STAG Industrial, Inc. - Q1 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended March 31, 2026. STAG Industrial, Inc. is an industrial real estate REIT focused on the acquisition, development, and operation of industrial properties across the United States. As of the reporting date, the Company owned 601 industrial buildings in 41 states, comprising approximately 120.3 million rentable square feet.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Revenue | $224.2 million | $205.6 million |
| Net Income (GAAP) | $63.3 million | $93.4 million |
| Net Income Attributable to Common Stockholders | $62.0 million | $91.3 million |
| Diluted EPS | $0.32 | $0.49 |
| Funds From Operations (FFO) | $126.6 million | $117.1 million |
| Net Operating Income (NOI) | $176.9 million | $161.9 million |
| Operating Cash Flow | $117.4 million | $103.5 million |
| Total Debt Outstanding | $3.20 billion | $3.27 billion |
| Cash & Restricted Cash | $39.2 million | $48.1 million |
| Liquidity (Cash + Credit Facility) | $805.7 million | N/A |
Material Changes vs. Prior Period
- Net Income Decline: Net income decreased by 32.2% ($30.0 million) primarily due to a $34.8 million reduction in gains from the sale of rental properties compared to Q1 2025. Q1 2025 included a significant gain on involuntary conversion ($1.9 million) which did not recur.
- Revenue Growth: Total revenue increased 9.1% year-over-year, driven by a 3.9% increase in same-store rental income and contributions from acquisitions.
- NOI Expansion: Net Operating Income increased 9.3% to $176.9 million. Same-store NOI grew 4.1%, reflecting successful lease renewals and new leases offsetting minor vacancy impacts.
- Interest Expense: Interest expense rose 10.3% to $35.9 million, largely due to the issuance of $550 million in unsecured notes in June 2025.
- Portfolio Activity: The Company acquired one building in Kansas City, MO (748,833 sq. ft.) for $80.7 million and sold one building (0.6 million sq. ft.) for net proceeds of $29.6 million, recognizing a $15.1 million gain.
Outlook, Risks, and Management Commentary
- Market Outlook: Management notes a slowing global economy with a higher risk of recession or stagflation. Unemployment edged up to 4.3% in March 2026. Acquisition activity in 2026 has been slower than historical paces due to market uncertainty.
- Leasing Trends: Same-store occupancy decreased slightly to 96.6% from 97.8%. However, cash rent changes for new leases were up 35.5% and renewals up 16.9%, indicating strong pricing power.
- Liquidity Position: The Company maintains strong liquidity with $8.9 million in cash and $796.8 million available on its unsecured credit facility. Total immediate liquidity is approximately $805.7 million.
- Debt Management: The weighted average interest rate on debt is 4.42%. Approximately $1.225 billion of variable rate debt is hedged via interest rate swaps, leaving only the $200 million credit facility balance exposed to floating rates.
- Risks: Key risks include potential tenant defaults, rising vacancy rates, refinancing risks, and geopolitical tensions affecting trade policies and supply chains.
Investor Verification Checklist
- Gain Volatility: Verify the sustainability of net income given the significant year-over-year drop in gains from property sales ($15.1M vs $49.9M).
- Occupancy Trends: Monitor the 1.2% decline in same-store occupancy to ensure it does not accelerate in subsequent quarters.
- Debt Maturities: Review the debt capital structure; 9.4% of debt matures within the next 12 months.
- Forward Sales: Note the $6.1 million in forward sale agreements outstanding; verify settlement terms and potential dilution impact.
- Interest Rate Exposure: Confirm the effectiveness of interest rate swaps in managing the $1.225 billion variable rate debt exposure.