Stag Industrial Inc ((STAG)) has held its Q3 earnings call. Read on for the main highlights of the call.
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STAG Industrial’s recent earnings call painted a picture of robust performance and strategic growth, albeit with some challenges. The company showcased strong leasing success and an increase in core FFO guidance, driven by year-to-date results surpassing expectations. However, elongated lease gestation periods and high national vacancy rates posed challenges, tempering the otherwise positive outcomes.
Increased Core FFO Guidance
STAG Industrial announced an increase in its core FFO guidance for the year, now ranging from $2.52 to $2.54 per share. This $0.03 increase at the midpoint is attributed to the company’s year-to-date performance exceeding internal projections, highlighting the company’s financial strength and strategic foresight.
Leasing Success
The company reported significant leasing achievements, with 99% of its forecasted leasing for 2025 accomplished and cash leasing spreads reaching approximately 24%. For 2026, STAG has already addressed 52% of the operating portfolio square feet expected to lease, demonstrating strong tenant engagement and proactive management.
Development Platform Growth
STAG’s development activities are thriving, with 3.4 million square feet of projects underway. Completed developments are 83% leased as of September 30, and a new build-to-suit project in Union, Ohio, is on track for completion in Q3 2026, promising a stabilized yield of 7%.
Strong Leasing Activity
In the third quarter, STAG commenced 22 leases totaling 2.2 million square feet, achieving cash and straight-line leasing spreads of 27.2% and 40.6%, respectively. This robust leasing activity underscores the company’s ability to capitalize on market opportunities.
Improved Acquisition Opportunities
The third quarter saw acquisition volumes reach $101.5 million, with an additional $153 million under agreement to close by year-end. This reflects STAG’s strategic approach to expanding its portfolio and capitalizing on favorable market conditions.
Elongated Lease Gestation Periods
Despite improvements in leasing demand, STAG noted that lease gestation periods remain elongated. However, increased tours and RFPs indicate a positive trend in tenant interest and engagement.
National Vacancy Rates
STAG anticipates national vacancy rates to hover around 7% for the next few quarters, which could impact market rent growth until the latter half of next year. This outlook suggests cautious optimism as the company navigates the current market landscape.
Credit Loss Impact
Same-store cash NOI growth was slightly hindered by a 23 basis point cash credit loss incurred during the year. This impact highlights the challenges faced in maintaining consistent growth amid varying market conditions.
Forward-Looking Guidance
Looking ahead, STAG Industrial has increased its core FFO guidance, reflecting confidence in its ongoing performance. The company expects cash leasing spreads of 18% to 20% for 2026, with a significant portion of the operating portfolio already addressed. Acquisition opportunities remain strong, with substantial deals set to close by year-end. Despite current challenges, STAG is optimistic about improving leasing demand and national vacancy rates in the latter half of 2026.
In summary, STAG Industrial’s earnings call highlighted a strong performance with strategic growth initiatives in place. While challenges such as elongated lease gestation periods and national vacancy rates persist, the company’s increased FFO guidance and robust leasing activities underscore its resilience and strategic foresight. Investors and market watchers will likely view these developments as a positive indicator of STAG’s future potential.