STAG INDUSTRIAL, INC. BOSTON, Feb. 25, 2016 /PRNewswire/ -- STAG Industrial, Inc. (the "Company") (NYSE: STAG), a real estate investment trust focused on the acquisition and operation of single-tenant, industrial properties throughout the United States, today announced its financial and operating results for the fourth quarter 2015.
"The fourth quarter was a strong finish to a solid operational year for STAG," said Ben Butcher, Chief Executive Officer of the Company. "This was readily apparent in the continuation of our robust leasing activity, healthy acquisition volume, continued asset dispositions and resultant portfolio improvements and most importantly, continued strong earnings growth."
Highlights:
-- Achieved $0.40 of Core FFO per diluted share for the fourth quarter of
2015, an increase of 8.1% compared to the fourth quarter ended December
31, 2014. Generated Core FFO of $28.3 million compared to $23.9 million
for the fourth quarter of 2014, an increase of 18.3%. For the year ended
December 31, 2015, Core FFO increased 23.9% in the aggregate compared to
the same period last year.
-- Generated Cash NOI of $48.8 million compared to $41.4 million for the
fourth quarter of 2014, an increase of 18.0%. For the year ended
December 31, 2015, Cash NOI increased 27.0% in the aggregate compared to
the same period last year.
-- Acquired 14 buildings consisting of 3.1 million square feet for $138
million with an aggregate Capitalization Rate of 8.8% in the fourth
quarter of 2015. For the year ended December 31, 2015, the Company
acquired 49 buildings consisting of 8.7 million square feet for $427
million with an aggregate Capitalization Rate of 8.4%.
-- Sold four buildings consisting of 486,577 square feet for $13 million
during the fourth quarter. For the year ended December 31, 2015, sold
six buildings consisting of 808,387 square feet for $22 million.
-- Achieved occupancy of 95.6% and executed leases for 1.4 million square
feet for the fourth quarter of 2015. Achieved an increase in cash and
GAAP rent of 0.5% and 12.0%, respectively, for the quarter's leasing
activity. For the year ended December 31, 2015, executed leases for 5.7
million square feet and achieved an increase in cash and GAAP rent of
1.6% and 7.1%, respectively, for the year's leasing activity.
-- Experienced 69.8% Retention for 4.9 million square feet of leases
expiring in the year. Achieved an increase in cash and GAAP rent of 4.2%
and 8.4%, respectively, for the year's renewals.
-- Agreed to pricing of a new $100 million private placement of senior
unsecured notes, and issued the notes on December 15, 2015. The notes
pay a fixed rate of 3.98% and mature on January 5, 2023.
-- Subsequent to year end, appointed William R. Crooker to serve as the
Company's Chief Financial Officer, Executive Vice President, and
Treasurer effective January 26, 2016.
Please refer to the Non-GAAP Financial Measures and Other Defined Terms section at the end of this release for definitions of capitalized terms used in this release.
The Company will host a conference call tomorrow, February 26, 2016, to discuss the quarter's results and provide information about acquisitions, operations, capital markets, and corporate activities. Details of the call can be found at the end of this release.
Key Financial Measures
For the three months ended December 31, 2015, Cash NOI was $48.8 million, which represents growth of 18.0% as compared to the three months ended December 31, 2014. Contributions to the growth in Cash NOI includes $7.7 million related to acquisition volume (net of dispositions), $(0.9) million of termination fee income, and $0.6 million from same store operations over the comparison period. Adjusting Cash NOI to account for termination income and the timing of acquisitions and dispositions, Run Rate Cash NOI would have been $49.3 million for the three months ended December 31, 2015.
Adjusted EBITDA was $41.9 million for the three months ended December 31, 2015, which represents growth of 23.2% over the three months ended December 31, 2014. Adjusting Adjusted EBITDA to account for the timing of acquisitions and dispositions, Run Rate Adjusted EBITDA would have been $43.8 million for the three months ended December 31, 2015.
For the three months ended December 31, 2015, Core FFO was $28.3 million, which represents growth of 18.3% as compared to the three months ended December 31, 2014. On a diluted, per share basis, Core FFO was $0.40 which represents growth of 8.1% compared to the three months ended December 31, 2014.
Net loss for the three months ended December 31, 2015 was $20.1 million. Included in net loss is depreciation and amortization expense of $30.5 million and a loss on impairments of $20.9 million related to 10 buildings. The impairments are primarily related to legacy, non-core flex/office assets that the Company is actively looking to dispose of to enhance the quality of the portfolio.
The Company's key financial measures are noted in the chart below:
KEY FINANCIAL MEASURES
Three months ended December 31, Year ended December 31,
------------------------------- -----------------------
Metrics 2015 2014 % Change 2015 2014 % Change
------- ---- ---- -------- ---- ---- --------
($000,000s, except per share data)
Cash NOI $48.8 $41.4 18.0% $180.9 $142.4 27.0%
Adjusted EBITDA $41.9 $34.0 23.2% $156.1 $121.7 28.2%
Core FFO $28.3 $23.9 18.3% $104.4 $84.2 23.9%
Core FFO per share / unit - basic and diluted $0.40 $0.37 8.1% $1.49 $1.45 2.8%
AFFO $28.8 $22.6 27.4% $107.3 $83.0 29.3%
Net loss $(20.1) $(2.6) - $(31.5) $(5.0) -
-------- ------ ----- --- ------ ----- ---
Definitions of Cash NOI, Run Rate Cash NOI, Adjusted EBITDA, FFO, Core FFO, and AFFO, all non-GAAP financial measures, together with reconciliations to Net Income (Loss) in accordance with GAAP, appear at the end of this release. Please also see the Company's supplemental information package for additional disclosure.
Acquisition & Disposition Activity
During the three months ended December 31, 2015, the Company acquired 14 buildings consisting of 3.1 million square feet for $138 million with an aggregate Capitalization Rate of 8.8%. These buildings had a weighted average occupancy rate of 94.6% upon acquisition. The chart below details the acquisition activity for the three months ended December 31, 2015:
FOURTH QUARTER 2015 ACQUISITION ACTIVITY
Location (CBSA) (1) Date Acquired Square Feet Buildings Purchase Price Remaining Lease Term
(MM) (2) (Years)
--- ------- ------
Durham-Chapel Hill, NC 10/7/2015 80,600 1 $4.2 3.7
Charlotte-Gastonia-Rock Hill, NC-SC 10/15/2015 124,680 1 5.4 7.1
Shreveport-Bossier City, LA 10/26/2015 420,259 1 11.0 3.9
Dayton, OH 11/23/2015 205,761 1 8.8 4.9
Milwaukee-Waukesha-West Allis, WI 12/4/2015 241,977 4 9.9 7.3
Knoxville, TN 12/10/2015 104,000 1 5.4 5.0
Dallas-Fort Worth-Arlington, TX 12/11/2015 164,914 1 7.6 NA
Greenville-Mauldin-Easley, SC 12/11/2015 125,000 1 5.5 4.6
Lancaster, PA 12/17/2015 240,529 1 9.4 2.4
Grand Rapids-Wyoming, MI 12/23/2015 301,317 1 9.4 5.1
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 12/28/2015 1,048,631 1 61.5 5.0
Total/Weighted Average 3,057,668 14 $138.1 4.9
---------------------- --------- --- ------ ---
(1) Core based statistical area
(2) Excludes property acquisition costs
For the year ended December 31, 2015, the Company acquired 49 buildings consisting of 8.7 million square feet for $427 million with an aggregate Capitalization Rate of 8.4%. The chart below details the acquisition activity for the year ended December 31, 2015:
2015 ACQUISITION ACTIVITY
Square Feet Buildings Purchase Price Remaining Lease Term (Years) Capitalization Rate
(MM) (1)
-------
Q1 1,485,717 5 $97.1 5.7 8.0%
Q2 1,639,383 12 83.8 6.0 8.4%
Q3 2,509,084 18 108.3 5.5 8.2%
Q4 3,057,668 14 138.1 4.9 8.8%
---
Total/Weighted Average 8,691,852 49 $427.3 5.4 8.4%
---------------------- --------- --- ------ --- ---
(1) Excludes property acquisition costs
Subsequent to quarter end and through February 25, 2016, the Company acquired three additional buildings consisting of 471,574 square feet for $17.8 million. These buildings were under contract as of December 31, 2015. As of February 25, 2016, the Company had entered into two contracts to acquire another two buildings for $10.1 million. The Company also executed non-binding letters of intent ("LOIs") to acquire four additional buildings for $47.8 million.((1) )
As of February 25, 2016, the Company's Pipeline of potential acquisitions is $1.4 billion across 136 buildings.
During the three months ended December 31, 2015, the Company sold four buildings consisting of 486,577 square feet for $12.8 million, resulting in a gain on sales of $3.3 million. For the year ended December 31, 2015 the Company sold six buildings consisting of 808,387 square feet for $22.1 million, resulting in a gain on sales of $5.0 million.
(1) The purchase and sale
agreements for the properties
under contract are subject to
satisfaction of closing
conditions, and the properties
under LOI require the
negotiation and execution of
definitive purchase and sale
agreements. There can be no
assurance that any of the
properties under contract or
LOI will be acquired on the
terms anticipated or at all.
Leasing Activity
During the three months ended December 31, 2015, the Company executed ten leases consisting of 1.4 million square feet. The chart below details the leases signed:
FOURTH QUARTER 2015 LEASING ACTIVITY
Lease Type Square Feet W.A. Lease Base Rent Lease Tenant Total Costs Cash Rent GAAP Rent
Term (Years) $/PSF Commissions Improvements $/PSF Change Change
$/PSF $/PSF
--- ----- -----
New Leases 529,785 11.2 $2.72 $0.88 $0.94 $1.82 0.5% 12.6%
Renewal Leases 251,800 5.8 $3.22 $0.42 $0.21 $0.63 0.5% 10.9%
-------------- ------- --- ----- ----- ----- ----- --- ----
Total /Weighted Avg New & Renewal 781,585 9.5 $2.88 $0.73 $0.71 $1.44 0.5% 12.0%
Temporary Leases 657,970
---------------- -------
Total Leasing Activity 1,439,555
---------------------- ---------
For the year ended December 31, 2015, the Company executed 55 leases consisting of approximately 5.7 million square feet. The chart below details the leasing activity for the year ended December 31, 2015:
2015 LEASING ACTIVITY
Lease Type Square Feet W.A. Lease Base Rent Lease Tenant Improvements Total Costs Cash Rent GAAP Rent
Term (Years) $/PSF Commissions $/PSF $/PSF Change(1) Change(1)
$/PSF
--- -----
New Leases 1,439,366 7.8 $3.63 $0.80 $1.20 $2.00 11.2% 16.4%
Renewal Leases 2,950,326 4.1 $3.98 $0.38 $0.23 $0.61 (1.0)% 4.6%
-------------- --------- --- ----- ----- ----- ----- ----- ---
Total /Weighted Avg New & Renewal 4,389,692 5.4 $3.87 $0.51 $0.55 $1.06 1.6% 7.1%
Temporary Leases 1,356,770
---------------- ---------
Total Leasing Activity 5,746,462
---------------------- ---------
(1) Rent change for new leases where there were no prior comparable leases, due to extended downtime or materially different lease structures, are excluded (six leases / 414,392 SF)
The Company experienced 49.2% Retention for 806,030 square feet of leases expiring in the quarter. This Retention rate was impacted by one lease for 400,000 square feet, 200,000 square feet of which the Company relet with no downtime. The Retention for the year ended December 31, 2015 was 69.8% for 4.9 million square feet of leases expiring. The chart below details the quarterly retention activity:
2015 RETENTION
Quarter Expiring Square Retained Square W.A. Lease Retention Rate Cash Rent Change GAAP Rent Change
Footage Footage Term (Years)
--- ------- ------- -----------
Q1 1,528,723 979,987 3.5 64.1% 6.7% 9.6%
Q2 468,169 136,789 3.8 29.2% 3.9% 10.0%
Q3 2,135,464 1,931,464 2.1 90.4% 3.3% 8.5%
Q4 806,030 396,430 3.5 49.2% 0.8% 4.2%
Total / Weighted Average 4,938,386 3,444,670 2.8 69.8% 4.2% 8.4%
------------------------ --------- --------- --- ---- --- ---
Portfolio Highlights
The Company's occupancy rate at the end of the fourth quarter was 95.6% compared to the prior year occupancy level of 94.9%. The Company's portfolio totaled approximately 54.7 million square feet as of December 31, 2015, representing an increase in square footage of 16.3% since December 31, 2014. The chart below details the portfolio characteristics:
PORTFOLIO CHARACTERISTICS
December 31, 2015 December 31, 2014
----------------- -----------------
Square Feet 54,712,384 47,024,076
Occupancy 95.6% 94.9%
Number of Tenants 266 227
Average Lease
Size (square
feet) 163,884 170,890
Average Building
Size (square
feet) 188,015 189,613
Average Building
Age (years) 28 29
Average Minimum
and Maximum
Clear Height
(feet)(1) 25-29 26-29
--------------- ----- -----
(1) Excludes flex / office buildings
The chart below details the Company's tenant credit profile:
TENANT CREDIT PROFILE ((1))
December 31, 2015 December 31, 2014
----------------- -----------------
Tenants Publicly
Rated 56.9% 53.6%
Tenants Rated
Investment Grade 28.8% 27.6%
Tenant Revenue > $100
Million 88.0% 87.5%
Tenant Revenue > $1
Billion 60.8% 58.3%
------------------- ---- ----
(1) Includes tenants, guarantors, and / or non-guarantor parents
Liquidity, Capital Markets Activity, and Financial Statistics
As of December 31, 2015, the Company had total Debt Capacity of $544 million and liquidity of $422 million, comprised of $12 million of cash and $410 million of Immediate Availability on the Company's unsecured credit facility and unsecured term loans.
On October 6, 2015, the Company agreed to the pricing of a $100 million note purchase agreement providing for the future private placement of senior unsecured notes ("Series F"). On December 15, 2015, the Company issued the $100 million Series F notes which bear interest at a fixed rate of 3.98% and mature on January 5, 2023.
On December 16, 2015, the Company funded the previously committed $150 million unsecured, 7-Year Term Loan B. The proceeds were used to repay amounts drawn under the unsecured Revolving Credit Facility.
As of December 31, 2015, the Company's enterprise value was approximately $2.4 billion, comprised of $1.3 billion of equity market capitalization, $139 million of preferred equity and total debt of $987 million.
As of December 31, 2015, the Company had approximately $987 million of debt outstanding with a weighted average remaining term of 6.5 years and a weighted average interest rate of 4.1%. All of the outstanding floating rate debt is fixed through interest rate swaps except for the Revolving Credit Facility.
The chart below details the Company's debt capital structure and financial ratios:
DEBT CAPITAL STRUCTURE AND FINANCIAL RATIOS
December 31, 2015 December 31, 2014
----------------- -----------------
Total Debt ($000s) $987,180 $686,347
Weighted Average
Duration (years) 6.5 6.9
Weighted Average
Interest Rate 4.1% 4.0%
% Secured 23.4% 33.0%
% Maturing Next 12
Months 1.4% 0.0%
Net Debt to Real
Estate Cost Basis 45.0% 37.0%
Total Debt to
Enterprise Value 40.3% 28.0%
Net Debt to
Annualized Run Rate
Adjusted EBITDA 5.6x 4.9x
Fixed Charge Coverage
Ratio 3.1x 3.1x
Interest Coverage
Ratio 4.4x 5.0x
----------------- ---- ----
During the three months ended December 31, 2015, the Company did not issue any shares of common stock under its ATM program. The Company has one ATM program with a total of $107 million of additional issuance capacity. The chart below details the ATM activity:
2015 ATM ACTIVITY
ATM Shares Issued Price per Share (Weighted Avg) Gross Proceeds (MM) Net Proceeds (MM)
--- ------------- ------------------------------ ------------------ ----------------
Q1 417,115 $24.29 $10,133 $9,981
Q2 2,888,282 $21.36 61,694 60,768
Q3(1) 151,006 $20.30 3,065 3,019
Q4 - NA - -
Total /
Weighted
Average 3,456,403 $21.67 $74,892 $73,768
--------- --------- ------ ------- -------
(1) Last shares sold June 30, 2015 and closed July 6, 2015
For the year ended December 31, 2015, the Company raised $97.8 million of equity consisting of $74.9 million in gross proceeds raised through the ATM programs and $22.9 million of common units in the Operating Partnership privately placed in connection with an acquisition.
Dividends
On October 22, 2015 the Board of Directors declared a monthly common stock dividend of $0.115833 per share commencing with the January 2016, equating to an annual dividend rate of $1.39.
Subsequent to quarter end, on February 22, 2016, the Company's Board of Directors declared a monthly common stock dividend of $0.115833 per share for the months of April, May, and June 2016. The chart below details the common dividends declared:
Q1 2016 & Q2 2016 COMMON DIVIDENDS DECLARED
Month Record Date Payment Date Dividend
----- ----------- ------------ --------
January 2016 January 29, 2016 February 16, 2016 $0.115833
February 2016 February 29, 2016 March 15, 2016 $0.115833
March 2016 March 31, 2016 April 15, 2016 $0.115833
April 2016 April 29, 2016 May 16, 2016 $0.115833
May 2016 May 31, 2016 June 15, 2016 $0.115833
June 2016 June 30, 2016 July 15, 2016 $0.115833
--------- ------------- ------------- ---------
Subsequent to quarter end, on February 22, 2016, the Company's Board of Directors declared the first quarter preferred stock dividends for its 9.0% Series A Cumulative Redeemable Preferred Stock (NYSE: STAG Pr A) ("Series A Preferred") and its 6.625% Series B Cumulative Redeemable Preferred Stock (NYSE: STAG Pr B) ("Series B Preferred"). The quarterly dividend for the Series A Preferred is $0.5625 per share, which equates to $2.25 per share on an annualized basis, and the quarterly dividend for the Series B Preferred is $0.4140625 per share, which equates to $1.65625 per share on an annualized basis. The record date for the preferred stock dividends is March 15, 2016, and the dividends are payable March 31, 2016.
The Company's dividend policy is set by the Board of Directors, which considers, among other factors, REIT distribution requirements and recurring, distributable, cash income.
Conference Call
The Company will host a conference call tomorrow, Friday, February 26, at 10:00 a.m. (Eastern Time) to discuss the quarter's results. The call can be accessed live over the phone toll-free by dialing (877) 407-4018, or for international callers, (201) 689-8471. A replay will be available shortly after the call and can be accessed by dialing (877) 870-5176, or for international callers, (858) 384-5517. The passcode for the replay is 13628453.
Interested parties may also listen to a simultaneous webcast of the conference call by visiting the Investor Relations section of the Company's website at www.stagindustrial.com, or by clicking on the following link:
http://ir.stagindustrial.com/corporateprofile.aspx?iid=4263385
Supplemental Schedules
The Company has provided a supplemental information package to provide additional disclosure and financial information on its website (www.stagindustrial.com) under the "Presentations" tab in the Investor Relations section.
Additional information is also available on the Company's website at www.stagindustrial.com.
CONSOLIDATED BALANCE SHEETS
STAG Industrial, Inc.
(unaudited, $000s, except share data)
December 31, 2015 December 31, 2014
----------------- -----------------
Assets
Rental Property:
Land $228,919 $191,238
Buildings and improvements, net of
accumulated depreciation of
$150,395 and $105,789, respectively 1,332,298 1,118,938
Deferred leasing intangibles, net of
accumulated amortization of
$200,758 and $146,026, respectively 276,272 247,904
------- -------
Total rental property, net 1,837,489 1,558,080
Cash and cash equivalents 12,011 23,878
Restricted cash 8,395 6,906
Tenant accounts receivable, net 21,478 16,833
Prepaid expenses and other assets 24,996 22,661
Interest rate swaps 1,867 959
Total assets $1,906,236 $1,629,317
========== ==========
Liabilities and Equity
Liabilities:
Unsecured credit facility $56,000 $131,000
Unsecured term loans 300,000 150,000
Unsecured notes 400,000 180,000
Mortgage notes 231,180 225,347
Accounts payable, accrued expenses
and other liabilities 25,662 21,558
Interest rate swaps 3,766 873
Tenant prepaid rent and security
deposits 14,628 11,480
Dividends and distributions payable 8,234 7,355
Deferred leasing intangibles, net of
accumulated amortization of $8,536
and $6,565, respectively 11,387 10,180
------ ------
Total liabilities 1,050,857 737,793
--------- -------
Equity:
Preferred stock, par value $0.01 per
share, 10,000,000 shares
authorized,
Series A, 2,760,000 shares
(liquidation preference of $25.00
per share) issued and outstanding
at December 31, 2015 and December
31, 2014 69,000 69,000
Series B, 2,800,000 shares
(liquidation preference of $25.00
per share) issued and outstanding
at December 31, 2015 and December
31, 2014 70,000 70,000
Common stock, par value $0.01 per
share, 100,000,000 shares
authorized, 68,077,333 and
64,434,825 shares issued and
outstanding at December 31, 2015
and December 31, 2014, respectively 681 644
Additional paid-in capital 1,017,394 928,242
Common stock dividends in excess of
earnings (334,623) (203,241)
Accumulated other comprehensive loss (2,350) (489)
------ ----
Total stockholders' equity 820,102 864,156
Noncontrolling interest 35,277 27,368
Total equity 855,379 891,524
Total liabilities and equity $1,906,236 $1,629,317
========== ==========
CONSOLIDATED STATEMENTS OF OPERATIONS
STAG Industrial, Inc.
(unaudited, $000s, except share data)
Three months ended December 31, Year ended December 31,
2015 2014 2015 2014
---- ---- ---- ----
Revenue
Rental income $50,262 $43,375 $186,463 $149,470
Tenant recoveries 8,531 6,513 31,666 23,607
Other income 94 145 504 739
--- ---
Total revenue 58,887 50,033 218,633 173,816
------ ------ ------- -------
Expenses
Property 11,362 9,103 42,627 33,388
General and administrative 7,296 6,934 28,750 26,396
Property acquisition costs 2,246 953 4,757 4,390
Depreciation and amortization 30,503 25,451 112,545 88,057
Loss on impairments 20,894 2,840 29,272 2,840
Other expenses 157 192 1,048 803
--- ---
Total expenses 72,458 45,473 218,999 155,874
------ ------ ------- -------
Other income (expense)
Interest income 2 4 9 15
Interest expense (9,838) (7,168) (36,098) (25,109)
Loss on extinguishment of debt - (686) - (686)
Gain on sales of rental property 3,273 646 4,986 2,799
----- ---
Total other income (expense) (6,563) (7,204) (31,103) (22,981)
------ ------ ------- -------
Net loss from continuing operations $(20,134) $(2,644) $(31,469) $(5,039)
-------- ------- -------- -------
Net loss $(20,134) $(2,644) $(31,469) $(5,039)
-------- ------- -------- -------
Less: loss attributable to noncontrolling interest after preferred stock dividends (1,113) (199) (2,066) (1,014)
------ ---- ------ ------
Net loss attributable to STAG Industrial, Inc. $(19,021) $(2,445) $(29,403) $(4,025)
-------- ------- -------- -------
Less: preferred stock dividends 2,712 2,712 10,848 10,848
Less: amount allocated to unvested restricted stockholders 94 87 385 345
--- ---
Net loss attributable to common stockholders $(21,827) $(5,244) $(40,636) $(15,218)
-------- ------- -------- --------
Weighted average common shares outstanding - basic and diluted 67,805,519 62,788,210 66,307,972 54,086,345
---------- ---------- ---------- ----------
Loss per share - basic and diluted
Loss from continuing operations attributable to common stockholders $(0.32) $(0.08) $(0.61) $(0.28)
------ ------ ------ ------
Loss per share - basic and diluted $(0.32) $(0.08) $(0.61) $(0.28)
====== ====== ====== ======
STAG Industrial, Inc.
(unaudited, $000s, except share data)
Three months ended December 31, Year ended December 31,
2015 2014 2015 2014
---- ---- ---- ----
NET OPERATING INCOME RECONCILIATION
-----------------------------------
Net income (loss) $(20,134) $(2,644) $(31,469) $(5,039)
Asset management fee income (77) (135) (379) (598)
General and administrative 7,296 6,934 28,750 26,396
Property acquisition costs 2,246 953 4,757 4,390
Depreciation and amortization 30,503 25,451 112,545 88,057
Interest income (2) (4) (9) (15)
Interest expense 9,838 7,168 36,098 25,109
Loss on impairments 20,894 2,840 29,272 2,840
Loss on extinguishment of debt - 686 - 686
Other expenses 157 192 1,048 803
Gain on sales of rental property (3,273) (646) (4,986) (2,799)
Corporate sub lease rental income - (17) (187) (17)
NET OPERATING INCOME $47,448 $40,778 $175,440 $139,813
------- ------- -------- --------
Net operating income $47,448 $40,778 $175,440 $139,813
Straight-line rent adjustments, net (809) (1,030) (3,115) (3,673)
Intangible amortization in rental income, net 2,195 1,653 8,526 6,253
CASH NET OPERATING INCOME $48,834 $41,401 $180,851 $142,393
------- ------- -------- --------
Cash net operating income $48,834
Net Cash NOI from acquisitions' and dispositions' timing 1,941
Cash termination income (1,478)
RUN RATE CASH NOI $49,297
-------
ADJUSTED EBITDA RECONCILIATION
------------------------------
Net loss $(20,134) $(2,644) $(31,469) $(5,039)
Intangible amortization in rental income, net 2,195 1,653 8,526 6,253
Straight-line rent adjustments, net (995) (941) (3,405) (3,255)
Non-cash compensation expense 1,911 1,976 7,578 5,168
Termination income (1,299) (2,484) (2,986) (2,519)
Property acquisition costs 2,246 953 4,757 4,390
Depreciation and amortization 30,503 25,451 112,545 88,057
Interest income (2) (4) (9) (15)
Interest expense 9,838 7,168 36,098 25,109
Non-recurring other expenses - - 167 -
Loss on impairments 20,894 2,840 29,272 2,840
Loss on extinguishment of debt - 686 - 686
Gain on sales of rental property (3,273) (646) (4,986) (2,799)
Consultant services - - - 2,839
ADJUSTED EBITDA $41,884 $34,008 $156,088 $121,715
------- ------- -------- --------
Adjusted EBITDA $41,884
Net Adjusted EBITDA from acquisitions' and dispositions' timing 1,941
RUN RATE ADJUSTED EBITDA $43,825
=======
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
STAG Industrial, Inc.
(unaudited, $000s, except share data)
Three months ended December 31, Year ended December 31,
2015 2014 2015 2014
---- ---- ---- ----
CORE FUNDS FROM OPERATIONS RECONCILIATION
-----------------------------------------
Net loss $(20,134) $(2,644) $(31,469) $(5,039)
Rental property depreciation and amortization 30,456 25,412 112,365 87,856
Loss on impairments 20,894 2,840 29,272 2,840
Gain on sales of rental property (3,273) (646) (4,986) (2,799)
------ ---- ------ ------
Funds from operations $27,943 $24,962 $105,182 $82,858
------- ------- -------- -------
Preferred stock dividends (2,712) (2,712) (10,848) (10,848)
Amount allocated to unvested restricted stockholders (94) (87) (385) (345)
--- --- ---- ----
Funds from operations attributable to common stockholders and unit holders $25,137 $22,163 $93,949 $71,665
------- ------- ------- -------
Funds from operations attributable to common stockholders and unit holders $25,137 $22,163 $93,949 $71,665
Intangible amortization in rental income, net 2,195 1,653 8,526 6,253
Termination income (1,299) (2,484) (2,986) (2,519)
Property acquisition costs 2,246 953 4,757 4,390
Loss on extinguishment of debt - 686 - 686
Consultant services - - - 2,839
Non-recurring other expenses - 929 167 929
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CORE FUNDS FROM OPERATIONS $28,279 $23,900 $104,413 $84,243
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Weighted average shares and units outstanding
Weighted average common shares 67,805,519 62,778,210 66,307,972 54,086,345
Weighted average restricted shares 271,400 264,041 280,839 268,894
Weighted average units 3,486,150 2,427,440 3,417,964 3,706,932
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Weighted average shares and units outstanding - basic and diluted 71,563,069 65,469,691 70,006,775 58,062,171
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CORE FUNDS FROM OPERATIONS PER SHARE / UNIT - BASIC AND DILUTED $0.40 $0.37 $1.49 $1.45
ADJUSTED FUNDS FROM OPERATIONS RECONCILIAITON
---------------------------------------------
Core funds from operations $28,279 $23,900 $104,413 $84,243
Add: non-rental property depreciation and amortization 47 39 180 201
Straight-line rent adjustments, net (995) (941) (3,405) (3,255)
Recurring capital expenditures (547) (26) (1,136) (1,316)
Lease renewal commissions and tenant improvements (229) (1,731) (1,595) (2,486)
Non-cash portion of interest expense 355 328 1,262 1,337
Non-cash compensation expense 1,911 1,047 7,578 4,239
ADJUSTED FUNDS FROM OPERATIONS $28,821 $22,616 $107,297 $82,963
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Non-GAAP Financial Measures and Other Definitions
Adjusted Earnings before Interest, Taxes, Depreciation, and Amortization (Adjusted EBITDA): We define Adjusted EBITDA as net income (loss) (computed in accordance with GAAP) before interest, tax, depreciation and amortization, property acquisition costs, gain on sales of rental property, termination income, straight-line rent adjustments, non-cash compensation, intangible amortization in rental income, loss on impairments, loss on extinguishment of debt and other non-recurring items.
Annualized Adjusted EBITDA: We define Annualized Adjusted EBITDA as Adjusted EBITDA multiplied by four.
Annualized Adjusted Run Rate EBITDA: We define Annualized Adjusted Run Rate EBITDA as Annualized Adjusted EBITDA plus incremental Adjusted EBITDA on an annualized basis related to acquisitions acquired in each quarter for which a full quarter's results were not reflected less Adjusted EBITDA related to the quarter's dispositions.
Annualized Base Rental Revenue: We define Annualized Base Rental Revenue as the monthly base cash rent for the applicable property or properties (which is different from rent calculated in accordance with GAAP for purposes of our financial statements), multiplied by 12. If a tenant is in a free rent period the annualized rent is calculated based on the first contractual monthly base rent amount multiplied by 12.
Capitalization Rate: We define Capitalization Rate as the estimated weighted average cash capitalization rate, calculated by dividing (i) the Company's estimate of year one net cash flow from the applicable property's operations stabilized for occupancy (post-lease-up for vacant properties), which does not include termination income, miscellaneous other income, capital expenditure, general and administrative costs, reserves, tenant improvements and leasing commissions, credit loss, or vacancy loss, by (ii) the acquisition price, as defined by GAAP. These capitalization rate estimates are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control, including those risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2014.
Debt Capacity: We define Debt Capacity as the aggregate undrawn nominal commitments under the Company's debt instruments.
Fixed Charge Coverage Ratio: We define the Fixed Charge Coverage Ratio as Adjusted EBITDA divided by cash interest expense, preferred dividends and principal payments.
Funds from Operations (FFO), Core FFO, and Adjusted FFO (AFFO): We define FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts ("NAREIT"). FFO represents net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, impairment write-downs of depreciable real estate, real estate related depreciation and amortization (excluding amortization of deferred financing costs and fair market value of debt adjustment) and after adjustments for unconsolidated partnerships and joint ventures. Core FFO and AFFO exclude property acquisition costs, lease termination income, intangible amortization in rental income, loss on extinguishment of debt, consulting services fees and non-recurring other expenses. AFFO also excludes non-rental property depreciation and amortization, straight-line rent adjustments, non-cash portion of interest expense, non-cash compensation expense and deducts recurring capital expenditures and lease renewal commissions and tenant improvements.
GAAP: U.S. generally accepted accounting principles.
GAAP Rent Change: GAAP basis rent is a ratio of the change in base rent (including straight-line rent adjustments as required by GAAP) of the comparable lease. Prior to the third quarter of 2015, GAAP rent change did not include the deferred rent associated with early lease renewals. The Company changed the definition of GAAP Rent Change to include the deferred rent associated with early lease renewals effective the third quarter of 2015 for the current and prior periods presented. The definition change is not considered significant.
Immediate Availability: We define Immediate Availability as the amount of Debt Capacity the Company could borrow consistent with the financial covenants in its debt instruments.
Interest Coverage Ratio: We define the Interest Coverage Ratio as Adjusted EBITDA divided by interest expense less the non-cash portion of interest expense.
Net operating income (NOI), Cash NOI, and Run Rate Cash NOI: We define NOI as rental income, including reimbursements, less property expenses and real estate taxes, which excludes depreciation, amortization, loss on impairments, general and administrative expenses, interest expense, interest income, corporate sub-lease rental income, asset management fee income, property acquisition costs, loss on extinguishment of debt, gain on sales of rental property, and other expenses.
We define Cash NOI as NOI less straight-line rent adjustments and less intangible amortization in rental income.
We define Run Rate Cash NOI as Cash NOI plus Cash NOI adjusted for a full period of acquisitions, less termination income, and less Cash NOI from dispositions.
Pipeline: The pipeline is a point in time measure that includes all of the transactions under consideration by the Company's acquisitions group that have passed the initial screening process. The pipeline also includes transactions under contract and transactions with non-binding LOIs.
Renewal Lease: We define a Renewal Lease as a lease signed by an existing tenant to extend the term for twelve months or more, including (i) a renewal of the same space as the current lease at lease expiration, (ii) a renewal of only a portion of the current space at lease expiration and (iii) an early renewal or workout, which ultimately does extend the original term for twelve months or more, but the renewal term commences before the lease expiration of their current lease.
Real Estate Cost Basis: We define Real Estate Cost Basis as the book value of rental property and deferred leasing intangibles, exclusive of the related accumulated depreciation and amortization.
Retention: We define Retention as the percentage determined by taking Renewal Lease square footage commencing in the period divided by square feet of leases expiring in the period. Neither the Renewal Leases nor leases expiring include Temporary Leases or License Agreements.
Temporary Leases/License Agreements: We define a Temporary Lease or a License Agreement as any lease that is signed for an initial term of less than twelve months; this includes short-term new leases and short-term renewal leases.
Forward-Looking Statements
This press release, together with other statements and information publicly disseminated by the Company, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe the Company's future plans, strategies and expectations, are generally identifiable by use of the words "believe," "will," "expect," "intend," "anticipate," "estimate," "should," "project" or similar expressions. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond the Company's control and which could materially affect actual results, performances or achievements. Factors that may cause actual results to differ materially from current expectations include, but are not limited to, the risk factors discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2015. Accordingly, there is no assurance that the Company's expectations will be realized. Except as otherwise required by the federal securities laws, the Company disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
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SOURCE STAG Industrial, Inc.
