STAG Industrial, Inc. (STAG) provided update on its leasing and acquisition transactions for December 2013 and fourth-quarter 2013. We believe the deals are aimed at securing steady revenue growth opportunities and improving the company’s portfolio quality.
Leasing Deals
In Dec 2013, STAG Industrial penned one new lease deal for approximately 35,000 square feet of space in Holland, Mich. In addition, the real estate investment trust (REIT) inked one lease renewal deal for 56,000 square feet of space in Cincinnati, Ohio.
Overall, in fourth-quarter 2013, the company signed leases for around 728,000 square feet of space in aggregate. Of these, around 134,000 square feet were renewal lease deals and roughly 594,000 square feet were new and expansion leases.
Consequently, the occupancy rate at STAG Industrial for fourth-quarter 2013 was pushed up 160 basis points sequentially and 50 basis points on a year-over-year basis to 95.6%.
Acquisitions Transactions
In Dec 2013, STAG Industrial bought 6 buildings – which include 4 warehouse and distribution facilities and 2 light manufacturing facilities – for about $56 million. Of the acquired buildings, 3 assets are situated near Chicago (Illinois) and the rest are near Janesville (Wisconsin), Lansing (Michigan) and Knoxville (Tennessee). The properties, comprising a total of 1.7 million square feet, are 100% leased having over five years of remaining weighted average lease term.
Overall, in fourth-quarter 2013, STAG Industrial bought 10 industrial assets (spanning a total of about 3.1 million square feet) for roughly $97 million. Further, the company has penned an acquisition deal for buying a property for around $11 million. The deal is yet to be accomplished and is subject to a number of closing conditions.
In Conclusion
We remain encouraged with STAG Industrial’s leasing and acquisition activities and expect these to enhance the quality of the company’s portfolio and prove accretive to its earnings, going forward. In particular, the successful execution of the company’s acquisition activity helped it accomplish the buyout of 39 industrial facilities in full-year 2013 for roughly $346 million and also helped in increasing its portfolio square footage by 30.8%.
Notably, these portfolio enhancement activities depict the company’s focus on portfolio diversification by maintaining a mix of markets and tenants, which limits its exposure to any single tenant or geographic location. This strategic act provides better return and offers protection against volatility, which augurs well for STAG Industrial.
STAG Industrial presently carries a Zacks Rank #3 (Hold). However, some better-ranked REIT- Equity Trust – Other stocks include National Health Investors Inc. (NHI), Getty Realty Corp. (GTY) and W. P. Carey Inc. (WPC). All stocks carry a Zacks Rank #1 (Strong Buy).
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