STAG STAG Q4 2025 Earnings Call Transcript

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Date

Feb. 12, 2026 at 10 a.m. ET

Call participants

• Chief Executive Officer — William R. Crooker
• Chief Financial Officer — Matts S. Pinard
• Chief Operating Officer — Steven Kimball
• Chief Investment Officer — Michael Christopher Chase
• Executive Vice President and Corporate Secretary — Steve Xiarhos

Takeaways

• Core FFO Per Share -- $0.66 for the quarter and $2.55 for the year, with the annual figure up 6.3% and including $0.10 per share from two onetime items in the quarter.
• Same-Store Cash NOI Growth -- 5.4% in the quarter and 4.3% for the year, reflecting outperformance of initial guidance.
• Leasing Activity -- 31 leases commenced in the quarter, totaling 3,000,000 square feet, generating cash and straight-line leasing spreads of 16.3% and 27.4% respectively.
• Full-Year Leasing Spreads -- Achieved cash spreads of 24% and straight-line spreads of 38.2% in 2025.
• 2026 Cash Leasing Spread Guidance -- Projected range of 18%-20%, with 69% of expected lease expirations addressed for the year at these spread levels.
• Retention Rates -- 75.8% for the quarter and 77.2% for the year; 2026 retention guidance set at 70%-80%.
• Portfolio Occupancy -- Entered the year near 98% occupancy; average same-store occupancy for 2026 is projected between 96%-97%.
• Acquisition Volume -- $285.9 million in the fourth quarter spanning seven buildings at 6.47% cash and straight-line cap rates; post-quarter acquisition of $80.6 million at a 6.1% cash cap rate.
• 2026 Acquisition Guidance -- Expected volume of $350 million-$650 million at cash cap rates of 6.25%-6.75%, with activity weighted to the back half of the year.
• Dispositions -- 2026 guidance calls for $100 million-$200 million in disposition volume.
• Development Pipeline -- 3,500,000 square feet across 14 buildings with 59% completed and 73% leased as of year-end; new 186,000 square foot project in Lenexa, Kansas, targeting a 7.2% projected cash yield.
• Dividend Change -- Dividend raised 4% after year-end, largest increase since 2014, and cadence modified from monthly to quarterly payments.
• Net Debt and Liquidity -- Year-end net debt to annualized run-rate adjusted EBITDA of 5.0x, with $750 million in liquidity.
• 2026 Core FFO Per Share Guidance -- Initiated at $2.60-$2.64 per share after factoring in a $0.03 headwind from higher interest expense due to a $300 million term loan refinancing.
• G&A Expense Guidance -- Expects $53 million-$56 million in general and administrative expenses for 2026.
• Credit Loss -- 22 basis points in 2025; 2026 guidance assumes a 50 basis point credit loss in same-store NOI calculations.
• Development Leasing Guidance -- 907,000 square feet projected for 2026, including one build-to-suit, leaving about 530,000 square feet yet to be leased as of the call.
• Capital Markets Activity -- Settled $157.4 million in proceeds from forward ATM sales in December.
• Acquisition Pipeline -- Current pipeline stands at $3.6 billion, with increased visibility relative to the prior year's first quarter.

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Risks

• Matts S. Pinard noted, "the increase in interest expense from our recent refinancing of our $300,000,000 term loan g be a $0.03 headwind to core FFO per share growth in 2026."
• Matts S. Pinard stated, "average same-store occupancy for 2026 is expected to be between 96% and 97%," reflecting higher anticipated vacancy related to "a record amount" of expiring square footage.

Summary

Management emphasized a record-setting year for leasing volume and core FFO per share growth, framing 2025 as a high watermark for both operational and financial performance. The company addressed 69% of expected 2026 expirations at favorable lease spreads, while entering the year with historically high portfolio occupancy. Guidance for 2026 targets consistent growth in same-store NOI and core FFO per share, despite headwinds from increased interest expense and record levels of space rolling. The pipeline for acquisitions is robust at $3.6 billion, with acquisition activity expected to accelerate late in the year as market conditions improve. Dividend policy was meaningfully enhanced with a 4% increase and a shift to quarterly payments.

• Steve Xiarhos stated, "we are seeing increased TENECA activity across our markets," specifically highlighting broader tenant engagement and the strength of tenant demand from sectors such as 3PL, food and beverage, and emerging data center tenants.
• Steven Kimball commented that development leasing guidance for the year includes 907,000 square feet, clarifying that "one of those is a build-to-suit."
• Matts S. Pinard said the company's current leverage and cash flow retention position allow execution of the 2026 business plan "without accessing the the equity capital markets."
• The majority of supply deliveries in 2026 are expected to be build-to-suit, accounting for about 40% of new supply, with national vacancy rates projected to peak early in the year and improve in the back half.
• Dividend increase was described by William R. Crooker as "the largest raise we have had since 2014," supported by a multi-year reduction in payout ratio.

Industry glossary

• Core FFO: Funds from Operations adjusted to exclude certain non-recurring items, used as a recurrent operating performance metric for REITs.
• ATM Sales: "At-the-market" equity sales allowing shares to be sold incrementally over time at prevailing market prices.
• Cap Rate: Capitalization rate; annual net operating income divided by property value, used to measure real estate investment returns.
• Build-to-Suit: Development projects constructed to meet the specific requirements of tenants who agree to lease the property upon completion.
• 3PL: Third-party logistics providers offering outsourced logistics services for distribution, warehousing, and fulfillment.
• NOI: Net Operating Income; income after operating expenses but before interest and taxes, a key real estate profitability measure.

Full Conference Call Transcript

Steve Xiarhos: Welcome to STAG Industrial, Inc.'s conference call covering the fourth quarter 2025 results. In addition to the press release distributed yesterday, we have posted an unaudited quarterly supplemental information presentation on the company's website at stagindustrial.com under the Investor Relations section. On today's call, the company's prepared remarks and answers to your questions will 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, and may cause actual results to differ from those discussed today.

Examples of forward-looking statements include forecasts or 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. Encourage all listeners to review the more detailed discussion related to these forward-looking statements contained in the company's filings with the SEC and the definitions and reconciliations of non-GAAP measures 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, Inc. assumes no obligation to update any forward-looking statements. On today's call, you will hear from William R. Crooker, our Chief Executive Officer, and Matts S. Pinard, our Chief Financial Officer.

Also here with us today are Michael Christopher Chase, our Chief Investment Officer, and Steven Kimball, our Chief Operating Officer, who are available to answer questions specific to their areas of focus. I will now turn the call over to William R. Crooker. Thank you, Steve. Good morning, everybody, and welcome to the fourth quarter earnings call for STAG Industrial, Inc. We are pleased to have you join us and look forward to discussing the fourth quarter and full-year 2025 results. We will also provide our initial 2026 guidance. As I look back on 2025, it was arguably one of our more successful years.

Operator: We outperformed almost all of our budgeted metrics, including occupancy,

Steve Xiarhos: credit loss, leasing spreads, same-store cash NOI, development starts, and core FFO. We grew same-store cash NOI by 4.3% and grew core FFO per share by 6.3%. This growth was supported an improved industrial supply backdrop with deliveries down almost 35% versus 2024. Most of the markets we operate in remain healthy from both a supply and demand standpoint, with positive rent growth across almost all of our markets. While many business leaders remain optimistic, we are seeing increased TENECA activity across our markets. Economic growth has begun to improve, and meaningful investment has followed.

William R. Crooker: We expect 180,000,000 square feet of deliveries or less this year, much of which will be driven by build-to-suit transactions. We anticipate a net absorption will improve in 2026 contributing to another year of positive rent growth across our markets. We expect national vacancy rates to peak in the first half of this year with an inflection point in the back half of 2026. 2025 was a high watermark for leasing volume STAG. We expect 2026 to follow suit driven by a record amount of square footage expiring in a calendar year for our company. I am pleased to report that we have addressed 69% of the operating portfolio square feet we expect to lease in 2026.

We project cash leasing spreads of 18% to 20% for 2026. This leasing success is a testament to the quality of our portfolio and a welcome sign of tenant engagement and commitment to their space. Q4 was the most active transaction quarter of 2025. This was due in part to less macro volatility which brought sellers to the market in the second half of the year. Acquisition volume for the fourth quarter totaled $285,900,000. This consisted of seven buildings, with cash, straight-line cap rates of 6.47% respectively. These buildings are 97% leased to strong credits with weighted average rental escalators of 3.5%. Subsequent to quarter end, we acquired one building for $80,600,000 with a 6.1% cash cap rate.

This is a Class A building leased to a strong credit for twelve years. In terms of our development platform, we have 3,500,000 square feet development activity or recent completions across 14 buildings as of the end of Q4. 59% of 3,500,000 square feet are completed developments. These completed developments are 73% leased as of December 31. In the fourth quarter, we commenced a new development that was identified within our existing portfolio by our operations team. The 186,000 square foot project is located southwest of Kansas City in Lenexa, Kansas. The project has an estimated delivery date of Q1 2027.

The building will have the flexibility to demise into suites of 60,000 square feet or less in a market with healthy fundamentals. We are projecting a cash yield of 7.2% on this project. Subsequent to quarter end, we executed a 78,000 square foot lease in one of our Charlotte development projects to a manufacturing and assembly company. The building is now 39% leased. We initially underwrote fully stabilizing the building in the first quarter 2027. Before I turn it over to Matts, I am pleased to say that after year end, we raised our dividend 4%, which is the largest raise we have had since 2014.

This raise is a result of many years of reducing our payout ratio and retaining as much free cash flow as possible. In addition to raising our dividend, we have modified the dividend payment cadence from monthly to quarterly going forward. With that, I will turn it over to Matts who will cover our remaining results and guidance for 2026.

Steve Xiarhos: Thank you, Bill, and good morning, everyone.

William R. Crooker: Core FFO per share was $0.66 for the quarter,

Steve Xiarhos: and $2.55 for the year, representing an increase of 6.3% as compared to 2024. Included in core FFO for the quarter are two onetime items that contributed approximately

Matts S. Pinard: $0.10 to core FFO per share. During the quarter, we commenced 31 leases totaling 3,000,000 square feet which generate cash and straight-line leasing spreads of 16.3% and 27.4%, respectively. This leasing activity included five fixed-rate renewal options totaling 882,000 square feet, most of any quarter in 2025. Excluding these five fixed-rate leases, fourth quarter cash leasing spreads would have been 20%, an increase of 570 basis points. For the year, we achieved cash and straight-line leasing spreads of 24% and 38.2% respectively. Same-store cash NOI growth was 5.4% for the quarter, and 4.3% for the year. We incurred 22 basis points of cash credit loss in 2025. Retention was 75.8% for the quarter and 77.2% for the year.

As mentioned by Bill, we have accomplished 69% of the square feet we currently expect to lease in 2026, achieving 20% cash leasing spreads. Moving to capital market activity, on December 8, company settled $157,400,000 of proceeds related to forward ATM sales that occurred throughout 2025. Net debt to annualized run-rate adjusted EBITDA was 5.0x at year end with liquidity of $750,000,000. 2026 guidance can be found on Page 20 of our supplemental package, which is available in the Investor Relations section of our website. Same-store cash NOI growth is expected to range between 2.75% and 3.25%.

The components of our same-store cash NOI guidance include the following: retention to range between 70% and 80%; cash leasing spreads of 18% to 20%; average same-store occupancy for 2026 is expected to be between 96% and 97%. In consistent with previous years, 50 basis points of credit loss is included in our initial cash same-store guidance. Acquisition volume guidance is a range of $350,000,000 to $650,000,000 with a cash capitalization rate between 6.25% and 6.75%. Acquisition timing will be more heavily weighted to the back end of the year. Disposition volume guidance is between $100,000,000 and $200,000,000. G&A is expected to be between $53,000,000 and $56,000,000.

Finally, the increase in interest expense from our recent refinancing of our $300,000,000 term loan g be a $0.03 headwind to core FFO per share growth in 2026. Incorporating these components, we are initiating a core FFO per share range between $2.60 and $2.64 per share. I will now turn it back over to Bill. Thank you, Matts.

William R. Crooker: And thank you to our team for their continued hard work and outperformance of our 2025 goals. We are excited about the opportunities that are in front of us here at STAG Industrial, Inc., and we look forward to building off this momentum 2026. We will now turn it back to the operator for questions.

Operator: Thank you. We will now be conducting a question-and-answer session. A confirmation tone will indicate that your line is in the question queue. You may press star 2 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. We ask that analysts limit themselves to one question and a follow-up so that other analysts have an opportunity to do so as well. One moment, please, while we poll for questions. Our first question comes from Craig Allen Mailman with Citi. Please proceed with your question.

William R. Crooker: Just kind of curious on the leasing front.

Craig Allen Mailman: You know, I know, Bill, you said you guys are not expecting vacancy nationally to peak until middle of the year. But just from commentary from peers and brokers, it feels like the leasing environment and velocity is picking up. So I am just kind of curious as you guys kind of contemplate the 100 basis points of occupancy decline, which I understand you guys have 20,000,000 square feet rolling. And so you know, 25% of that nonrenewals is a fairly large amount.

But I am just kind of curious how you guys thought about the pace of backfill activity in guidance and kinda what could be the upside to that if the momentum that we are seeing coming out of '25 kinda hold and sustainable and maybe even ticks up a bit.

William R. Crooker: Yeah. Thanks, Craig. And we had a really successful year 2025 with leasing and exceeded, as I mentioned, you know, most, if not all, of our budgeted metrics, including our leasing volume. If, you know,

Matts S. Pinard: If, you know,

William R. Crooker: certainly, if that continues, you know, there is we could at least product earlier in the year, and that would be upside. And the way we look at it and prepare our budgets, and we entered the year in 2026 at close to 98% you know, occupancy rate. And so when you have 20,000,000 square feet rolling at our you know, historical retentions, you have got a fair number of square feet that is going vacant. In our budgets and contemplated, you know, a nine to twelve month lease up period for those assets. There is a number of examples where you know, we outperformed that in 2025, you know, for, you know, just one example.

For example, we leased a asset in Savannah, Georgia. In '25. It went vacant in the first quarter. We anticipated releasing that in the '26. We found a tenant, released that asset with no downtime. That was in a market that at that time had 10% vacancy rates. So some other you know, options for the tenants ultimately decided to go with our building. And that is something when we budget, we are going to, you know, budget that, I think, prudently to lease up nine to twelve months, but we our outcome was zero downtime. There is several other examples I could I could give you on that happened in 2025.

If those scenarios could pan out in '26, but the way we budget, we try to be prudent, and we certainly do not budget zero downtime for our assets. But there is you know, those things happen some years and certainly happened a lot. In '25, and we hope it continues in '26. And then and just going back to you know, our view on the overall industrial market, I mean, it is it is still pretty strong. Right? I mean, there we are we have to chew to do through some of this supply.

We think that happens you know, you know, peaks, you know, midway through '26, and it starts to really improve as you move through the back half of '26 and into '27. So overall, you know, really happy with the way 2025 played out. Really happy with the results. You are coming into the year with some really high occupancy. Some great trends. We hope it continues as we move through '26, but we try to be, you know, prudent when we budget for '26.

Craig Allen Mailman: That is helpful. Then just on the acquisition front, you know, you guys are came out of the gates with the 81,000,000, but you know, Matt had mentioned it is more heavily weighted to the back end. Could you just talk a little bit more about what you have visibility on today and kind of anticipated timing versus what is speculative in the guidance for acquisitions?

William R. Crooker: Yeah. I mean, right now, all we have disclosed is the 81,000,000. We typically do not disclose any you know, LOI acquisitions or on a contract acquisitions. You know, things do fall out of LOI. They do fall out of contract. We have been underwriting more deals, you know, frankly, this first quarter than we did last force last first quarter. We the momentum from Q4 has continued into the first quarter. A typical transaction year, though, is usually slower in the first quarter. And then it starts to build as you move through the year.

So we do expect first quarter to be slower, but we are underwriting more transactions now than we did in the first quarter of 2025. Our pipeline is strong. It stands at $3,600,000,000. Michael Christopher Chase can certainly dive into the details of that if you would like. But overall, the in the transaction market is really healthy. We are seeing some portfolios come to the market. There is just it seems to be, you know, pretty healthy. There is you can call it, pent-up you know, seller demand that came to the market at the back half of 2025, and that has continued as we moved into 2026.

Craig Allen Mailman: Great. Thank you.

William R. Crooker: Thanks, Craig.

Operator: Our next question comes from Michael Griffin with Evercore ISI. Please proceed with your question.

Steve Xiarhos: Great, thanks. Bill, I appreciated the comments in

Matts S. Pinard: prepared remarks around sort of increased tenant activity. I was wondering if you could unpack that a little bit. Are these customers, potential tenants you have been monitoring that are looking around for a deal? Or are they really, I guess, you know, closer to, you know, signing on the dotted line? And have you seen

Steve Xiarhos: maybe more newer prospects come into the market that might have been holding off last year?

William R. Crooker: Yeah. That is that is a good question. Interesting question. I mean, beginning of last year, certainly, after, you know, quote, unquote, Liberation Day, there was the tenants hanging around the hoop looking into space, but it did not feel like real demand. This tenant activity is real demand. We are seeing you know, tenants make decisions, lease space. We obviously had, you know, a lot of successes in 2025. Let us say the demand is pretty broad based. We are seeing it from 3PL, seeing it from food and beverage. I would say something that is a little newer, a little more nuanced is they are seeing a fair bit of demand from data center tenants.

So those are tenants that are either supplying generators to data centers or even some light manufacturing of data centers. Storing other things for data centers, say data center developments. Know, we looked at our portfolio. We have got 3,000,000 square feet leased to data center tenants for these are five plus year leases to good credits. In addition, we have got some prospects at some of our buildings for data center demand. So that is a newer demand. But with respect to overall tenant demand, it feels

Matts S. Pinard: it feels real.

William R. Crooker: It does not feel like they are just kicking tires. These are tenants that need space and are looking for space. You know, I think the caveat to all that is there is, you know, there is some supply that we need to chew through. So these tenants have options. Our portfolio, when I say this a lot is know, we buy buildings. We add buildings to our portfolio. We make sure those buildings fit the submarkets that they operate in and fit them well. And because of that, we all we have historically and continue to maintain occupancy levels well above market occupancy levels. We expect that to continue.

You know, we have been fortunate in 2025 to win deals when there were other options that tenants could have gone to, but we proved to be a very good landlord. And we proved to have very good product in our respective submarkets. So, we hope that continues, and, you know, just need to get through some of the supply, but the demand out there is real. And we expect, you know, absorption to increase as we move through the year. Great. That is certainly some helpful context. And then maybe just going back to

Blaine Heck: sort of the outlook for supply, maybe to unpack that a little bit more. I mean, look, it seems like if trends are improving into 2026, if you expect vacancies to decline in the back half of the year, if others in the industry are seeing this as well, I guess, there a worry that we could see a ramp back up in supply if the fundamental picture continues to improve? Or are there more governors or barriers to entry, whether it is elevated development costs that might, you know, preclude a, you know, overbuilding problem that we have had a couple of years ago. Yeah. I mean, I think the developers in industrial are generally

William R. Crooker: prudent. We had a little bit of excess supply there, but I think really, the story there was just a falloff in demand. Right? So I think the supply was

Matts S. Pinard: was

Steve Xiarhos: okay. It was just that the

William R. Crooker: falloff in demand. And as that picks back up and you start to look at your crystal ball and underwrite more market rent growth, more developments pencil out. Right? But I think those developments, if you know, if you have got a, you know, piece of land and you need a permit and then title it and then build it, you know, you are looking well into '27 before any of these things come online. Right? So there is a window here where it is going to flip. And when it starts to flip, I think it is gonna flip pretty quickly in the landlord's favor here.

So with respect to new supply coming online and being a concern, I am not concerned about it. Our team's not concerned about it. And if that supply comes back on, it is gonna come back on, I think, prudently, and I think you know, middle to late 2027 or even later than that.

Blaine Heck: Great. That is it for me. Thanks for the time. Thanks.

Matts S. Pinard: Thank you.

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

Blaine Heck: Good morning. Bill, just want to make sure you invest around talking turns after, Sunday, but, we can move out to some other things. Just overall on I understand there is a new organic growth story with STAG. And you had mentioned in our prior conversations looking to maybe even improve on that growth rate by potentially looking to do some more

Matts S. Pinard: strategic exits of the individual markets that might cause some like

Blaine Heck: near-term dilution. I would enhance the longer-term growth rate. I guess, has there been any changes in that conversation or any recent developments on the thought process there? And

Matts S. Pinard: is any of that baked into some of the disposition guidance that is included in 2026?

William R. Crooker: Yeah. I would say there is it is not a material shift to what we have been on the past

Steve Xiarhos: five years. Right? There is

William R. Crooker: every year, there is some noncore assets we dispose of, and every year, there is some opportunistic dispositions. Generally, we can you know, we have a sense of the noncourt dispositions to start the year. We do not really have a sense of the opportunistic because you know, oftentimes, those are reverse inquiries that come in. And we had two of those, this in 2025. Two assets, one was in the first quarter, one was in the fourth quarter where there were assets that went vacant and know, we love the leasing's prospects. And we are we were planning on holding those assets and leasing them up, and we got we sold both those assets at what a market

Matts S. Pinard: rate would be, market cap rate would be, market rent would be.

William R. Crooker: Those were sold at a 4.9% cap rate. So just, you know, great execution from the team, but users wanted the space and did not want to lease it. So, great execution. So we anticipate having some you know, hopefully, having some of those this year. But right now, the plan is what is in our guide is just some noncore dispositions. But nothing in excess of past years. I think, you know, reflecting back on our conversation, Nick, that is just when you look at the map of STAG's portfolio, there might be, you know, one asset in a market.

And if we do not feel like we can grow into that market over time, that is an asset that we will opportunistically dispose just to be a little bit more efficient on the operating side. But that is on the margin and not really that impactful to the numbers.

Matts S. Pinard: Oh, very helpful. And then maybe just appetite to hold land on the balance sheet for development opportunities, understanding that, that is a growing part of the business and the most of your development opportunities have been with JV partners.

Blaine Heck: But just appetite on growing the land bank.

William R. Crooker: Yeah. Certainly not part of our 2026 plan. Put something that is part of our long-term development plan. We are gonna, you know, step our way into that. Right now, we have got fair amount of developments. I am very happy with how the development initiative has progressed. The results we are seeing it is great to see that at least get signed in our Concord development. There is some good opportunities that we are looking at now with some other potential leasing on the development side. And with respect to newer development opportunities, hopefully, there is some things we can announce in the near future on that.

And then, you know, when you start to think about the longer-term view of markets, you know, the land is not in our plan, as I mentioned. Holding land right now is not in our plan for '26, but we are looking it is early days. We are looking into some phase developments that may be an opportunity to for us to

Matts S. Pinard: you know, have a

William R. Crooker: call it, quasi land position. But we are looking at a lot of those things as we grow this platform.

Blaine Heck: Very helpful. Thank you.

William R. Crooker: Thank you.

Operator: Our next question comes from Blaine Heck with Wells Fargo. Please proceed with your question.

Blaine Heck: Hey, thanks. Good morning. Can you just talk about how you are thinking about your overall cost of capital today and the spread between your cost of debt? Or maybe more importantly cost of equity and your required returns on investment?

Matts S. Pinard: Yeah. Good morning, Blaine. This is Matts. So cost of debt is pretty easy. You know, if we were to go to the private placement market where you historically have been an issuer, spread there anywhere between 140 and 150 basis points over. If we would go to the public bond market, which we have been evaluating and have discussed on these calls, after our inaugural issuance, we would likely we have been polled receive a 25 to 30 basis point pricing benefit. So if we think about today in the market in which we are currently operating in, it is called 5.5% to 5.75% depending on tenor.

Cost equity, you can you can do that many different ways from an implied cap rate base using one of our sell-side analysts' rubrics. You know, we are in the low sixes. But what is important is we are retaining, and Bill mentioned this remarks, we are retaining north of $100,000,000 of cash flows after dividend as well. So it is a different way to kinda go through the funding for '26. If you look at the net acquisitions of $350,000,000 and that is obviously gross acquisitions less dispositions, factor in the $100,000,000 plus of retained earnings, we have the ability to operate this business plan without accessing the equity capital markets.

Our leverage would be right in the midpoint of our range. Right now, we are at five times levered. We operate this business plan for '26 at the midpoint, so we would be at 5.25 leverage.

Blaine Heck: Great. That is that is helpful color, Matts. Second question, you guys commented on the fixed-rate renewals weighing on spreads during the fourth quarter. Can you just tell us what percentage of your leases have those fixed-rate renewals incorporated in their terms, and whether there are any chunky ones that we should be aware of in the coming quarters.

William R. Crooker: Yeah. It is single

Blaine Heck: digits.

William R. Crooker: Usually, we do not even call that out, Blaine. We just called it out in the fourth quarter because you know, it looked like spreads were moderating in the in Q4, but it was really due to that. So every year, there is you know, a few fixed renewal options, a handful, and they are just spread out throughout the year. So it is just part of our leasing plan. But because it was concentrated in the fourth quarter, it is why we called it out. So know, it is single digits in there. They are laddered. But the good thing is as you get through these, you work these off.

It is not like they are they are, you know, unlimited fixed renewal options. Generally, there is one. And then you get through it, and then you are you are just pushing out the mark-to-market opportunity.

Steve Xiarhos: Got it. Thanks, Bill.

William R. Crooker: Thanks.

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

William R. Crooker: I was

Blaine Heck: we think about potential development starts in 2026? And kind of what is your appetite to start new spec projects this year? Is it dependent on leasing current

Jason Belcher: projects or just on a deal-by-deal basis? Curious how you are thinking about that and the amount that is maybe reasonable this year.

William R. Crooker: Yeah. Hey, Vince. I mean, given, where our development

Matts S. Pinard: portfolio sits today, we are

William R. Crooker: you know, very eager to start some new spec projects. Right? Especially given our outlook the industrial market in the '26 and into '27. Right? It is just

Steve Xiarhos: and we view it as a great time to start some projects. So

William R. Crooker: for us, it is just whether we can, you know, source some more. We think we can. You know, this year, we are a little over $100,000,000 of kinda new projects sourced.

Steve Xiarhos: You know, I think that is our

William R. Crooker: that is that is what we have planned for this year. Hopefully, we can we can exceed that. Now that is not gonna come in day one. Right? It is gonna come in throughout the year.

Steve Xiarhos: But

William R. Crooker: it is something that is,

Steve Xiarhos: it is an initiative that

William R. Crooker: you know, I feel strongly that we continue to build on. Team feels strongly we can continue to build on it. And we think it is

Steve Xiarhos: know, it is something that we will be able to build on.

William R. Crooker: But with respect to starting a new spec project today, very happy to do that, assuming the returns pencil up.

Jason Belcher: No. Makes sense. Helpful. Helpful color. And maybe just switching gears, could you talk a little bit broadly about kind of the concession environment in your markets like, particularly free rent? Do you feel you know, that free rent levels or, you know, TIs have really stabilized across the market among private players with you know, some more vacancy potentially. They do not some of your peers have called that out as a headwind. The near-term growth does not look like that is an issue for your same-store guide. Just love to hear color on kind of, you know, free rent trends and concessions in your market.

Operator: Yeah. And what we I have we think they are very stable.

William R. Crooker: They have been stable, really, since know, beginning at '25. But you know, there are instances in markets in our markets where you will have a you know, a private landlord do not see it with I do not see it really with the public peers, but you have a private landlord that has been sitting on an asset and just saying, you know what? I am gonna buy this deal. And I am gonna give them whatever they need, and I am gonna give them a bunch of free rent and

Steve Xiarhos: but that is not market. Right? I mean, if you have got five buildings that are

William R. Crooker: competing against one another and one is willing to just

Blaine Heck: you know,

William R. Crooker: give a ton of free rent and concessions. The other four are not. So generally, what we are seeing in a in a market that has vacancy rates you know, 5% to 10%, you are seeing a half a month of free rent per year right now, but that has been stable since '25. With respect to TIs, we have not seen a material change in TIs. What you do see sometimes is, okay, a tenant a tenant wanting additional dock doors. If there is not, you know, maybe LED lighting, generally, our buildings have that. But if there is not something like that, where it is more of a building upgrade, they may ask for that.

And those situations, you are seeing landlords in the market, and we would be willing to do it too, to put that capital in the building. But that is I do not view that as much a TI. It is, like, putting capital in your building, making your building more marketable and thankfully, more valuable. Much different than a tenant specific TI. So I have not seen a big uptick in tenant specific TI packages, which are is what we really view as concessions.

Matts S. Pinard: Great. Thank you.

Steve Xiarhos: Thank you.

Craig Allen Mailman: Our next

Operator: question comes from Michael William Mueller with JPMorgan. Please proceed with your question.

William R. Crooker: Yes. Hi. Just a quick one. What is baked into your '26 guide for development leasing? Sorry. I missed that, Mike. What was that again?

Matts S. Pinard: Yeah. Sorry. What is

Craig Allen Mailman: baked into your '26 guide for developing?

Steve Xiarhos: Yeah. Hey, Mike. It is Steven Kimball here. We have guided for 907,000 square feet of leasing.

Matts S. Pinard: And we have one of those is a build-to-suit that is in those numbers.

Blaine Heck: We and Bill mentioned the

Steve Xiarhos: Charlotte lease that was done after the quarter.

Blaine Heck: So we would have

Steve Xiarhos: after those two, we would be left with 530 square feet of leasing or about a half million square feet of leasing that we have projected to do in 2026.

Operator: Got it. Thanks.

Steve Xiarhos: Welcome.

William R. Crooker: Thanks, Mike.

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

William R. Crooker: Great. Thanks for taking my questions.

Blaine Heck: Bill, maybe you could just walk through your markets and

Steve Xiarhos: and highlight which ones are particularly strong right now and which ones are lagging.

William R. Crooker: Yes. So we are seeing some really good demand in the Midwest markets. I mean,

Craig Allen Mailman: similar to the last couple of quarters,

William R. Crooker: Minneapolis remained strong. Chicago, Milwaukee. But what we have seen really in the past I would say, four months is an increase in demand in some of the big bulk Midwest distribution markets, Indianapolis being one of them. And Louisville is really strong.

Matts S. Pinard: Columbus has strengthened with a lot of bulk distribution

William R. Crooker: leases getting done there.

Matts S. Pinard: Self

William R. Crooker: Southeast has been pretty strong. I would say the on the on the other side of it where we are seeing a little bit more weakness,

Matts S. Pinard: it is some of the Southeast port markets, frankly. It is Jacksonville, Savannah,

William R. Crooker: Charleston, seeing some weakness there.

Steve Xiarhos: And then but then when you think about

William R. Crooker: know, then going a bit down you know, continuing down, you go to around to Texas, Houston is really strong. Dallas is really strong. So overall, I mean, some good fundamentals, but seeing some weakness in those Southeast port markets.

Blaine Heck: Okay. Great. Thanks. That is helpful.

Steve Xiarhos: And I believe you have suggested in the past that

Blaine Heck: market rent growth would be kind of 0% to 2% throughout 2026. With that context in mind, when those markets that are particularly strong, much are we seeing those stronger markets deviate from that 0% to 2% average?

William R. Crooker: Yeah. I do not have all the numbers right in front of me, but I would say generally, it is it is a pretty tight band. Because you are still you still have some vacancy in those markets. So you are getting, you know, a couple, 3% market rent growth in some of those stronger markets. But, like, for example, in India or Columbus, that has really strengthened lately, I do not think you are seeing you know, a 3% rent growth there.

Steve Xiarhos: But in the Minneapolis and Milwaukee and

William R. Crooker: Chicago, you might be seeing it there. And then on the other side, it is closer to that zero to 1%.

Steve Xiarhos: Okay. So it is the demand that you are seeing is roughly

Blaine Heck: it is mostly coming through as absorption

Steve Xiarhos: rather than

Matts S. Pinard: pushing rents more aggressively.

William R. Crooker: Yeah. I think what you are seeing you are gonna see the rent growth really start to accelerate as you move into '27.

Matts S. Pinard: Okay. Great. Thanks for help. I think that is

William R. Crooker: dynamic is I think, why you are seeing some and what we are seeing, I think others are too, is

Matts S. Pinard: there are larger

William R. Crooker: more sophisticated tenants you know, coming to us well in advance to try to renew their leases. Try to get ahead of some of the market rent growth that

Blaine Heck: is, is likely to come.

Craig Allen Mailman: Okay.

Matts S. Pinard: Thank you.

Operator: Helpful. Thank you. Our next question comes from John Kim with BMO Capital Markets. Please proceed with your question. Thank you. You have had a healthy

Matts S. Pinard: leasing activity recently. I am wondering if you could provide

Blaine Heck: the leasing executed or signed during the quarter. And in particular,

Matts S. Pinard: the volume versus the 3,500,000 square foot average that you had last year? And the lease spreads compared to your 18% to 20% guidance?

William R. Crooker: There is a lot there, John. I do not have the executed leases. In front of me, you know, but we are in you know, with respect to what we are budgeting for this year, I think we are budgeting almost 18,000,000 square feet of leasing for 2026. It is our it will be our largest

Matts S. Pinard: you know, just

William R. Crooker: absolute square footage of leasing for the year. So I do not you look at our leasing spreads of 18% to 20%, you know, what the stuff you just from recollection, right, you know, we see these leases getting signed. We get notified of everything. There is nothing that you know, I see that is kind of a big deviation one way or the other with respect to those spreads. You might see something a little bit lower because the lease is a little closer to market or something a little bit higher because the lease was a little bit below market. But it is not like we are seeing a, you know, a trend one way or the other.

And rent and rent bumps are holding up, and we are signing rent bumps in the you know, 3% to 3.5%

Steve Xiarhos: range.

Craig Allen Mailman: But just following up on that, I mean, you if expect an 18,000,000 square feet of leasing that is

Jonathan Hughes: almost 30% more than what you did last year, yet you are expecting occupancy to go down. So is this a lot of early renewals? Or I am just trying to marry the lease activity versus the occupancy guidance.

William R. Crooker: Yeah. It is because we had so much square feet rolling. That is the biggest. Right? So we had you know, initially, a little over 20,000,000 square feet rolling. And so when you have that and you have got your, call it, 75% retention rate, and these leases roll throughout the year. So we budget typically a nine to twelve month lease up time for these. So if they roll halfway through the year, and it is a nonrenewal, just the absolute square footage is a little higher, but we are budgeting that at least is going to be released in '27. Right? So that is our occupancy guy is average.

Matts S. Pinard: So

William R. Crooker: if you that is what is impacting it, especially, you know, another example, if you have a nonrenewal happening March 31,

Matts S. Pinard: and that is gonna be

William R. Crooker: vacancy for nine months of the year. Right? Because we are budgeting that to lease up in '27. Now yeah, maybe there is some, know, some exam maybe we leased up earlier. We certainly had several of those examples in 2025. I gave one earlier on this call. But our budget is that will lease up in '27. So it really is it is a factor of having a large amount of square feet rolling, in 2026 you know, offset by high occupancy coming into '26. So if our occupancy was lower, there is more opportunity to backfill some of that nonrenewal. And it was just a it was just an interesting dynamic that happened in '26.

Jonathan Hughes: But overall by your renewal.

Operator: I

William R. Crooker: high occupancy numbers, good leasing spreads. You know, really great year in '25. Some great tailwinds with respect to development. We are seeing some good acquisition activity. I mean, I am I was just thrilled with how '25 went and know, '26, other than some of this occupancy loss is shaping up to be you know, I am really happy with the projections that we are putting out.

Jonathan Hughes: And a similar renewal rate than what you have achieved? In prior years. Yeah. Right.

William R. Crooker: Exactly. It is not like renewals are downs. I think our mixed midpoint of renewal guidance is 75%.

Jonathan Hughes: Right. Okay. Thank you.

William R. Crooker: Thanks.

Operator: Our next question comes from Richard Anderson with Cantor Fitzgerald. Please proceed with your question.

Blaine Heck: Thanks. Good morning. So just looking back, start the year last year, your same-store guidance was 3.5% to 4%. You usually beat that, at 4.3%. You are starting this year at three. Not to belabor the 20,000,000 square feet, rolling in 2026, and the 75% retention. But if you beat that retention, obviously, that is the main driver to beating your 3% same-store guidance, I assume, and you can answer that. Let me let me just finish the thought. Do you have a line of sight into some clarity that 25% is not gonna renew, or is that just kinda going off of your history? Do you already have a sense of that vacancy

Matts S. Pinard: level?

Steve Xiarhos: Just curious if you can respond to that. Yeah.

William R. Crooker: Yeah. So I will answer the second question first. We have line of sight for a lot of our renewal or a lot of our lease expirations in the first half of the year. So there is certainly lease expirations in the back half of the year that we are saying

Steve Xiarhos: hey. These three are going to renew, and this one is going to vacate. Right?

William R. Crooker: That is how we that is how we build up a budget. Right? The back half of the year, it is not we are not certain with what is gonna happen, but you know, our team is close to our tenants. We get we have a sense.

Craig Allen Mailman: We are usually

William R. Crooker: you know, within 5% of our of our retention guidance every year. So but it but a lot some of it is speculative. And with respect to you know, outperformance or potential outperformance on same-store, it is not just retention. Retention is a factor, right, a that goes up to 80% or 83%, yeah, that will help same-store because you are not incurring any downtime on that additional 5% to 8%. But, really, it is you know, we have lease-up projections that are the new leasing is really heavily weighted to the back half of the year.

So I think we have got about 3,000,000 budgeted for new leasing, most of which is expected to occur in the back half of the year. So if that leasing occurred sooner, that would be a benefit to same-store NOI. The other factor to same-store NOI I mean, really, the components are leasing spreads. We have pretty good insight to that. And bumps and leases, we have got pretty good insight to that. But the last factor is credit loss. Right? We are budgeting 50 basis points of credit loss this year in our same-store pool. Last year, we budgeted 75, and we achieved well, I do not know if achieved is the right word. We realized 20 basis points.

So there is an incremental 30 basis points that we are budgeting for 2026. No new tenants on the watch list. It is more of a broad-based budget. It is not like we have, you know, allocated that specifically to one tenant like we did last year with some of our credit loss budgets. So, that is the other factor that could move same-store one way or the other.

Blaine Heck: K. Great. Great color. You mentioned, early in the call deliveries down 35% versus 2024.

Steve Xiarhos: And I think you mentioned a 180,000,000 square feet

Blaine Heck: 2026 deliveries. What would that equate to in terms of a draft downward versus 2025 and where do you think this all settles next year in terms of deliveries? Because, you know, to in response to a an earlier question, you know, perhaps there will be a reignite reignited development activity, you know, maybe. We will see. But I am just curious, you know, what is the cadence of things to 2027 as you see it right now from a delivery standpoint?

William R. Crooker: Yeah. I will let Steven Kimball jump in on this one to kick it off. Yeah. So appreciate the question. Know, we are looking at new deliveries in 2025.

Steve Xiarhos: Of about 225,000,000 square feet.

Blaine Heck: Obviously, well down from previous years.

William R. Crooker: When you go forward to 2026, as you mentioned or Mark,

Steven Kimball: we are looking at about a 180,000,000 square feet. We think of a stabilized market, more 200,000,000 to 300,000,000 square feet of deliveries. So deliveries are gonna be well below the average at the 180,000,000, and I think they start to pick back up in 2027 to some of the questions that came earlier in the call about is there gonna be a little more activity about around the development world and a little more interest in going spec? And I think that is probably the case. So we probably move back up into the 200,000,000 to 200,000,000 plus square feet in 2027.

But I do not think there will be a big increase to the numbers that we saw a few years ago.

Jonathan Hughes: And then the build-to-suit component of that is, like,

William R. Crooker: 40% this year? Yeah. It is it is moved up, you know, from

Steven Kimball: 30% to the 40%, but that is not that is not abnormal. Right?

Steve Xiarhos: Right.

Jonathan Hughes: Okay.

Blaine Heck: And last for me, and I and this is something I am I think I am trying to will to happen, but you mentioned the, 78,000 square foot manufacturing oriented lease in the first quarter.

Steven Kimball: Can you sort of

Jason Belcher: describe that

Blaine Heck: you know, is that a supplier? Is that a real manufacturing? Is it is there any kind of power issues, you know, just generally? I mean, we talk lot about your markets and being a beneficiary of onshoring and so on.

Steven Kimball: You get this question a lot, I am sure, but I am I am just wondering if

Blaine Heck: if there is any glimmer of manufacturing happening in your markets to a greater degree and how that might play a role longer term for STAG? Thanks. Yeah. I will let I will let Steven Kimball answer it. And nice job

William R. Crooker: sneaking in that third question.

Jonathan Hughes: There, Rich. It is late in the call. I figured I am the last one.

Steven Kimball: You are not the last one. I wanted to really appreciate the question. We do have a balance of demand, particularly in our development markets. Where we have a balance between distribution and manufacturing, and we saw that in Nashville where half our building leased up to distribution, the other half the manufacturing. And that is that is voted well for the development pipeline. The lease we talked about for 78,000 square feet in the Charlotte market that we just inked, that is they are they have a larger facility that is in the submarket. And they need and that manufacturing is growing. And it is more around automotive, but specialty automotive and government uses.

And so, yes, it is manufacturing related. We are seeing it grow in that market, and we are seeing it elsewhere.

William R. Crooker: And I just want to characterize the man the manufacturing. It is it is really just light manufacturing. Yes.

Steven Kimball: This yeah. So that is a good point. So a lot of what we are seeing is the heavy manufacturing is doing well. These are relief valves in some case where they need to either store raw materials or do some light assembly that is tertiary, you know, a part of their core business.

William R. Crooker: Yeah. When we develop buildings, I mean, we develop buildings, and these ones in particular, these are developed as you know, warehouse distribution buildings, but can also have some additional power that can be a solution for some of these ancillary manufacturing tenants.

Steven Kimball: Perfect. Thanks very much.

Jonathan Hughes: Thank you.

Operator: Our next question is from Michael Albert Carroll with RBC Capital Markets. Please proceed with your question.

Blaine Heck: Yes, thanks. Bill, I wanted to turn back to some of your comments on the acquisition market. I think guess throughout the call, did I hear you correctly that you are seeing more deals to come across your desk right now? And if so, what is driving that increased activity? Are there more sellers coming back to the market? Or is that STAG doing something differently going forward?

William R. Crooker: No. It is really sellers. And we saw that in the back half of '25. You know, everything just came to a halt the at the beginning of the year. Last year. Really from April to July. See saw a lot of sellers come back to the market in the back half of '25. That was one of the reasons why we had such a successful acquisition quarter in Q4 2025. And those sellers are still in the market. And we are seeing a lot more portfolios start to come to market even you know, even whispers of portfolios coming to market. We are just evaluating more transactions.

So really, nothing that we are doing, just more opportunities that are in the market today.

Blaine Heck: And then how competitive are these deals? I mean, I guess, are you competing with, and has that changed? And, I mean, just looking at your acquisition cap rate guidance, I mean, 2026 is really in line with 2025. So it is kind of those cap rates kind of holding steady, where they were last year?

William R. Crooker: Yeah. I mean, depending on the product, I mean, you could see you are seeing some cap rates compress. You know, for us, and when we look at deals, you know, one of the first things, you know, first things we have is know, does this building, you know, fit the submarket it operates in. Right? And checks that box and

Craig Allen Mailman: so we need to make sure these deals

William R. Crooker: are accretive to our portfolio and to earnings. And for us, our cap rate guidance is a little bit of a function of our of our cost of capital. So know, we bid to where know, we can we can buy deals accretively and you know, if we do not get a deal, we are okay with that. So a little bit when you think about market color, yeah, we saw we are seeing a little bit of cap rate compression. We are certainly seeing, you know, portfolio premiums are out there. But I would say, yeah, probably, you know, similar to '25 pricing, maybe slightly lower with respect to market.

But because we operate in the, you know, in the CBRE tier one markets, there is there is a lot of opportunities, and we can cast a pretty wide net. So we are we are looking at so many opportunities and we are able to pick off the ones that

Steven Kimball: you know, fit the submarkets well, but are also accretive to our portfolio.

Jonathan Hughes: K. Great. Appreciate it. Thanks, Mike.

Operator: We have reached the end of our question and answer session, which means that there are no further questions at this time. I would now like to turn the floor back over to William R. Crooker for closing comments.

William R. Crooker: Yes. Thanks, everybody, again for

Jonathan Hughes: for joining the call and then asking

William R. Crooker: asking the questions. We look forward to, you know, another great year. Certainly really proud of the results we put forth in 2025. And, we will see you all soon at the upcoming conferences.

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

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