Stag Industrial Q3 Earnings Call Highlights

Key Points

• STAG Industrial raised its 2026 outlook after reporting third-quarter Core FFO of $0.66 per share, up 1.5% year over year. The company increased Core FFO guidance to $2.64–$2.66 per share and same-store cash NOI growth guidance to 3.5%–3.75%.
• Operating performance remained strong, with 23.8% cash leasing spreads, 90.3% tenant retention and 3.5% same-store cash NOI growth. Management cited improving industrial-market fundamentals, lower-than-expected credit losses and rising occupancy expectations.
• STAG is seeing substantial demand from data center-related tenants, which represented about 30% of year-to-date 2026 new leasing. However, interest-rate volatility is pressuring acquisition pricing, leading the company to assume limited additional 2026 acquisitions despite maintaining strong liquidity and investment-grade credit ratings.

STAG Industrial NYSE: STAG reported third-quarter 2026 Core FFO of $0.66 per share, up 1.5% from a year earlier, as the industrial real estate owner cited improving operating fundamentals, strong leasing spreads and lower-than-expected credit losses.

Chief Executive Officer Bill Crooker said national industrial fundamentals continued to improve during the quarter. National vacancy rates declined from the prior quarter, while net absorption totaled approximately 75 million square feet, the highest quarterly level since early 2023. Year-to-date absorption exceeded 186 million square feet, with non-coastal markets accounting for 80% of that activity, he said.

“New construction remains disciplined,” Crooker said, noting that product under construction was less than 2% of existing inventory and that much of the pipeline had already been committed through pre-leasing or build-to-suit agreements.

Leasing and Same-Store Performance

During the quarter, STAG commenced 30 leases spanning 3.6 million square feet. Cash leasing spreads were 23.8%, while straight-line leasing spreads were 35.7%. Tenant retention was 90.3%.

Same-store cash net operating income rose 3.5% in the third quarter and 3.9% through the first nine months of the year. Chief Financial Officer Matts Pinard said the year-to-date result included roughly 30 basis points of benefit from the timing of a tenant payment tied to a company affiliated with the First Brands bankruptcy.

The tenant did not pay rent in the third quarter of 2025 but substantially paid both the prior-quarter and current rent in the fourth quarter of 2025, Pinard said. Adjusting for that timing difference, year-to-date same-store cash NOI growth would have been 3.6%.

For 2027 lease expirations, Crooker said the company had completed about 40% of its leasing plan. Cash rollover spreads on that completed portion were 12%, or 17.5% excluding leases with fixed renewal options. STAG expects leasing spreads of approximately 15% next year.

Management expects market rent growth of 2% to 4% in 2027, compared with an expected 1.6% for 2026. Crooker said strength has been particularly notable in markets where the company has significant exposure, including Greenville-Spartanburg and Columbus. He also said the company expects low- to mid-double-digit leasing spreads in 2028 and 2029 assuming moderate market rent growth.

Data Center Demand and Development Pipeline

STAG continued to see demand from third-party logistics providers, advanced manufacturers and data center-related tenants. Crooker said the company has leased 2.5 million square feet to data center-related tenants since the beginning of 2025, representing 26% of all new operating portfolio leasing during that period.

Through year-to-date 2026, data center-related leasing accounted for about 30% of new leasing activity, according to Crooker. He said the leases generally carry terms of six to seven years and involve tenants supporting data center operations. The activity has been concentrated in markets with significant data center development, including the Midwest, Southeast and Texas.

The company had seven development buildings totaling 1.8 million square feet that were not in service at the end of the third quarter, with an expected stabilized yield of 7%. STAG executed two development leases during the period totaling 69,000 square feet.

Chief Operating Officer Steve Kimball said STAG was tracking more than $500 million of investment across 16 development buildings in 11 markets, with more than 20% of the program in build-to-suit projects. He said the company underwrites 12 months of downtime for speculative developments.

Kimball highlighted active projects in Kansas City, Dallas and Phoenix, and said the company was encouraged by leasing activity at developments in Charlotte and Louisville. He identified the company’s Reno North Valleys project as carrying the most leasing risk, citing slower demand from traditional distribution and fulfillment users despite improving vacancy and absorption trends.

Acquisitions, Capital Position and Guidance

STAG acquired two buildings for $107.9 million during the third quarter, at cash and straight-line capitalization rates of 6.9% and 7.2%, respectively. After the quarter ended, the company acquired another building for $55 million at a 6.7% cash capitalization rate and a 7.1% straight-line capitalization rate.

Chief Investment Officer Mike Chase said recent interest-rate volatility had begun to produce some buyer retrades and repricing in the acquisition market. He estimated that pricing adjustments could ultimately amount to about 25 to 30 basis points. Crooker said STAG expects stabilized capitalization rates to be 25 to 35 basis points higher than levels seen earlier in the year, though the company’s revised acquisition outlook assumes limited additional activity in 2026 because of capital-market uncertainty.

The company ended the quarter with net debt to annualized run-rate adjusted EBITDAre of 5.1 times and $546 million of liquidity. STAG also had $70 million in forward equity net proceeds available for settlement.

During the quarter, the company repaid a $50 million private placement note that matured July 1. It also combined two term loans due in March 2027 into a $350 million loan maturing in January 2032. The company said it received a BBB rating with a stable outlook from S&P Global Ratings in August, joining its investment-grade ratings from Fitch and Moody’s.

• Average same-store occupancy guidance was raised to 96.75% to 97.25%.
• Cash same-store NOI growth guidance was raised to 3.5% to 3.75%, from 3% to 3.5%.
• Acquisition volume guidance was narrowed to $530 million to $600 million.
• Expected stabilized capitalization rates were set at 6.3% to 6.4%.
• Core FFO guidance was increased to $2.64 to $2.66 per share.

Pinard said the higher same-store NOI outlook reflected improved occupancy expectations and credit losses that have remained below the company’s initial projections. STAG reported 12 basis points of credit loss through the third quarter, compared with its initial expectation of 50 basis points for the year.

“We will finish this year ahead of our initial budgets and are well-positioned going into 2027,” Crooker said.

About Stag Industrial (NYSE:STAG)

STAG Industrial, Inc is a real estate investment trust (REIT) that owns, operates and acquires industrial properties throughout the United States. The company focuses primarily on single-tenant properties, which it leases to businesses for uses such as warehousing, distribution, manufacturing and logistics.

Its portfolio includes a range of industrial facilities serving tenants across diverse industries and geographic markets. STAG Industrial's business activities include property acquisition, leasing, management and development, with an emphasis on facilities that support supply-chain and operating requirements.

Founded in 2010 and headquartered in Boston, Massachusetts, STAG Industrial became a publicly traded company in 2011.

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