Executive Summary / Key Takeaways

• Robust Operational Performance: STAG Industrial continues to deliver strong results, with Q3 2025 Core FFO per share increasing 8.3% year-over-year to $0.65 and year-to-date same-store cash NOI growing 3.5%. The company has already accomplished 99% of its forecasted 2025 leasing, achieving impressive cash leasing spreads of 23.9%.
• Strategic Growth Pillars: STAG's investment thesis is underpinned by its disciplined acquisition strategy, focusing on value-driven industrial properties, and a burgeoning development platform. The company is actively expanding its portfolio, with $212 million in stabilized acquisitions closed year-to-date and another $153 million under agreement for year-end 2025.
• Market Stability and Opportunity: Despite earlier macroeconomic uncertainties, industrial fundamentals are stabilizing, with leasing demand improving and the supply pipeline contracting. STAG's diversified portfolio across geographies and tenant industries positions it to capitalize on long-term trends like e-commerce growth, onshoring, and supply chain resilience.
• Strong Financial Health: A recent credit rating upgrade to Baa2 by Moody's, coupled with low leverage (5.1x net debt to adjusted EBITDA) and ample liquidity ($904.10 million), underscores STAG's robust financial position, enabling opportunistic capital deployment and effective risk management.
• Forward-Looking Momentum: Management has raised its 2025 Core FFO guidance to $2.52-$2.54 per share and increased same-store cash NOI guidance to 4%-4.25%, reflecting confidence in continued operational outperformance and strategic execution.

The Industrial Backbone: STAG's Foundational Strategy

STAG Industrial, Inc. operates as a real estate investment trust (REIT) focused on the acquisition, development, ownership, and operation of industrial properties across the United States. Structured as an umbrella partnership REIT (UPREIT), STAG conducts substantially all its business through its operating partnership, STAG Industrial Operating Partnership, L.P. This structure has been instrumental in its growth, culminating in a portfolio of 601 industrial buildings spanning 41 states and approximately 119.20 million rentable square feet as of September 30, 2025.

The company's overarching strategy is to identify properties offering relative value in CBRE-EA Tier 1 industrial markets, leverage sophisticated industrial operations for growth, and maintain an appropriate capital structure. This approach has allowed STAG to consistently expand its footprint and enhance its asset quality. Historically, STAG has demonstrated consistent growth through strategic acquisitions, such as the December 2024 acquisition of a five-building single-tenant portfolio in Chicago submarkets for $73 million, aimed at securing attractive current income and long-term Net Operating Income (NOI) growth.

Technological Edge: Proprietary Risk Assessment and Operational Sophistication

While STAG Industrial does not develop proprietary hardware or software in the traditional sense, its core technological differentiator lies in its proprietary risk assessment model. This sophisticated analytical tool is central to STAG's acquisition strategy, enabling the company to identify value-driven properties across diverse markets. The model allows for a principled application of risk assessment, helping STAG make informed investment decisions that balance income stability with growth potential.

The tangible benefits of this model are evident in STAG's ability to consistently acquire properties that meet its return thresholds and integrate seamlessly into its diversified portfolio. For investors, this translates into a competitive moat by reducing acquisition risk and optimizing capital allocation, contributing directly to STAG's financial performance through accretive transactions and robust asset management. Furthermore, STAG's "sophisticated industrial operation" leverages data-driven insights to manage its vast portfolio efficiently, ensuring high occupancy rates and strong leasing spreads.

Beyond its internal model, STAG's physical assets are strategically positioned to benefit from broader technological advancements in the industrial sector. The company's modern warehouses, often with desirable clear heights and configurations, are well-suited for evolving logistics, automation, and e-commerce demands. For instance, STAG has signed leases with tenants involved in solar manufacturing and the production of generators for data centers, directly benefiting from technology-driven industrial growth and onshoring trends. This strategic alignment with technological shifts in the broader economy reinforces STAG's market positioning and long-term growth prospects.

Competitive Landscape: Diversification as a Differentiator

In the competitive industrial REIT sector, STAG faces formidable rivals such as Prologis (PLD), Rexford Industrial Realty (REXR), and EastGroup Properties (EGP). Prologis, a global behemoth, emphasizes scale and global expansion, often integrating technology aggressively into property management. Rexford Industrial Realty specializes in high-demand Western U.S. markets with a focus on value-add investments. EastGroup Properties targets Sunbelt markets with an emphasis on business parks and flex spaces.

STAG differentiates itself through its nationwide diversification and a primary focus on single-tenant industrial properties. This strategy provides resilience against regional economic shifts, a key advantage over regionally concentrated players like Rexford. While Prologis benefits from sheer scale, STAG's single-tenant emphasis can lead to greater tenant loyalty and more predictable income streams, potentially translating to stronger cash flow generation and superior margins by mitigating turnover risks. STAG's disciplined underwriting, informed by its proprietary risk assessment model, allows it to compete effectively on pricing and identify accretive opportunities, even when not the highest bidder, particularly with sellers prioritizing surety of closure.

Operationally, STAG's diversified portfolio across various markets, tenant industries, and lease terms provides inherent stability, a critical factor in volatile macroeconomic environments. This contrasts with competitors who might have higher exposure to specific market downturns or operational complexities associated with multi-tenant or value-add strategies. STAG's ability to secure favorable zoning for its developments, such as in the Charlotte market, also creates high barriers to entry for competitors, reinforcing its market position.

Financial Performance and Operational Momentum

STAG's financial performance in 2025 reflects a strong operational cadence and strategic execution. For the three months ended September 30, 2025, net income for the total portfolio increased by 16.2% to $49.60 million compared to the prior year. This growth was primarily fueled by a 4.5% increase in same-store rental income, driven by new leases and renewals. Year-to-date, net income surged by 37.4% to $194.10 million. Core FFO per share for Q3 2025 stood at $0.65, an 8.3% increase year-over-year. Same-store cash NOI grew 3.9% for the quarter and 3.5% year-to-date, with management noting that a specific tenant's repayment agreement is expected to boost Q4 same-store NOI.

Leasing activity has been robust, with 2.15 million square feet of operating portfolio leases commenced in Q3 2025, yielding cash rent changes of 27.2% and straight-line rent changes of 40.6%. For the first nine months of 2025, 11.33 million square feet were leased with cash and straight-line spreads of 26.3% and 41.4%, respectively. STAG has already accomplished 99% of its forecasted 2025 leasing, achieving 23.9% cash leasing spreads, demonstrating the strength of its portfolio. The weighted average rental escalator across the portfolio is 2.9%, steadily increasing as new leases are signed with 3% to 3.5% escalators.

The company's development platform is gaining significant traction. As of September 30, 2025, STAG had 3.4 million square feet of development activity across 13 buildings, with completed developments 83% leased. A notable success includes the Nashville development becoming 100% leased post-Q3, achieving a 9.3% cash stabilized yield, 210 basis points higher than initial underwriting and six months ahead of schedule. A new build-to-suit project in Union, Ohio, for a 349,000 square foot warehouse, is fully leased for 10 years with a 7% expected stabilized yield, further highlighting the success of this initiative.

Liquidity and Capital Allocation

STAG maintains a strong financial position, bolstered by a credit rating upgrade from Moody's to Baa2 with a stable outlook in May 2025. This upgrade cited strong leverage, fixed charge coverage, excellent liquidity, and access to unsecured debt capital. As of September 30, 2025, immediate liquidity totaled approximately $904.10 million, comprising $17.30 million in cash and $886.80 million available on its unsecured credit facility. The company's net debt to annualized run rate adjusted EBITDA stood at a healthy 5.1x.

STAG strategically manages its debt profile, as evidenced by the refinancing of the Unsecured Term Loan G in September 2025, extending its maturity to March 15, 2030. The company also successfully executed a private placement of $550 million in senior unsecured notes in April 2025, with a weighted average fixed interest rate of 5.65% and a 6.5-year tenor, demonstrating strong demand for its debt. Interest rate risk is actively managed through interest rate swaps, with all variable rate debt (excluding the unsecured credit facility) fixed through maturity.

This robust capital structure provides STAG with the flexibility to fund its acquisition and development pipelines and meet its long-term liquidity needs through a combination of operating cash flow, property dispositions, and capital market activities.

Outlook and Guidance: A Path to Continued Growth

STAG's management is optimistic about the company's trajectory, reflected in its updated 2025 guidance. Core FFO guidance for the year has been increased to a range of $2.52 to $2.54 per share, a $0.03 increase at the midpoint. Cash same-store NOI guidance has also been raised to 4% to 4.25%, an increase of 25 basis points at the midpoint. These revisions are driven by year-to-date outperformance and confidence in the company's operational execution.

Acquisition volume guidance has been narrowed to $350 million to $500 million, with a cash capitalization rate between 6.25% and 6.75%. Management anticipates acquisition activity to be heavily weighted towards the back end of the year, driven by stable interest rates, a more stable macroeconomic environment, and sellers eager to close deals by year-end. Development remains a key growth driver, with STAG bullish on pursuing projects that achieve at least a 7% going-in yield. General and administrative (G&A) expenses are expected to be between $51 million and $52 million, a decrease of $1 million at the midpoint.

Looking ahead to 2026, STAG has already addressed approximately 52% of its operating portfolio square feet expected to lease, a significant increase from prior years, with anticipated cash leasing spreads between 18% and 20%. This early success is attributed to proactive tenant engagement and the quality of its portfolio. Management expects national vacancy rates to hover around 7% for the next two to three quarters before improving materially in the latter half of 2026, leading to market rent growth similar to 2025 levels.

Risks and Challenges

Despite the positive outlook, STAG faces several risks. Macroeconomic trends, including interest rate fluctuations, inflation, and geopolitical tensions, could impact financial market volatility and tenant cash flows. Changes in international trade policies and tariffs pose a risk, potentially increasing costs for tenants and affecting their profitability. While STAG's diversified portfolio aims to mitigate these impacts, elongated lease gestation periods observed due to uncertainty could affect lease-up times. The company also faces inherent real estate risks, including fluctuations in property values and competition for tenants. However, STAG's proactive risk management, including hedging activities for floating rate debt and a focus on diversified markets, helps to buffer against these challenges.

Conclusion

STAG Industrial stands as a compelling investment opportunity, demonstrating resilient growth and strategic adaptability in a dynamic industrial real estate market. Its disciplined approach to acquisitions, fueled by a proprietary risk assessment model, combined with a burgeoning development pipeline, positions the company for sustained expansion. The strong operational performance, highlighted by robust Core FFO and same-store NOI growth, underscores the effectiveness of its strategy.

With a healthy balance sheet, ample liquidity, and a proactive management team, STAG is well-equipped to capitalize on improving industrial fundamentals and long-term secular tailwinds such as e-commerce growth and supply chain diversification. While macroeconomic uncertainties and competitive pressures persist, STAG's commitment to a diversified portfolio and a focus on stable income streams provide a strong foundation for enduring value creation for its discerning investor base.