts and minimal common-area maintenance, Stag Industrial seeks to deliver stable rental income and attractive risk-adjusted returns for its shareholders.

Since its founding in 2010 and initial public offering in 2011, Stag Industrial has pursued a disciplined investment strategy centered on high-quality, well-located assets.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.