Leasing Insights: Contradictions in Market Demand and Macroeconomic Impacts from Q1 2025 Call

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Strong Start to 2025:
- STAG Industrial reported core FFO per share of $0.61 for Q1 2025, exceeding initial expectations.
- The growth was driven by a very strong start to the year, with 78.5% of the expected 2025 leasing already accomplished, achieving cash leasing spreads of 25.1%.

Leasing Activity and Tariff Impact:
- The company signed 3.6 million square feet of leases commencing in Q2, with 1 million of new leasing.
- The leasing pace is similar to previous years, but some tenants are taking longer to make leasing decisions due to global trade war uncertainties and supply chain diversification efforts.

Acquisition and Disposition Strategy:
- STAG's acquisition volume for Q1 totaled $43 million, with cash and straight-line cap rates of 6.8% and 7.0% respectively.
- The focus was on acquiring stabilized deals at attractive yields, with the most recent acquisitions in Shakopee, Minnesota, and Buffalo Grove, Illinois, at cash cap rates of 6.5% and 6.9% respectively.

Development Pipeline and Cash Flow:
- The company has approximately 2.5 million square feet of development activity, with 50% under construction and 16% pre-leased.
- STAG raised $550 million in a private placement, enhancing liquidity and enabling the company to maintain a strong balance sheet with leverage at 5.2 times net debt to annualized adjusted EBITDA.

Debt Management and Credit Loss Projections:
- STAG repaid a $100 million private placement note and issued $550 million of fixed rate senior unsecured notes with an average interest rate of 5.65%.
- The company maintained its 2025 credit loss guidance of 75 basis points, despite the ongoing discussions with American Tire Distributors.