Greetings, and welcome to the STAG Industrial, Inc. Fourth Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Steve Xiarhos, Vice President, Investor Relations. Thank you, sir. You may begin.

Welcome to STAG Industrial's conference call covering the fourth quarter 2024 results. In addition to the press release distributed yesterday, we have posted an unaudited quarterly supplemental information package on the company's website at www.stagindustrial.com under the Investor Relations section. On today's call, the company's prepared remarks and answers to your questions contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address matters that are subject to risks and uncertainties, which may cause actual results to differ from those discussed today. Examples of forward-looking statements include forecasts of core FFO, same-store NOI, G&A, acquisition and disposition volumes, retention rates, and other guidance, leasing prospects, rent collections, industry and economic trends, and other matters. We encourage all listeners to review the more detailed discussion related to these forward-looking statements contained in the company's filings with the SEC. The definitions and reconciliations of non-GAAP measures are contained in the supplemental information package available on the company's website. As a reminder, forward-looking statements represent management's estimates as of today. STAG Industrial assumes no obligation to update any forward-looking statements. Today's call, you will hear from Bill Crooker, Chief Executive Officer; Matts Pinard, our Chief Financial Officer. Also here with us today is Michael Chase, our Chief Investment Officer. Steven Kimball, EVP of Real Estate Operations, is available to answer questions specific to their areas of focus. I'll now turn the call over to Bill.

Thank you, Steve. Good morning, everybody. Welcome to the fourth quarter earnings call for STAG Industrial. We are pleased to have you join us and look forward to discussing the fourth quarter and full-year 2024 results. We will also provide our initial 2025 guidance. 2024 ended with an improved industrial supply backdrop and another solid quarter of operating results produced by our team. The supply pipeline continues to contract with deliveries down over 30%, and this is expected to continue in 2025. In aggregate, 2024 national industrial leasing demand was muted compared to recent years. However, much of the weakness was specific to certain markets. Many of the markets we operate in remain healthy, from both a supply and demand standpoint. We are seeing an increase in tenant demand since the election spanning a broad array of industries. The most active tenant industries have been commercial services, building products, and airfreight and logistics. In 2024, within our portfolio, we witnessed the strongest market rent growth in our non-coastal and manufacturing markets. Issuing and onshoring projects continue to progress. This, along with pent-up demand from delayed decision-making by tenants, should result in growing warehouse demand. Leasing activity has reaccelerated with tenants committing to the space to serve their warehousing needs. This is demonstrated in the leasing progress we have achieved to date in our 2025 business plan. I'm happy to report that we've already leased 70% of our operating portfolio square feet we currently expect to lease in 2025, achieving cash leasing spreads of 23.8%. This level of leasing is on a similar pace to last year and consistent over the last few years. As an update to last quarter, American Tire Distributors is still working through the bankruptcy process. As of today, all leases are current with zero missed rental payments. The ATD credit exposure is reflected in our initial 2025 guidance provided in yesterday's earnings release, including same-store NOI and core FFO per share for the year. Moving to acquisitions, volume for the fourth quarter totaled $294 million. This consisted of 15 buildings with cash and straight-line cap rates of 6.2% and 6.9%, respectively. In December, we closed on a portfolio of five single-tenant buildings totaling 726,000 square feet in three different submarkets of Chicago. We acquired the portfolio for $73 million at a cash cap rate of 6.5%. The portfolio was 100% occupied with a weighted average lease term of 7.1 years and rents 12% below market. This transaction offered an attractive combination of current income and long-term NOI growth. Subsequent to quarter-end, we acquired one building for $16.6 million at a 6.4% cash cap rate. The recent volatility with interest rates caused an initial slowdown in the transaction market to start the year. We anticipate the acquisition market will gain momentum as we move through the year. In terms of dispositions this quarter, we sold two buildings for aggregate proceeds of $29 million. One of those buildings was a non-core asset. The other building was in Pleasant Prairie, Wisconsin, resulting in proceeds of $26 million, supporting a cash cap rate of 5.7%. In January, the company sold one building in Nashua, New Hampshire, for gross proceeds of $67 million, representing a cash cap rate of 4.9%. On the development front, as of December 31, we have approximately 2.5 million square feet of activity across 11 buildings in the U.S. I'd like to highlight two events in the development portfolio. First, on the leasing front, roughly 50% of the 2.5 million square feet under construction and 16% is pre-leased. The remaining 50% has been delivered and is currently 43% leased. This includes a full building lease set to commence May 1, 2025, for our 474,000 square foot facility in Greer, South Carolina. The existing customer expanded their footprint with STAG and will use this space for the production and distribution of consumer products. Second, in December, STAG entered a 90/10 joint venture development partnership to construct approximately 400,000 square feet across two railroad buildings in the Charlotte market. The project is in the Concord submarket northeast of the city. It has a project cost of approximately $56 million and an expected stabilized yield of 7%. The site has secured favorable zoning, which positions us well in this high barrier-to-entry market. With that, I'll turn it over to Matts, who will cover the remaining results and guidance for 2025.

Thank you, Bill, and good morning, everyone. Core FFO per share was $0.61 for the quarter, representing an increase of 4.8% as compared to 2023. Cash available for distribution totaled $370 million in 2024. This past year, we retained approximately $95 million of free cash flow after dividends paid. Net debt to annualized run rate adjusted EBITDA was 5.2 times at year-end with liquidity of $623 million. During the quarter, we commenced 23 leases totaling 2.4 million square feet, which generated cash and straight-line leasing spreads of 19.4% and 34.9%, respectively. For the year, we achieved cash and straight-line leasing spreads of 28.3% and 41.8%. Same-store cash NOI grew 4.4% for the quarter, and we achieved record same-store cash NOI growth of 5.8% for the year. Retention was 76.9% for the quarter and 76.6% for the year. As mentioned by Bill, we have accomplished 70% of the operating portfolio square feet we currently expect to lease in 2025, achieving 23.8% cash leasing spreads, demonstrating the strength of our portfolio. Moving to capital market activity, we repaid the $50 million private placement note, which matured on October 1. All forward equity proceeds have been settled, and we do not have any forward equity contracts outstanding. There are minimal debt maturities in 2025. We are pleased to provide guidance, which can be found on page 20 of our supplemental package available in the Investor Relations section of our website. Same-store cash NOI growth is expected to range between 3.5% to 4%. Components of our same-store cash NOI guidance include the following: retention to range from 70% to 75%, cash leasing spreads are projected to be approximately 25%, and 14 million square feet of budgeted new and renewal leasing for the year. We expect same-store occupancy to decrease 100 basis points during the year. Given the volatile capital market environment, acquisition volume guidance ranges from $350 million to $650 million with a cash capitalization rate between 6.25% and 6.75%. Acquisition timing will be more heavily weighted to the back end of this year. Disposition volume guidance ranges from $100 million to $200 million. G&A is expected to be between $52 million and $54 million. Incorporating these components, we are initiating a core FFO per share range of $2.46 to $2.50 per share. I will now turn it back over to Bill.

Thank you, Matts, and thank you to our team for the 2024 achievements. I'm really proud of all we accomplished over the course of the year and look forward to a strong 2025. We'll now turn it back to the operator for questions.

Thank you. We will now be conducting a question and answer session. We ask that analysts limit themselves to one question. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions. Our first question comes from Craig Mailman with Citi. Please proceed with your question.

Hey. Good morning, guys. Maybe one question in two parts. On leasing and spreads here, you know, you guys had a good year overall in 2024 on the spread side, but the fourth quarter was a little bit lighter at 19%. And you're expected to, you know, reaccelerate to 24% and the 70% you did so far. Is that 24% a good kind of place to think about the full year to be? Then just separately, the 14 million square feet planned for 2025, if you kind of look last quarter, you guys were closer to 15 million square feet. Is what's going on with the volatility or how should we think about that in terms of the overall plan of gross leasing?

Yeah. Hey, Craig. Very interesting way you phrased the question to get a couple of questions into one, but I appreciate it. So the leasing spreads for Q4 were a little lower. That was related to some fixed-rate renewal options in Q4. That was factored into our original guidance. If you exclude those, our leasing spreads in Q4 would have been 34%. And then looking into 2025, we're approximately 24% today for about 70% of the leasing we expect to do. So I think leasing spreads for 2025 will be in and around 24-25%. So we've got a pretty good chunk of that done already. And then with respect to prior views on leasing activity versus current views on leasing activity, a couple of things happened there. One, we sold the building in Nashua, New Hampshire, in Q1. That was a building that we were repositioning in Q4, and we were planning on leasing it ultimately. We decided to sell it just due to the economics. Very interesting transaction there. That was a drop in leasing activity we previously expected to lease in 2024, but now we've sold the building. And there was also another non-renewal that we expected to renew on the back half of next year that didn't renew, so now we're planning to lease in the back half of 2025.

Our next question comes from Nicholas Thillman with Baird. Please proceed with your question.

Hey, good morning, guys. Wanted to touch a little bit on the development and more specifically on kind of the yields you're seeing within that portfolio. The Tampa construction just finished up and was moved into the completed, but that in-service. And we noticed kind of the yield still stayed at 5.5%. Is there anything in that? I know originally you guys were saying mid-sixes on that. We thought the composition would drift a little higher. Is there anything in there that's causing that? Did you have to change any underwriting for any of those specific assets? And also, just a little commentary on the activity you're seeing in Spartanburg. Obviously, you signed the lease. I assume it was on the other properties.

Yeah, Nick. I'm not sure where the mid-fives were for the Tampa, but we're still expecting mid-sixes for stabilization on those two assets. And as I previously said, we're expecting we underwrite a 12-month downtime. So, end of 2025 for leasing on those assets. With respect to Spartanburg, that's a market, as I mentioned previously too, that had some oversupply. But there was some leasing getting done there. That has created more of a sense of urgency amongst tenants in that market. We were able to strike a lease at our facility, 474,000 square feet. So a little bit ahead of the revised timing last quarter. I think I mentioned we're expecting this to be, you know, middle call it end of Q2. That lease is expected to start May 1, so we're really happy with that outcome. We're seeing a lot of tours on the rear load building there, the 240,000 square foot. And then on the other building, the casual drive facility, we have part of that building leased right now. We're getting some really good inquiries on the remaining pieces, the remaining two suites of that building.

That's helpful. Maybe just a point of clarification. I was talking about the mid-fives for the Spartanburg, but I assume with moving the Tampa into the portfolio that that yield would drift higher. Did you adjust any yields for the Spartanburg assets?

Yeah. So the one we leased was approximately 5%. That was part of the change.

Our next question comes from Jason Belcher with Wells Fargo. Please proceed with your question.

Good morning. Just wondering if you could touch on the topic of tariffs a little bit, maybe share anything you're hearing from your tenants on that. As well as any trends you might be seeing across your tenants or tenant industries in your portfolio that you might attribute to tariff concerns. And then, if you can just kind of comment generally on how you're thinking about tariffs and potential impact? Is it something you think could hit in the next six to twelve months in terms of what you see in results, or do you think it's further out than that?

Yeah. It's a good question. I think there's just a lot of uncertainty with respect to the tariffs. Some have been announced, some have been delayed. Expecting some more to be announced today or soon. And so the question is, what products are getting impacted? And when? And I don't think our tenants really know. I mean, the feedback that we've been hearing from tenants is it's a little too early to tell. Certainly, seeing this really was a trend last year, storing more finished goods in the facilities ahead of tariffs. Onshoring dialogue, nearshoring dialogue increasing, but those decisions take a little bit of time. And so the question is if tenants are thinking if these tariffs are going to be in place for the long term, then I think it will spur more onshoring. And depending on what happens with your neighbors, maybe some additional nearshoring. I just think right now it's a little too early to tell. And from our tenants, it's just a lot of uncertainty.

Got it. Thank you.

Our next question comes from Vince Tibone with Green Street. Please proceed with your question.

Hi. Good morning. Can you discuss recent trends in the private transaction market? And specifically, have you seen any slowdown in transaction activity or a notable change in price since the ten-year has climbed pretty significantly from the trough in, you know, September last year?

I mean, there's been some interesting trends in the private market. There were some portfolios that got executed last year. There was some big appetites for some of the larger private equity shops. The largest private equity shops are actually selling more, which I think you know who I'm referencing. But right now, there's a little bit of probably a pause in the private market. We are seeing and hearing of some portfolios coming out that may trade, and those may trade at a little bit tighter yields because they're shorter lease terms that they can get higher yields in the next three years. But, Mike, I don't know if there's anything else you want to touch on there.

Yeah. No, Bill. I think you hit on that. The year-end was a little bit slower. Well, it was a fast year-end for closing deals, but it was a slower year at year-end for deals coming out to market. That trickled into January, but we've seen a little bit of an uptick in February, and we expect that to accelerate throughout the rest of the year.

Our next question comes from Steven Kimball with Evercore ISI. Please proceed with your question.

Yeah. Thanks. Good morning. Bill, I was just wondering, you know, we've heard from many of your peers and some brokers that, you know, activity, leasing, seemed to noticeably pick up once the election was over. And so just taking your comments about tariffs and the uncertainty into account, just like, what have you seen on the actual just kind of pace of leasing activity towards your pipeline? And is there a big difference in that pickup between kind of the existing portfolio and maybe the development pipeline? Thanks.

Thanks, Steve. We've seen a pretty material uptick in tours, calls, inquiries, to start this year. We're seeing it. It's really broad-based across our markets. You're seeing it a lot in Greenville, Spartanburg, Milwaukee, Chicago, the Sunbelt, certainly the Nashville market. The new builds are getting a lot of looks. There's a lot of commentary in the market that there's a flight to quality. But we're seeing a lot of demand in our existing buildings as well. It takes a little bit of time for those tours, increased calls to convert to trading papers and signing leases. But the activity has increased and probably at a level we haven't seen in, you know, twelve months or so. So we're really happy with the activity we're seeing.

Great. Thank you.

Our next question comes from John Kim with BMO Capital Markets. Please proceed with your question.

Thank you. Can you tie in the 100 basis point occupancy loss you expect this year with the 9.7 million square feet that you've addressed for 2025, and also the 6.9 million square feet that is expiring? I'm just doesn't seem like it's apples to apples to me, so I just wanted to clarify.

Don't know if I can connect all those dots, but we certainly can drill down more detailed maybe after the call, John. But, I mean, what we're seeing here is our expected leasing for 2025 is around 14 million-ish square feet. We've done 70% of our leasing in our operating portfolio. So the math there is we've got another 4 million square feet in our operating portfolio we expect to lease. And then there's about 2 million square feet we expect to lease outside of the operating portfolio, which is a higher number than what we've had in the past, but I think it speaks to what we've been doing with our developments, our redevelopments, our repositioning. And so that's all, you know, I think it's a great shift. But there's still a fair amount of wood to chop as we move through the year.

I guess, what's in that expected leasing number? There's 2025 expirations. There's developments. There's existing vacancy.

Also vacancy that there's you've got new leasing that is from either existing vacancy or vacancy that we think is going to not renew earlier in the year and maybe gets leased up later. You've got renewal leasing, and then you've got non-operating portfolio leasing. That is that additional 2 million square feet I was referencing, which includes developments and some other repositioning assets.

Got it. Thank you.

Yeah. John, this is Matts. So I'll jump in here. I think one point of clarification here is when we talk about the square feet we expect to lease in 2025, that's not simply addressing expiries to Bill's point. It includes new executive leasing that we have in our budget as well. I think that's going to help bridge the numbers you're looking at.

Great. Thanks.

Our next question comes from Michael Carroll with RBC Capital Markets. Please proceed with your question.

Hi. Good morning. This is Didi on for Mike. I guess just thinking about how are you thinking about development starts for 2025. Are you planning on leasing some projects that are currently under construction before starting breaking ground on new things? Just wanted to know your thoughts.

I mean, right now, we're really happy with the way the development platform is running. We expect and we hope to have some additional development starts. I mean, we just leased our biggest building in our development pipeline at 474,000 square feet. So even if it was apples to apples, we would, you know, add at least that. Hopefully, it really comes down to opportunities. The assets that we're putting in our development pipe are in really strong markets. We're seeing really attractive yields. We just were able to put two buildings in our development pipeline in Concord, North Carolina. Those sites fit the market well. In total, it's, you know, call it $55 million. So we're really happy with the development pipeline right now, and we'll add to it for sure if the right opportunities come up.

Great. Thank you.

Our next question comes from Brendan Lynch with Barclays. Please proceed with your question.

Great. Thanks for taking my question. Maybe you could put your 70% of renewals that you've addressed already into historical context. And is it normal to have that level completed at this point in the year? And are you reaching out to clients earlier than in the past? Are they coming to you earlier?

Yeah. The 70% that we've done to date for 2025 is consistent with last year and really consistent with the past few years. So we're always in front of our tenants. I don't think there's a strategic push to change whether we're going to, you know, try to renew tenants early or not. It's a back-and-forth conversation. So we're at a similar pace to last year and the last few years.

Great. And maybe just follow-up there. At what point do you turn your attention to 2026?

Well, we've leased, what, 8% of 2026 already. So, you know, we're always looking to make the best transactions and decisions for the company. And part of that is tenants may come to us with their 2026 lease expirations and say, hey, I want to renew early. And if the economics work and we like the transaction, then we'll execute on it. So we're about 8% of our way through our 2026 at this point. Thank you. And I just want to thank everybody for participating in the call today. And I certainly want to thank the analysts for their questions and look forward to seeing everyone at the upcoming conferences. Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.