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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 September 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 October 26, 2022 was 179,216,436.



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)
 September 30, 2022December 31, 2021
Assets  
Rental Property:  
Land$647,379 $617,297 
Buildings and improvements, net of accumulated depreciation of $725,035 and $611,867, respectively
4,711,118 4,435,743 
Deferred leasing intangibles, net of accumulated amortization of $338,070 and $282,038, respectively
532,616 567,658 
Total rental property, net5,891,113 5,620,698 
Cash and cash equivalents13,369 18,981 
Restricted cash1,082 4,215 
Tenant accounts receivable103,231 93,600 
Prepaid expenses and other assets77,815 60,953 
Interest rate swaps77,508 5,220 
Operating lease right-of-use assets31,778 29,582 
Total assets$6,195,896 $5,833,249 
Liabilities and Equity  
Liabilities:  
Unsecured credit facility$136,000 $296,000 
Unsecured term loans, net1,020,104 970,577 
Unsecured notes, net1,295,253 896,941 
Mortgage notes, net7,981 54,744 
Accounts payable, accrued expenses and other liabilities109,482 76,475 
Interest rate swaps 17,052 
Tenant prepaid rent and security deposits38,019 37,138 
Dividends and distributions payable22,282 21,906 
Deferred leasing intangibles, net of accumulated amortization of $26,240 and $21,136, respectively
34,560 35,721 
Operating lease liabilities35,501 33,108 
Total liabilities2,699,182 2,439,662 
Commitments and contingencies (Note 11)
Equity:  
Preferred stock, par value $0.01 per share, 20,000,000 shares authorized at September 30, 2022 and December 31, 2021; none issued or outstanding
  
Common stock, par value $0.01 per share, 300,000,000 shares authorized at September 30, 2022 and December 31, 2021, 179,214,795 and 177,769,342 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively
1,792 1,777 
Additional paid-in capital4,184,839 4,130,038 
Cumulative dividends in excess of earnings(840,521)(792,332)
Accumulated other comprehensive income (loss)75,663 (11,783)
Total stockholders’ equity3,421,773 3,327,700 
Noncontrolling interest74,941 65,887 
Total equity3,496,714 3,393,587 
Total liabilities and equity$6,195,896 $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 September 30,Nine months ended September 30,
 2022202120222021
Revenue            
Rental income$164,683 $140,277 $484,341 $411,907 
Other income1,622 1,837 2,673 2,629 
Total revenue166,305 142,114 487,014 414,536 
Expenses   
Property30,087 26,742 90,736 79,100 
General and administrative10,884 12,668 35,431 38,036 
Depreciation and amortization69,456 59,246 206,101 174,985 
Loss on impairment1,783  1,783  
Other expenses578 821 1,607 2,184 
Total expenses112,788 99,477 335,658 294,305 
Other income (expense)   
Interest and other income 26 30 83 92 
Interest expense(21,155)(15,746)(56,310)(46,377)
Debt extinguishment and modification expenses(838) (838)(679)
Gain on the sales of rental property, net33,168 22,662 57,499 35,047 
Total other income (expense)11,201 6,946 434 (11,917)
Net income$64,718 $49,583 $151,790 $108,314 
Less: income attributable to noncontrolling interest after preferred stock dividends1,388 1,067 3,258 2,273 
Net income attributable to STAG Industrial, Inc.$63,330 $48,516 $148,532 $106,041 
Less: preferred stock dividends   1,289 
Less: redemption of preferred stock   2,582 
Less: amount allocated to participating securities59 72 180 219 
Net income attributable to common stockholders$63,271 $48,444 $148,352 $101,951 
Weighted average common shares outstanding — basic179,054 162,652 178,648 160,288 
Weighted average common shares outstanding — diluted179,162 163,462 178,790 160,869 
Net income per share — basic and diluted   
Net income per share attributable to common stockholders — basic$0.35 $0.30 $0.83 $0.64 
Net income per share attributable to common stockholders — diluted$0.35 $0.30 $0.83 $0.63 

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 September 30,Nine months ended September 30,
 2022202120222021
Net income$64,718 $49,583 $151,790 $108,314 
Other comprehensive income:    
Income on interest rate swaps39,618 3,923 89,364 17,505 
Other comprehensive income39,618 3,923 89,364 17,505 
Comprehensive income104,336 53,506 241,154 125,819 
Income attributable to noncontrolling interest after preferred stock dividends(1,388)(1,067)(3,258)(2,273)
Other comprehensive income attributable to noncontrolling interest(850)(82)(1,918)(381)
Comprehensive income attributable to STAG Industrial, Inc.$102,098 $52,357 $235,978 $123,165 

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 September 30, 2022
Balance, June 30, 2022$ 179,211,738 $1,792 $4,182,165 $(838,437)$36,895 $3,382,415 $74,080 $3,456,495 
Proceeds from sales of common stock, net—   (16)— — (16)— (16)
Dividends and distributions, net— — — — (65,414)— (65,414)(1,436)(66,850)
Non-cash compensation activity, net— 3,057  2,040  — 2,040 709 2,749 
Rebalancing of noncontrolling interest— — — 650 — — 650 (650)— 
Other comprehensive income— — — — — 38,768 38,768 850 39,618 
Net income— — — — 63,330 — 63,330 1,388 64,718 
Balance, September 30, 2022$ 179,214,795 $1,792 $4,184,839 $(840,521)$75,663 $3,421,773 $74,941 $3,496,714 
Three months ended September 30, 2021
Balance, June 30, 2021$ 160,315,538 $1,603 $3,486,942 $(804,113)$(26,742)$2,657,690 $59,212 $2,716,902 
Proceeds from sales of common stock, net— 9,350,395 93 308,408 — — 308,501 — 308,501 
Dividends and distributions, net— — — — (59,852)— (59,852)(1,278)(61,130)
Non-cash compensation activity, net— (5,646) 2,085  — 2,085 1,139 3,224 
Redemption of common units to common stock— 51,984 1 862 — — 863 (863)— 
Rebalancing of noncontrolling interest— — — (2,022)— — (2,022)2,022 — 
Other comprehensive income— — — — — 3,841 3,841 82 3,923 
Net income— — — — 48,516 — 48,516 1,067 49,583 
Balance, September 30, 2021$ 169,712,271 $1,697 $3,796,275 $(815,449)$(22,901)$2,959,622 $61,381 $3,021,003 
Nine months ended September 30, 2022
Balance, December 31, 2021$ 177,769,342 $1,777 $4,130,038 $(792,332)$(11,783)$3,327,700 $65,887 $3,393,587 
Proceeds from sales of common stock, net— 1,328,335 13 54,854 — — 54,867 — 54,867 
Dividends and distributions, net— — — — (195,941)— (195,941)(4,820)(200,761)
Non-cash compensation activity, net— 52,118 1 832 (780)— 53 7,814 7,867 
Redemption of common units to common stock— 65,000 1 1,216 — — 1,217 (1,217)— 
Rebalancing of noncontrolling interest— — — (2,101)— — (2,101)2,101 — 
Other comprehensive income— — — — — 87,446 87,446 1,918 89,364 
Net income— — — — 148,532 — 148,532 3,258 151,790 
Balance, September 30, 2022$ 179,214,795 $1,792 $4,184,839 $(840,521)$75,663 $3,421,773 $74,941 $3,496,714 
Nine months ended September 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 $2,771,052 
Proceeds from sales of common stock, net— 11,238,685 112 371,748 — — 371,860 — 371,860 
Redemption of preferred stock(75,000)— — 2,573 (2,582)— (75,009)— (75,009)
Dividends and distributions, net— — — — (176,716)— (176,716)(7,039)(183,755)
Non-cash compensation activity, net— 92,445 1 1,063 (121)— 943 10,093 11,036 
Redemption of common units to common stock— 171,318 2 2,852 — — 2,854 (2,854)— 
Rebalancing of noncontrolling interest— — — (3,682)— — (3,682)3,682 — 
Other comprehensive income— — — — — 17,124 17,124 381 17,505 
Net income— — — — 106,041 — 106,041 2,273 108,314 
Balance, September 30, 2021$ 169,712,271 $1,697 $3,796,275 $(815,449)$(22,901)$2,959,622 $61,381 $3,021,003 
The accompanying notes are an integral part of these consolidated financial statements.
6

STAG Industrial, Inc.
Consolidated Statements of Cash Flows
(unaudited, in thousands)
 Nine months ended September 30,
 20222021
Cash flows from operating activities:        
Net income$151,790 $108,314 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization206,101 174,985 
Loss on impairment1,783  
Non-cash portion of interest expense2,755 2,079 
Amortization of above and below market leases, net(208)2,022 
Straight-line rent adjustments, net(12,440)(13,159)
Debt extinguishment and modification expenses21  
Gain on the sales of rental property, net(57,499)(35,047)
Non-cash compensation expense9,426 12,377 
Change in assets and liabilities:  
Tenant accounts receivable934 2,163 
Prepaid expenses and other assets(25,044)(19,770)
Accounts payable, accrued expenses and other liabilities19,369 17,109 
Tenant prepaid rent and security deposits881 3,540 
Total adjustments146,079 146,299 
Net cash provided by operating activities297,869 254,613 
Cash flows from investing activities:  
Acquisitions of land and buildings and improvements(414,648)(574,673)
Additions of land and building and improvements(65,178)(27,778)
Acquisitions of other assets(2,134)(465)
Acquisitions of tenant prepaid rent 1,024 
Acquisitions of operating lease right-of-use assets(3,541) 
Proceeds from sales of rental property, net130,929 77,899 
Acquisition deposits, net1,520 (4,482)
Acquisitions of deferred leasing intangibles(47,810)(74,508)
Acquisitions of operating lease liabilities 3,541  
Net cash used in investing activities(397,321)(602,983)
Cash flows from financing activities:  
Proceeds from unsecured credit facility1,167,000 1,640,000 
Repayment of unsecured credit facility(1,327,000)(1,698,000)
Proceeds from unsecured term loans375,000 300,000 
Repayment of unsecured term loans(325,000)(300,000)
Proceeds from unsecured notes400,000 325,000 
Repayment of mortgage notes (46,859)(1,491)
Payment of loan fees and costs(5,142)(4,569)
Proceeds from sales of common stock, net54,691 371,819 
Redemption of preferred stock (75,000)
Dividends and distributions(200,387)(182,213)
Repurchase and retirement of share-based compensation(1,596)(1,342)
Net cash provided by financing activities90,707 374,204 
Increase (decrease) in cash and cash equivalents and restricted cash(8,745)25,834 
Cash and cash equivalents and restricted cash—beginning of period23,196 20,339 
Cash and cash equivalents and restricted cash—end of period$14,451 $46,173 
Supplemental disclosure:  
Cash paid for interest, net of capitalized interest$48,770 $42,562 
Supplemental schedule of non-cash investing and financing activities  
Additions to building and other capital improvements$(2,673)$ 
Transfer of other assets to building and other capital improvements$2,673 $ 
Acquisitions of land and buildings and improvements$ $(4,883)
Acquisitions of deferred leasing intangibles$ $(791)
Change in additions of land, building, and improvements included in accounts payable, accrued expenses, and other liabilities$(13,752)$2,079 
Additions to building and other capital improvements from non-cash compensation$(50)$ 
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$108 $1,032 
Dividends and distributions accrued$22,282 $20,932 
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 September 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 September 30, 2022, the Company owned 563 industrial buildings in 41 states with approximately 111.6 million rentable square feet, consisting of 488 warehouse/distribution buildings, 73 light manufacturing buildings, and 2 flex/office buildings.

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 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)September 30, 2022December 31, 2021
Cash and cash equivalents$13,369 $18,981 
Restricted cash1,082 4,215 
Total cash and cash equivalents and restricted cash$14,451 $23,196 

Uncertain Tax Positions

As of September 30, 2022 and December 31, 2021, there were no liabilities for uncertain tax positions.
8


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 September 30, 2022 and December 31, 2021.

Rental Property (in thousands)September 30, 2022December 31, 2021
Land$647,379 $617,297 
Buildings, net of accumulated depreciation of $485,260 and $406,670, respectively
4,251,576 4,035,210 
Tenant improvements, net of accumulated depreciation of $31,599 and $26,065, respectively
46,138 43,999 
Building and land improvements, net of accumulated depreciation of $208,176 and $179,132, respectively
340,353 320,041 
Construction in progress