STAG INDUSTRIAL ANNOUNCES THIRD QUARTER 2014 RESULTS

View all news 10/30/2014 BOSTON, Oct. 30, 2014 /PRNewswire/ -- STAG Industrial, Inc. (the "Company") (NYSE:STAG), a real estate investment trust focused on the acquisition and management of single-tenant industrial properties throughout the United States, today announced its financial and operating results for the third quarter of 2014. Third Quarter Highlights: Generated Core Funds from Operations ("Core FFO") of $21.0 million compared to $17.5 million for the third quarter of 2013, an increase of 20%. This represents $0.36 per diluted share compared to $0.35 per diluted share in the third quarter of 2013, an increase of 3%. For the nine months ended September 30, 2014, Core FFO increased 23% in the aggregate and 9% on a diluted per share basis compared to the same period last year. Generated Adjusted Funds from Operations ("AFFO") of $20.4 million compared to $17.6 million for the third quarter of 2013, an increase of 16%. For the nine months ended September 30, 2014, AFFO increased 26% in the aggregate compared to the same period last year. Increased monthly common dividend by 2.3% to $0.1125 per share commencing with the January 2015 dividend. The increase equates to an annual dividend of $1.35 per share, or a yield of 6.5% based on the quarter ended stock price of $20.71. Acquired 18 industrial buildings consisting of approximately 3.5 million square feet for $173.7 million. Achieved quarter end occupancy on the Company's portfolio of 94.8%. Executed leases for approximately 629,000 square feet. Achieved a retention rate of 98.5% for leases expiring in the quarter. Raised gross proceeds of $44.7 million under the Company's "At the Market" offering programs ("ATM"). Appointed Jeffrey M. Sullivan as Executive Vice President, General Counsel and Secretary, effective January 1, 2015. "A very strong quarter for the Company with record acquisition volume and strong leasing results," said Ben Butcher, CEO of STAG. "We look forward to carrying the momentum established in the third quarter into our traditionally strong fourth quarter's activity and on into 2015." Acquisition Activity and Guidance During the three months ended September 30, 2014, the Company acquired 18 industrial buildings consisting of approximately 3.5 million square feet for $173.7 million. The acquired properties were 97.2% occupied at closing. Details of the acquired properties are shown in the chart below: THIRD QUARTER 2014 ACQUISITIONS Location (CBSA) Date Acquired Square Feet Buildings Cost (MM) Weighted Average Lease Term (Years) Minneapolis-St. Paul-Bloomington, MN-WI 7/30/2014 244,050 1 $9.8 4.3 Charlotte-Concord-Gastonia, NC-SC 8/18/2014 166,980 1 5.0 1.8 Charlotte-Concord-Gastonia, NC-SC 8/18/2014 101,591 1 4.1 4.3 Ashville, NC 8/27/2014 146,014 1 4.4 8.0 El Paso, TX 9/18/2014 994,097 4 58.4 2.9 Richmond, VA 9/22/2014 100,000 1 5.0 8.3 Harrisburg-Carlisle, PA 9/23/2014 1,077,054 4 45.9 4.0 Cincinnati, OH-KY-IN 9/25/2014 116,200 1 7.5 4.4 Boulder, CO 9/29/2014 159,611 1 13.9 3.0 Kansas City, MO-KS 9/30/2014 276,219 2 13.3 11.3 Reno, NV 9/30/2014 87,264 1 6.4 5.9 Total/Weighted Average 3,469,080 18 $173.7 4.4 During the nine months ended September 30, 2014, the Company acquired 31 industrial buildings consisting of approximately 6.6 million square feet for $292.7 million. The chart below reflects the acquisition activity during the nine months ended September 30, 2014: 2014 ACQUISITION ACTIVITY Quarter Square Feet (MM) Buildings Cost (MM) Weighted Average Lease Term (Years) Q1 1.0 4 $37.3 4.9 Q2 2.1 9 81.7 4.9 Q3 3.5 18 173.7 4.4 Total/Weighted Average 6.6 31 $292.7 4.6 Subsequent to quarter end, and through October 30, 2014, the Company acquired one industrial building consisting of 98,151 square feet for $6.2 million. This building was under contract as of September 30, 2014. As of October 30, 2014, the Company had entered into contracts to acquire 12 industrial buildings for $147.7 million. Included in the acquisitions under contract are three build-to-suit transactions, which are scheduled to close in the second quarter of 2015. The Company also executed non-binding letters of intent ("LOI") to acquire five additional industrial buildings for $106.3 million. These contracts and LOIs are subject to various conditions, including the negotiation and execution of a definitive purchase and sale agreement with respect to the buildings subject to the LOIs, which have not yet been satisfied and there can be no assurance that the transactions will be consummated. As of October 30, 2014, the pipeline of potential acquisitions exceeded $1.4 billion and 112 industrial buildings. 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. It also includes transactions under contract and transactions with non-binding LOIs. Inclusive of contracts executed but not yet closed, the Company has closed or committed to close a total of $446.6 million of acquisitions year-to-date. This exceeds the Company's full year 2014 target of $325 million to $350 million of acquisitions, an amount that represented 25% growth in the Company's December 31, 2013 real estate cost basis. In 2015, consistent with past years, the Company will target acquiring industrial buildings equal to 25% of the December 31, 2014 portfolio on a real estate cost basis. Leasing Activity During the three months ended September 30, 2014, the Company executed leases consisting of approximately 629,000 square feet. The leases signed are detailed below: THIRD QUARTER 2014 LEASING ACTIVITY Lease Type Count Square Feet Base Rent $/PSF Lease Commissions $/PSF Tenant Improvement $/PSF Total Costs $/PSF New Leases(1) 1 74,400 $5.44 $0.66 $0.40 $1.06 Renewal Leases 6 470,623 4.83 0.80 3.09 3.89 Total /Weighted Average New & Renewal Activity 7 545,023 $4.91 $0.78 $2.72 $3.50 Temporary Leases / License Agreements 3 83,770 Total Leasing Activity 10 628,793 (1) New leases consist of one new lease for 28,800 square feet and three leases, which are included in the renewal lease count, that added 45,600 square feet of new space at renewal. During the nine months ended September 30, 2014, the Company executed approximately 3.2 million square feet of leases of all types, comprised of 2.8 million square feet of renewal leases and 437,000 square feet of new leases. The chart below reflects the leasing activity: 2014 LEASING ACTIVITY Quarter New Square Feet Renewal Square Feet Total Leasing Activity Square Feet Q1 125,400 1,121,781 1,247,181 Q2 209,952 1,138,479 1,348,431 Q3 101,900 526,893 628,793 YTD 437,252 2,787,153 3,224,405 Six leases consisting of approximately 766,000 square feet expired in the third quarter and the tenant retention rate for these leases is 98.5%. The rental rate on the renewed leases expiring in the third quarter increased 3.5% on a cash basis and 7.5% on a GAAP basis. The tenant retention rate for the nine months ended September 30, 2014 is 69.0% as detailed in the chart below: 2014 RETENTION RATES Quarter Retention Rate Q1 75.4% Q2 35.1% Q3 98.5% Weighted Average YTD 69.0% Subsequent to September 30, 2014, the Company has executed four leases consisting of 432,500 square feet. As of October 30, 2014, the Company had 11 leases in negotiation for approximately 1.2 million square feet. These negotiations are subject to various conditions which have not yet been satisfied and there can be no assurance that the transactions will be consummated. Portfolio Highlights The Company's portfolio, inclusive of the new acquisitions, totaled approximately 44.5 million square feet as of September 30, 2014, representing an increase in square footage of 26% since September 30, 2013. Occupancy for the portfolio was 94.8% at the end of the quarter compared to 94.0% at end of the third quarter 2013. Year-over-year, same store occupancy decreased from 92.9% to 92.6%. Portfolio characteristics are detailed in the chart below: PORTFOLIO CHARACTERISTICS September 30, 2014 September 30, 2013 Square Feet 44,499,166 35,256,122 # of Tenants 212 177 Average Lease Size 170,802 157,780 Average Building Age 29 29 Average Clear Height(1) 25-29 26-29 (1)Excludes office buildings. The chart below details the Company's tenant profile: TENANT PROFILE September 30, 2014 September 30, 2013 Top Tenant % 2.4% 3.0% Top Ten Tenant % 15.0% 17.7% Average Tenant % 0.5% 0.6% % Tenants Publicly Rated (1) 57.2% 55.9% % Tenants Investment Grade Rated (1) 29.9% 31.2% % Tenants > $100MM in Revenue(1) 87.5% 86.2% % Tenants >$1B in Revenue(1) 58.4% 62.0% (1)Based on annualized rent and the inclusion of tenants, guarantors, and / or parents. Key Financial Measures Core FFO and AFFO for the third quarter were $21.0 million and $20.4 million, respectively. The Company believes that Core FFO and AFFO are useful supplemental measures of the Company's operating performance as they provide a more meaningful and consistent comparison of the Company's operating performance and allow investors to more easily compare the Company's operating results. The Company continued its accretive growth of recurring operating income during the three months ended September 30, 2014, with Core FFO growing 20% as compared to the three months ended September 30, 2013 in the aggregate and 3% on a diluted, per share basis. AFFO also grew 16% over the same period. The Company's key financial measures are noted in the chart below: KEY FINANCIAL MEASURES Three months ended September 30, Nine months ended September 30, Metrics 2014 2013 % Change 2014 2013 % Change ($000,000s, except per share data) Cash Net Operating Income $35.4 $29.3 21% $101.0 $81.7 24% Core FFO $21.0 $17.5 20% $60.3 $49.0 23% Core FFO per share / unit - diluted $0.36 $0.35 3% $1.09 $1.00 9% AFFO $20.4 $17.6 16% $60.3 $47.9 26% Net Income for the three months ended September 30, 2014 was $251,000. Included in Net Income is depreciation and amortization expense of $22.0 million. A reconciliation of Net Income to Cash Net Operating Income ("NOI"), adjusted earnings before interest, tax, depreciation and amortization ("Adjusted EBITDA"), Core FFO, FFO, and AFFO, all non-GAAP financial measures, appears at the end of this release. Capital Markets Activity, Liquidity and Financial Statistics As of September 30, 2014, the Company had $204.3 million of total liquidity comprised of $5.3 million of cash and $199.0 million of immediate availability on the Company's unsecured credit facility and unsecured term loans. The Company also had $45.0 million of additional capacity on its unsecured facilities for future acquisitions, subject to customary terms and conditions. As of September 30, 2014, the Company's enterprise value was approximately $2.1 billion comprised of $1.2 billion of equity market capitalization, $139.0 million of preferred equity and total debt of $678.2 million. During the three months ended September 30, 2014, Fitch Ratings assigned a 'BBB-' rating, to STAG Industrial Operating Partnership L.P.'s$50 million, 12-year unsecured notes that closed during the quarter. Fitch Ratings also re-affirmed its 'BBB-' rating for the Company and its operating partnership, with additional ratings as follows: senior unsecured: 'BBB-', and preferred equity: 'BB'. Subsequent to September 30, 2014, Fitch Ratings assigned a 'BBB-' rating to STAG Industrial Operating Partnership, LP's$50 million, 10-year unsecured notes that were issued on October 1, 2014, and re-affirmed the above mentioned ratings. As of September 30, 2014, the Company had approximately $678.2 million of debt outstanding with a weighted average remaining term of 4.5 years and a weighted average interest rate of 3.6%. During the three months ended June 30, 2014, the Company executed a $100 million private placement of senior unsecured notes consisting of $50 million of 10-year notes and $50 million of 12-year notes. Borrowings under both tranches of notes bear interest at a fixed rate of 4.98%. The 12-year notes were issued on July 1, 2014 and the 10-year notes were issued on October 1, 2014. The chart below details the Company's debt capital structure and financial ratios: DEBT CAPITAL STRUCTURE AND FINANCIAL RATIOS September 30, 2014 September 30, 2013 Total Debt ($000s) $678,192 $496,686 Weighted Average Duration (years) 4.5 5.2 Weighted Average Interest Rate 3.62% 3.98% % Secured 33% 54% % Maturing Next 12 Months 0.0% 0.0% Net Debt to Real Estate Cost Basis 40% 37% Total Debt to Enterprise Value 33% 30% Interest Coverage Ratio 5.0x 5.0x Net Debt to Adjusted EBITDA(1) 5.5x 4.6x (1)Annualized Adjusted EBITDA as defined at the end of this release. During the three months ended September 30, 2014, the Company issued 2.0 million shares of common stock under its ATM offering programs realizing net proceeds of $44.0 million. The Company has two ATM programs with a total of $200.8 million available. The chart below reflects the activity in the ATM programs for the nine months ended September 30, 2014: 2014 ATM ACTIVITY ATM Shares Issued Price per Share (Weighted Avg) Gross Proceeds (MM) Net Proceeds (MM) Q1 3,431,459 $22.61 $77.6 $76.4 Q2 1,756,613 23.79 41.8 41.2 Q3 2,003,465 22.32 44.7 44.0 Total/Weighted Average 7,191,537 $22.82 $164.1 $161.6 Subsequent to quarter end, on October 20, 2014, the Company closed a marketed, overnight common stock offering of 6,325,000 shares, inclusive of underwriters' option to purchase additional shares, at a price of $21.20 per share. The Company raised gross proceeds of $134.1 million and net proceeds of $128.2 million. A significant number of the allocated shares were to new and existing large, dedicated REIT investors. Personnel On September 8, 2014, Kathryn Arnone, Executive Vice President, General Counsel and Secretary of the Company, notified the Company that she is resigning effective December 31, 2014. Ms. Arnone has served in these capacities since the Company went public in 2011 and served as General Counsel to the Company's predecessor business since 2006. Simultaneously, the Company announced the appointment of Jeffrey M. Sullivan, a partner at Hunton & Williams LLP, by the Board of Directors to serve as Executive Vice President, General Counsel and Secretary of the Company, effective January 1, 2015. Mr. Sullivan's practice has focused on securities law, mergers and acquisitions, corporate governance matters and general corporate law, primarily involving REITs and other real estate companies, private equity funds and underwriters. Mr. Sullivan has represented the Company since it initiated its efforts to become a public company. During the second and third quarter of 2014, three of the Company's executive officers entered into standard 10b5-1 trading plans to diversify their personal assets. The trading plans meet the guidelines promulgated by the Board of Directors and eliminate officer discretion regarding the timing of sales. These programmatic sales represent the first sales of stock by any executive officer of the Company. All executive officers continue to hold significant ownership positions in the Company, well in excess of the stock ownership requirements established by the Board of Directors, and continue to receive a majority of their compensation in the form of Company equity. The Board of Directors supports these sale efforts. Dividends The Board of Directors declared an increase in the Company's monthly common stock dividend from a rate of $0.11 per share to $0.1125 per share, commencing with the January 2015 dividend. The increase equates to an annual dividend of $1.35 per common share and represents an annual distribution rate of 6.5% based on the Company's September 30, 2014 stock price of $20.71 per share. The record and payment dates for the 2014 fourth quarter and 2015 first quarter dividends are as follows: DIVIDENDS DECLARED Month Record Date Payment Date Dividend October-2014 October 31, 2014 November 17, 2014 $0.1100 November-2014 November 28, 2014 December 15, 2014 $0.1100 December-2014 December 31, 2014 January 15, 2015 $0.1100 January-2015 January 30, 2015 February 17, 2015 $0.1125 February-2015 February 27, 2015 March 16, 2015 $0.1125 March-2015 March 31, 2015 April 15, 2015 $0.1125 The Company's Board of Directors has declared a December 15, 2014 record date for the fourth 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 Company confirmed that the dividend for the Series A Preferred is $0.5625 per share, which equates to $2.25 per share on an annualized basis, and the dividend for the Series B Preferred is $0.4140625 per share, which equates to $1.65625 per share on an annualized basis. Both preferred stock dividends will be payable on December 31, 2014. Conference Call The Company will host a conference call on Friday, October 31, 2014, at 11:00 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 13591750. The replay will be available until November 7, 2014. 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) September 30, 2014 December 31, 2013 Assets Rental Property: Land $ 169,808 $ 134,399 Buildings 1,141,478 944,647 Less: accumulated depreciation (96,849) (71,653) Total rental property, net 1,214,437 1,007,393 Cash and cash equivalents 5,290 6,690 Restricted cash 6,668 6,806 Tenant accounts receivable, net 15,371 13,790 Prepaid expenses and other assets 21,656 16,526 Interest rate swaps 2,192 3,924 Due from related parties 150 185 Deferred leasing intangibles, net of accumulated amortization of $133,866 and $95,201, respectively 235,226 214,967 Total assets $ 1,500,990 $ 1,270,281 Liabilities and Equity Liabilities: Mortgage notes payable $ 222,192 $ 225,591 Unsecured Notes 50,000 - Unsecured credit facility 106,000 80,500 Unsecured term loans 300,000 250,000 Accounts payable, accrued expenses and other liabilities 24,304 18,574 Interest rate swaps 228 - Tenant prepaid rent and security deposits 10,005 8,972 Dividends and distributions payable 6,565 5,166 Deferred leasing intangibles, net of accumulated amortization of $5,875 and $4,520, respectively 7,586 6,914 Total liabilities 726,880 595,717 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 September 30, 2014 and December 31, 2013 69,000 69,000 Series B, 2,800,000 shares (liquidation preference of $25.00 per share) issued and outstanding at September 30, 2014 and December 31, 2013 70,000 70,000 Common stock, par value $0.01 per share, 100,000,000 shares authorized, 57,216,577 and 44,764,377 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively 572 447 Additional paid-in capital 783,518 577,039 Common stock dividends in excess of earnings (176,851) (116,877) Accumulated other comprehensive income 1,627 3,440 Total stockholders' equity 747,866 603,049 Noncontrolling interest 26,244 71,515 Total equity 774,110 674,564 Total liabilities and equity $ 1,500,990 $ 1,270,281 CONSOLIDATED STATEMENTS OF OPERATIONS STAG Industrial, Inc. (unaudited, $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 42,358 34,643 123,783 96,474 Expenses Property 7,694 6,299 24,285 17,182 General and administrative 5,704 4,376 19,462 13,385 Property acquisition costs 2,190 986 3,437 2,831 Depreciation and amortization 21,983 17,261 62,606 48,903 Other expenses 181 89 611 336 Total expenses 37,752 29,011 110,401 82,637 Other income (expense) Interest income 3 3 11 9 Interest expense (6,462) (5,370) (17,941) (14,866) Gain on sales of real estate 2,104 - 2,153 - Total other income (expense) (4,355) (5,367) (15,777) (14,857) Net income (loss) from continuing operations $ 251 $ 265 $ (2,395) $ (1,020) Discontinued operations Income attributable to discontinued operations - 29 - 248 Gain on sale of real estate - - - 464 Total income attributable to discontinued operations - 29 - 712 Net Income (loss) $ 251 $ 294 $ (2,395) $ (308) Less: loss attributable to noncontrolling interest after preferred stock dividends (90) (335) (784) (958) Net income (loss) attributable to STAG Industrial, Inc. $ 341 $ 629 $ (1,611) $ 650 Less: preferred stock dividends 2,712 2,712 8,136 6,783 Less: amount allocated to unvested restricted stockholders 87 64 258 197 Net loss attributable to common stockholders $ (2,458) $ (2,147) $ (10,005) $ (6,330) Weighted average common shares outstanding — basic and diluted 55,354,125 42,753,722 51,157,219 41,766,740 Loss per share — basic and diluted Loss from continuing operations attributable to common stockholders $ (0.04) $ (0.05) $ (0.20) $ (0.16) Income from discontinued operations attributable to common stockholders $ - $ - $ - $ 0.01 Loss per share — basic and diluted $ (0.04) $ (0.05) $ (0.20) $ (0.15) RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES STAG Industrial, Inc. (unaudited, $000s, except share data) Three months ended September 30, Nine months ended September 30, 2014 2013 2014 2013 NET OPERATING INCOME RECONCILIATION 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 2,190 986 3,437 2,831 Depreciation and amortization 21,983 17,463 62,606 49,508 Interest income (3) (3) (11) (9) Interest expense 6,462 5,370 17,941 14,866 Offering costs - - - 27 Other expenses 181 89 611 336 Gain on sales of real estate (2,104) - (2,153) (464) NET OPERATING INCOME $ 34,521 $ 28,383 $ 99,035 $ 79,438 Net operating income $ 34,521 $ 28,383 $ 99,035 $ 79,438 Straight-line rent adjustments, net (689) (632) (2,643) (2,139) Intangible amortization in rental income, net 1,581 1,524 4,600 4,399 CASH NET OPERATING INCOME $ 35,413 $ 29,275 $ 100,992 $ 81,698 Cash net operating income $ 35,413 $ 29,275 $ 100,992 $ 81,698 New property cash net operating income (7,357) (741) (29,748) (7,569) Cash net operating income from sales of real estate (127) (433) (467) (1,418) SAME STORE CASH NET OPERATING INCOME $ 27,929 $ 28,101 $ 70,777 $ 72,711 ADJUSTED EBITDA RECONCILIATION 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 2,190 986 3,437 2,831 Depreciation and amortization 21,983 17,463 62,606 49,508 Interest income (3) (3) (11) (9) Interest expense 6,462 5,370 17,941 14,866 Offering costs - - - 27 Gain on sales of real estate (2,104) - (2,153) (464) Consultant services - - 2,839 - ADJUSTED EBITDA $ 30,360 $ 25,634 $ 86,864 $ 70,850 RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES STAG Industrial, Inc. (unaudited, $000s, except share data) Three months ended September 30, Nine months ended September 30, 2014 2013 2014 2013 CORE FUNDS FROM OPERATIONS RECONCILIATION 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 estate (2,104) - (2,153) (464) Funds from operations $ 20,047 $ 17,757 $ 57,896 $ 48,736 Preferred stock dividends (2,712) (2,712) (8,136) (6,783) Amount allocated to unvested restricted stockholders (87) (64) (258) (197) Funds from operations attributable to common stockholders and unit holders $ 17,248 $ 14,981 $ 49,502 $ 41,756 Funds from operations attributable to common stockholders and unit holders $ 17,248 $ 14,981 $ 49,502 $ 41,756 Intangible amortization in rental income, net 1,581 1,524 4,600 4,399 Termination income - - (35) - Property acquisition costs 2,190 986 3,437 2,831 Offering costs - - - 27 Consultant services - - 2,839 - CORE FUNDS FROM OPERATIONS $ 21,019 $ 17,491 $ 60,343 $ 49,013 Weighted average shares and units outstanding Weighted average common shares 55,354,125 42,753,722 51,157,219 41,766,740 Weighted average restricted shares 264,438 214,389 270,530 220,466 Weighted average units 2,108,708 6,898,650 4,138,116 6,554,247 Weighted average shares and units outstanding - basic 57,727,271 49,866,761 55,565,865 48,541,453 Unvested outperformance plan - 497,018 - 497,018 Weighted average shares and units outstanding - diluted 57,727,271 50,363,779 55,565,865 49,038,471 CORE FUNDS FROM OPERATIONS PER SHARE / UNIT - BASIC $ 0.36 $ 0.35 $ 1.09 $ 1.01 CORE FUNDS FROM OPERATIONS PER SHARE / UNIT - DILUTED $ 0.36 $ 0.35 $ 1.09 $ 1.00 ADJUSTED FUNDS FROM OPERATIONS RECONCILIATION Core funds from operations $ 21,019 $ 17,491 $ 60,343 $ 49,013 Add: non-rental property depreciation and amortization 83 - 162 - Straight-line rent adjustments, net (693) (632) (2,314) (2,139) Recurring capital expenditures (876) (249) (1,290) (940) Lease renewal commissions and tenant improvements (535) (8) (755) (985) Non-cash portion of interest expense 351 268 1,009 783 Non-cash compensation expense 1,092 742 3,192 2,227 ADJUSTED FUNDS FROM OPERATIONS $ 20,441 $ 17,612 $ 60,347 $ 47,959 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, property acquisition costs, offering costs, gain on sales of real estate, and other expenses. The Company defines Cash NOI as NOI less straight-line rent adjustments and less intangible amortization in rental income. The Company considers NOI and Cash NOI to be appropriate supplemental performance measures because they reflect the operating performance of the Company's properties and exclude certain items that are not considered to be controllable in connection with the management of the property. However, these measures should not be viewed as alternative measures of the Company's financial performance since they exclude expenses which could materially impact the Company's results of operations. Further, the Company's NOI and Cash NOI may not be comparable to that of other real estate companies, as they may use different methodologies for calculating NOI and Cash NOI. Funds from Operations (FFO): is calculated 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. The Company uses FFO as a supplemental performance measure because, in excluding real estate related depreciation and amortization and gains and losses from property dispositions, it provides a performance measure that, when compared year-over-year, captures trends in occupancy rates, rental rates and operating costs. The Company also believes that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare the Company's operating performance with that of other REITs. Core FFO and Adjusted FFO (AFFO): are presented excluding property acquisition costs, offering costs, lease termination income, and intangible amortization in rental income. AFFO of the Company 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. In Core FFO and AFFO, the Company also excludes certain consultant services fees, which are non-recurring items that the Company does not believe is reasonably likely to recur within two years. The Company believes that Core FFO and AFFO are useful supplemental measures regarding the Company's operating performance as they provide a more meaningful and consistent comparison of the Company's operating performance and allows investors to more easily compare the Company's operating results. However, because FFO, Core FFO and AFFO exclude rental property depreciation and amortization and capture neither the changes in the value of the Company's properties that result from use or market conditions, nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of the Company's properties, all of which have real economic effect and could materially impact the Company's results from operations, the utility of FFO, Core FFO and AFFO as measures of the Company's performance is limited. Other equity REITs may not calculate FFO in accordance with the NAREIT definition and, accordingly, the Company's FFO, Core FFO and AFFO may not be comparable to such other REITs. FFO, Core FFO and AFFO should not be used as a measure of the Company's liquidity, and are not indicative of funds available for the Company's cash needs, including its ability to pay dividends. Adjusted Earnings before Interest, Taxes, Depreciation, and Amortization (Adjusted EBITDA): represents net income (loss) (computed in accordance with GAAP) before interest, tax, depreciation and amortization, property acquisition costs, offering costs, consultant services fees, gain on sales of real estate, and intangible amortization in rental income. Adjusted EBITDA is deemed helpful to investors by the Company as a supplemental measure of the operating performance of a real estate company because it is a direct measure of the actual operating results of the Company's industrial properties. The Company also uses this measure in ratios to compare its performance to that of its industry peers. 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, 2013, as updated by the Company's subsequent reports filed with the Securities and Exchange Commission. 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. SOURCE STAG Industrial, Inc. View all news