Stag Industrial, Inc. · NYSE:STAG

Stag Industrial — Investor Presentation (January 2015)

64 slides from Stag Industrial's investor presentation, January 2015

  1. Slide 1: Investor Presentation January 2015

    INVESTOR PRESENTATION JANUARY 2015

  2. Slide 2: Legal Notices

    LEGAL NOTICES This presentation, together with other statements and information publicly disseminated by STAG Industrial, Inc. (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 E

  3. Slide 3: Table of Contents

    TABLE OF CONTENTS I. OVERVIEW 4 II. TARGET MARKET & ASSET CLASS 10 III. ACQUISITION & OPERATIONS MODEL 14 IV. PORTFOLIO SUMMARY 20 V. FINANCIAL SUMMARY 28 VI. SUMMARY 34 VII. APPENDIX - SUPPLEMENTAL 36 2

  4. Slide 4: Slide 4

  5. Slide 5: Overview

    OVERVIEW

  6. Slide 6: Company Overview

    COMPANY OVERVIEW  STAG Industrial, Inc. (NYSE: STAG) is a real estate investment trust (REIT) focused on the acquisition and operation of single-tenant, industrial properties throughout the United States.  The industrial market in the United States is a large (est. $1 trillion)(1) and fragmented m

  7. Slide 7: Business Strategy

    BUSINESS STRATEGY MISSION  To be a disciplined, relative value investor and the preeminent institutional owner and operator of single-tenant, industrial properties in the United States OPPORTUNITY  Individual, single-tenant, industrial properties are priced according to the binary nature of their

  8. Slide 8: Investment Strategy

    INVESTMENT STRATEGY STAG Industrial is a relative value investor focused on identifying opportunities in single-tenant, industrial real estate in the U.S. Industrial Real Estate Higher current returns (1) Lower capital expenditures (1) Single Tenant Binary risk profile creates pricing inefficiencies

  9. Slide 9: Platform

    PLATFORM Fully integrated, highly experienced management team Board of Directors Benjamin Butcher (Chairman) Virgis Colbert Jeffrey Furber Larry Guillemette Francis Jacoby Christopher Marr Hans Weger Benjamin Butcher Chief Executive Officer and President Stephen Mecke David King Jeffrey Sullivan Geo

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  11. Slide 11: Target Market & Asset Class

    TARGET MARKET & ASSET CLASS

  12. Slide 12: Industrial Market

    INDUSTRIAL MARKET Recovery of the U.S. economy and specifically the improving dynamic for U.S. industrial production is expected to continue to increase demand for industrial space Supply has not kept pace with demand, equating to a positive dynamic for owners and operators of U.S. industrial real e

  13. Slide 13: Target Markets

    TARGET MARKETS While STAG invests across all markets, our proprietary risk assessment model commonly identifies the best relative value in “secondary” markets Market Type # of Buildings S quare Footage % Primary 43 7,955,666 1 7.9% S econdary 1 40 28,938,253 65.0% Tertiary 55 7,605,247 1 7.1 % TOTAL

  14. Slide 14: Target Markets: Secondary Market Rent and Occupancy

    TARGET MARKETS Secondary industrial markets generally provide less rent volatility and equivalent occupancy as compared to primary industrial markets(1) Warehouse Rent Growth (1) Warehouse Occupancy (1) Secondary industrial markets are defined as:  Net rentable square footage ranging between approx

  15. Slide 15: Acquisition & Operation Model

    ACQUISITION & OPERATION MODEL

  16. Slide 16: Acquisition Model

    ACQUISITION MODEL Proprietary risk assessment model allows us to evaluate all markets, all industries, and all tenants in search of relative value Opportunity Model Inputs Leasing Proprietary Risk  Market rent & growth  Renewal probability Broker / Owner Network Assessment Model  Downtime estimat

  17. Slide 17: Acquisition Activity

    ACQUISITION ACTIVITY Real Estate Cost Basis $1,700 Pipeline $'s $1,500 Total Real Estate Cost Basis ($ in mm) $1,300 $1,100 $900 $700 $500 $300 $100  Average annual portfolio growth of 42% (1)  Pipeline of potential acquisitions exceeds $1.4 billion (2) Stated goal of 25% annual portfolio growth 1

  18. Slide 18: Operations

    OPERATIONS CHALLENGE:  To manage and lease a growing portfolio of 238 properties across 35 states with 212 tenants RESULT:  Consistent occupancy levels in excess of market  High tenant retention and strong leasing volume HIS TORICAL RETENTION AND LEAS ING ACTIVITY Leas ing Acvity Ending New S qua

  19. Slide 19: Operational Structure

    OPERATIONAL STRUCTURE Internal framework of industrial real estate operating experts directly managing tenant relationships and leveraging a network of local third parties  Build direct, long term relationships with tenants  Possess the in-house expertise to manage all operational aspects of the p

  20. Slide 20: Slide 20

  21. Slide 21: Portfolio Summary

    PORTFOLIO SUMMARY

  22. Slide 22: Portfolio Overview

    PORTFOLIO OVERVIEW (1) Square Footage Annualized Base Rent Building Type # of Buildings # % $ % Warehouse 168 37,848,701 85.3% $133,179,100 82.4% Light Manufacturing 50 5,511,938 12.6% 19,753,989 12.2% Flex / Office 20 1,138,527 2.1% 8,810,415 5.4% TOTAL 238 44,499,166 100.0% $161,743,504 100.0% % A

  23. Slide 23: Peer Analysis - Operations

    PEER ANALYSIS - OPERATIONS In house, institutional, real estate operating capabilities continue to produce optimal leasing results Source: Company filings. 22

  24. Slide 24: Tenant Profile

    TENANT PROFILE High quality tenancy: Our tenants are significant enterprises that require large blocks of industrial space in our markets TENANT PROFILE S eptember 30, 201 4 Divers ific ation: Top Tenant % 2.4% Top Ten Tenant % 1 5.0% Average Tenant % 0.5% Credit Quality: % Tenants Publicly R ated (

  25. Slide 25: Peer Analysis - Assets

    PEER ANALYSIS - ASSETS PORTFOLIO CHARACTERIS TICS S eptember 30, 201 4 S quare Feet 44,499,1 66 # of Buildings 238 Average Building S ize 1 86,971 (1) Weighted Average Year Built 1 991 Weighted Average Clear Height (1) 27 feet Average Industrial Building Size Weighted Average Industrial Weighted Ave

  26. Slide 26: Geographic Diversification

    GEOGRAPHIC DIVERSIFICATION 238 buildings in 35 states with no single state accounting for more than 9.2% of the portfolio Asset Locations Geographic Concentration 25

  27. Slide 27: Tenant Diversification

    TENANT DIVERSIFICATION Portfolio of single-tenant properties performs like a well diversified “virtual industrial park” ABR % of Total # Tenant Product / Service ($ in mm) ABR 1 Solo Cup Company Containers $3.8 2.4% 2 International Paper Packaging 3.0 1.9 3 Exel Logistics Logistics 2.4 1.5 4 Bank of

  28. Slide 28: Laddered Lease Maturities

    LADDERED LEASE MATURITIES  11% tenant rollover through year end 2015  26% tenant rollover through year end 2016  Weighted average lease term of approximately 4.5 years 27

  29. Slide 29: Financial Summary

    FINANCIAL SUMMARY

  30. Slide 30: Capital Structure

    CAPITAL STRUCTURE A balance sheet that is designed to allow STAG to capitalize on its market opportunity in any economic climate Liquidity September 30, 2014 Equity, Immediate Liquidity $204 mm 63% Total Capacity $249 mm Cash Flow Coverage Net Debt / Adjusted EBITDA Annualized (1) 5.5x Net Debt/ Run

  31. Slide 31: Peer Analysis - Debt

    PEER ANALYSIS - DEBT Debt / Recurring EBITDA (x) Recurring EBITDA / Interest Expense (x) 8.0x 6.8x 6.0x 5.8x 6.0x 4.1x 4.0x 3.7x 4.0x 2.0x 2.0x 0.0x 0.0x STAG PEER AVERAGE STAG PEER AVERAGE Debt/ Book Capitalization (%) Debt/ Total Enterprise Value (%) 60.0% 40.0% 35.0% 48.2% 33.2% 50.0% 47.6% 30.0%

  32. Slide 32: Valuation Analysis

    VALUATION ANALYSIS ENTERPRISE VALUE September 30, 2014 (1) Equity Market Capitalization $1,236 Total Debt $678 Perpetual Preferred 139 Total Debt + Preferred $817 Total Enterprise Value $2,053 EQUITY VALUATION METRICS (2) Core FFO Multiple 14.4x (2) AFFO Multiple 14.8x (3) Implied Cap Rate (Q3 Run-R

  33. Slide 33: Peer Analysis - Equity

    PEER ANALYSIS - EQUITY September 30, 2014 Dividend Yield September 30, 2014 Implied Cap Rate 7.0% 8.0% 6.4% 6.0% 7.0% 6.8% 5.0% 6.0% 4.0% 5.0% 3.0% 4.0% 2.0% 1.0% 3.0% 0.0% 2.0% FR REXR PLD DCT EGP DRE MNR STAG PLD EGP MNR DCT REXR DRE STAG FR FFO Multiple (Est. 2014 FFO) AFFO Multiple (Est. 2014 AF

  34. Slide 34: Dividend

    DIVIDEND Our monthly dividend is entirely derived from operating income and has grown consistently since inception  Average payout ratio for the trailing twelve months of 89% (2) $1.60 35% Annualized Dividend/Share $1.40 30% Dividend Growth $1.20 25% Dividend Change % Annual Dividend $1.00 20% $0.8

  35. Slide 35: Summary

    SUMMARY

  36. Slide 36: Summary

    SUMMARY By adhering to a relative value investing model and developing operational expertise in its target markets, STAG has consistently delivered a combination of both income and growth to its shareholders  Total shareholder return 141% since IPO (1) (88% price appreciation, 53% dividends)  STAG

  37. Slide 37: Appendix

    APPENDIX

  38. Slide 38: Supplemental Information

    SUPPLEMENTAL INFORMATION UNAUDITED THIRD QUARTER 2014

  39. Slide 39: Forward-Looking Statements

    Forward-Looking Statements This supplemental information package 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. STAG Industrial, Inc. (STAG) intends such forw

  40. Slide 40: Table of Contents

    TABLE OF CONTENTS Overview Portfolio Performance Company Overview 38 Portfolio Summary 51 Third Quarter Highlights 39 Portfolio Growth 52 Financial Highlights Occupancy 53 Consolidated Balance Sheets 41 Leasing Statistics 54 Consolidated Statements of Operations 42 Tenant Retention 55 Net Operating

  41. Slide 41: Company Overview

    COMPANY OVERVIEW OVERVIEW Snapshot (September 30, 2014) STAG Industrial, Inc. (NYSE: STAG) is a real estate Square Feet 44.5 million investment trust focused on the acquisition and management of single-tenant industrial properties Number of Buildings / States 238 / 35 throughout the United States. Q

  42. Slide 42: Third Quarter Highlights

    THIRD QUARTER HIGHLIGHTS Three months ended September 30, 2014 2013 % Change ($000,000s, execept per share data) Cash Net Operating Income (1) $35.4 $29.3 21% Core FFO (1) $21.0 $17.5 20% Core FFO per share / unit - diluted $0.36 $0.35 3% AFFO (1) $20.4 $17.6 16% • At the third quarter Board of Dire

  43. Slide 43: Financial Highlights

    INDUSTRIAL FINANCIAL HIGHLIGHTS 42

  44. Slide 44: Consolidated Balance Sheets

    CONSOLIDATED BALANCE SHEETS ($000s, except share data) September 30, December 31, September 30, December 31, 2014 2013 2014 2013 Assets Liabilities and Equity Rental Property: Liabilities: Land $ 169,808 $ 134,399 Mortgage notes payable $ 222,192 $ 225,591 Buildings 1,141,478 944,647 Unsecured notes

  45. Slide 45: Consolidated Statements of Operations

    CONSOLIDATED STATEMENTS OF OPERATIONS ($000s, except share data) Three months ended September 30, Nine months ended September 30, 2014 2013 2014 2013 Revenue Rental income $ 36,774 $ 30,171 $ 106,095 $ 84,210 Tenant recoveries 5,399 4,265 17,094 11,399 Other income 185 207 594 865 Total revenue 42,3

  46. Slide 46: Net Operating Income (NOI)

    NET OPERATING INCOME (NOI) ($000s) Three months ended September 30, Nine months ended September 30, 2014 2013 2014 2013 Net income (loss) $ 251 $ 294 $ (2,395) $ (308) Asset management fee income (143) (192) (463) (707) General and administrative 5,704 4,376 19,462 13,358 Property acquisition costs

  47. Slide 47: Core Funds from Operations (Core FFO)

    CORE FUNDS FROM OPERATIONS (CORE FFO) ($000s, except share data ) Three months ended September 30, Nine months ended September 30, 2014 2013 2014 2013 Net income (loss) $ 251 $ 294 $ (2,395) $ (308) Rental property depreciation and amortization 21,900 17,463 62,444 49,508 Gain on sales of real estat

  48. Slide 48: Adjusted Funds from Operations (AFFO) / Adjusted EBITDA

    ADJUSTED FUNDS FROM OPERATIONS (AFFO) / ADJUSTED EBITDA ($000s) Three months ended September 30, Nine months ended September 30, 2014 2013 2014 2013 Net income (loss) $ 251 $ 294 $ (2,395) $ (308) Intangible amortization in rental income, net 1,581 1,524 4,600 4,399 Property acquisition costs 2,190

  49. Slide 49: Debt Summary

    DEBT SUMMARY ($000,000s) Debt Summary as of 9/30/2014 ($mm) Debt Characterization Current Category Committed Balance Interest Rate Maturity Secured Debt Sun Life $3.5 $3.6 6.05% 06/01/16 32.8% Secured Webster Bank 5.7 5.7 4.22% 08/04/16 Debt Union Fidelity 6.2 6.3 5.81% 04/30/17 Webster Bank 3.0 3.0

  50. Slide 50: Debt Maturity Schedule

    DEBT MATURITY SCHEDULE ($000,000s) Debt Maturity Schedule ($mm) $250 $200 $162.6 $150.0 $150 $134.3 $115.3 $100 $66.0 $50.0 $50 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Unsecured Revolver Unsecured Term Loans Unsecured Private Placements

  51. Slide 51: Financial Statistics

    FINANCIAL STATISTICS ($000,000s, except share data) Three months ended September 30, Three months ended September 30, Net debt /adjusted EBITDA ratio Enterprise Value (7) Total debt $678.2 Equity Market Cap $1,375.0 Net debt (less cash) $672.9 Total debt $678.2 (1)(2) Adjusted EBITDA (annualized) $1

  52. Slide 52: Same Store Statistics

    SAME STORE STATISTICS ($000s) Same store portfolio consists of only those properties owned and operated for the entire current and prior periods presented. Three months ended Nine months ended September 30, September 30, 2014 2013   2014 2013   Total Portfolio Square Footage / Total Buildi

  53. Slide 53: Portfolio Performance

    INDUSTRIAL PORTFOLIO PERFORMANCE 52

  54. Slide 54: Portfolio Summary

    PORTFOLIO SUMMARY (As of September 30, 2014) Annualized Base % Annualized Base Building Type # of Buildings Total Square Feet Occupancy Rental Revenue (1) Rental Revenue Warehouse 168 37,848,701 95.1% $133,179,100 82.4% Light Manufacturing 50 5,511,938 96.4% $19,753,989 12.2% Flex / Office 20 1,138,

  55. Slide 55: Portfolio Growth

    PORTFOLIO GROWTH (Three and nine months ended September 30, 2014) Acquisitions Square Feet Buildings Price $ (mm) Q1 Acquisitions 975,275 4 $37.3 Q2 Acquisitions 2,130,958 9 $81.7 Q3 Acquisitions 3,469,080 18 $173.7 YTD Acquisitions 6,575,313 31 $292.7 Location (CBSA) Date Acquired Square Feet Build

  56. Slide 56: Occupancy

    OCCUPANCY (Three months ended, September 30, 2014) Square footage change from leasing Total square feet beginning of quarter 41,197,524 Occupied beginning of quarter 38,941,949 Occupancy percentage beginning of period 94.5% Expirations: Expiring square footage (766,079) Lease Terminations (127,000)

  57. Slide 57: Leasing Statistics

    LEASING STATISTICS (Three and nine months ended, September 30, 2014) Third Quarter Activity Lease Tenant Base Rent Commissions Improvements Total Costs Lease Type Lease Count Square Feet $/PSF $/PSF $/PSF $/PSF (1) New Leases 1 74,400 $5.44 $0.66 $0.40 $1.06 Renewal Leases 6 470,623 $4.83 $0.80 $3.0

  58. Slide 58: Tenant Retention

    TENANT RETENTION (Three and nine months ended, September 30, 2014) Third Quarter 2014 Lease Tenant Cash Rollover GAAP Rollover Base Rent Commissions Improvements Total Costs Rent Change Rent Change Lease Type Lease Count Square Feet $/PSF $/PSF $/PSF $/PSF % % Q3 Expirations 6 766,079 $4.71 Q3 Expir

  59. Slide 59: Lease Expiration Schedule

    LEASE EXPIRATION SCHEDULE (As of September 30, 2014) % of Total Lease Number of Square Feet of % of Occupied Annualized Base Annualized Base Average Base Expiration Year Leases Expiring Leases Expiring Square Feet (1) Rental Revenue Rental Revenue Rent Per SF MTM 6 70,925 0.2% $272,500 0.2% $3.84 20

  60. Slide 60: Geographic Diversification

    GEOGRAPHIC DIVERSIFICATION (As of September 30, 2014) Total Annualized 9/30/2014 Total Annualized 9/30/2014 9/30/2014 % # Base Rental State / Region 9/30/2014 % # Base Rental State / Region Region State Square Feet Square Feet Bldgs Revenue % Occupancy Region State Square Feet Square Feet Bldgs Reve

  61. Slide 61: Top Tenants

    TOP TENANTS (As of September 30, 2014) Annualized Base % Annualized Base (1) Tenant # of Leases Square Feet Rental Revenue Rental Revenue Solo Cup Company 1 1,035,249 $3,809,716 2.36% International Paper 2 573,323 3,017,357 1.87% Exel Logistics 3 799,074 2,421,555 1.50% Bank of America, N.A. 1 318,9

  62. Slide 62: Industry Concentration

    INDUSTRY CONCENTRATION (As of September 30, 2014) % of Total Total % of Total Total Annualized Annualized Leased Leased Square Base Rental Base Rental Industry Square Feet Feet (1) Revenue (2) Revenue (1) Sample Tenants Automotive 4,995,105 11.8% $20,028,485 12.4% Magna, Chrysler, Michelin Ind Equip

  63. Slide 63: Management / Board of Directors

    MANAGEMENT / BOARD OF DIRECTORS SENIOR MANAGMEENT BOARD OF DIRECTORS Benjamin S. Butcher Chief Executive Officer, President, Virgis W. Colbert Independent and Chairman of the Board Executive Vice President World Wide Director Operations (Retired) Miller Brewing Company Geoffrey G. Jervis Chief Finan

  64. Slide 64: Non-GAAP Financial Measures

    Non-GAAP Financial Measures Net operating income (NOI): is defined as rental revenue, including reimbursements, less property expenses and real estate taxes, which excludes depreciation, amortization, general and administrative expenses, interest expense, interest income, asset management fee income

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