STAG Industrial: My Favorite Industrial REIT Remains A Buy After Q3 Report

seekingalpha2024-11-05

Currently, I have only one industrial REIT in my portfolio. It is STAG Industrial.The reason I have been bullish on STAG since March this year is because of high-quality financials, low multiple, and ...

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It is STAG Industrial.The reason I have been bullish on STAG since March this year is because of high-quality financials, low multiple, and ...</p>\n\n<a href=\"https://seekingalpha.com/article/4732827-stag-industrial-my-favorite-industrial-reit-remains-a-buy-after-q3-report\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>STAG Industrial: My Favorite Industrial REIT Remains A Buy After Q3 Report</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSTAG Industrial: My Favorite Industrial REIT Remains A Buy After Q3 Report\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-05 03:50 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4732827-stag-industrial-my-favorite-industrial-reit-remains-a-buy-after-q3-report><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Currently, I have only one industrial REIT in my portfolio. It is STAG Industrial.The reason I have been bullish on STAG since March this year is because of high-quality financials, low multiple, and ...</p>\n\n<a href=\"https://seekingalpha.com/article/4732827-stag-industrial-my-favorite-industrial-reit-remains-a-buy-after-q3-report\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4585","symbol_name":"ETF&股票定投概念","start_time":0,"source_url":"https://seekingalpha.com/article/4732827-stag-industrial-my-favorite-industrial-reit-remains-a-buy-after-q3-report","article_id":"2481354001","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1383521658/image_1383521658.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2481354001","pubTimestamp":1730749833,"columns":[],"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Currently, I have only one industrial REIT in my portfolio. It is STAG Industrial.The reason I have been bullish on STAG since March this year is because of high-quality financials, low multiple, and ","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4585":"ETF&股票定投概念","BK4224":"工业房地产信托","STAG":"STAG Industrial","BK4588":"碎股","BK4171":"工业房地产投资信托"},"translate_title":"STAG Industrial：第三季度报告后我最喜欢的工业房地产投资信托基金仍然值得买入","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"STAG":0.9},"content_text":"Currently, I have only one industrial REIT in my portfolio. It is STAG Industrial.The reason I have been bullish on STAG since March this year is because of high-quality financials, low multiple, and decent growth prospects.The Q3 2024 earnings report confirms once again that the business is strong and nicely positioned to safely accommodate the envisaged growth.I elaborate in more detail about Q3 2024 earnings and explain why I have remained bullish on STAG stock.Justin Paget  I have been long STAG Industrial, Inc. (NYSE:STAG) since March this year, when I issued my first bullish piece on this attractive, ~ $6.7 billion market cap industrial REIT. The case at its core is basic: STAG trades at below sector average multiple despite having a fortress balance sheet, strong FFO growth and decent dividend yield that is underpinned by conservative FFO payout. It is also interesting that over the past 3-years, STAG has delivered slightly negative total returns, in line with the broader REIT market. This has happened, while STAG's underlying business has consistently grown quarter by quarter. All of this decline (which has been even larger if we adjust for the dividends) has been fueled by the valuation multiple contraction. Ycharts As a result of these dynamics, I have made STAG as one of my largest REIT holdings in the portfolio. Looking at the Q3 2024 earnings results, I still believe that the case remains intact, and with the recent REIT market dip, currently, there is an attractive buying opportunity on STAG. Allow me to explain the most important data points from the Q3 2024 report. STAG Industrial Q3 review The core FFO per share generation landed at $0.60, which implies an increase of 1.7% relative to Q3, 2023, which is a very tough comp. In Q3, 2024, STAG also achieved very solid same-store cash NOI growth of 4.4% or 6.1% on a year-to-date basis. As a result of the continued growth in the cash generation and conservative FFO payout, STAG managed to accumulate extra cash of $75 million, which contributes nicely to covering future growth in a less debt-heavy manner. The underlying business performance was also strong, with 99.5% of the leasing volume that was expected to be handled in 2024 already signed at cash leasing spreads of 28.5%. This is clearly a powerful message to the market that there is a strong demand for STAG's high-quality and well-located industrial properties. Plus, as of now, STAG has already signed lease agreements for 38% of the square feet it expects to lease in 2025 at also high double-digit (24.1%) cash leasing spreads. The portfolio remains strongly occupied, with the only somewhat notable exception to tenant American Tire Distributors, which has filed for Chapter 11 bankruptcy. This tenant accounts for 1% of STAG's annualized base rent, or ABR, spread across seven individual buildings. The expectation is that STAG will either keep the current tenant provided that it emerges successfully from the Chapter 11 phase or that STAG will relatively easily find a replacement given the attractive locations of those buildings. Here, it is important to note that the tenant has not missed any lease payments yet. Now, when it comes to the growth agenda, Q3 2024 came in with some positive messages. Let's first start with a rich comment from William Crooker - President and Chief Executive Officer - who during the earnings call indicated that the M&A markets are slowly but surely coming back into vogue: I think there's - it was pent up, call it, seller demand to sell properties, so we've seen a lot more properties on the market. I think with rates stabilizing for a period of time, reduced the bid-ask spread. So you saw a lot of transactions occurring. And I think there's just a lot of confidence that where we can buy a building, the cap rates we can pay for it, but that's market. So we're seeing a lot of opportunities. Our pipeline, as you saw, moved a little bit north of $4 billion, which was nice to see about 75% of that pipeline is individual assets across the CBRE Tier 1 markets. About 20% of that pipeline is, you call it, portfolios, anywhere from a little five buildings or more. And about 5% of the pipeline is in development. During the quarter, STAG's acquisition volume totaled $130 million, consisting of six buildings with a blended cash cap rate of 6.7% (and lease escalators of 3.75%). All of these buildings are currently fully leased, and thus will already make a positive impact on STAG's FFO performance in Q4, 2025. The organic CapEx activity has stayed quite high for STAG with over 2.1 million square feet of under development, spread across nine buildings in the U.S. Here, however, the first cash flows will kick in only in mid or late 2025. As articulated above, the beauty of STAG is that it carries a very solid balance sheet of net debt to adjusted EBITDA of 5.1x and available liquidity of $974 million, which represents ~ 13% of STAG's market cap level. Given that the current FFO payout is only 61% and the cash flows are growing each quarter, the REIT has ample financial capacity to accommodate the growth going forward. The bottom line Currently, STAG trades at a P/FFO of 15.4x and 7.5% below its 52-week-high. It also offers a monthly dividend of 4.01% that is underpinned by a robust balance sheet and one of the lowest FFO payout ratios in the sector (currently, at 61%). In my view, these are attractive enough metrics and warrant a Buy rating, especially considering the growth prospects and the inherent durability of the industrial REIT business.  In a nutshell, the Q3 2024 earnings report once again proves that STAG is a great buy for durable income-seeking investors.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":1,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.30.2","shortVersion":"4.30.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2481354001"}