Q4 2021 STAG Industrial Inc Earnings Call
Speaker 1: Greetings and welcome to the Stagg and Dustrial 4th quarter 2021 earnings conference call. At this time, all participants are in a listen only mode. A brief question and answer.
Greetings and welcome to the Stag industrial fourth quarter 2021 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 press star zero on your telephone keypad.
Speaker 1: If anyone should require operator assistance during the conference, please press star 0 on your telephone.
Speaker 1: As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Steve Darros. Thank you, Steve. I'm Steve Darros, and I'm going to be your host for the next couple of days.
As a reminder, this conference is being recorded it is now.
Now my pleasure to introduce your host Steve Darice. Thank you Steve you may begin.
Speaker 2: Thank you. Welcome to Stagg Industrial's conference call covering the fourth quarter 2021 results.
Thank you welcome to Stag Industrials conference call covering the fourth quarter 2021 results.
Speaker 2: In addition to the press release distributed yesterday, we have posted an unaudited quarterly supplemental information presentation on the company's website at www.stagindustrial.com under the Invest Relations section.
In addition to the press release distributed yesterday, we've posted an unaudited quarterly supplemental information presentation on the Companys website at Www Dot stag industrial Dot com under the Investor Relations section.
Speaker 2: 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.
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.
Speaker 2: Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today. Examples of forward-looking statements include forecasts of core FFO, same store and ally, G&A, acquisition and disposition volumes, retention rates and other guidance, leasing prospects, rent collections, industry and economic trends, and other matters.
Forward looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today.
Examples of forward looking statements include forecasts of course about 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.
Speaker 2: We encourage all our 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 reconciliation of non-GAB measures contained in the supplemental informational package available on the company's website. As a reminder, forward looking statements represent management estimates as of today. Stagg industrial assumes no obligation to update any forward looking statement.
We encourage all our listeners to review the more detailed discussion related to these forward looking statements.
And 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.
As a reminder, forward looking statements represent managements estimates as of today.
Stag industrial assumes no obligation to update any forward looking statements.
On today's call, you'll hear from Ben Butcher, our Chief Executive Officer.
Speaker 2: On today's call, you will hear from Ben Butcher, a chief executive officer.
Speaker 2: Bill Crocker, our president and Matt Spanard, our chief financial officer. Also here with us today, Steve Mecky, our chief operating officer, who is available to answer questions specific to operations. I will now turn the call over to Ben.
Bill Crooker, our president and Matts Pinard, our Chief Financial Officer.
Also here with US today, Steve Mackey, our Chief operating officer, who is available to answer questions specific to operations.
Now I'll turn the call over to Ben.
Speaker 3: Thank you Steve, good morning everybody and welcome to the fourth quarter earnings call for Stagg Industrial. We're pleased to have you join us and look forward to telling you about our fourth quarter result.
Thank you Steve Good morning, everybody and welcome to the fourth quarter earnings call for Stag Industrial we're pleased to have you join us and look forward to telling you about our fourth quarter results.
Speaker 3: Before we get started, I want to touch on the succession announcement made a little over a month ago. As previously announced, on July 1st, my title will be changing. I will leave the CEO role and become the executive chair of the Board of Directors. Phil Crooker, our president, will be taking over from a position as CEO . My transition from CEO to executive chairman this July will be made without the slightest hesitation or concern.
Before we get started I wanted to touch on the succession announced they made a little over a month ago.
Previously announced on July 1st My title will be changing I will lead the CEO role and become the executive chair of the board of Directors Bill Crooker, our president will be taking over my position as CEO .
My transition from CEO to executive Chairman. This July with me he made without the slightest hesitation or concern.
Speaker 3: Almost 11 years ago, we had the opportunity to move our successful private equity fund platform to the public markets. The compelling reasons for making this move have all been validated by our experience in the public.
Almost 11 years ago, we had the opportunity to move our successful private equity fund platform to the public markets. The compelling reasons for making this move have all been validated by our experience in the public markets.
I take great Cross pride in the company, we have built a company that continues to exceed operational expectations is genuinely a great place to work and grow.
Speaker 3: I take great pride in the company we have built. The company that continues to exceed operational expectations is genuinely a great place to work and grow. We have focused on growing.
We are focused on growing our team from within.
Speaker 3: This commitment to employ development has provided us with a deep and talented best of colleagues that we can rely on now and in the future.
This commitment to employee development is provide us with a deep and talented colleagues that we can move on now and in the future as.
Speaker 3: As we enter 2022, I'm highly confident that the STAG came across all levels of the organization.
As we enter 2022 I'm highly confident that the stag team across all levels of the organization.
Speaker 3: I want to thank you for the opportunity to be your CEO since we founded the company over 18 years ago.
I want to thank you for the opportunity to be your CEO since he founded the company over 18 years ago.
Speaker 3: My job has been made easier by the MS level support I received from the many stakeholders in STAG. I'm excited for my new role for the next phase of STAG's journey as a public.
My job has been made easier by the unmatched level of support I received from the many stakeholders and stag I'm excited for my new role for the next phase of stacks journey as a public company.
Well into 'twenty, one was another great year for stag industrial strong execution across all facets of the company allowed us to meet or exceed all of our goals and guidance for the year.
Speaker 3: 2021 was another great year for Stagg Industrial. Strong execution across all facets of the company allowed us to meet or exceed all our goals and guidance for the year. Our performance in the fourth quarter was no different. The acquisition volume in the quarter was the highest ever, and we produced a high level of the same story and a wide.
Performance in the fourth quarter was no different the acquisition volume in the quarter was our highest ever and we produce a high level of same store NOI growth.
Speaker 3: We accomplish all this, or maintain our strong investment grade balance.
We accomplished all this while maintaining our strong investment grade balance sheet.
Industrial fundamentals remained strong as we start 2022 and are projected to remain healthy for some time.
Speaker 3: Industrial fundamentals remain strong as we start 2022 and are projected or may help you for some time.
Speaker 3: Demand exceeded supply in almost all U.S. markets throughout 2021. This drove the strongest market-run growth we have seen in our portfolio and are operating history.
Demand exceeded supply in almost all U S markets throughout 2021.
This drove the strongest market rent growth, we've seen in our portfolio and our operating history.
Speaker 3: Based on our current projections, we expect the sea continues strong market rent growth throughout 2022.
Based on our current projections, we expect to see continued strong market rent growth throughout 2022.
Speaker 3: As Bill and Matt will discuss shortly, these market dynamics contributed to both a very positive 2021 results and our strong 2022 guide.
As Bill and Matt will discuss shortly these market dynamics contributed to both our very positive 2021 results and our strong 2022 guidance.
Finally, I am proud to report that the Companys inaugural environmental Social and governance report was published in December we take great Pride in our best in class ESG profile and fully expect this to be an annual sustainability report.
Speaker 3: Finally, I am proud to report that the company's inaugural environmental social and governance report was published in December . We get great pride in our best in class ESG profile and fully expect this to be in the annual Sustainability Report. This report represents an additional tool for us to comprehensively communicate our ESG efforts and provide context for the considerable progress we continue to make.
This report represents an additional tool for us to comprehensively communicate our ESG efforts and provide context for the considerable progress we continue to make.
Speaker 3: With that, I'll turn it over to Bill, who will discuss our acquisition and disposition results and outlook for 2022.
With that I'll turn it over to Bill will discuss our acquisition and disposition results and outlook for 2022.
Thank you Ben good morning, everyone.
Speaker 4: First, I want to thank the entire STAG team for its tremendous effort during the record fourth quarter and record.
First I want to thank the entire stag team for its tremendous effort during the record fourth quarter and record year.
Speaker 4: We acquired over $700 million of properties in the span of three months, including an ongoing development process.
We acquired over $700 million of properties in the span of three months, including an ongoing development project.
This is a testament to the platform Stag has built the best in class processes in place and the hard work of our talented team.
Speaker 4: This is a testament to the platform Staggers built, the best in class processes in place, and the hard work of our talent.
Acquisition volume for the fourth quarter totaled $689 $5 million across 35 buildings with stabilized cash and straight line cap rates of 5% and five 2% respectively.
Speaker 4: Acquisition volume for the fourth quarter totaled $689.5 million across 35 buildings with stabilized cash and straight line cap rates of 5% and 5.2% respect.
Speaker 4: For the year, acquisition volume totaled $1.3 billion with stabilized cash and straight line cap rates of 5.2% and 5.6% respectively. Competition for...
For the year acquisition volume totaled $1 $3 billion with stabilized cash and straight line cap rates of five 2% and five 6% respectively.
Competition for industrial properties remain elevated.
Speaker 4: The re-evaluation of supply chain infrastructures and challenges associated with inventory contained it's a drive demand to historical level.
The re evaluation of supply chain infrastructures and challenges associated with inventory continues to drive demand to historical levels. These dynamics have attracted capital from traditional and new investors looking to increase exposure to industrial real estate.
Speaker 4: These dynamics have a track to capital from traditional and new investors looking to increase exposure to industrial rail.
Speaker 4: One of our core competencies is the ability to acquire industrial real estate on a granular basis across 60 plus markets nationwide with an attractive return profile.
One of our core competencies is the ability to acquire industrial real estate on a granular basis across 60, plus markets nationwide with an attractive return profile.
Speaker 4: The ability to efficiently evaluate a thousand plus transactions per year to identify attractive relative value on a granular basis continues to be extremely valuable.
The ability to efficiently evaluate a thousand plus transactions per year to identify attractive relative value on a granular basis continues to be extremely valuable.
Speaker 4: Today our pipeline of potential investments is $4.1 billion, demonstrating the opportunity set in front of us today.
Today, our pipeline of potential investments is $4 1 billion demonstrating the opportunity set in front of us today.
Speaker 4: There are a few larger transactions. I would like to highlight that closed this quarter.
There are a few larger transactions I would like to highlight that closed this quarter.
In November stagger required a small portfolio of four warehouse distribution facilities totaling 580000 square feet located in greater Chicago for $62 $9 million at a 4.9 stabilized cash cap rate.
Speaker 4: In November , Stag acquired a small portfolio of four warehouse distribution facilities, totaling 580,000 square feet, located in greater Chicago for $62.9 million at a 4.9 stabilized cash cap.
Speaker 4: This collection of leases featured below market rents with a weighted average lease term of approximately three and a half years, providing an attractive opportunity to create value in the near term.
This collection of leases features below market rents with a weighted average lease term of approximately three and a half years, providing an attractive opportunity to create value in the near term.
Speaker 4: One of the four buildings contains a 50,000 square foot vacant suite that is seen a high level of activity and we expect to execute a lease on this suite.
One of the four buildings contains a 50000 square foot vacant suite that has seen a high level of activity and we expect to execute a lease on this suite soon.
This transaction is a good example of how we have built an investment process that avoids decision rules the opportunity did not meet the typical criteria of two ends of the traditional real estate investor spectrum.
Speaker 4: This transaction is a good example of how we have built an investment process that avoids decision.
Speaker 4: The opportunity did not meet the typical criteria of two ends of the traditional real estate investor spectrum due to the least term being too long for traditional value-ad investors and too short for the typical cash flow buyer. Our differentiated approach and deep broker relationships allowed us to acquire this portfolio at a very attractive
Due to the lease term being too long for traditional value add investors and too short for the typical cash flow buyer.
Our differentiated approach and deep broker relationships allowed us to acquire this portfolio at a very attractive basis.
In December we acquired a 590000 square foot warehouse distribution facility located in Hazleton, Pennsylvania for $53 $8 million, a 5% stabilized cash cap rate.
Speaker 4: And December , we acquired a 590,000 square foot warehouse distribution facility located in Hazelton, Pennsylvania for $53.8 million at a 5% stabilized cash cap.
Speaker 4: Well located in the I-81 quarter with proximity to both I-80 and I-81, the building is fully leased to 310.
Well located in the I 81 corridor with proximity to both I 80, and I 81. The building is fully leased to three tenants in it.
Speaker 4: In aggregate, the leases are 9% below market with a weighted average lease term with just under three years, providing an attractive opportunity to bring these leases to market.
Aggregate the leases are 9% below market with a weighted average lease term of just under three years, providing an attractive opportunity to bring these leases to market.
Speaker 4: This includes one 160,000 square foot suite set to roll in less than one year.
This includes one 160000 square foot suite, such a role in less than one year.
Speaker 4: The mix of least terms in this multi-tentive building, along with the location and secondary market, allowed us to acquire this attractive acquisition with near turn-off, near turn-ups.
The mix of lease terms in this multi tenant building along with the location of secondary market allowed us to acquire this attractive acquisition with near turn off near term upside.
Speaker 4: Finally, at the end of December , we acquired two buildings totaling 1.2 millions square feet in Haggrestown, Maryland for $140.7 million at a 4.9% stabilized cash cap.
Finally at the end of December we acquired two buildings totaling $1 2 million square feet in Hagerstown, Maryland for $140 $7 million at a four 9% stabilized cash cap rate.
Speaker 4: The facilities are fully raised to strong credits who have deep commitments to the space. With a weighted left.
The facilities are fully leased to strong credits, who have deep commitment to the space.
With a weighted average lease term of nine years. This transaction includes 13 acres of land available for potential expansion that is not encumbered by the lease providing an opportunity to add additional value to the site.
Speaker 4: This transaction includes 13 acres of land available for potential expansion that is not uncovered by the lease providing an opportunity to add additional value to the site.
He's built buildings have benefited significantly from the rise in big box demand tied to e-commerce and logistics tailwind similar to their south central P. A counterparts to the north along I 81.
Speaker 4: These buildings have benefited significantly from the rise in big box demand tied to e-commerce and logistic tailwinds similar to their self central PA counterparts to the north along IED.
Speaker 4: The last transaction I would like to highlight is a new opportunity for staff.
The last transaction I would like to highlight is a new opportunity for stag.
Speaker 4: This is the first investment made in an ongoing speculative development project. Located in Sacramento, Stag acquired the project from the developer for $28.9 million, which consists of hard and soft costs and credit.
This is the first investment made in ongoing speculative development project located in Sacramento Stag acquired the project from developer for $28 $9 million, which consists of hard and soft costs incurred to date.
Speaker 4: Today, the building is 65% complete with total expected project cost of $34.8 million.
Today, the building is 65% complete with total expected project.
Costs of $34 $8 million.
Speaker 4: Stag will fund their remaining development draws which are projected to total an additional $5.9 million.
Stag will fund the remaining development draws which are projected to total an additional $5 $9 million.
Speaker 4: As of today we have received three lease proposals and expected fully pre-leases building prior to completion.
As of today, we have received three these proposals and expect to fully pre leased building prior to completion.
Speaker 4: We see this development funding transaction profile as a natural extension of our industrial operating expertise. And I'm excited about the attractive prospects of growing this line of business.
This development funding transaction profile as a natural extension of our industrial operating expertise and are excited about the attractive prospects of growing this line of business.
Speaker 4: Liching to capital recycling, dispositions for the quarter totaled $112.5 million, highlighted by a sale of the Taunt and Massachusetts facility for $78 million at a 3.1% cash cap.
Switching to capital recycling dispositions for the quarter totaled $112 $5 million highlighted by our sale of the Taunton, Massachusetts facility for $78 million at a three 1% cash cap rate.
Speaker 4: I would also like to highlight the sale of our Belfast, Maine Flex Office Campus, which consisted of five buildings.
I would also like to highlight the sale of our Belfast Belfast main Flex office campus, which consisted of five buildings with.
Speaker 4: With the sail, our flex-off was portfolio is now less than 100,000 square.
With this sale our flex office portfolio is now less than 100000 square feet.
Speaker 4: For the year, disposition volume totaled $193.4 million with an aggregate disposition cap rate for our core industrial assets of 4.5%.
For the year disposition volume totaled $193 $4 million with an aggregate disposition cap rate for our core industrial assets of four 5%.
Speaker 4: Turning to guidance for 2022, we continue to see an attractive opportunity to grow apart fully.
Turning to guidance for 2022, we continue to see an attractive opportunity to grow our portfolio.
Speaker 4: While competition has increased, so is the cash flow profile of these opportunities we are about.
While competition has increased so has the cash flow profile of these opportunities we are evaluating.
Speaker 4: We expect acquisition volume to be between $1 billion and $1.2 billion with an expected stabilized cash cap rate range of 5% to 5.25%.
We expect acquisition volume to be between 1 billion and $1 $2 billion with an expected stabilized cash cap rate range of five 5% to five 5%.
We expect straight line cap rates to be 40 basis points higher than cash cap rates.
Speaker 4: We expect straight line cap rates to be 40 bases points higher than cash.
With the heightened appetite for industrial real estate, we have increased our expectation for capital recycling in this environment as well.
Speaker 4: With the heightened appetite for industrial real estate, we have increased our expectation for capital recycling this environment.
Speaker 4: We expect disposition volume to be between $200 million and $300 million for 2022, with disposition cap rates similar to those achieved in 2021.
We expect disposition volume to be between $200 million and $300 million for 2022 with disposition cap rates similar to those achieved in 2021.
It was a busy year for stag in 2021 and we're equally as excited to continue our execution in 2022.
Speaker 4: There was a busy year for Stagg in 2021 and we are equally as excited to contain our execution in 2020.
Speaker 4: Before I turn over to Matt's, I would like to take the opportunity to share how grateful I am of Ben and the board for the conference they have placed.
Before I turn it over to Matt I would like to take the opportunity to share how grateful I am a fan and the board for their confidence they have place to me I also want to thank Ben for his leadership Mentorship and continued counsel as we transition over the upcoming months.
Speaker 4: I also want to thank Ben for his leadership, mentorship, and continued council as we transition over the upcoming month.
Speaker 4: Ben has created an extraordinary company as impact will be long-lasting.
Ben has created an extraordinary company and its impact will be long lasting.
With that I will turn it over to Matt who will cover the remaining results and guidance for 2022. Thank you Bill and good morning, everyone core <unk> was 51 for the quarter and $2 <unk> for the year, an increase of 9% as compared to 2020 cash available for distribution totaled $293 $8 million.
Speaker 4: With that, I will turn it over to maps who will cover the remaining results and guides for 20 seconds.
Speaker 2: Thank you, Bill. And good morning, everyone. Core FFO was 51 cents for the quarter in $2.06 for the year, an increase of 9% as compared to 2012.
Speaker 2: Pass available for distribution total $293.8 million in 2021, a year-over-year increase of 20.5.
21, a year over year increase of 25%.
Speaker 2: Consistent with our previous messaging, the dividend payout ratio continues to moderate declining from 90% in 2020 to 82.4% at year end 2021. Leveraging year end remains near the lower end of our range with net debt to run rate adjusted EBITDA equal to five.
Instant with our previous messaging the dividend payout ratio continues to moderate declining from 90% in 2020 to 82, 4% at year end 2021 leverage at year end remains near the lower end of our range with net debt to run rate adjusted EBITDA equaled five times during the quarter, we commenced 30 leases totaling $3 six.
Speaker 2: During the quarter, we commence 30 leases totaling 3.6 million square feet, which generally had cash and straight line leasing spreads of 16% and 22.6% respectively. Retention was 77.6% for the quarter and 76.6% for the year. Cash, same store, NY Group, 3.4% for the quarter and 3.8% for the year. The highest level and record for staff.
6 million square feet, which generated cash and straight line leasing spread of 16% and 22, 6%, respectively retention was 77, 6% for the quarter and 76, 6% for the year.
Cash same store NOI grew three 4% for the quarter and three 8% for the year the highest level on record for stag.
Speaker 2: 2021 included an 80 basis point benefit from free rent associated with two large leases at our Hamston, Maryland and Memphis 10C facilities. This benefit does not exist in 2020.
2021 included an 80 basis point benefit from free rent associated with two large leases at our Hampton, Maryland in Memphis, Tennessee facilities. This benefit does not exist in 2022 are.
Speaker 2: Our initial 2022 guidance range for cash range score is 3% to 4%, anchored by weighted average rental escalators of approximately 2.35%, retention of 70% is the midpoint of our guidance range, and cash leasing spreads expected to be in the low teams for the year. There are no large, known moveouts or material free rent tailwinds included in our guidance.
Our initial 2022 guidance range for cash same store represents a 4% anchored by weighted average rental escalators of approximately 235% retention of 70% at the midpoint of our guidance range and cash leasing spreads expected to be in the low teens for the year. There are no large known move outs or material free rent tailwind is included in that.
Our guidance range.
Speaker 2: Moving to capital market activity and beginning with equity, in the fourth quarter we completed an equity offering at $42.50 per share, which resulted in aggregate net proceeds of approximately $386.3 million, with a portion of the proceeds to be received on a forward basis.
Moving to capital market activity and beginning with equity in the fourth quarter, we completed an equity offering at $42 50 per share, which resulted in aggregate net proceeds of approximately $386 $3 million with a portion of the proceeds to be received on a forward basis.
Speaker 2: Net proceeds of $220.4 million were received in November . On December 27th, we partially settled the forward equity component of this transaction and received $115 million in net proceeds, which we used to fund for the Quarraque.
Net proceeds of $224 million were received in November .
December 27th we partially settled the forward equity component of this transaction and received $115 million of net proceeds, which we used to fund fourth quarter acquisitions as of yearend. We have an additional $51 million of net proceeds available at our option to fund future.
Speaker 2: As of year end, we have an additional $50.1 million of net proceeds available at our option to fund forward future acquisition.
Future acquisitions.
Speaker 2: As previously discussed, in October , we refinanced our $750 million unsecured revolving credit facility.
As previously discussed in October , we refinanced our $750 million unsecured revolving credit facility.
Speaker 2: This revolver matures in October 2025 with two six month extension options at our options.
Revolver matures in October 2025, with two six month extension options at our option.
Speaker 2: The facility bears an interest rate of liboard plus a spread of 77.5 basis points based on the company's current leverage level and debt rating. In addition, the company refinements a $150 million unscored term loan. The term loan now matures in March, 2027 and is fully swapped with an all in interest rate of 2.15%.
Facility bears an interest rate of LIBOR, plus a spread of 77 five basis points based on the company's current leverage level and debt rating. In addition, the company refinanced a $150 million unsecured term loan the term loan now matures in March 2027, and is fully swapped with an all in interest rate of 2.15%.
Speaker 2: Finally, the company improved pricing on $675 million of Termalum debt, specifically Termalum's EF&G. The Termalum's now bear a current interest rate of LIBOR plus a spite of 85 basis points with no change in maturity.
Finally, the company improved pricing on $675 million of term loan debt, specifically term loans E F and G. The term loans now bear a current interest rate of LIBOR, plus a spread of 85 basis points with no change in maturities.
Speaker 2: Our initial 2022 guidance can be found on page 21 of our supplemental package, which is available in the Invest your Relations section on our web.
Our initial 2022 guidance can be found on page 21 of our supplemental package, which is available on the Investor Relations section on our web site components of our initial 2020 guidance are as follows our core <unk> guidance is a range of $2 15 to.
Speaker 2: Components of our initial 2022 guidance are as follows. Our core for folk guidance is a range of $2.15 to $2.19 per share with the midpoint of $2.70.
To $2 19 per share with a midpoint of $2 17, we.
Speaker 2: We expect 2022 annual same store pulls cash and a wide growth to be between 3% and 4% for the year, with the retention ranges 65% to 75%.
We expect 2020 to annual same store pools cash NOI growth to be between 3% and 4% for the year with a retention range of 65% to 75%.
Speaker 2: GNA is expected to be between $49.51 million for the year. Note that this range now includes the expense related to the retirement.
Gene G&A is expected to be between 49 and $51 million for the year.
Note that this range now includes the expense related to the retirement plan. This.
Speaker 2: This expense is expected V670 $1,000 in both the first and second quarters. We expect net debt to run rate adjusted EBDA to be between 4.75 times and 5.5 times for the year. I will now turn it back over to Ben.
This expense is expected to be $671000 in both the first and second quarters, we expect net debt to run rate adjusted EBITDA to be between 475 times and five five times for the year I will now turn it back over to Ben.
Speaker 3: Thank you, Bill and Matt. In closing, I want to reiterate what a great position our company is in. My colleagues worked extremely hard this year and have throughout the pandemic. I thank them for achieving the great 2021 results. I also want to thank our various stakeholders again for their constant and continued support.
Thank you Bill and mass in closing I want to reiterate what a great position in our company is that my colleagues worked extremely hard this year.
About the pandemic.
Thanks to them for achieving the great 2021 results I also want to thank our various stakeholders again for their constant and continued support.
Speaker 3: I'm very proud of Stagg and everything we've accomplished in the past year and more importantly over the last decade. I have the utmost confidence in the team and our strength.
I am very proud of stag and everything we have accomplished in the past year and more importantly over the last decade.
The utmost confidence in the team and our strategy going forward.
Speaker 3: Thank you for time this morning. We'll now turn it back to the operator for questions. I had to turn the speaker off now.
Thank you for your time this morning, I'll now turn it back to the operator for questions.
Ill turn the speaker off now.
Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
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Speaker 1: Thank you. Our first question is from Sheila McGrat with Evercore ISI. Please proceed with the
Thank you. Our first question is from Sheila Mcgrath with Evercore ISI. Please proceed with your question.
Speaker 5: Yes, good morning. Congrats on the smooth transition and all the promotion.
Hi, yes, good morning, congrats on the smooth transition and the all the promotion.
Speaker 5: My first question is on the
My first question is on.
On the.
Speaker 5: acquisition of the development that you mentioned Bill. What kind of premium yield are you thinking about when you're buying a development and are there other projects in the pipeline similar to that?
Acquisition of the development that you mentioned bill what kind of premium yield are you thinking about when you're buying.
Buying a development and are there other projects in the pipeline similar to that.
Sure sure.
Speaker 3: She'll also be saying, although those are directly to Bill, thank you for your thank yous and I'll let Bill answer the question.
Although those although those directly to bill. Thank you for your thank yous and I'll, let bill answer the question.
Speaker 4: Hey, thanks Sheila. That transaction was a great transaction for STAG. We don't necessarily target a development yield. There's
Hey, Thanks Sheila.
That transaction was a great transaction for stag.
Don't necessarily targeted development yield theirs.
Speaker 4: of various yields we're looking at for those type of projects. This particular project, it'll stabilize in around a five cap with a 33% pro-form and development yield. So, very happy about that. There are some other development type of projects in our pipeline that we'll hopefully will be successful on going forward.
Various yields were looking at for those type of projects. This particular project will stabilize in and around a five cap with a 33%.
Our pro forma development yields so very happy about that there are some other development type of projects in our pipeline that.
And that will hopefully we'll be successful on a going forward.
Speaker 5: Okay, and then on the dispositions, you mentioned in 22 are going to be higher. What's driving that? Are there opportunistic sales like the Amazon one that you did or is there a portfolio? And just how should we think about time?
Okay, and then on the dispositions.
You mentioned in 'twenty, two or could it be higher.
What's driving that is it either opportunistic sales like the Amazon one that you did or is there a portfolio and just how it how should we think about timing on that.
Speaker 3: So we do have a two property portfolio that is on the market now that we'll likely close in the beginning of Q2. The guidance for this year, 203 million of dispositions is elevated, as compared to past years. And as I noted, the cap rate weighted average for our dispositions this year, we expect to be in and around the same cap rate we had for 2021, which is mid-forged cap rate.
So we do have the.
Two property portfolio.
That is on the market now that will likely close in the beginning of Q2.
The guidance for this year 200, and 300 million of dispositions is elevated as compared to past years and as I noted that the cap rate weighted average for our dispositions you see or we expect to be in and around the same cap rate. We had for 2021 which is mid fours cap rate.
Okay. Thank you.
Speaker 1: Thank you, our next question comes from Jamie Feldman with Bank of America. Please proceed with the-
Thank you. Our next question comes from Jamie Feldman with Bank of America. Please proceed with your question.
Speaker 6: Great, thank you. Going back to the comments on the dividend payout ratio, it improved during 21. I'm just curious what your thoughts are on 22. You think that'll improve further?
Great. Thank you.
And going back to the comments on the dividend payout ratio.
Yeah.
During 'twenty one I'm just curious what your thoughts are on 22 do you think that will improve further.
Speaker 3: You know, uh, Jamie Jamie that certainly has been a goal of ours through throughout the, uh,
Hey, Jamie Jamie that certainly certainly has been a goal of ours through throughout the Ah <unk>.
Speaker 3: The last five or six years, we've been looking at getting it a payout ratio down, we're getting pretty close to the point where we're comfortable that it is sort of a continuing level. So that's something we'll look at as we go through the year. Maps use something to add to that.
The last five or six years, we've been looking at getting that payout ratio down we're getting pretty close to the point, where we're comfortable that it is sort of a continuing level.
So that's something we'll look at as we go through the year masks, you have something to add to that.
Speaker 2: No, that's exactly right, Ben. You know, we're 82.4% at the end of 21. Jamie, just for context, we're at 90% at 2020. So a material decrease in the payout ratio. As Ben said, we continue to look at it, but we're happy with the progress we've made.
No that's exactly right Ben.
82, 4% at the end of 'twenty, one Jamie just for context, we were at 90% at 2020, so a material decrease in the payout ratio as Ben said, we continue to look at it but we're happy with the progress we have made.
Okay.
Speaker 6: Thank you. And similar to Sheila, come congratulations, everyone for the transitions and the changes. He would expect to see more.
Thank you.
Yes, it's similar to sheila's comments, congratulations to everyone for the transitions and the changes do you expect to see more you know management and accretion of additional management roles or or new hiring to fill any void going forward or G&A kind of set.
Speaker 6: management and creation of additional management roles or new hiring to fill any voids going forward or its GNA kind of set.
Speaker 3: Where it looks today. We're, yeah, so we are, you know, the transition involves a couple of pieces. Most of which has been announced. We don't see any need for additional hires at, you know, at significant compensation levels.
Where it looks today.
Yeah. So we are the transition involves a couple of pieces.
Most of which has been announced.
Don't see any need for additional hires with significant compensation levels.
Okay.
Speaker 6: And then I get spend big picture, you know, and I think back to the IPO and where the company stood then and where the industrial markets stood then.
And then I guess big picture.
When I think back to the IPO and where the company stood then and where the industrial markets did then versus you know demand for assets today, and and operating conditions today I assume as you thought about transitioning your career, you've thought about potentially selling the company or cashing out what was the thought process to think about stag.
Speaker 6: versus, you know, demand for assets today and operating conditions today.
Speaker 6: I assume as you thought about transitioning your career, you thought about potentially selling the company or cashing out.
Speaker 6: What was the thought process to think about stag 2.0 with you in a different role?
<unk> with you in a different role.
Speaker 6: And kind of what's your vision of the next 10 years versus maybe, you know, had you as you cashed out today or sold the company today? You know, what was that thought process like?
And kind of what's your vision of the next 10 years versus maybe had you had you cashed out today, we sold the company today and what was that thought process like.
Speaker 3: Well, I mean, I think, you know, one of the important elements is that we look at the opportunity set in front of us as large and we think we still create a tremendous amount of value for our shareholders by continuing to buy individual granular assets.
Well I mean, I think you know one of the important elements is that we look at the opportunity set in front of US is large and we think we can still create a tremendous amount of volume for our shareholders by continuing to buy individual granular assets worse, depending on what they look at US we have around $10 billion of AST.
Speaker 3: You know, worse, depending on what they look at us, we have around $10 billion of assets. Again, depending on valuation today, that's still a very, very minor portion of the overall industrial landscape. And again, we think there's a lot of opportunity to continue to grow a creatively continued driver after the faux-prosary era. I think that the board is always amenable to listening to...
Again, depending on valuation today, that's still a very very minor portion of the overall industrial landscape.
And again, we think there's a lot of opportunity to continue to grow Accretively continued to drive our poker share up.
I think that the you know the.
The board is always amenable to listening to.
Speaker 3: You know, an investor inquiry is selling the company, but that would have to be a very...
An investor inquiries to selling the company.
But that would have to be a very.
Speaker 3: Dear Price to get the boards to walk away from the opportunity set we see in front of us.
Dear price to get the board to walk away from the opportunity set we see in front of us.
Yeah.
Okay that makes sense.
Speaker 6: And then I guess just focusing again on next year. Can you talk about some of the larger explorations any risk of somokin filos?
And then I.
I guess, just focusing again on next year.
Can you talk about some of the larger explorations any risks.
Some occupancy loss.
Speaker 3: Yeah, so I'll let Steve answer this more, more grandly, but it is a
Yes, so I'll, let Steve answer this.
More more granularly, but it is a.
Speaker 3: Without question, I less, uh, grain less bumpy year, there's nothing big, uh, that I'm aware of in the system too.
Without question.
Less granular less bumpy year, there's nothing big that.
I'm aware of in the system Steve.
Yeah, Hey, Jamie its bill.
Speaker 4: Yeah, hey, Jamie, it's Bill. Yeah, looking at 2022, there's no large lease aspirations. Our average lease size is in and around the 200,250,000 range. There's nothing above 400,000 expiring this year. And everything is contemplated in our guidance. So much different than it was a couple of years ago where we had those two 1 million square footers expiring. We have nothing like that in the end.
Yes, looking at 2022 there is no large lease expirations. Our average lease size is in and around the 200200 50000 range. There's nothing above 400000 expiring this year.
Everything is contemplated in our guidance so much different than it was a couple of years ago, where we had.
Two 1 million square footage expiring, we have nothing like that in the in.
2022.
Speaker 6: Okay. Any of the 400,000, but what are your largest move out?
Okay.
Any of the 400000, but what are your largest move outs.
I think our largest move out as well right.
Speaker 7: I think our largest move out is right around 300,000 square feet.
This is Steve right around 300000 square feet.
Speaker 7: And we've got good activity on almost all of our known vacates at this point. So we're pretty confident for these years.
And we.
We've got good activity on almost all of our.
No known Vacates at this point, so we're pretty confident for the year.
Jamie one thing I might add to that is as you've seen in our occupancy levels and same store NOI et cetera is downtime.
Speaker 3: Jamie, one thing I might add to that is, as you've seen in our occupancy levels and same story in O.I. et cetera, his downtime has dropped significantly over the last couple of years just the reflective of demand in the market. A lot of, we've developed this parlance of immediate backfills. That is a sort of a hallmark of the market now. There's demand for almost every asset in every market that is immediate.
It has dropped.
Significantly over the last couple of years as the.
Reflective of the demand in the market a lot of we've developed this parlance of immediate backfill.
That is a sort of a hallmark of the market now is there is demand for almost every asset in every market that is immediate.
Okay.
Speaker 6: And then I guess similarly, if you look at some of the acquisitions in the quarter, you had seen pretty low wall on several of them, kind of one to two years. Can you provide a little bit more color?
And then I guess similarly, if you look at some of the acquisitions in the quarter you had some pretty low wall and several of them kind of one one to two years.
Can you provide a little bit more color on those transactions.
Speaker 3: Obviously? No. So go ahead.
Obviously.
Go ahead bill.
Speaker 4: I was going to say, yeah, I mean, there's, there's a few, right? There's the Omaha, there's the Sacramento transaction. There's the Philadelphia, let's say on average, those are double digit below market rents. Jamie, some markets that we're very comfortable operating in some near term, expiration that we're really able to unlock some value there.
I was going to say, yes, I mean, there's there's a few right. There's the Omaha, there's the Sacramento transaction.
There's the Philadelphia I would say on average those are double digit below market rents Jamie.
Jamie some markets that we're very comfortable operating in.
Some near term expirations that were being able to unlock some value there.
Speaker 4: And as you know, our cap rates reflect the current in place rents on those properties and do not reflect a mark to market on.
And as you as you know in our cap rates reflect the current in place rents on those properties and do not reflect.
A mark to market on this.
Speaker 6: Are you feel pretty comfortable with backfilling? Are you already in discussions with some of them?
Okay are you are you feel pretty comfortable with that feeling like you're already in discussions with some of them.
Speaker 4: very comfortable. Generally, we're not at this given the supply-demand dynamics we're seeing in our markets. We're not entertaining least discussions over 12 months out. We'll start those discussions. Usually, maybe six, nine months out, just because Mark are in, so I'm moving quite by quickly, so we don't want to entertain two early-least discussions.
Very comfortable generally we're not at this given the supply demand dynamics, we're seeing in our markets. We're not entertaining lease discussions over a 12 months out we will start those discussions are usually six maybe six to nine months out just because market rents are moving quite quickly. So we don't want to entertain too early at least.
Discussions.
Speaker 3: And reflect on that, Jamie, is ten answer starting to talk about renewals, etc. 12 to 18, myself, so that the, in our prior history, they would have been the ones probably waiting longer to start the discussions, but now reflect the level of the fact that venture moving in their starting earlier. Okay.
And reflecting that Jamie is tech tenants are starting to talk about.
Renewals et cetera, 12 to 18 months out so that the.
Our prior history, they would have been the ones probably waiting longer to start discussions, but now reflect a little bit.
That's a moving theyre starting earlier.
Okay, Alright, great. Thanks for your thoughts.
Thanks, Jamie.
Speaker 1: Thank you. Our next question comes from Manning Corpman with City. Please St? & replace the
Thank you. Our next question comes from Manny Korchman with Citi. Please proceed with your question.
Speaker 1: Good morning, everyone. Earlier in the call, you mentioned the fact that some of the stuff you're looking at doesn't fit the sweet spot for other investors, whether the wall being too long or too short or, I don't know, it's not like the portages and just right. Have you seen changes in the landscape of buyers where they're getting more comfortable, sort of operating outside of their traditional limitations on whether it be the wall or geography of how you were otherwise?
Hey, good morning, everyone earlier in the call you mentioned, the fact that some of the stuff Youre looking at it doesn't fit the sweet spot for other investors, whether it's the waltz being too long or too short.
I know that sounds like the Portage isn't just right.
Have you seen changes in the landscape of buyers, where they're getting more comfortable sort of operating outside of their traditional.
No limitations on them, whether it be walter or childhood fair value or otherwise.
So.
Speaker 3: So, so, man, there's no question the market is hotter across all sort of all facets. But the one thing that is remains the case is that it's very difficult to use it for passive equity.
There's no question the market is hotter across all sort of all facets.
But the one thing that is has remained the case is that it's very difficult excuse me for passive equity to get involved in individual granular transactions are that is one of our.
Speaker 3: to get involved in individual granular transactions. That is one of our great strengths is the ability to look at these, a short-term deal on its own or a long-term deal on its own as opposed to the mix within a portfolio. And so while we're seeing more activity generally across the markets are peculiar strength in looking at individual transactions from the hands of a hallmark. I'll build you up anything there.
Our great strengths is the ability to look at these short term deal on its own or a long term deal on its own as opposed to the mix within our portfolio.
And so while we're seeing more activity.
Generally across the markets are peculiar strengthen and looking at individual transactions remains a hallmark Bill do you have anything to add.
Speaker 4: I know that's right, I mean, as we said in the prepared marks and you noted manning and there are
Yeah, that's right Pat.
As we said.
In the prepared remarks, you noted many I mean, there are certain asset types or lease terms at the traditional investors are looking for.
Speaker 4: certain asset types or lease terms that the traditional investors are looking for, markets may change what they're looking at, but generally it's either the value ad players or the longer term cash flow buyers.
Markets May change, what theyre looking at but generally it's either the value add players or the longer term cash flow buyers.
Speaker 4: and generally those are bigger transactions. So our approach continues to be individual granular transactions and we're able to acquire both long-term leases. And as you just talked on the last.
And generally those are bigger.
Bigger transactions. So our approach continues to be individual granular transactions and we're able to acquire both long term leases and as John just talked on the last.
Speaker 4: call the last question was, you know, a short term lease is where we can add value in the near term. So we look at all those aspects.
Carl The last question was la as short term leases, where we can add some value in the near term. So we look at all.
All of those aspects.
Speaker 1: Thanks for that. And then could you, I don't know if this one's for Bill or Matt, but can you talk about your going in cap rates? You talked a lot about stabilized cap rates. And I was just wondering what the spread is between going in cap rates and stable us.
Thanks for that and then could you I don't know if this one is for bill to match, but can.
Can you talk about your going in cap rates, you talked a lot about stabilized cap rates I was just wondering what the spread is between going in cap rates and stabilize.
Yeah.
Speaker 4: Yeah, I mean, the general, I mean, we say stabilized, that is our going in. I mean, that's where for modeling purposes, you would just take that multiplied by the acquisition price. And that's gonna generate our year one NLI. I mean, there's some transactions that we have that have
Yeah I.
I mean the.
Generally I mean, when we say stabilize it yeah that is our going in I mean, that's what we're.
For modeling purposes, you would just take that.
Multiplied by the acquisition price and that's going to generate our year. One NOI I mean, there are some transactions that we have.
That have.
Speaker 4: three years at least, the one in St. Louis, for example, that's one that, again, we're looking at the in-place cash flows, but it's also one that we're able to roll up in three years. So when you say stabilize, I don't know how far you look out before we stabilize these. So everything is in place cash flows, except for if there's a vacancy. And then under vacancies, we will use the prevailing market rate for to stabilize that.
Three years of lease term the one in St. Louis for example, that's one that again, we're looking at the in place cash flows, but it's also one that we're able to roll up.
In three years so.
When you say stabilize I don't how far you look out before we stabilize these so.
Is is in place cash flows except for if Theres a vacancy and then under vacancies, we will use the prevailing market rate.
Four to stabilize that.
Speaker 1: So I guess on that point, if you look at whether before Q21 acquisitions or total for 2021, including those vacancies, I guess, was there, and I don't remember how much of it was vacant, but was there a big spread between sort of your year one cash flow and then your point that fully stabilized, release everything under leased or vacant prospect?
So I guess on that point, if you look at whether it be for Q2 1 acquisitions, our total for 2021, including the those vacancies I guess was there.
And I don't remember how much of it was vacant but was there a big spread between sort of your year, one cash flow and then your your to your point that that fully stabilized well leased everything that's under leased or vacant.
Back to <unk>.
Speaker 4: It's probably, you know, I don't know 25-ish basis points probably a difference there or we can we can
It's probably yeah, I don't know 25 ish basis points, probably a difference there and we can we can.
Get that you get you the exact number but that's probably a good estimate for now.
Speaker 4: Get the you get your exact number, but that's probably a good estimate for now. In homie.
Okay.
It's smaller than I.
Speaker 3: I'm sorry it would be smaller than what normally would be because it would track the downtime is gotten so short.
I'm sorry, it will be smaller than what normally would be because of the fact that downtime has gotten so short.
Speaker 1: Right. And then maybe just to follow up on the lease expiration question.
Right and then maybe just a follow up on the on the lease exploration question.
Speaker 1: but your retention rate for next year is projected to be lower than it was this year or last year.
But your retention rate for next year is projected to be lower than it was this year or last year.
Yeah.
So you know what is driving that.
Speaker 1: So what is driving that lower retention rate? Is it pushing rents? Is it a few of those moveouts that just, you are forcing them to smaller in scale or something else?
Lower retention rate is it pushing rents is it a few of those move outs that just you.
You are foreseeing, but they're smaller in scale or something else.
Speaker 3: So many the typically across cycles, the more vibrant the market is, the lower the retention is, because the tenants are doing things, moving the bigger buildings, consolidating, etc. So it's reflective of the fact that it's in vibrant generally across all of our markets, vibrancy among tenant behaviors.
So many of the typically across cycles the more vibrant the market is lower the retention is cause.
The tenants are doing things moving to bigger buildings consolidating et cetera. So it's reflective of the fact that it's a vibrant generally across all of our markets, there's vibrancy among tenant behavior.
Speaker 3: That leads to lower retention, but doesn't necessarily lead to increased vacancy because of these down times are also being driven down. But it's generally Good reasons why tennis or do I think there is some sticker shot in a you have a tent at this sort of Been existing in a location that they probably didn't need to be in because it should have been more expensive as we move to market rents Some of those tennis will move to less expensive buildings and probably less attractive locations
That leads to lower retention, but doesn't necessarily lead to increased vacancy because of these down times are also being driven down but it's generally.
Good reasons why tenants or do you think there is some sticker shock.
You have a tenant that's sort of been existing in the location that they probably didn't need to be in because it's it should have been more expensive and as we move to market rents.
Some of those tenants will move to a less expensive buildings and probably less attractive locations.
Speaker 3: So there's some of that, but generally speaking, the lower tensions reflect the low vibrant market activity. So that's activity.
Some of that but generally speaking the low retentions look like the love vibrant market activity.
Thanks, everyone.
Speaker 8: Thank you. Our next question comes from Blaine Heck with Wells Fargo. Please beertaideer plans of a direct series to Carolina Daily was completed.
Thank you. Our next question comes from Blaine Heck with Wells Fargo. Please proceed with your question.
Speaker 4: Great thanks. Good morning. Master Bill, can you guys just talk about how you're planning on running the balance sheet and any shifts in your leverage profile you guys may have in the future? You know, you're running it five times.
Great. Thanks, good morning.
Matt or Bill can you guys just talk about how youre planning on running the balance sheet and any shifts in your leverage profile you got me happen in the future.
Running at five times on a run rate basis in your guidance is somewhat wide at four and three quarters to five and a half. So clearly there's a bit of a balancing act between keeping dry powder for acquisitions and increasing leverage to drive a little bit more oh growth, but you know can you just talk about your thoughts around that subject and whether we should expect you to run.
Speaker 4: on a run rate basis and your guidance is somewhat wide at four and three quarters to five and a half. Clearly, there's a bit of a balancing act between keeping dry powder for acquisitions and increasing leverage to drive a little bit more FFO growth. But can you just talk about your thoughts around that subject and whether we should expect you to run closer to the lower end or the higher end of that
Or the lower end or the higher end of that guidance range.
Okay.
Speaker 2: Hey, Blaine. Good morning. This is Matt's. Obviously. We're very comfortable where the balance sheet is today. Five times is at the lower end of the range, the 4.75 to the five and a half. Looking at equity, we have $500 million of forward equity available to us today. Acquisition volume is historically weighted the back half of the year. First quarter is traditionally the lower point. So as we said here today, five times is a comfortable place for us with balance sheet leverage.
Hey, Blaine good morning. This is Matt obviously, we're very comfortable with the balance sheet is today five times as at the lower end of the range of $4 75 to five and a half.
Looking at equity, we have $500 million of forward equity available to us today acquisition volume is historically weighted to the back half of the year first quarter is traditionally the lower point. So as we sit here today at five times is a comfortable place for us with the balance sheet leverage.
And Blaine, that's consistent with our investment grade ratings as well the the range that we put forth a weaker operate where anywhere in that range. Even at the high end of that range consistently and well be well be with well within the investment grade ratings that we have.
Speaker 2: And, and, and that's consistent with our investment grade ratings as well. The, the range that we put forth, we can operate anywhere in that range, even at the higher that range consistently, and well, the, well, be, well within the investment grade rating.
Speaker 4: Great, that's helpful guys. Bill, and I think two of the acquisitions you described in your prepared remarks, the properties were multi-tenant properties with either vacant suites or upcoming expertise in suites. You just talk about, is that just the coincidence or are you guys seeing more opportunity
Great that's helpful guys.
Bill.
I think two of the acquisitions you described in your prepared remarks, the properties were multi tenant properties with either vacant suites are upcoming expiries in suites. You just talked about is that just a coincidence or are you guys seeing more opportunity in the multi tenant buildings, then and your more traditional targets the single tenant properties.
Speaker 2: We have been adding multi-tenant properties to the portfolios over the years. It's something that we underwrite. We talked earlier on the column where we really don't implement decision rules as long as we're able to underwrite.
And we have been adding multi tenant properties to the portfolios over the years.
It's something that we underwrite.
We talked earlier on the call and where we really don't implement decision rules as long as we're able to underwrite.
Speaker 2: The property, the real estate, then will evaluate it and determine a price to pay for it. So these opportunities were ones where...
The property the real estate, then we'll evaluate it and determine a price to pay for it. So these opportunities were ones where.
Speaker 2: I think we had a little bit of a competitive advantage. We knew the markets. We knew we could operate the properties, as I mentioned.
We had a little bit of a competitive advantage we knew the markets. We knew we could operate the properties as I mentioned they weren't a traditional type of acquisition for either a value add buyer of long term cash flow buyer. So I will continue to evaluate those type of transactions and if we're successful we're very comfortable.
Speaker 2: They weren't a traditional type of acquisition for either a value add buyer or a long-term cashflow buyer. So we'll continue to evaluate those tripatransactions and if we're successful, we're very comfortable adding those to the portfolio. Right now our portfolio is
Adding those to the portfolio right now our portfolio is circa 80% single tenant with 20% multi tenant.
Speaker 2: During all day onion testing, we just keep your
Great that's helpful and again.
Speaker 4: Great, that's helpful. And again, plan, I'm just gonna say we're looking for overlays, we're being overpaid for whatever risk we might be taking in the acquisition and we can find that in multi-penet as well as single-
Go ahead, Dan I was just going to say, where you know we're looking for overlays, where we're being overpaid for whatever risk we might be taking in the acquisition and we can find out is multi tenant as well as single tenant.
Speaker 4: Great, that's helpful. And then maybe one for you Ben, there's been a lot of discussion in the industrial sector about rent growth differential.
Great. That's helpful and then maybe one for you Ben.
Been a lot of discussion in the industrial sector about rent growth differential between primary tier one markets and secondary markets. You know based on your rent spreads. This year. It seemed like the secondary markets that picked up in and started to see rent growth that was similar to the primary markets, but now we're hearing about 20, 30% year over year rent growth in some of those coastal.
Speaker 4: primary to your one market, some secondary markets. Based on your rent spreads this year, it seemed like the secondary markets had picked up.
Speaker 4: and started to see rent growth that was similar to primary markets. But now we're hearing about 20, 30% year over year rent growth and some of those coastal tier one markets. I guess how would you characterize the year over year rent growth in your markets in 2022? And do you think we'll see the same surge as they're seeing since supply seems to be pretty limited?
Your one markets I guess, how would you characterize the year over year rent growth in your markets in 2022, and do you think we'll see the same surge as theyre seeing since.
Supply seems to be pretty limited everywhere.
Speaker 3: Yeah, I would agree supply is limited everywhere and that's why you're seeing this this strong growth across all markets. We've always maintained that the market or the spread of markets that we invest in is less volatile than the primary market. And so, you know, we're never going to see again across the six year so markets an average of 20%. You may see and markets were involved in that have significant red growth.
Yes, I would agree supply is limited everywhere and that's why you're seeing the strong rent growth across all markets.
We've always maintained that the market or the spread of markets that we invest in is less volatile than the primary markets and so we're never going to see again across the 60 or so markets at an average of 20%.
They see.
Markets were involved in that have significant rent growth, but I wouldn't expect a 20 or 30% rent growth that you see in some of these primary markets.
Speaker 3: But I wouldn't expect a 20 or 30% growth that you see in some of these primary markets. The important thing is the, what is the cost of entry into those markets? 20% rent growth over an initial two and a half cap doesn't get you that far, relative to the cap rates we can find and the growth we can find in other markets. So we're looking at the cash flows to be derived from owning assets that were a long period of time and not necessarily overpaying for one or two years of spectacular rent growth.
The important thing is the what is the cost of entry into those markets.
20% rent growth over an initial two and a half cap doesn't get you that far.
Relative to the cap rates, we can find in the growth we can find in other markets. So we're looking at the cash flows to be arrived building assets over a long period of time.
And not necessarily overpaying for one or two years of spectacular rent growth.
Great. Thanks, Congrats bill of Mats and ban I'm sure you all see you, but it's been great working with you over the years and all the best in the future.
Speaker 4: Great thanks. Congrats Bill and Matt and Ben. I'm sure you'll see you, but it's been great working with you over the years and all the best in the future.
Speaker 3: Thank you, Blaine and I'm not disappearing. I'm accepting to executive chair.
Thank you Blayne.
I'm not disappearing I'm ascending to executive chair.
Fair enough.
Speaker 8: Thank you. Our next question comes from Michael Carroll with RBC Capital. Please
Yeah.
Our next question comes from Michael Carroll with RBC Capital. Please proceed with your question.
Speaker 1: Yeah, thanks. So I wanted to circle back to the development investment. I know, Billy, you mentioned that there's a few in the pipeline. I mean, how big is that opportunity set? And in general, why are these developers electing to sell their properties in the middle of the construction period?
Yes, Thanks, I wanted to circle back to the development investment I know Bill you mentioned that there's a few in the pipeline I mean, how big is that opportunity set and in general why are these developers are electing to sell their properties in the middle of the construction period.
Speaker 2: Yeah, I mean part of it is Mike is that they're moving on to the next project, right? So they're able to realize...
Yeah, I mean part of it part of it is Mike is that Theyre moving onto the next project right, so they're able to realize.
Speaker 2: is some of the profit, but they've also got more projects in the pipeline. And these are local regional developers. These aren't your national developers.
Some of the profit, but they've also got more projects in the pipeline and these are local regional developers. These aren't your national developers, who who move from project to project right. So that that's a big part of it kind of dovetails right into our acquisition strategy of the granular acquisition strategy. So.
Speaker 2: who move from project to project, right? So that's a big part of it. Kind of dovetails right into our acquisition strategy of the granular acquisition strategy. So there are some in the pipeline, but our pipeline is $4.1 billion. So we're hopeful to be successful on some more of these. There are obviously great returns.
There are some in the pipeline, but our pipeline is full point $1 billion. So we're hopeful to be successful on some more of these they're obviously great returns.
Speaker 2: but we'll see how the year unfolds and what our success rate is going forward on.
But we'll see how the year unfolds and what our success rate is going forward on this.
Speaker 1: Okay, so it's down my good. My God, my God, I was just gonna say, we're seeing some of the national developers reach out and look for these kinds of transactions too, but they're looking for all their profit up front plus funding the next development and federal. So as we do an individual stabilized transactions, we're looking to get paid well for whatever risk we're taking.
Okay. So it sounds like that might go.
Mike I was just going to say, we're seeing some of the national developers reach out and look for these types of transactions too.
They're looking for.
All of their profit upfront plus funded the next development et cetera.
As we do on individual.
Stabilized transactions, we're looking to get paid well for whatever risk we're taking.
Okay and it sounds like there's maybe a handful of these in the pipeline is that a fair statement and are there specific markets that you are looking at where you want to do these or are you willing to go to really most market as long as the fundamentals are healthy.
Speaker 1: Okay, and it sounds like there's what maybe I would have a handful of these in the pipeline, is that a fair statement in their specific markets that you're looking at where you wanna do these, or are you willing to go to really most market as long as the fundamentals are healthy?
Speaker 2: Yeah, I mean, again, I would characterize it hand full. I think that's fair at this point.
Yeah.
Again, I would characterize that handful I think that's that's fair at this point.
Speaker 2: In terms of the markets, it's markets that we're familiar with and we've operated in least properties in. I mean, this one was Sacramento. We've been talking about that market for a couple years. We really like the fundamentals. We have a very good handle on market conditions, supply demand dynamics in those markets.
In terms of the markets, it's markets that we're familiar with and we've operated in lease properties in I mean, this one was Sacramento, we've been talking about that market for a couple of years, we really like the fundamentals.
Have a very good handle on market conditions supply demand dynamics in those markets.
Speaker 2: If it's other markets that we've been operating in for a while, you know, pick Greenville Spartanburg, for example, and that's a market would be comfortable doing something like this and two So it really is markets that that we know very well and we're very comfortable with the underwriting and leasing those assets
If it's other markets that we've been operating in for Awhile.
Greenville Spartanburg for example, I mean, that's a market would be comfortable doing something like this in too. So it really is markets that that we know very well and we're very comfortable with the underwriting and leasing those assets I mean, we lease a lot of square feet every year across our portfolio. So for US This is not.
Speaker 2: We lease a lot of square feet every year across our portfolio. So for us, this is not really just an extension of what we're already doing.
Really is just an extension of what we're already doing.
Speaker 1: Okay, great. And then on the private market trend, I mean, has some of the macro volatility, I guess particularly higher interest rates, I mean, has or do you expect that will push cap rates on the type of deals that you're pursuing higher? Have you seen any of that happening right now?
Okay, Great and then.
On the private market trends I mean has some of the the macro volatility I guess, particularly higher interest rates I mean has or do you expect that will push cap rates on the type of deals that you are pursuing higher is have you seen any of that happening right now.
Speaker 9: We have a C8. Yeah, Ben, you go. You can take it.
Thanks.
Yeah, Ben Yugo, you can take it.
Speaker 3: Now, as I'm going to say, we, you know, caprice have the quantity to decline, but, you know, the expectation of higher interest rates.
No I was going to say.
Cap rates of decline continue to decline, but the expectation of higher interest rates, especially on the kind of assets that we're pursuing the granular assets, where our competition is smaller and typically more leveraged buyers.
Speaker 3: especially in the kind of assets that we're pursuing, the granular assets where our composition is smaller and typically more leveraged buyers. We would expect cap rates to stabilize.
We would expect cap rates to stabilize.
Speaker 3: You know, on the individual acquisition front, we were expecting to stabilize and perhaps move higher as it interest rates do indeed move. The place where passive equity is involved, which is not for followers or larger transactions, I wouldn't be surprised to see cap rates hold up, and perhaps even decline further because the way back cap.
On the individualized individual acquisition front, we would expect them to stabilize and perhaps move higher.
If interest rates do indeed moves.
The.
The place where passive equity is involved which is our portfolios are larger transactions I wouldn't be surprised to see cap rates hold up and perhaps even decline further.
The way that capital.
Speaker 3: and I would like to have between our great granular acquisitions that portfolio by was and should increase
Great. Thank you Ed between our great granular acquisitions and portfolio valuations should increase.
Great. Thanks.
Thank you. That's a reminder, if you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that your line is in the question queue.
Speaker 8: Thank you as a reminder, if you would like to ask you a question, Please press Star one on your telephone C pad. A confirmation tone will be.
Our next question comes from Dave Rodgers with Baird. Please proceed with your question.
Speaker 8: Our next question comes from Dave Rogers with Baird. Please proceed with this...
Yes, good morning, everybody and I'll add my congratulations to Ben and Bill and Matt on your on your upcoming Ascension.
Speaker 4: Yeah, good morning everybody and I'll add my congratulations to Ben and Bill and Matt on your upcoming ascension.
Speaker 4: I wanted to quickly ask about just the acquisition pipeline overall. It continues to grow and obviously you guys have added people to help with that process. One of the stats that you give that's pretty good is about the percentage of revenues coming from tenants like over $100 million in revenues.
Wanted to quickly ask about just the acquisition pipeline overall it continues to grow and obviously you guys have added people to help with that process. One of the stat that you gave that's pretty good as is the percentage of revenues.
Coming from tenants like over $100 million in revenues and that number has continued to come down. So I guess two questions embedded in this one is is that a function of more multi tenant acquisitions is that a function of maybe more coastal migration oriented market acquisition and then two just on the pipeline in general can you give us a breakdown for kind of what that looks.
Speaker 4: And that numbers continue to come down. So I guess two questions embedded in this. One is, is that a function of more multi-tenant acquisitions? Is that a function of maybe more coastal migration-oriented market acquisitions? And then two, just on the pipeline in general, can you give it the breakdown for what that looks like in terms of multi-tenant? You've kind of addressed the development side. But what's the breakdown of the pipeline that allows you to continue to grow that?
Like in terms of multi tenant you've kind of addressed the development side, but what's the breakdown of the pipeline that that allowed you to continue to grow that.
Yeah.
Speaker 2: Yeah, thanks Dave. I would say there's not, I would say, an overarching reason why maybe the number of publicly rated tenants is decreasing a bit. I would say we're very comfortable with the underwriting where assets are, the fundamentals of the market. So in those situations, certainly comfortable taking on non-publicly rated tenants and leasing those assets if there was something that happened. I will say going back to 20...
Steve.
I would say there is there is not I would say an overarching reason why maybe the number of publicly rated tenants is decreasing a bit.
I'd say were very comfortable with the underwriting where assets are the fundamentals of the market. So.
In those situations certainly comfortable taking on call. It non publicly rated tenants and leasing those assets. If there was something that happened I will say going back to 2020, we collected 99, 6% of our rents in 2020 . One we collected 99, 8% of Rins. So our collection history is extremely strong whether those tenants are public.
Speaker 2: We collected 99.6% of our rents and 2021 we collected 99.8% of our rents. So our collection history is extremely strong whether those tenants are publicly rated or not. So we feel so credit overall on the portfolio is extremely strong. And then in terms of the pipeline and the makeup of that pipeline.
The weighted or not.
So we feel so credit overall in the portfolio.
Is extremely strong and then in terms of the pipeline and the makeup of that pipeline consistent with what we've said in the past I would say there is some multi tenant in there.
Speaker 2: Consistent with what we've said in the past, I would say there is some multi-tenant in there. I think it's fair to say it's close to what the portfolio is today. 20% multi-tenant, maybe a touch higher. The rest being single-tenant, there's our sum.
I think it's fair to to say, it's close to what the portfolio is today, 20% multi tenant.
Maybe a touch higher the rest being single tenant theres are some development.
Speaker 2: development transactions that we are looking at, as I said.
Development transactions that we are looking at as I said.
Speaker 2: to Mike that's, you know, handful, I think is fair characterization of that today. And that's, yeah, I think that's pretty good characterization of the pipeline.
So Mike that's handful I think is fair characterization of that today.
And that's yeah, I think that's pretty good calculation of the pipeline.
Great. That's helpful. Thank you.
Thanks, Dave.
Speaker 8: Thank you. Our next question comes from Mike Mueller with JP Morgan. Please proceed with your
Thank you. Our next question comes from Mike Mueller with Jpmorgan. Please proceed with your question.
Speaker 10: Yeah, hi, I guess on the development transaction, oh, curious, what changed, where you're willing to look at these transactions and pull the trigger on some of them, where you just hadn't done it in the past.
Yeah, Hi, I guess on the development transaction curious what changed.
What are you willing to look at these transactions and pull the trigger on some of them where you just haven't done it in the past.
So I think like that.
Speaker 3: So I think Mike, the reason is just to growing comfort with our ability to manage those transactions, we've always had the capacity to manage those transactions. But having completed a ground up development ourselves completed and sold just more comfort and also develop more that capacity has been developed internally with the growth of our capital market on that time, excuse me, our capital projects team.
The reason is just growing comfort with our ability to manage those transactions. We've always had the capacity to manage those transactions.
But having completed a ground up development ourselves and completed and sold.
Just more comfort.
And also develop more and more of that capacity that's been developed internally.
With the growth of our capital markets.
She was on our capital projects team.
Speaker 3: So a higher degree of comfort, just part of the evolution.
A higher degree of comfort.
Just part of the evolution of the business.
Got it and in terms of economics.
Speaker 10: And in terms of economics, I apologize if I missed a few four, but what sort of yield benefit are you getting from acquiring it this way as opposed to if you buy the same building once the lease has been signed? Is it you're getting a yield benefit or is it you're just securing the building and kind of taking on a little more risk by kind of getting a market price? I mean, which dynamic is it? So we're, yeah, I think we're getting 15, 20% plus better pricing.
Contracts witnessed before but.
What sort of yield benefit are you getting from acquiring it this way as opposed to a few probably the same building wants to lease has been signed is it youre getting any real benefit or is it you're just security in the building and kind of taken on a little more risk, but kind of getting a market price I mean, which dynamic is it.
Yes, I think we're getting 15, 20% plus.
Better pricing.
Speaker 3: by entering, you know, and maybe more, depending on if I build a scribe one earlier that we expect to get 30 plus percent better pricing. So I think it's mostly, it made it is a combination of securing
By entering.
Maybe more depending upon what bill described earlier that we expect to get 30 plus percent better pricing. So I think it's mostly I mean, it is a combination of securing.
Transactions, I mean sort of better market better building transactions at a favorable price. It allows them to participate sometimes in market. So it would be harder for us to participate in.
Speaker 3: transactions and it's sort of better market, better building transactions at a favorable price. It allows the participating sometimes in market to be harder for us to participate in variety of writing reasons, but there is an economic benefit, certainly a financial benefit, the Dylan.
A variety of riding reasons, but there is an economic benefit certainly a financial benefit for doing it.
Got it okay that was it thank you.
Yeah.
Thank you. Our next question comes from Chris Lucas with capital One Securities. Please proceed with your question.
Speaker 8: Thank you. Our next question comes from Chris Lucas with Capital One Securities. Please receive your question.
Hey, good morning, everybody.
Speaker 3: Hey, good morning everybody. I'll add my congratulations to everyone as well, but just a couple of detailed questions on the tenant detention guide for the year. Just so I understand, it's indicated that there weren't any major.
I'll add my congratulations to everyone as well, but just a couple of detailed questions on the tenant retention.
Guide for the year, just so I understand.
You indicated that there werent any major.
Speaker 3: leases that you are aware of that were in the non-renewal status. So this is kind of a, it sounds like a placeholder, but I guess I'm really curious and then just making sure Ben had mentioned that there's more lead time for early renewal. So if you get early renewals, do those go into this tenant retention metric?
Leases that you were aware of that were non renewal status. So this is kind of it.
It sounds like a placeholder, but but I guess I'm really curious.
And then just making sure Ben had mentioned that there is.
More lead time for early renewals. So if you get early renewals do those go into this tenant retention metrics.
Yes, Chris This is bill yes, they do.
Speaker 2: But as we mentioned earlier, we're given the supply demand dynamics. We're not entertaining lease renewals greater than six and nine months ahead of lease expiration, but those will factor in to the retention number. And I think the question before, what other other large known move outs and the answer is now, but
But as we mentioned earlier were given the supply demand dynamics.
We're not entertaining lease renewals greater than six nine months ahead of lease exploration, but those will factor in to the retention number and I think the question before what other are there large known move outs and the answer is no but yeah.
Speaker 2: Yeah, as we move into the, we're in February right now, as we move to the back half of the year, there are tenants that are rolling that we're not in least negotiations with because, you know, partly because of us. And so...
As we move into the we're in February right now as we move to the back half of the year. There are tenants that are rolling that were not in lease negotiations with because you know partly because of us and so we view those as coin flips and and those situations, some where we're projecting to have new and we're projecting not to renew.
Speaker 2: We view those as coin flips and those situations, we're projecting to a new and some we're projecting not to a new. In the case of non-renewal, the market is extremely strong and we feel really comfortable getting those spaces back and leasing those as Ben said early and sure at down times that we've historic.
In the case of non renewal the market is extremely strong and we feel really comfortable getting those spaces back and leasing those as Ben said early ensure downtime than we've historically seen.
Okay. Thanks for that Bill and then just in terms of the acquisitions for the quarter. It sounds to me. It appears that there's a little bit more value add obviously development deals unique for or somewhat unique for what you guys. Typically do if you strip those deals out kind of what's the core cap rate that you were buying at for sort of your standard bread and butter deals that you keep for.
Speaker 3: Thanks for that, Bill. And then just in terms of the acquisitions for the quarter, it's not, I mean, it appears that you're a little bit more value-ad, obviously, the development deals unique for, or somewhat unique for what you guys typically do. If you strip those deals out, kind of what's the core cap rate that you were buying at for sort of your standard bread and butter deals that you traditionally...
Additionally invested them.
Speaker 4: Those fields are the cap rates we're reflecting are reflective of those deals. We're again in the low fives with a little the balance of the
So those deals are.
The cap rates, we're reflecting or the R are reflective of those deals were again in the low fives.
With a little of the balance of the the value added et cetera.
Speaker 4: The value add, et cetera. You know, perhaps a little lower, but stabilized adder above those notes.
Perhaps.
Lower.
But stabilized at or above those numbers.
Okay.
Speaker 3: And then, Ben, while I've got you just in terms of, you know, obviously the business has been built on the sort of granular acquisition and the idea that you know, there's premium for portfolio deals. I guess if maybe you could just update us on sort of what you see is sort of the premium portfolio pricing and sort of where those break points are in terms of the size.
And then Dan while I've got you just in terms.
Obviously your business has been built on the sort of the granular acquisition and the idea that there's premium for portfolio deals I guess, if maybe you could just update us on sort of what you see as sort of the premium portfolio pricing and sort of where those breakpoints are in terms of deal sizes.
Well.
Speaker 3: Well, you know, there's the super passive equity to sovereign wealth funds.
The Super passive equity sovereign wealth funds.
Speaker 3: people of that ilk, some of the big non-traders, et cetera, are trading portfolios, you know, fungible industrial assets in three handles. We're still able to buy these assets currently in the low five. I mean, I think that's a script of the kind of spread that we're seeing. Obviously, individual portfolios with different parameters and up trading at different numbers. But
People that some of the big non traded et cetera are trading portfolios.
Fungible industrial assets and three handles.
We're still able to buy these assets granularly in the low fives I mean, I think that's a script of the kind of spread.
Shane.
Obviously individual portfolios with different parameters and up trading at different numbers, but.
Speaker 3: We historically had seen 100 plus basis point difference between individual or individual transactions on a contemporaneous basis with portfolios of the same kind of assets. I think that that spread is still at least the 100 basis points and again, historically we've seen it be larger than that.
We historically had seen 100 plus.
On a basis point differential between individual or individual transactions on a contemporaneous basis with portfolios of the same kind of.
Assets I think that that that spread is.
Still at least 100 basis points and again, historically, we seem to be larger than that.
Okay. Thank you appreciate it this morning.
Speaker 8: Thank you. Our next question comes from Manny Corkman with City. Please proceed with your...
Thank you. Our next question comes from Manny Korchman with Citi. Please proceed with your question.
Speaker 11: It's Michael Belliman here with Manny. I wanted to come back sort of on capital allocation sources and uses and clearly you've enhanced selling a little bit more this year. I think it was targeting two to 300 million in a four cap range. Obviously, you were able to get that sale off in the fourth quarter at a three and you just talked about how competitive the marketplaces. I guess when you step back and you look at your cost of capital.
Hey, it's Michael Bilerman here with Manny I, just wanted to come back sort of on capital allocation and sources and uses and clearly you've enhanced selling a little bit more this year I think it was targeting two to 300 million a four cap range. Obviously, you were able to get that fell off in the fourth quarter at a three.
Can you just talked about how competitive the market places.
I guess when you step back and you look at your cost of capital.
Speaker 11: Obviously, the equity is not trading at a multiple, which makes these fields significantly accretive relative to selling assets.
Obviously, the equity is not trading at a multiple which makes me feel good.
It can be accretive relative to selling assets, so why not be substantially more aggressive portfolio.
Speaker 11: So why not be substantially more aggressive at portfolio changes in disposing dramatically more if you're able to get access to these value at opportunities north of the five?
Changes in disposing dramatically more if you're able to get access to these value add opportunities north of a five.
Speaker 3: So, Michael, thank you for the question. And one of the things that remains the cases that our average FFO per share on acquisitions is significantly above our portfolio average on that.
So Michael Thank you. Thank you for the question I mean, one of the things that is remains the case is that our average per share on acquisitions is significantly above our.
Portfolio average.
So we remain significantly accretive through through acquisitions.
Speaker 3: So we remain significantly accretive through acquisitions. And a part of that is obviously the spread between our implied cap rate and where we're buying assets. We also have operating leverage. We continue to have operating leverage that our marginal GNA is significantly lower than our average GNA. So that continues to be a...
And a part of that is obviously the spread between our implied cap rate and where we're buying assets, but we also have operating leverage continue to have operating leverage.
Our marginal G&A.
Significantly lower than our average G&A, so that continues to be a.
Speaker 4: You know, a factor. We are increasing our dispositions this year. And we will have, we will look at, you know, continuing to do that as a source of capital. But in that acquisition, because of that offering leverage, remains a big driver, in part because of the operating leverage, remains a big driver or a half of a accretion. In addition to our internal growth, I believe.
A factor we are increasing our dispositions this year.
And we will have we will look at continuing to do that as a source of capital, but net acquisitions because of that operating leverage remains a big driver.
In part because of the operating leverage remains a big driver of our basketball accretion in addition to our internal growth obviously.
Speaker 11: but if you step back from it and you look at where your equity is trading, right? Your equity is trading on a cash flow basis in the north of a five and on an SFO earning space is almost at a six.
Right, but if you step back from it and you look at where your equity is trading right. Your equity is trading on a cash flow basis, north of a five and on an FSA earnings basis, almost a six and as you're issuing in diluting investors by issuing that equity at arguably a discount to where those assets would trade in the private market.
Speaker 11: And as you're issuing and deluding investors by issuing that equity at arguably a discount to where those assets were trade in the private market.
Speaker 11: Why not take advantage where the private market may be valuing those assets at a much higher multiple than what's embedded in static, right? You're going to in order to outperform you sort of have to look to your lowest cost of capital which may in fact be assets that are in the company today rather than enlarging your equity base at a dilutive cost.
Why not take advantage, where the private market may be valuing those assets at a much higher multiple than what's embedded in static Greg you're going to in order to outperform you sort of have to look to your lowest cost of capital, which may in fact be asked etcetera in the company today rather than.
Enlarging your equity base added Duluth is cost.
Speaker 3: Yeah, Michael. So we're looking at that, that valuation. And we are certainly aware of where this passive equity is violating our assets. And that opens up opportunities, potential opportunities for things that we haven't looked before at before, which surely we're aware of those valuables.
Yes, Michael So Michael we're looking at that that valuation and we are.
Certainly aware, where this passive equity is violating our assets and.
And that opens up opportunities but.
Potential opportunities for things that we haven't look before that before.
Sure.
Certainly, we're aware of those valuations below or something to that.
Speaker 2: Yeah, Michael, just to say right now, we still have some forward equity outstanding. And we do have a, as I mentioned earlier, small portfolio in the market. So right now we're not in the market issuing equity. I mean, it's something that we're well aware of where we issue equity, where we can sell properties. So over the, our life cycle as a public company, we've proven to be prudent, allocated as a capital and we'll continue to do so. And that disconnect is something more. Yeah, it's one person, and you have a big support for that, giving your virtual campus.
Yeah, Michael I'd, just like to say right now we still have some forward equity outstanding and we do have a as I mentioned earlier, a small portfolio in the market. So.
Right now we're not in the market issuing equity I mean, it's something that we're well we're aware of where we issue equity, where we're where we can sell properties, so and over the lifecycle as a public company, we've proven to be prudent allocators of capital and we will continue to do so and that disconnect is something we've got we're well aware of.
Speaker 11: I mean, like you've been a pretty active issue or the number of offerings in like 19 and 20, obviously, the forward last year. And your stock is traded at a meaningful discount to industrial peers and even to net least, net least peers. So I'm just.
I don't know like you've been a pretty active as you were right. The number of offerings in 19 and 20, obviously at the forward last year.
And your stock is traded at a meaningful discount to industrial peers and even can at least net lease peers. So I'm just wondering if there's going to be a more aggressive look at sources and uses of capital cost of capital to move your multiple up I don't think you would probably be happy that you were trading at the lowest multiple of.
Speaker 11: wondering if there's going to be a more aggressive look at sources and uses of capital, cost of capital, to move your multiple up. I don't think you would probably be happy that you're trading at the lowest multiple of the industrial space. Something doesn't add up, right? And so...
The industrial space.
Something doesn't add up right and so.
Speaker 11: That's where I was just trying to dig into about whether there's going to be a bigger focus on trying to outperform in leveraging your asset base to do that rather than diluting shareholders with new equity.
That's where I was just trying to dig into about whether theres going to be a bigger focus on.
Trying to outperform and leveraging your asset base.
Do that rather than diluting shareholders with new equity.
Speaker 3: Yeah, Michael. So one of the things we've talked about in Source Inequity, we've always relied primarily on company.
Yeah, Michael So one of the things we've talked about in sourcing of equity we've always relied primarily on common equity.
Speaker 4: When it's priced appropriately, as a way to continue our net acquisition.
When it's priced appropriately et cetera, as a way to continue our net acquisitions.
Speaker 4: We have used leverage when we are on a temporary basis, and we certainly have used selling assets. One of the things that we had...
We have we have used leverage when we a temporary basis and we certainly have us selling assets one of the things that we had.
Have always look.
Speaker 3: have always looked, some of the scant's had its joint ventures. There is a way to use joint ventures that would take advantage of the pricing in the market from passive equity for us as a source of capital. And certainly that is something that we will look at going forward.
Some of the scanner that its joint ventures, there is a way to use joint ventures that would take advantage of.
The pricing in the markets from passive equity for us.
A source of capital.
That is something that we will look at.
Going forward.
Okay. Thank you.
Speaker 8: Thank you. There are no further questions at this time. I would like to turn the floor back over to Ben butcher for any closing
Thank you there are no further questions at this time I would like to turn the floor back over to Ben Butcher for any closing comments.
Speaker 3: Well, thank you all for joining us this morning. As I've mentioned in earlier remarks, Stagg is in a great place. And the leadership of Stagg is also in a great place. And...
Well. Thank you all for joining us this morning.
As I've mentioned in our earlier remarks stag is in a great place.
And the leadership of Stag is also in a great place and.
I am and you should be comfortable with the transition that is ongoing and the opportunity set in front of US remains large and we look forward to delivering continued great returns to our shareholders. Thanks.
Speaker 3: I am and you should be comfortable with the transition that is ongoing and the opportunity set in front of us remains large and we look forward to delivering continued grave returns to our shareholders. Thanks.
Speaker 8: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
Yeah.
Yeah.
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