STAG Industrial, Inc. — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. STAG is a U.S. industrial real estate REIT focused on acquiring, owning and operating industrial properties. The filing reports annual results; it does not provide a clear standalone fourth-quarter financial summary.
Business and portfolio
- Owned 562 buildings across 41 states, totaling approximately 111.7 million rentable square feet.
- Portfolio was 98.5% leased at year-end; the Operating Portfolio was 99.0% leased. No tenant represented more than approximately 3.0% of annualized base rent, and no industry exceeded approximately 10.9%.
- Weighted average lease term was approximately 4.7 years. New and renewal leases achieved combined cash rent growth of 14.3% and straight-line rent growth of 24.3%.
Financial and operating results
- Revenue: $657.3 million, up 16.9% from $562.2 million in 2021.
- Net income: $182.2 million, down 7.2% from $196.4 million. Net income attributable to common stockholders was $178.1 million; diluted EPS was $1.00 versus $1.15.
- NOI: $531.6 million, up 17.1% from $454.2 million. Same-store NOI rose 3.6%; same-store occupancy improved to 99.1% from 97.8%. NOI is a non-GAAP measure.
- FFO attributable to common stockholders and unit holders: $400.8 million, up from $332.2 million. FFO is non-GAAP and should not be treated as liquidity or cash available for dividends.
- Cash flow: Operating cash flow was $387.9 million, up 15.4%. Investing activities used $447.5 million, versus $1.22 billion in 2021; financing activities provided $63.2 million, versus $887.1 million.
- Debt and liquidity: Total principal debt was $2.51 billion, weighted average interest rate 3.39%, weighted average duration 5.2 years, and net debt to real estate cost basis 36.0%. Immediate liquidity was approximately $847.3 million: $25.9 million cash plus $821.4 million available under the credit facility. Secured debt was 0.3% of debt. The company reported compliance with applicable debt covenants.
- Distributions: Common dividends and distributions were $1.46 per share/unit for 2022, compared with $1.45 in 2021.
Changes versus 2021 and notable items
- Revenue and NOI growth reflected acquisitions and improved existing-property performance. STAG acquired 26 buildings for approximately $472.6 million in 2022, compared with 74 buildings for approximately $1.37 billion in 2021.
- Despite revenue growth, net income declined, primarily reflecting lower property-sale gains ($57.5 million versus $98.0 million), higher interest expense ($78.0 million versus $63.5 million), and higher depreciation and amortization. Depreciation and amortization rose 15.2% to $275.0 million.
- STAG recorded a $1.8 million impairment loss and approximately $2.1 million of expense from relinquishing a deposit on a terminated acquisition contract.
- Debt principal increased from approximately $2.23 billion at year-end 2021 to $2.51 billion. The company issued $400 million of 4.12% notes due 2032 and entered two $187.5 million term loans due 2028; it also expanded its unsecured credit facility commitment to $1.0 billion. A $100 million note due January 2023 was repaid at maturity on January 5, 2023.
- Interest-rate exposure is partly hedged: the filing says outstanding variable-rate debt other than the $175 million credit-facility balance was fixed with swaps through maturity. A 100-basis-point increase applied to that facility balance would have increased 2022 interest expense by approximately $1.8 million.
- William R. Crooker became CEO effective July 1, 2022; Benjamin S. Butcher became Executive Chair.
Outlook, risks and contingencies
- Management gave no specific numerical earnings or acquisition guidance. It described inflation, rising interest rates, geopolitical tensions and recession risk as sources of volatility, while expressing confidence in portfolio diversification, occupancy, rent growth, liquidity and access to capital.
- Management expects industrial demand to be supported over the longer term by e-commerce, domestic manufacturing and supply-chain resilience. It also cautioned that weakening economic conditions could reduce space demand and increase vacancy.
- Leases representing approximately 7.7% of annualized base rental revenue expire in 2023; approximately 19.5% expire before year-end 2025, excluding month-to-month leases. Management expects 2023 expirations to re-lease at higher rents, subject to renewal, downtime and market conditions.
- Principal risks include tenant defaults or non-renewals, lease rollover, economic and industrial-market weakness, higher financing and operating costs, refinancing and capital-market access, real estate valuation declines, and environmental, climate and insurance exposures.
- STAG reported no legal proceedings expected to have a material adverse effect. It had approximately $3.6 million of letters of credit outstanding and no other material off-balance-sheet arrangements. The auditor issued unqualified opinions on the financial statements and internal controls.
Key facts for investors to verify
- Review the reconciliation and assumptions behind FFO and NOI, and distinguish these non-GAAP measures from GAAP earnings and cash available for distributions.
- Track lease renewals, rent spreads, occupancy and downtime against the 2023–2024 rollover schedule, especially the 19.5% of annualized base rent expiring before 2025.
- Confirm debt maturities, refinancing costs, covenant headroom and the extent to which swap hedges continue to offset variable-rate exposure.
- Assess acquisition returns and property-sale gains separately from recurring operating performance; 2022 acquisitions were materially below 2021 levels.
- Monitor dividend coverage using operating cash flow and capital needs, rather than relying on FFO alone.