STAG's Q3 2025: Contradictions Emerge on Market Recovery, Acquisition Pipeline, and Leasing Activity

Guidance:

• Core FFO guidance raised to $2.52 to $2.54 per share (up $0.03 at the midpoint).
• Cash same-store NOI guidance increased to 4.0% to 4.25% for 2025.
• Acquisition volume narrowed to $350M to $500M for 2025 (reduced top end).
• G&A guidance lowered to $51M to $52M for the year.
• Company expects 2026 cash leasing spreads of ~18%–20% and market rent growth ~2%.

Business Commentary:

* Strong Year-to-Date Results and Guidance Increase: - STAG Industrial reported that its year-to-date results exceeded internal projections, leading to an increase in core FFO guidance for 2025 to a range of $2.52 to $2.54 per share, a $0.03 increase at the midpoint. - The growth was supported by stable industrial fundamentals and improved leasing demand.

• Leasing and Development Activities:
• The company accomplished 99% of its forecasted leasing for 2025 at levels consistent with initial guidance, including 24% cash leasing spreads.

• This was driven by increased leasing demand and early renewals of large leases, demonstrating strong tenant engagement and commitment to their space.

• Acquisition Volume and Opportunities:

• STAG Industrial's acquisition volume for the third quarter totaled $101.5 million, with $153 million more under agreement and expected to close by year-end.

• The increase in acquisition opportunities was due to eager sellers closing by year-end and favorable market conditions allowing for more accretive transactions.

• Development Platform and Stability:

• STAG has 3.4 million square feet of development activity or recent completions across 13 buildings, with 52% completed developments currently 88% leased.
• The stable demand and high occupancy rates in key markets have contributed to the success of the development platform, with continued interest from credit tenants.

Sentiment Analysis:

Overall Tone: Positive

• Management raised core FFO guidance and increased same-store NOI outlook; reported Q3 core FFO per share $0.65 (up 8.3%) and strong leasing activity (5.9M sqft in Q3, record year-to-date leasing), and noted accelerating acquisition opportunities and stabilized market fundamentals.

Q&A:

• Question from Craig Mailman (Citigroup Inc., Research Division): Bill, the progress on '26 here is really good, puts you guys in a good spot for next year. I'm just kind of curious, is it tenants coming to you -- could you just talk about what is driving that, I guess? Is there a higher weighting of those maturities kind of skewed towards the first half, and so you're just in that window of tenants kind of looking to get that done? Or are people coming to you early? I just kind of want a little bit more color on what's driving that. Is it -- like what's the breakout of renewals versus kind of new leasing or backfills of vacated lease expirations?
  Response: About 95% of the addressed 2026 leasing are renewals; STAG has proactively engaged tenants and has already addressed ~52% of the expected 2026 expirations.

• Question from Craig Mailman (Citigroup Inc., Research Division): And you guys -- you talked about the build-to-suit in Ohio. You guys got Greenville done, you got Nashville done. I mean is this -- I know that everyone and you guys included have been talking about sort of a thawing of the tenant decision-making. I mean is it people just feeling more comfortable putting capital out the door? Or is there a bit of FOMO in some of your markets where you don't have as much new supply as kind of where it's top-heavy in a couple of markets in the U.S. and so some things have been taken off the table and now people are rushing to make sure they secure a spot? Like could you talk a little bit about the dynamics across some of your markets and maybe point out some of the really -- kind of your best and maybe still slowest markets in terms of activity?
  Response: Markets are stabilizing (national vacancy ~7%); STAG's portfolio has been less volatile than top-5 markets, development is productive, and tenant activity/comfort is improving, driving leasing and selective FOMO in tighter submarkets.

• Question from Nicholas Thillman (Robert W. Baird & Co. Incorporated, Research Division): Maybe talking on the '26 leasing and the progress there, just the sustainability of these spreads in the mid-20 is a little bit higher. You mentioned sort of the 4 large renewals. If we just look at the expiration schedule, it looks like the rents expiring here around 15% below where they were at the beginning of this year. So just curious on what we're thinking for spreads for the remainder of the expirations?
  Response: Guidance for 2026 cash leasing spreads is 18%–20%; remaining lower spreads reflect many fixed renewal options embedded in the remaining expirations.

• Question from Nicholas Thillman (Robert W. Baird & Co. Incorporated, Research Division): And then just on maybe Matts on occupancy, you had a little bit of a headwind this year. As we think of building blocks for '26, good progress on the leasing. How are we feeling about sort of portfolio occupancy or potentially even growing that in the same-store pool next year?
  Response: No 2026 occupancy guidance provided now; management will issue 2026 guidance in February and declined to give specifics today.

• Question from Eric Borden (BMO Capital Markets Equity Research): Bill, can you just talk a little bit about your appetite to lean into developments here, just given the improving demand environment and the potential for a vacancy inflection in the back half of '26? Is there -- how are you feeling about potentially leaning into developments to get ahead or time up the deliveries with the improving landscape?
  Response: Bullish on development when underwriting meets targets (aiming for ~7% going-in stabilized yield), while also increasing acquisition activity as attractively priced deals appear.

• Question from Eric Borden (BMO Capital Markets Equity Research): I appreciate that. Just one on the guidance. You raised guidance $0.03 at the midpoint, but it implies a sequential deceleration from the third quarter to the fourth quarter. Maybe could you just talk about some of the offsetting factors in the fourth quarter that are driving that sequential drag?
  Response: Sequential drag reflects a conservative credit-loss reserve baked into Q4 modeling; if the company outperforms that assumption, results would be toward the high end of guidance.

• Question from Blaine Heck (Wells Fargo Securities, LLC, Research Division): Just following up on acquisitions, Bill, can you talk about what might have changed over the last 90 days to kind of pull back on your forecast, if there was anything specific that you noticed? And then this is probably difficult to forecast now, but given the trends you're seeing today that you just alluded to, how do you feel about your ability to make up for this 2025 decrease in 2026 and show a more significant increase in activity year-over-year?
  Response: Earlier uncertainty reduced deal flow; over the past quarter market stability, improved seller pricing and year-end seller urgency increased deal flow and STAG expects to capitalize on more Q4 transactions.

• Question from Blaine Heck (Wells Fargo Securities, LLC, Research Division): Okay. That's helpful and makes a lot of sense. Just shifting gears to leasing. Can you talk about any leases you've signed that are directly or indirectly related to manufacturing projects or nearshoring and onshoring? And any markets that you think are particularly well positioned in your portfolio to benefit from some of those trends?
  Response: Yes — portfolio benefits from onshoring and manufacturing (Midwest and Southeast), including recent leases tied to onshored wood flooring supplier, solar manufacturing, and generator manufacturing for data centers.

• Question from Vince Tibone (Green Street Advisors, LLC, Research Division): For the near-term acquisitions you're looking at, are you considering any value-add deals that will require lease-up or focus more on stabilized assets? Just curious kind of where you find the best opportunity today and if there's any greater opportunities from some forced sellers with some spec projects that have not gone according to their underwriting, kind of hitting the market and allowing for any interesting opportunities for yourself?
  Response: Currently seeing few attractively priced value-add opportunities; focus is skewed toward stabilized, longer-term leased assets, though they will evaluate developer carve-outs when economics work.

• Question from Vince Tibone (Green Street Advisors, LLC, Research Division): No, that's helpful color. Maybe just switching gears for a second. Just on the updated same-store guide for the year, it looks like it's implying decent acceleration in the fourth quarter. If you could just talk about kind of what's driving that? Are you expecting any sequential occupancy gains in the fourth quarter kind of what else may be at play that kind of gets. I think like the mid- to high 5s is what it implies for the fourth quarter, the updated same-store guide? Can you just touch on that, that would be helpful.
  Response: Q4 acceleration driven by timing: a tenant moved to cash-basis and AR was written off in Q3 but entered a repayment agreement and is making required payments; if they cure by year-end, same-store NOI will be near the high end of guidance.

• Question from Vince Tibone (Green Street Advisors, LLC, Research Division): No, that's super helpful. And is there any color on occupancy. I mean, should we expect same-store occupancy to be around 97% as well in the fourth quarter, given it sounds like most of the leasing is done?
  Response: Occupancy guidance unchanged — the company expects roughly 75 basis points of occupancy loss for the full year and is not updating 2026 occupancy now.

• Question from Jonathan Petersen (Jefferies LLC, Research Division): The $153 million of acquisitions that you have under agreement, can you give us a sense of the cap rates on those properties that we should be thinking about?
  Response: Cap rates on under-agreement deals are consistent with recent Q3 closings, which ranged around mid-6% to low-7% cash cap rates.

• Question from Jonathan Petersen (Jefferies LLC, Research Division): Okay. And then the new land that you bought in Union, Ohio, I believe that's near Dayton. Can you just talk about that market a little bit? It's maybe not one I'm super familiar with. So just what are you seeing from a demand and supply perspective that gives you confidence in doing a development there?
  Response: Dayton is an emerging market (~104M sqft, ~4% vacancy, <1M sqft under construction); the Union, OH build-to-suit sits near the airport and is pre-leased to a strong-credit tenant for 10 years, making it an easy development decision.

• Question from Jonathan Petersen (Jefferies LLC, Research Division): Okay. And then I know we're all trying to tease out 2026 same-store. So maybe I'll ask it one more way. Is there any known move-outs that we should be thinking about as we look into '26?
  Response: No material move-outs to disclose; of five large expirations (>400k sqft) four have been addressed and the final one is in active negotiations.

• Question from Michael Griffin (Evercore ISI Institutional Equities, Research Division): Bill, I want to go back to your comment in your prepared remarks about lease gestation time frame remaining longer and maybe marrying that up to the execution you've had in your '26 leasing plan already, I mean, whether it's new leases or renewals? Like can you give us a sense, are tenants shopping around for a deal? Or does it seem like they're getting closer and closer and ready to sign on the dotted line, given the maybe greater clarity and certainty that's out in the market?
  Response: Lease gestation remains elongated in general, but can be very short in tight markets (example: Nashville done in weeks); gestation should shorten as vacancy rates decline.

• Question from Michael Griffin (Evercore ISI Institutional Equities, Research Division): Appreciate the color there. And then maybe you could just give us some insights into the demand of the 4 development projects that are going to be completed in the fourth quarter? I know there's probably some time until those stabilize, but what's the traction sort of looking like on that space? And would you be willing to give on concessions in order to get the projects leased up?
  Response: Leasing traction varies by market: Greenville (70k) and Tampa (140k) have active interest; Charlotte two 200k buildings in improving submarket; Reno slower but some activity; Louisville strong with limited competing supply.

• Question from Nikita Bely (JPMorgan Chase & Co, Research Division): It looks like you are pretty bullish on both acquisitions and developments. Can you talk a little bit about how you rank them on a relative basis, one versus another? And as you start to ramp both of them up, it appears in 2026, how do you plan to fund it? And are we close enough to issue equity at these prices?
  Response: No forced ranking — they pursue whichever opportunity meets return criteria; funding will come first from retained FCF (> $100M), low leverage buffer (target ~low 5x), and $47M unfunded forward equity, with no immediate equity issuance planned.

• Question from Brendan Lynch (Barclays Bank PLC, Research Division): You mentioned the fixed renewal options that are in place for some of the leases that are going to roll in 2026. Do you have a lot more of these? And are they mostly reflecting acquisitions that you've made and the contracts that were put in place by the prior owners?
  Response: Fixed renewal options are largely inherited from assumed leases on acquisitions and are not materially different in concentration than prior years; many include short notice periods.

Contradiction Point 1

Market Recovery and Leasing Activity

It involves differing views on the recovery of leasing activity and market conditions, which are critical for assessing the company's growth prospects and investment decisions.

With developments in Greenville and Nashville, is tenant decision-making slowing due to increased comfort with capital deployment or FOMO in certain markets? - Craig Mailman(Citigroup Inc., Research Division)

2025Q3: Markets are stabilizing, and STAG is seeing success in development...We are getting more tenant engagement and we're seeing more traction on our internal and partner developments. - [William Crooker](CEO)

Which markets are showing early recovery signs versus lagging markets? - Craig Allen Mailman(Citigroup Inc., Research Division)

2025Q2: The first quarter was slow for leasing, with 0.8 million square feet leased and 0.5 million square feet as new leasing...Markets have seen some tenant demand pick-up, but the leasing environment remains choppy. - [William R. Crooker](CEO)

Contradiction Point 2

Acquisition Activity and Pipeline Strength

It involves differing assessments of acquisition activity and the strength of the pipeline, which are crucial for understanding the company's growth strategy and capital deployment.

What factors in the past 90 days caused the revised acquisition forecast? Can the 2025 decline be offset by 2026? - Blaine Heck(Wells Fargo Securities, LLC, Research Division)

2025Q3: The market is stable. We're getting a lot of interest from sellers and a lot of underwriting done, both our internal acquisitions and external. Our pipeline has been strong. - [William Crooker](CEO)

What is driving the increase in acquisition activity? - Michael Albert Carroll(RBC Capital Markets)

2025Q2: Our pipeline in terms of underwritten deals has been very consistent over the last few quarters, and we think it's good enough to see us through the second half. - [William R. Crooker](CEO)

Contradiction Point 3

Tenant Engagement and Leasing Activity

It involves changes in tenant behavior and leasing activities, which directly impact the company's revenue and occupancy rates.

What is driving progress in 2026 leasing? Are tenants approaching early or is activity concentrated in the first half of the year? - Craig Mailman (Citigroup Inc., Research Division)

2025Q3: The progress on 2026 leasing is largely driven by proactive engagement with tenants due to the larger-than-normal lease expirations. 95% of the leases are renewals, with only 5% being new leases. - [William Crooker](CEO)

Is new leasing activity holding up, and is the focus more on renewals than new leasing? - Michael Carroll (RBC Capital Markets)

2025Q1: While renewals were more frequent in Q1, new leasing is robust in Q2, with a million square feet commenced. - [William Crooker](CEO)

Contradiction Point 4

Leasing Spreads and Activity

It involves differing perspectives on leasing spreads and activity, which are crucial for understanding the company's financial performance and growth potential.

What is STAG's strategy for sustaining high spreads in 2026 leasing given expiration rates 15% lower than the beginning of the year? - Nicholas Thillman (Robert W. Baird & Co. Incorporated, Research Division)

2025Q3: STAG is guiding to 18% to 20% cash leasing spreads for 2026. - [William Crooker](CEO, President & Director)

Given your strong 2024 leasing performance but Q4's 19% rate, is it reasonable to expect a 24% leasing rate on 70% of the portfolio as a full-year benchmark? - Craig Mailman (Citi)

2024Q4: Leasing spreads for Q4 were lower due to fixed-rate renewal options factored into original guidance. Actual spreads were 34%. - [William Crooker](CEO)

Contradiction Point 5

Acquisition Pipeline and Market Dynamics

It involves the company's approach to acquisitions and the market dynamics influencing those decisions, which affects the company's growth strategy and financial outlook.

What factors led to the revised acquisition forecast over the last 90 days? Can the 2025 decrease be offset in 2026? - Blaine Heck (Wells Fargo Securities, LLC, Research Division)

2025Q3: The dynamics include stable interest rates, macroeconomic stability, and seller pent-up demand. STAG is preferred due to its reputation for closing deals quickly, especially by year-end. - [William Crooker](CEO)

How are you underwriting acquisitions with higher return thresholds? Is there an update on credit loss guidance? - Nick Tillman (Robert W. Baird)

2025Q1: STAG is evaluating a broad mix of assets, including short and long-term leases, with increased underwriting thresholds due to market conditions. - [William Crooker](CEO)