STAG - NYSE

Greetings, and welcome to STAG Industrial, Inc. Fourth Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Steve Xiarhos, Vice President, Investor Relations. Thank you, sir. You may begin. Thank you.

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 for 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. We 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. They 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.

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

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 by 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 tenant activity across our markets. Economic growth has begun to improve, and meaningful investment has followed.

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 that 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 at 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 of 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.

Thank you, Bill, and good morning, everyone.

Core FFO per share was $0.66 for the quarter,

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 one-time items that contributed approximately

$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, the 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 will 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.

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 in 2026. We will now turn it back to the operator for questions.

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.

Just kind of curious on the leasing front.

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 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 kind of what could be the upside to that if the momentum that we are seeing coming out of 2025 holds and is sustainable and maybe even ticks up a bit.

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,

certainly, if that continues, you know, we could at least backfill 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% occupancy rate. And so when you have 20,000,000 square feet rolling at our 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 we outperformed that in 2025. For, you know, just one example. For example, we leased an asset in Savannah, Georgia. In 2025, it went vacant in the first quarter. We anticipated releasing that in 2026. 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 options for the tenants ultimately decided to go with our building. And that is something when we budget, we are going to budget that, I think, prudently to lease up nine to twelve months, but our outcome was zero downtime. There are several other examples I could give you on that that happened in 2025. Those scenarios could pan out in 2026, but the way we budget, we try to be prudent, and we certainly do not budget zero downtime for our assets. But those things happen some years and certainly happened a lot in 2025, and we hope it continues in 2026. And then and just going back to our view on the overall industrial market, I mean, it is still pretty strong. Right? I mean, we have to chew through some of this supply. We think that happens, you know, peaks, you know, midway through 2026, and it starts to really improve as you move through the back half of 2026 and into 2027. So overall, 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 2026, but we try to be, you know, prudent when we budget for 2026.

That is helpful. Then just on the acquisition front, you know, you guys came out of the gates with the $81,000,000, but you know, Matts 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?

Yeah. I mean, right now, all we have disclosed is the $81,000,000. We typically do not disclose any 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 first quarter. 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 can certainly dive into the details of that if you would like. But overall, the transaction market is really healthy. We are seeing some portfolios come to the market. There just seems to be pretty healthy. There is, you can call it, pent-up seller demand that came to the market at the back half of 2025, and that has continued as we moved into 2026.

Great. Thank you.

Thanks, Craig.

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

Great, thanks. Bill, I appreciated the comments in

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 signing on the dotted line? And have you seen

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

Yeah. That is a good question. Interesting question. I mean, beginning of last year, certainly, after, you know, quote, unquote, Liberation Day, there were 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 tenants make decisions, lease space. We obviously had 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 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. 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

it feels real.

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 some supply that we need to chew through. So these tenants have options. Our portfolio, and I say this a lot, is 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 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 just need to get through some of the supply, but the demand out there is real. And we expect absorption to increase as we move through the year. Great. That is certainly some helpful context. And then maybe just going back to

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, is 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 preclude an overbuilding problem that we have had a couple of years ago. Yeah. I mean, I think the developers in industrial are generally

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

was

okay. It was just that the

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 have got a piece of land and you need a permit and entitle it and then build it, you are looking well into 2027 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 going to 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 is not concerned about it. And if that supply comes back on, it is going to come back on, I think, prudently, and I think middle to late 2027 or even later than that.

Great. That is it for me. Thanks for the time. Thanks.

Thank you.

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

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

strategic exits of the individual markets that might cause some

near-term dilution but 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

is any of that baked into some of the disposition guidance that is included in 2026?

Yeah. I would say there is not a material shift to what we have been on the past

five years. Right? There is

every year, there are some non-core assets we dispose of, and every year, there are some opportunistic dispositions. Generally, we have a sense of the non-core dispositions to start the year. We do not really have a sense of the opportunistic because oftentimes, those are reverse inquiries that come in. And we had two of those in 2025. Two assets, one was in the first quarter, one was in the fourth quarter where there were assets that went vacant and we loved the leasing prospects. And we were planning on holding those assets and leasing them up, and we sold both those assets at what a market

rate would be, market cap rate would be, market rent would be.

Those were sold at a 4.9% cap rate. So just 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, hopefully having some of those this year. But right now, the plan is what is in our guide is just some non-core dispositions. But nothing in excess of past years. I think, reflecting back on our conversation, Nick, that is just when you look at the map of STAG's portfolio, there might be 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.

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 most of your development opportunities have been with JV partners.

But just appetite on growing the land bank.

Yeah. Certainly not part of our 2026 plan, but something that is part of our long-term development plan. We are going to step our way into that. Right now, we have got a 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 are 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 are some things we can announce in the near future on that. And then, when you start to think about the longer-term view of markets, the land is not in our plan, as I mentioned. Holding land right now is not in our plan for 2026, but we are looking, it is early days, we are looking into some phased developments that may be an opportunity for us to

you know, have a

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

Very helpful. Thank you.

Thank you.

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

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?

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 we 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, it is, call it, 5.5% to 5.75% depending on tenor. Cost of equity, 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 6s. But what is important is we are retaining, and Bill mentioned this in his remarks, we are retaining north of $100,000,000 of cash flows after dividend as well. So it is a different way to kind of go through the funding for 2026. 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 5.0x levered. We operate this business plan for 2026 at the midpoint, so we would be at 5.25x leverage.

Great. 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.

Yeah. It is single

digits.

Usually, we do not even call that out, Blaine. We just called it out in the fourth quarter because it looked like spreads were moderating in Q4, but it was really due to that. So every year, there is 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 it is single digits and they are laddered. But the good thing is as you get through these, you work these off. It is not like they are unlimited fixed renewal options. Generally, there is one. And then you get through it, and then you are just pushing out the mark-to-market opportunity.

Got it. Thanks, Bill.

Thanks.

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

I was

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

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.

Yeah. Hey, Vince. I mean, given where our development

portfolio sits today, we are

very eager to start some new spec projects. Right? Especially given our outlook for the industrial market in 2026 and into 2027. Right? It is just

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

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

You know, I think that is our

that is what we have planned for this year. Hopefully, we can exceed that. Now that is not going to come in day one. Right? It is going to come in throughout the year.

But

it is something that is,

it is an initiative that

you know, I feel strongly that we continue to build on. The team feels strongly we can continue to build on it. And we think it is

you know, it is something that we will be able to build on.

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

No. Makes sense. Helpful color. And maybe just switching gears, could you talk a little bit broadly about the concession environment in your markets, like particularly free rent? Do you feel that free rent levels or TIs have really stabilized across the market among private players with some more vacancy potentially? 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 free rent trends and concessions in your market.

Yeah. And we think they are very stable.

They have been stable, really, since the beginning of 2025. But there are instances in markets, in our markets, where you will have a private landlord, 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 going to buy this deal. And I am going to give them whatever they need, and I am going to give them a bunch of free rent and

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

competing against one another and one is willing to just

you know,

give a ton of free rent and concessions, the other four are not. So generally, what we are seeing in a market that has vacancy rates five to 10%, you are seeing a half a month of free rent per year right now, but that has been stable since 2025. With respect to TIs, we have not seen a material change in TIs. What you do see sometimes is 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 in 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 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 is what we really view as concessions.

Great. Thank you.

Thank you.

Our next

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

Yes. Hi. Just a quick one. What is baked into your 2026 guide for development leasing? Sorry. I missed that, Mike. What was that again?

Yeah. Sorry. What is

baked into your 2026 guide for developing?

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

And one of those is a build-to-suit that is in those numbers.

We and Bill mentioned the

Charlotte lease that was done after the quarter.

So we would have

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.

Got it. Thanks.

Welcome.

Thanks, Mike.

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

Great. Thanks for taking my questions.

Bill, maybe you could just walk through your markets and

and highlight which ones are particularly strong right now and which ones are lagging.

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

similar to the last couple of quarters,

Minneapolis remains 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.

Columbus has strengthened with a lot of bulk distribution

leases getting done there.

Southeast

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

it is some of the Southeast port markets, frankly. It is Jacksonville, Savannah,

Charleston, seeing some weakness there.

And then but then when you think about

continuing down, you go around to Texas, Houston is really strong. Dallas is really strong. So overall, some good fundamentals, but seeing some weakness in those Southeast port markets.

Okay. Great. Thanks. That is helpful.

And I believe you have suggested in the past that

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

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

But in Minneapolis and Milwaukee and

Chicago, you might be seeing it there. And then on the other side, it is closer to that 0% to 1%.

Okay. So the demand that you are seeing is roughly

it is mostly coming through as absorption

rather than

pushing rents more aggressively.

Yeah. I think what you are seeing, you are going to see the rent growth really start to accelerate as you move into 2027.

Okay. Great. Thanks for the help. I think that is

dynamic is, I think, why you are seeing some, and what we are seeing, I think others are too, is

there are larger

more sophisticated tenants coming to us well in advance to try to renew their leases. Try to get ahead of some of the market rent growth that

is likely to come.

Okay.

Thank you.

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

leasing activity recently. I am wondering if you could provide

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

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?

There is a lot there, John. I do not have the executed leases in front of me, but 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 will be our largest

absolute square

footage of leasing for the year. So you look at our leasing spreads of 18% to 20%, from recollection, we see these leases getting signed. We get notified of everything. There is nothing that I see that is 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 trend one way or the other. And rent bumps are holding up, and we are signing rent bumps in the 3% to 3.5%

range.

But just following up on that, I mean, if you expect 18,000,000 square feet of leasing, that is

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.

Yeah. It is because we had so much square feet rolling. That is the biggest factor. Right? So we had 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 that lease is going to be released in 2027. Right? So our occupancy guide is average.

So

that is what is impacting it, especially, you know, another example, if you have a nonrenewal happening March 31,

and that is going to be

vacant for nine months of the year. Right? Because we are budgeting that to lease up in 2027. Now, maybe there are some examples where we lease up earlier. We certainly had several of those examples in 2025. I gave one earlier on this call. But our budget is that that will lease up in 2027. So it really is a factor of having a large amount of square feet rolling in 2026, offset by high occupancy coming into 2026. So if our occupancy was lower, there is more opportunity to backfill some of that nonrenewal. And it was just an interesting dynamic that happened in 2026.

But overall by your renewal.

I

high occupancy numbers, good leasing spreads. Really great year in 2025. Some great tailwinds with respect to development. We are seeing some good acquisition activity. I mean, I was just thrilled with how 2025 went and 2026, other than some of this occupancy loss, is shaping up to be, I am really happy with the projections that we are putting out.

And a similar renewal rate than what you have achieved in prior years. Yeah. Right.

Exactly. It is not like renewals are down. I think our midpoint of renewal guidance is 75%.

Right. Okay. Thank you.

Thanks.

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

Thanks. Good morning. So just looking back, start of 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 3%. 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 just finish the thought. Do you have a line of sight into some clarity that 25% is not going to renew, or is that just kind of going off of your history? Do you already have a sense of that vacancy

level?

Just curious if you can respond to that. Yeah.

Yeah. So I will answer the second question first. We have line of sight for a lot of our lease expirations in the first half of the year. So there are certainly lease expirations in the back half of the year that we are saying,

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

That is how we build up a budget. Right? The back half of the year, we are not certain with what is going to happen, but our team is close to our tenants. We have a sense.

We are usually

within 5% of our retention guidance every year. But some of it is speculative. And with respect to outperformance or potential outperformance on same store, it is not just retention. Retention is a factor, right, if that goes up to 80% or 83%, that will help same store because you are not incurring any downtime on that additional 5% to 8%. But, really, we have lease-up projections where 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, really, the components are leasing spreads, we have pretty good insight to that, and bumps in 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 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.

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

And I think you mentioned 180,000,000 square feet

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, in response to an earlier question, perhaps there will be a reignited development activity, you know, maybe. We will see. But I am just curious, what is the cadence of things to 2027 as you see it right now from a delivery standpoint?

Yeah. I will let Steve jump in on this one to kick it off. Yeah. So appreciate the question. We are looking at new deliveries in 2025

of about 225,000,000 square feet.

Obviously, well down from previous years.

When you go forward to 2026, as you mentioned or mark,

we are looking at about 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 going to 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 going to be a little more activity 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.

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

40% this year? Yeah. It is moved up, you know, from

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

Right.

Okay.

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

Can you sort of

describe that,

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

You get this question a lot, I am sure, but I am just wondering 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 Steve answer it. And nice job

sneaking in that third question.

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

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 to manufacturing. And that has boded 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 have a larger facility that is in the submarket. 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.

And I just want to characterize the manufacturing. It is really just light manufacturing. Yes.

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 cases where they need to either store raw materials or do some light assembly that is tertiary, you know, a part of their core business.

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

Perfect. Thanks very much.

Thank you.

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

Yes, thanks. Bill, I wanted to turn back to some of your comments on the acquisition market. I think throughout the call, did I hear you correctly that you are seeing more deals 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?

No. It is really sellers. And we saw that in the back half of 2025. You know, everything just came to a halt at the beginning of the year last year. Really from April to July. We saw a lot of sellers come back to the market in the back half of 2025. 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 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.

And then how competitive are these deals? I mean, I guess, who 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 are those cap rates kind of holding steady where they were last year?

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

so we need to make sure these deals

are accretive to our portfolio and to earnings. And for us, our cap rate guidance is a little bit of a function of our cost of capital. So we bid to where we can buy deals accretively and if we do not get a deal, we are okay with that. So a little bit when you think about market color, yeah, we are seeing a little bit of cap rate compression. We are certainly seeing portfolio premiums are out there. But I would say, probably, similar to 2025 pricing, maybe slightly lower with respect to market. But because we operate in the CBRE Tier 1 markets, there are a lot of opportunities, and we can cast a pretty wide net. So we are looking at so many opportunities and we are able to pick off the ones that

fit the submarkets well, but are also accretive to our portfolio.

K. Great. Appreciate it. Thanks, Mike.

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.

Yes. Thanks, everybody, again for joining the call and asking the questions. We look forward to 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.