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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
____________________________________________________________________________
 
FORM 10-Q 
____________________________________________________________________________
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Quarterly Period Ended June 30, 2022
 
OR
 
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from              to              .
 
Commission file number 1-34907
 
____________________________________________________________________________
 
STAG Industrial, Inc.
(Exact name of registrant as specified in its charter) 
____________________________________________________________________________
Maryland27-3099608
(State or other jurisdiction of(IRS Employer Identification No.)
incorporation or organization)
One Federal Street
23rd Floor
Boston,Massachusetts02110
(Address of principal executive offices)(Zip code)
                        
(617) 574-4777
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, $0.01 par value per shareSTAGNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No 
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes   No 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer      Accelerated filer       Non-accelerated filer      Smaller reporting company      Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No 

The number of shares of common stock outstanding at July 26, 2022 was 179,215,896.



STAG Industrial, Inc.
Table of Contents
  
PART I.
  
Item 1.
  
 
  
 
  
 
  
 
  
 
  
 
  
Item 2.
  
Item 3.
  
Item 4.
  
PART II.
  
Item 1. 
  
Item 1A. 
  
Item 2.
  
Item 3.
  
Item 4.
  
Item 5.
  
Item 6. 
  
 

2

Part I. Financial Information
Item 1.  Financial Statements

STAG Industrial, Inc.
Consolidated Balance Sheets
(unaudited, in thousands, except share data)
 June 30, 2022December 31, 2021
Assets  
Rental Property:  
Land$636,274 $617,297 
Buildings and improvements, net of accumulated depreciation of $682,095 and $611,867, respectively
4,610,814 4,435,743 
Deferred leasing intangibles, net of accumulated amortization of $311,916 and $282,038, respectively
551,061 567,658 
Total rental property, net5,798,149 5,620,698 
Cash and cash equivalents12,614 18,981 
Restricted cash3,233 4,215 
Tenant accounts receivable100,500 93,600 
Prepaid expenses and other assets66,903 60,953 
Interest rate swaps37,899 5,220 
Operating lease right-of-use assets32,237 29,582 
Assets held for sale, net57,773  
Total assets$6,109,308 $5,833,249 
Liabilities and Equity  
Liabilities:  
Unsecured credit facility$116,000 $296,000 
Unsecured term loans, net971,272 970,577 
Unsecured notes, net1,295,064 896,941 
Mortgage notes, net53,635 54,744 
Accounts payable, accrued expenses and other liabilities84,379 76,475 
Interest rate swaps 17,052 
Tenant prepaid rent and security deposits37,549 37,138 
Dividends and distributions payable22,282 21,906 
Deferred leasing intangibles, net of accumulated amortization of $24,066 and $21,136, respectively
36,084 35,721 
Operating lease liabilities35,894 33,108 
Liabilities held for sale, net654  
Total liabilities2,652,813 2,439,662 
Commitments and contingencies (Note 11)
Equity:  
Preferred stock, par value $0.01 per share, 20,000,000 shares authorized at June 30, 2022 and December 31, 2021; none issued or outstanding
  
Common stock, par value $0.01 per share, 300,000,000 shares authorized at June 30, 2022 and December 31, 2021, 179,211,738 and 177,769,342 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively
1,792 1,777 
Additional paid-in capital4,182,165 4,130,038 
Cumulative dividends in excess of earnings(838,437)(792,332)
Accumulated other comprehensive income (loss)36,895 (11,783)
Total stockholders’ equity3,382,415 3,327,700 
Noncontrolling interest74,080 65,887 
Total equity3,456,495 3,393,587 
Total liabilities and equity$6,109,308 $5,833,249 

The accompanying notes are an integral part of these consolidated financial statements.
3

STAG Industrial, Inc.
Consolidated Statements of Operations
(unaudited, in thousands, except per share data)
 Three months ended June 30,Six months ended June 30,
 2022202120222021
Revenue            
Rental income$161,057 $137,805 $319,658 $271,630 
Other income443 622 1,051 792 
Total revenue161,500 138,427 320,709 272,422 
Expenses   
Property28,874 25,356 60,649 52,358 
General and administrative12,234 12,578 24,547 25,368 
Depreciation and amortization69,279 57,332 136,645 115,739 
Other expenses532 511 1,029 1,363 
Total expenses110,919 95,777 222,870 194,828 
Other income (expense)   
Interest and other income 23 30 57 62 
Interest expense(17,896)(15,273)(35,155)(30,631)
Debt extinguishment and modification expenses   (679)
Gain on the sales of rental property, net376 5,976 24,331 12,385 
Total other income (expense)(17,497)(9,267)(10,767)(18,863)
Net income$33,084 $33,383 $87,072 $58,731 
Less: income attributable to noncontrolling interest after preferred stock dividends708 733 1,870 1,206 
Net income attributable to STAG Industrial, Inc.$32,376 $32,650 $85,202 $57,525 
Less: preferred stock dividends   1,289 
Less: redemption of preferred stock   2,582 
Less: amount allocated to participating securities59 74 121 147 
Net income attributable to common stockholders$32,317 $32,576 $85,081 $53,507 
Weighted average common shares outstanding — basic179,049 159,736 178,442 159,086 
Weighted average common shares outstanding — diluted179,144 161,367 178,586 160,249 
Net income per share — basic and diluted   
Net income per share attributable to common stockholders — basic$0.18 $0.20 $0.48 $0.34 
Net income per share attributable to common stockholders — diluted$0.18 $0.20 $0.48 $0.33 

The accompanying notes are an integral part of these consolidated financial statements.
4

STAG Industrial, Inc.
Consolidated Statements of Comprehensive Income
(unaudited, in thousands)
 Three months ended June 30,Six months ended June 30,
 2022202120222021
Net income$33,084 $33,383 $87,072 $58,731 
Other comprehensive income:    
Income on interest rate swaps12,509 1,432 49,746 13,582 
Other comprehensive income12,509 1,432 49,746 13,582 
Comprehensive income45,593 34,815 136,818 72,313 
Income attributable to noncontrolling interest after preferred stock dividends(708)(733)(1,870)(1,206)
Other comprehensive income attributable to noncontrolling interest(266)(31)(1,068)(299)
Comprehensive income attributable to STAG Industrial, Inc.$44,619 $34,051 $133,880 $70,808 

The accompanying notes are an integral part of these consolidated financial statements.
5

STAG Industrial, Inc.
Consolidated Statements of Equity
(unaudited, in thousands, except share data)
 Preferred StockCommon StockAdditional Paid-in CapitalCumulative Dividends in Excess of EarningsAccumulated Other Comprehensive Income (Loss)Total Stockholders’ EquityNoncontrolling Interest - Unit Holders in Operating PartnershipTotal Equity
 SharesAmount
Three months ended June 30, 2022
Balance, March 31, 2022$ 179,211,305 $1,792 $4,179,361 $(805,400)$24,652 $3,400,405 $74,474 $3,474,879 
Proceeds from sales of common stock, net—   (93)— — (93)— (93)
Dividends and distributions, net— — — — (65,413)— (65,413)(1,910)(67,323)
Non-cash compensation activity, net— 433  2,071  — 2,071 1,368 3,439 
Rebalancing of noncontrolling interest— — — 826 — — 826 (826)— 
Other comprehensive income— — — — — 12,243 12,243 266 12,509 
Net income— — — — 32,376 — 32,376 708 33,084 
Balance, June 30, 2022$ 179,211,738 $1,792 $4,182,165 $(838,437)$36,895 $3,382,415 $74,080 $3,456,495 
Three months ended June 30, 2021
Balance, March 31, 2021$ 159,082,448 $1,591 $3,443,787 $(778,727)$(28,143)$2,638,508 $59,608 $2,698,116 
Proceeds from sales of common stock, net— 1,208,014 12 41,781 — — 41,793 — 41,793 
Dividends and distributions, net— — — — (58,036)— (58,036)(4,325)(62,361)
Non-cash compensation activity, net— 2,901  2,192  — 2,192 2,347 4,539 
Redemption of common units to common stock— 22,175  368 — — 368 (368)— 
Rebalancing of noncontrolling interest— — — (1,186)— — (1,186)1,186 — 
Other comprehensive income— — — — — 1,401 1,401 31 1,432 
Net income— — — — 32,650 — 32,650 733 33,383 
Balance, June 30, 2021$ 160,315,538 $1,603 $3,486,942 $(804,113)$(26,742)$2,657,690 $59,212 $2,716,902 
Six months ended June 30, 2022
Balance, December 31, 2021$ 177,769,342 $1,777 $4,130,038 $(792,332)$(11,783)$3,327,700 $65,887 $3,393,587 
Proceeds from sales of common stock, net— 1,328,335 13 54,870 — — 54,883 — 54,883 
Dividends and distributions, net— — — — (130,527)— (130,527)(3,384)(133,911)
Non-cash compensation activity, net— 49,061 1 (1,208)(780)— (1,987)7,105 5,118 
Redemption of common units to common stock— 65,000 1 1,216 — — 1,217 (1,217)— 
Rebalancing of noncontrolling interest— — — (2,751)— — (2,751)2,751 — 
Other comprehensive income— — — — — 48,678 48,678 1,068 49,746 
Net income— — — — 85,202 — 85,202 1,870 87,072 
Balance, June 30, 2022$ 179,211,738 $1,792 $4,182,165 $(838,437)$36,895 $3,382,415 $74,080 $3,456,495 
Six months ended June 30, 2021
Balance, December 31, 2020$75,000 158,209,823 $1,582 $3,421,721 $(742,071)$(40,025)$2,716,207 $54,845 $2,771,052 
Proceeds from sales of common stock, net— 1,888,290 19 63,340 — — 63,359 — 63,359 
Redemption of preferred stock(75,000)— — 2,573 (2,582)— (75,009)— (75,009)
Dividends and distributions, net— — — — (116,864)— (116,864)(5,761)(122,625)
Non-cash compensation activity, net— 98,091 1 (1,022)(121)— (1,142)8,954 7,812 
Redemption of common units to common stock— 119,334 1 1,990 — — 1,991 (1,991)— 
Rebalancing of noncontrolling interest— — — (1,660)— — (1,660)1,660 — 
Other comprehensive income— — — — — 13,283 13,283 299 13,582 
Net income— — — — 57,525 — 57,525 1,206 58,731 
Balance, June 30, 2021$ 160,315,538 $1,603 $3,486,942 $(804,113)$(26,742)$2,657,690 $59,212 $2,716,902 
The accompanying notes are an integral part of these consolidated financial statements.
6

STAG Industrial, Inc.
Consolidated Statements of Cash Flows
(unaudited, in thousands)
 Six months ended June 30,
 20222021
Cash flows from operating activities:        
Net income$87,072 $58,731 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization136,645 115,739 
Non-cash portion of interest expense1,744 1,276 
Amortization of above and below market leases, net(113)1,799 
Straight-line rent adjustments, net(8,089)(8,887)
Gain on the sales of rental property, net(24,331)(12,385)
Non-cash compensation expense6,686 9,154 
Change in assets and liabilities:  
Tenant accounts receivable1,307 3,212 
Prepaid expenses and other assets(10,915)(10,018)
Accounts payable, accrued expenses and other liabilities771 864 
Tenant prepaid rent and security deposits411 2,888 
Total adjustments104,116 103,642 
Net cash provided by operating activities191,188 162,373 
Cash flows from investing activities:  
Acquisitions of land and buildings and improvements(294,387)(194,164)
Additions of land and building and improvements(36,639)(18,913)
Acquisitions of other assets(2,134) 
Acquisitions of operating lease right-of-use assets(3,541) 
Proceeds from sales of rental property, net38,409 39,619 
Acquisition deposits, net593 (877)
Acquisitions of deferred leasing intangibles(40,751)(27,682)
Acquisitions of operating lease liabilities 3,541  
Net cash used in investing activities(334,909)(202,017)
Cash flows from financing activities:  
Proceeds from unsecured credit facility871,000 765,000 
Repayment of unsecured credit facility(1,051,000)(588,000)
Proceeds from unsecured term loans 300,000 
Repayment of unsecured term loans (300,000)
Proceeds from unsecured notes400,000  
Repayment of mortgage notes (1,173)(1,093)
Payment of loan fees and costs(2,119)(2,847)
Proceeds from sales of common stock, net54,797 63,314 
Redemption of preferred stock (75,000)
Dividends and distributions(133,537)(122,212)
Repurchase and retirement of share-based compensation(1,596)(1,342)
Net cash provided by financing activities136,372 37,820 
Decrease in cash and cash equivalents and restricted cash(7,349)(1,824)
Cash and cash equivalents and restricted cash—beginning of period23,196 20,339 
Cash and cash equivalents and restricted cash—end of period$15,847 $18,515 
Supplemental disclosure:  
Cash paid for interest, net of capitalized interest$33,105 $29,574 
Supplemental schedule of non-cash investing and financing activities  
Additions to building and other capital improvements$(1,713)$ 
Transfer of other assets to building and other capital improvements$1,713 $ 
Acquisitions of land and buildings and improvements$ $(4,239)
Acquisitions of deferred leasing intangibles$ $(703)
Change in additions of land, building, and improvements included in accounts payable, accrued expenses, and other liabilities$(7,064)$3,469 
Additions to building and other capital improvements from non-cash compensation$(40)$ 
Assumption of mortgage notes $ $5,103 
Fair market value adjustment to mortgage notes acquired$ $(161)
Change in loan fees, costs, and offering costs included in accounts payable, accrued expenses, and other liabilities$27 $1,016 
Dividends and distributions accrued$22,282 $19,803 
The accompanying notes are an integral part of these consolidated financial statements.
7

STAG Industrial, Inc.
Notes to Consolidated Financial Statements
(unaudited)
1. Organization and Description of Business

STAG Industrial, Inc. (the “Company”) is an industrial real estate operating company focused on the acquisition and operation of single-tenant, industrial properties throughout the United States. The Company was formed as a Maryland corporation and has elected to be treated and intends to continue to qualify as a real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. The Company is structured as an umbrella partnership REIT, commonly called an UPREIT, and owns substantially all of its assets and conducts substantially all of its business through its operating partnership, STAG Industrial Operating Partnership, L.P., a Delaware limited partnership (the “Operating Partnership”). As of June 30, 2022 and December 31, 2021, the Company owned a 97.9% and 98.1%, respectively, common equity interest in the Operating Partnership. The Company, through its wholly owned subsidiary, is the sole general partner of the Operating Partnership. As used herein, the “Company” refers to STAG Industrial, Inc. and its consolidated subsidiaries, including the Operating Partnership, except where context otherwise requires.

As of June 30, 2022, the Company owned 559 industrial buildings in 40 states with approximately 111.5 million rentable square feet.

COVID-19 Pandemic

The Company and the real estate industry generally continue to face risks and uncertainties related to the ongoing public health crisis of the novel coronavirus disease (“COVID-19”) pandemic.

The Company closely monitors the effect of the COVID-19 pandemic on all aspects of its business, including how the pandemic will affect its tenants and business partners. The Company did not incur significant disruptions from the COVID-19 pandemic or enter into any rent deferral agreements during the three and six months ended June 30, 2022 and 2021. The Company will continue to evaluate tenant rent relief requests on an individual basis, considering a number of factors. Not all tenant requests will ultimately result in modified agreements, nor is the Company foregoing its contractual rights under its lease agreements.

The Company remains unable to predict the ultimate impact that the pandemic will have on its financial condition, results of operations and cash flows due to numerous uncertainties. The extent to which the COVID-19 pandemic affects the Company’s operations and those of its tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others.

2. Summary of Significant Accounting Policies

Interim Financial Information
 
The accompanying interim financial statements have been presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and with the instructions to Form 10-Q and Regulation S-X for interim financial information. Accordingly, these statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, the accompanying interim financial statements include all adjustments, consisting of normal recurring items, necessary for their fair statement in conformity with GAAP. Interim results are not necessarily indicative of results for a full year. The year-end consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Basis of Presentation

The Company’s consolidated financial statements include the accounts of the Company, the Operating Partnership, and their consolidated subsidiaries. Interests in the Operating Partnership not owned by the Company are referred to as “Noncontrolling Common Units.” These Noncontrolling Common Units are held by other limited partners in the form of common units (“Other Common Units”) and long term incentive plan units (“LTIP units”) issued pursuant to the STAG Industrial, Inc. 2011 Equity Incentive Plan, as amended and restated (the “2011 Plan”). All significant intercompany balances and transactions have been
8

eliminated in the consolidation of entities. The financial statements of the Company are presented on a consolidated basis for all periods presented.

Restricted Cash

The following table presents a reconciliation of cash and cash equivalents and restricted cash reported on the accompanying Consolidated Balance Sheets to amounts reported on the accompanying Consolidated Statements of Cash Flows.

Reconciliation of cash and cash equivalents and restricted cash (in thousands)June 30, 2022December 31, 2021
Cash and cash equivalents$12,614 $18,981 
Restricted cash3,233 4,215 
Total cash and cash equivalents and restricted cash$15,847 $23,196 

Taxes

Federal Income Taxes

The Company’s taxable REIT subsidiary recognized net income (loss) of approximately $0, $0.1 million, $(4,000), and $(4,000) for the three and six months ended June 30, 2022 and 2021, respectively.

State and Local Income, Excise, and Franchise Tax

State and local income, excise, and franchise taxes in the amount of approximately $0.4 million, $0.9 million, $0.4 million, and $0.8 million have been recorded in other expenses on the accompanying Consolidated Statements of Operations for the three and six months ended June 30, 2022 and 2021, respectively.

Uncertain Tax Positions

As of June 30, 2022 and December 31, 2021, there were no liabilities for uncertain tax positions.

Concentrations of Credit Risk

Management believes the current credit risk of the Company’s portfolio is reasonably well diversified and does not contain any unusual concentration of credit risk.

3. Rental Property

The following table summarizes the components of rental property as of June 30, 2022 and December 31, 2021.

Rental Property (in thousands)June 30, 2022December 31, 2021
Land$636,274 $617,297 
Buildings, net of accumulated depreciation of $455,845 and $406,670, respectively
4,180,194 4,035,210 
Tenant improvements, net of accumulated depreciation of $29,256 and $26,065, respectively
43,072 43,999 
Building and land improvements, net of accumulated depreciation of $196,994 and $179,132, respectively
328,971 320,041 
Construction in progress58,577 36,493 
Deferred leasing intangibles, net of accumulated amortization of $311,916 and $282,038, respectively
551,061 567,658 
Total rental property, net$5,798,149 $