Q1 2026 STAG Industrial Inc Earnings Call

April 29, 2026

Operator 2: Greetings. Welcome to the STAG Industrial, Inc. Q1 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Steve Sarro, Vice President, Investor Relations. Please proceed, sir.

Operator: Greetings. Welcome to the STAG Industrial, Inc. Q1 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Steve Sarro, Vice President, Investor Relations. Please proceed, sir

Speaker #2: If any wants to require operator assistance during the conference, please press *0 on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Steve Xiarhos, Vice President, Investigations.

Speaker #2: Please proceed, sir. Thank you. Welcome to STAG Industrial's conference call covering the first quarter 2026 results. 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 Investor Relations sections.

Steve Sarro: Thank you. Welcome to STAG Industrial's conference call covering the Q1 2026 results. 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 investor relations sections. On today's call, the company's prepared remarks in answers to your questions will contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today. Examples of forward-looking statements include forecasts of Core FFO, Same-Store NOI, G&A, acquisition and disposition volumes, retention rates and other guidance, leasing prospects, rent collections, industry and economic trends, and other matters.

Steve Xiarhos: Thank you. Welcome to STAG Industrial's conference call covering the Q1 2026 results. 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 investor relations sections. On today's call, the company's prepared remarks in answers to your questions will contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today. Examples of forward-looking statements include forecasts of Core FFO, Same-Store NOI, G&A, acquisition and disposition volumes, retention rates and other guidance, leasing prospects, rent collections, industry and economic trends, and other matters.

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.

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 NOI, GNA, 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 listeners to review the more detailed discussion related to these forward-looking statements contained in the company's filings with the SEC and the definitions and reconciliations of non-GAAP measures contained in the supplemental information package available on the company's website.

Steve Sarro: We encourage all listeners to review the more detailed discussion related to these forward-looking statements contained in the company's filings with the SEC and the definitions and reconciliations of non-GAAP measures contained in the supplemental information package available on the company's website. As a reminder, forward-looking statements represent management's estimate as of today. STAG Industrial assumes no obligation to update any forward-looking statements. On today's call, you will hear from Bill Crooker, our Chief Executive Officer, and Matts Pinard, our Chief Financial Officer. Also here with us today are Michael C. Chase, our Chief Investment Officer, and Steven T. Kimball, our Chief Operating Officer, who are available to answer questions specific to their areas of focus. I'll now turn the call over to Bill.

Steve Xiarhos: We encourage all listeners to review the more detailed discussion related to these forward-looking statements contained in the company's filings with the SEC and the definitions and reconciliations of non-GAAP measures contained in the supplemental information package available on the company's website. As a reminder, forward-looking statements represent management's estimate as of today. STAG Industrial assumes no obligation to update any forward-looking statements. On today's call, you will hear from Bill Crooker, our Chief Executive Officer, and Matts Pinard, our Chief Financial Officer. Also here with us today are Michael C. Chase, our Chief Investment Officer, and Steven T. Kimball, our Chief Operating Officer, who are available to answer questions specific to their areas of focus. I'll now turn the call over to Bill.

Speaker #2: As a reminder, forward-looking statements represent management's estimate as of today. STAG Industrial assumes no obligation to update any forward-looking statements. On today's call, you will hear from Bill Crooker, our Chief Executive Officer, and Matts Pinard, our Chief Financial Officer.

Speaker #2: Also here with us today are Mike Chase, our Chief Investment Officer, and Steve Kimball, our Chief Operating Officer. We're available to answer questions specific to their areas of focus.

Speaker #2: I'll now turn the call over to Bill.

Speaker #3: Thank you, Steve. Good morning, everybody, and welcome to the first quarter earnings call for STAG Industrial. We are pleased to have you join us and look forward to discussing the first quarter 2026 results.

William R. Crooker: Thank you, Steve. Good morning, everybody, and welcome to the Q1 earnings call for STAG Industrial. We are pleased to have you join us and look forward to discussing the Q1 of 2026 results. Q1 industrial leasing velocity and volume are healthy both market wide and within STAG's portfolio. Year-over-year absorption continues to improve. Notably, the multiyear weakness in demand for big box product has reversed, with vacancy in larger spaces decreasing in many markets. This has not been limited to larger spaces, however, with strong activity in the 150 to 250 thousand square foot segment of the sector where STAG's portfolio predominantly sits. The market is benefiting from a more recent demand driver tied to the rapid acceleration of data center construction.

Bill Crooker: Thank you, Steve. Good morning, everybody, and welcome to the Q1 earnings call for STAG Industrial. We are pleased to have you join us and look forward to discussing the Q1 of 2026 results. Q1 industrial leasing velocity and volume are healthy both market wide and within STAG's portfolio. Year-over-year absorption continues to improve. Notably, the multiyear weakness in demand for big box product has reversed, with vacancy in larger spaces decreasing in many markets. This has not been limited to larger spaces, however, with strong activity in the 150 to 250 thousand square foot segment of the sector where STAG's portfolio predominantly sits. The market is benefiting from a more recent demand driver tied to the rapid acceleration of data center construction.

Speaker #3: Q1, Industrial Leasing Velocity and Volume, were healthy both market-wide and within STAG's portfolio. Year-over-year absorption continues to improve. Notably, the multi-year weakness in demand for big-box product has reversed, with vacancy in larger spaces decreasing in many markets.

Speaker #3: This has not been limited to larger spaces, however, with strong activity in the 150 to 250,000 square foot segment of the sector where STAG's portfolio predominantly sits.

Speaker #3: The market is benefiting from a more recent demand driver tied to the rapid acceleration of data center construction. 3PLs supporting these data center developments have resulted in a new segment of leasing demand for traditional warehouse facilities.

William R. Crooker: 3PLs supporting these data center developments have resulted in a new segment of leasing demand for traditional warehouse facilities. Since the beginning of 2025, we have signed 8 leases totaling 1.6 million square feet to data center related tenants. New supply also remains subdued with approximately 40% of new supply constructed for build-to-suit projects above historical averages. We continue to expect national vacancy rates to peak in the coming months with an inflection point in the H2 of 2026. Capital markets have remained stable to start the year, and industrial product remains one of the most liquid asset classes. We see momentum in the transaction market with the pipeline growing and transaction volume increasing. Our internal pipeline has increased to $3.9 billion.

Bill Crooker: 3PLs supporting these data center developments have resulted in a new segment of leasing demand for traditional warehouse facilities. Since the beginning of 2025, we have signed 8 leases totaling 1.6 million square feet to data center related tenants. New supply also remains subdued with approximately 40% of new supply constructed for build-to-suit projects above historical averages. We continue to expect national vacancy rates to peak in the coming months with an inflection point in the H2 of 2026. Capital markets have remained stable to start the year, and industrial product remains one of the most liquid asset classes. We see momentum in the transaction market with the pipeline growing and transaction volume increasing. Our internal pipeline has increased to $3.9 billion.

Speaker #3: Since the beginning of 2025, we have signed eight leases totaling $1.6 million square feet to data center-related tenants. New supply also remains subdued, with approximately 40% of new supply constructed for Build-A-Suit projects.

Speaker #3: Above historical averages. We continue to expect national vacancy rates to peak in the coming months with an inflection point in the back half of 2026.

Speaker #3: Capital markets have remained stable to start the year and industrial product remains one of the most liquid asset classes. We see momentum in the transaction market, but the pipeline growing and transaction volume increasing.

Speaker #3: Our internal pipeline has increased to $3.9 billion. In February, we acquired a $750,000 square foot building located in Platte City, Missouri, for $80.7 million at a reported cap rate of 6.1%.

William R. Crooker: In February, we acquired a 750,000 square foot building located in Platte City, Missouri for $80.7 million at a reported cap rate of 6.1%. The newly constructed class A building features 36 foot clear height, ESFR, ample trailer parking, and heavy power. Strategically located within a northwest submarket of Kansas City, the building benefits from close access to highways and the Kansas City International Airport. The building is 100% leased for 12 years with 3.2% annual rental escalators. In terms of our development platform, we have 7 buildings or 1.8 million square feet of development activity that is not in service as of the end of Q1. These buildings are in various stages of development and have an expected stabilized yield of 7.1%.

Bill Crooker: In February, we acquired a 750,000 square foot building located in Platte City, Missouri for $80.7 million at a reported cap rate of 6.1%. The newly constructed class A building features 36 foot clear height, ESFR, ample trailer parking, and heavy power. Strategically located within a northwest submarket of Kansas City, the building benefits from close access to highways and the Kansas City International Airport. The building is 100% leased for 12 years with 3.2% annual rental escalators. In terms of our development platform, we have 7 buildings or 1.8 million square feet of development activity that is not in service as of the end of Q1. These buildings are in various stages of development and have an expected stabilized yield of 7.1%.

Speaker #3: The newly constructed Class A building features 36-foot clear height, ESFR, ample trailer parking, and heavy power. Strategically located within a northwest submarket of Kansas City, the building benefits from close access to highways and the Kansas City International Airport.

Speaker #3: The building is 100% leased for 12 years with $3.2% annual rental escalators. In terms of our development platform, we have seven buildings or 1.8 million square feet of development activity that is not in service as of the end of Q1.

Speaker #3: These buildings are in various stages of development and have an expected stabilized yield of 7.1%. Subsequent to quarter end, we have signed two new development leases.

William R. Crooker: Subsequent to quarter end, we have signed 2 new development leases. We agreed to a 73,000 square foot lease at our Casual Drive development in Greenville. That building is now 100% leased. We also executed a lease totaling 45 square feet in one of our Charlotte development projects. That building is now 90% leased. With that, I will turn it over to Matts, who will cover our remaining results and guidance for 2026.

Bill Crooker: Subsequent to quarter end, we have signed 2 new development leases. We agreed to a 73,000 square foot lease at our Casual Drive development in Greenville. That building is now 100% leased. We also executed a lease totaling 45 square feet in one of our Charlotte development projects. That building is now 90% leased. With that, I will turn it over to Matts, who will cover our remaining results and guidance for 2026.

Speaker #3: We agreed to a $73,000 square foot lease at our casual drive development in Greenville. That building is now 100% leased. We also executed a lease totaling $45,000 square feet in one of our Charlotte development projects.

Speaker #3: That building is now 90% leased. With that, I will turn it over to Matts, who will cover our remaining results and guidance for 2026.

Speaker #2: Thank you, Bill. And good morning, everyone. Core FFO per share was 65 cents for the quarter, an increase of 6.6% as compared to last year.

Matts Pinard: Thank you, Bill, and good morning, everyone. Core FFO per share was $0.65 for the quarter, an increase of 6.6% as compared to last year. Leverage remains low, with net debt to annualized run rate adjusted EBITDA equal to 5 times. Equity stood at $806 million at quarter end. During the quarter, we commenced 37 leases across 6 million sq ft, generating cash and straight-line leasing spreads of 20.9% and 39.6% respectively. This is a quarterly record in terms of total operating portfolio square feet leased. Tenant demand is strong and it's in many industries, including air freight and logistics, retail, and containers and packaging. Retention for the quarter was 69.5%. We are maintaining our retention guidance of 70% to 80% for the year.

Speaker #2: Leverage remains low, with net debt to annualized run rate adjusted EBITDA equal to five times. Equity stood at $806 million at quarter end. During the quarter, we commenced 37 leases across 6 million square feet, generating cash and straight-line leasing spreads of 20.9% and 39.6%, respectively.

Speaker #2: This is a quarterly record in terms of total operating portfolio square feet leased, tenant demand is strong in span many industries including air freight and logistics retail and containers and packaging.

Speaker #2: Retention for the quarter was 69.5%. We are maintaining our retention guidance of 70 to 80% for the year. As of today, 79% of our forecasted leasing for 2026 has been addressed at levels consistent with our initial guidance and at levels equal to our previous years at this point.

Matts Pinard: As of today, 79% of our forecasted leasing for 2026 has been addressed at levels consistent with our initial guidance and at levels equal to our previous years at this point. We still expect cash leasing spreads of 18% to 20% this year. Same-Store Cash NOI grew 4.1% for the Q1. Credit loss was minimal for the Q1 as well. At this point, we are maintaining all guidance for the year. 2026 guidance can be found on page 21 of our supplemental package, which is available within the investor relations section of the website. I will now turn it back over to Bill.

Speaker #2: We still expect cash leasing spreads of 18 to 20% this year. Same-store cash NOI grew 4.1% for the quarter. Credit loss was minimal for the first quarter as well.

Speaker #2: At this point, we are maintaining all guidance for the year. 2026 guidance can be found on page 21 of our supplemental package, which is available within the Investor Relations section of the website.

Speaker #2: I'll now turn it back over to Bill.

Speaker #3: Thank you, Matts. I want to thank our team for the great start to 2026. STAG has set the foundation of sustainable growth in 2026 and will continue to benefit from a strong balance sheet, ample liquidity, and broad market diversification.

William R. Crooker: Thank you, Matts Pinard. I want to thank our team for the great start to 2026. Stag has set the foundation of sustainable growth in 2026 and will continue to benefit from a strong balance sheet, ample liquidity, and broad market diversification. We'll now turn it back to the operator for questions.

Bill Crooker: Thank you, Matts Pinard. I want to thank our team for the great start to 2026. Stag has set the foundation of sustainable growth in 2026 and will continue to benefit from a strong balance sheet, ample liquidity, and broad market diversification. We'll now turn it back to the operator for questions.

Speaker #3: We will now turn it back to the operator for questions.

Speaker #1: Thank you. Our first question comes from. At this time, if you would like to ask a question, please press star one. We ask that you limit yourself to one question and one follow-up.

Operator 2: Thank you. Our first question comes from Craig Melman with Citigroup. Please proceed.

Operator: Thank you. Our first question comes from Craig Melman with Citigroup. Please proceed.

Speaker #1: If you would like to ask a question at this time, please press star one on your telephone keypad. If you're on a speakerphone, you may press star two to remove yourself from the queue.

Speaker #1: Once again, that's star one to ask a question at this time. Our first question comes from Craig Melman with Citigroup. Please proceed.

Speaker #4: Hey, good morning, guys. Bill, you noted similar to peers that the leasing market is healthier here today. I'm just kind of curious, you guys did maintain retention guidance and all your guidance, actually.

Craig Melman: Good morning, guys. William R. Crooker, you noted similar to peers that the leasing market is healthier here today. I'm just kind of curious, you guys did maintain retention guidance and all your guidance actually. I know you guys have an elevated expiration schedule this year. Are you seeing, you know, quicker backfills on spaces that have come back to you or anything encouraging on that front? I know you guys are a little bit worried about that as a source of occupancy downside.

Speaker #4: Just in terms of I know you guys have an elevated expiration schedule this year. Are you seeing quicker backfills on spaces that have come back to you or anything encouraging on that front?

Speaker #4: Because I know you guys were a little bit worried about that as a source of occupancy downside.

Speaker #2: Yeah, thanks, Craig. Yeah, I mean, it's certainly a higher lease expiration year, and that's driving our guidance, our occupancy guidance. For the year. With respect to what we're budgeting, it's still 9 to 12 months of lease-up time for assets when they go vacant.

William R. Crooker: Thanks, Craig. I mean, it's certainly a higher lease expiration year, and that's driving our guidance, our occupancy guidance for the year. With respect to what we're budgeting, it's still 9 to 12 months of lease-up time for assets when they go vacant. I will say we had good activity in Q4. That has continued in Q1. We had a large amount of square footage leased in Q1. I think it was 6 million square feet. The activity is really strong. We're seeing it from multiple industries. We're getting a lot of RFPs. It feels really good. With all that being said, we have not changed our lease-up assumptions at this time. The momentum from Q4 has continued into Q1 and into Q2.

Bill Crooker: Thanks, Craig. I mean, it's certainly a higher lease expiration year, and that's driving our guidance, our occupancy guidance for the year. With respect to what we're budgeting, it's still 9 to 12 months of lease-up time for assets when they go vacant. I will say we had good activity in Q4. That has continued in Q1. We had a large amount of square footage leased in Q1. I think it was 6 million square feet. The activity is really strong. We're seeing it from multiple industries. We're getting a lot of RFPs. It feels really good. With all that being said, we have not changed our lease-up assumptions at this time. The momentum from Q4 has continued into Q1 and into Q2.

Speaker #2: I will say we had good activity in Q4. That has continued in Q1. We had a large amount of square footage leased in Q1.

Speaker #2: I think it was 6 million square feet. So activity is really strong. We're seeing it from multiple industries. We're getting a lot of RFPs.

Speaker #2: It feels really good. But with all that being said, we have not changed our lease-up assumptions at this time. But the momentum from Q4 has continued into Q1 and into Q2.

Craig Melman: Okay. Just a follow-up here. You mentioned, I think 8 leases, 1.6 million square feet to data center supply tenants.

Speaker #4: Okay. And then just a follow-up here. You mentioned, I think, eight leases, 1.6 million square feet to data center supply tenants. What markets are you seeing that in predominantly?

William R. Crooker: Yeah.

Bill Crooker: Yeah.

Craig Melman: What markets are you seeing that in predominantly? Do you think that this is concentrated in your portfolio or grows a little bit as just a proliferation of data centers takes hold?

Speaker #4: And do you think that this is concentrated in your portfolio or grows a little bit? Just to proliferation of data centers takes hold.

William R. Crooker: It certainly feels like it's going to continue to grow. I mean, South Carolina, we're seeing a lot of it. We had three leases in South Carolina, two in the Greenville Spartanburg market. Nashville, the lease we signed in Nashville was a data center-related tenant. We saw some in the Midwest, in Wisconsin, one lease there. We had a lease we signed in Ohio and also in Charlotte. It's really that Southeast, Midwest markets is where we're primarily seeing that demand. That's where a lot of our portfolio is concentrated. We anticipate further demand from data center-related tenants.

Bill Crooker: It certainly feels like it's going to continue to grow. I mean, South Carolina, we're seeing a lot of it. We had three leases in South Carolina, two in the Greenville Spartanburg market. Nashville, the lease we signed in Nashville was a data center-related tenant. We saw some in the Midwest, in Wisconsin, one lease there. We had a lease we signed in Ohio and also in Charlotte. It's really that Southeast, Midwest markets is where we're primarily seeing that demand. That's where a lot of our portfolio is concentrated. We anticipate further demand from data center-related tenants.

Speaker #2: Yeah, it certainly feels like it's going to continue to grow. I mean, South Carolina, we're seeing a lot of it. We had three leases in South Carolina, two in the Greenville, Spartanburg market.

Speaker #2: Nashville, one of the leases we signed in Nashville was a data center-related tenant. And then we saw some in the Midwest, in Wisconsin, one lease there.

Speaker #2: We had a lease we signed in Ohio and also in Charlotte. So it's really that southeast, Midwest markets is where we're primarily seeing that demand.

Speaker #2: And that's where a lot of our portfolio is concentrated. So we anticipate further demand from data center-related tenants.

Craig Melman: Not to ask a third one, but, like, what type of tenants are there? Are they 3PLs? Are they equipment manufacturers or servicers? Like, who are you leasing to?

Speaker #4: Not to ask a third one, but what type of tenants are they? Are they 3PLs or are they equipment manufacturers or servicers? Who are you leasing to?

William R. Crooker: One was a 3PL to one of the largest 3PLs in the world, serving a Meta data center contract. We have some tenants that are distributing generators to data centers. We have some light assembly of racking of power conversion systems in one of them. One's manufacturing battery components. It's a variety of things supporting data center developments and just the operations. These are long-term leases. The weighted average lease term is a little over 8 years, the leasing spreads we achieved on that 1.6 million square feet was about 35%. Good economics, long-term leases, strong credits backing these leases as well.

Bill Crooker: One was a 3PL to one of the largest 3PLs in the world, serving a Meta data center contract. We have some tenants that are distributing generators to data centers. We have some light assembly of racking of power conversion systems in one of them. One's manufacturing battery components. It's a variety of things supporting data center developments and just the operations. These are long-term leases. The weighted average lease term is a little over 8 years, the leasing spreads we achieved on that 1.6 million square feet was about 35%. Good economics, long-term leases, strong credits backing these leases as well.

Speaker #2: Yeah, so one was a 3PL. To one of the largest 3PLs in the world, serving a Meta data center contract. We have some tenants that are distributing generators to data centers.

Speaker #2: We have some light assembly of racking of power conversion systems in one of them. One's manufacturing battery components. So it's a variety of things supporting data center developments.

Speaker #2: And just the operations. And these are long-term leases. I mean, the weighted average lease term is a little over eight years. And the leasing spreads we achieved on that 1.6 million square feet was about 35%.

Speaker #2: So good economics, long-term leases, strong credits backing these leases as well.

Michael C. Chase: Great. Thank you.

Craig Melman: Great. Thank you.

Speaker #4: Great. Thank you.

William R. Crooker: Thanks, Craig.

Bill Crooker: Thanks, Craig.

Speaker #2: Thanks, Craig.

Operator 2: The next question comes from Michael Griffin with Evercore. Please proceed.

Operator: The next question comes from Michael Griffin with Evercore. Please proceed.

Speaker #1: The next question comes from Michael Griffin with Evercore. Please proceed.

Michael Griffin: Great. Thank you. I appreciate the commentary on the leasing front. It seems like it's been a good start to the year. I realize you've maintained your guide across the board, but maybe Bill, if you can give us a sense of any updated thoughts on, you know, market rent growth expectations. I think at the beginning of the year, it seemed like you were flat to up 2%. Does it feel like we're above the midpoint on that? I realize things can fluctuate around, but any commentary there would be helpful.

Speaker #5: Great. Thank you. I appreciate the commentary on the leasing front. It seems like it's been a good start to the year. I realize you've maintained your guide across the board, but maybe Bill, if you can give us a sense of any updated thoughts on market rent growth expectations.

Speaker #5: I think at the beginning of the year, it seemed like you were flat to up the midpoint on that? I realize things can fluctuate around, but any commentary there would be helpful.

William R. Crooker: Yeah. I mean, I think this is a, you know, part of the theme of Q1 calls, especially with us, where we just put out our annual guidance a couple of months ago. We had pretty good insight into, you know, where things were trending to start the year. Activity is probably a little bit stronger than what we initially thought. With all that being said, we maintained, you know, our guidance, you know, really across all components of that. With respect to market rent growth, our guide was 0% to 2%. That will, we're gonna maintain that guidance as well at this time.

Bill Crooker: Yeah. I mean, I think this is a, you know, part of the theme of Q1 calls, especially with us, where we just put out our annual guidance a couple of months ago. We had pretty good insight into, you know, where things were trending to start the year. Activity is probably a little bit stronger than what we initially thought. With all that being said, we maintained, you know, our guidance, you know, really across all components of that. With respect to market rent growth, our guide was 0% to 2%. That will, we're gonna maintain that guidance as well at this time.

Speaker #2: Yeah, I mean, I think this is part of the theme of Q1 calls. Especially with us, where we just put out our annual guidance a couple of months ago, we had pretty good insight into where things were trending to start the year.

Speaker #2: Activity is probably a little bit stronger than what we initially thought. But with all that being said, we maintained our guidance really across all components of that.

Speaker #2: With respect to market rent growth, our guide was 0% to 2%. We're going to maintain that guidance as well at this time.

William R. Crooker: That will likely trend higher on a quarterly basis as we move through the year, you know, as we see that vacancy rate, market vacancy rate, you know, peak in the, in the coming months. Everything, everything is panning out as we thought a couple of months ago. Maybe a little bit more optimism in the portfolio, just given the activity we're seeing and the leases we're signing and the discussions we're having with tenants. It's still early in the year, right? We're two months past our original guidance we put out.

Bill Crooker: That will likely trend higher on a quarterly basis as we move through the year, you know, as we see that vacancy rate, market vacancy rate, you know, peak in the, in the coming months. Everything, everything is panning out as we thought a couple of months ago. Maybe a little bit more optimism in the portfolio, just given the activity we're seeing and the leases we're signing and the discussions we're having with tenants. It's still early in the year, right? We're two months past our original guidance we put out.

Speaker #2: That will likely trend higher on a quarterly basis as we move through the year. As we see that vacancy rate, market vacancy rate peak in the coming months.

Speaker #2: So everything is panning out as we thought a couple of months ago. Maybe a little bit more optimism in the portfolio, just given the activity we're seeing and the leases we're signing and the discussions we're having with tenants.

Speaker #2: So but it's still early in the year, right? We're two months past our original guidance we put out.

Michael Griffin: Great. That's helpful. And then maybe for my follow-up, you're, you know, at about 80% of your 2026 leasing goal, seems pretty good so far. I don't wanna put the cart before the horse, obviously, but as you look to maybe 2027, are you starting to have those conversations? I mean, does it feel like as you look even at the year ahead, you're running maybe ahead of where you were relative to expectations? Or anything you can glean on maybe those 2027 conversations would be helpful.

Speaker #5: Great. That's helpful. And then maybe for my follow-up, at about 80% of your 2026 leasing goal, seems pretty good so far. I don't want to put the cart before the horse, obviously.

Speaker #5: But as you look to maybe 2027, are you starting to have those conversations? I mean, does it feel like as you look even at the year ahead, you're running maybe ahead of where you were relative to expectations?

Speaker #5: Or anything you can glean on maybe those 2027 conversations would be helpful.

William R. Crooker: Yeah. I mean, it's obviously a little early for 2027, but we do, especially for renewals, we start those conversations typically 12 months in advance. When you look at our 2027 leasing plan, we're about 25% through that at this point, and that's pretty comparable to the last few years.

Bill Crooker: Yeah. I mean, it's obviously a little early for 2027, but we do, especially for renewals, we start those conversations typically 12 months in advance. When you look at our 2027 leasing plan, we're about 25% through that at this point, and that's pretty comparable to the last few years.

Speaker #2: Yeah, I mean, it's obviously a little early for 2027, but we do—especially for renewals—we start those conversations typically 12 months in advance.

Speaker #2: So when you look at our 2027 leasing plan, we're about 25% through that at this comparable to the last few years.

Michael Griffin: Great. Thanks so much.

Speaker #5: Great. Thanks so much.

William R. Crooker: Thank you.

Bill Crooker: Thank you.

Speaker #2: Thank you.

Operator 2: The next question comes from Nick Thillman with Baird. Please proceed.

Operator: The next question comes from Nick Thillman with Baird. Please proceed.

Speaker #1: The next question comes from Nick Fillman with Baird. Please proceed.

Nick Thillman: Hey, good morning, guys. Maybe wanted to touch a little bit on what you're seeing on the acquisition front. Is there any sort of change in the pool of assets you're looking at? Are you willing to take on with the increased demand environment? Are you willing to take a little bit more value add? Or is, I guess, bucket the development value add versus core acquisitions and what you're underwriting today and how that's sort of trended over the last 90 days or so.

Speaker #6: Hey, good morning, guys. Maybe I wanted to touch a little bit on what you're seeing on the acquisition front. Is there any sort of change in the pool of assets you're looking at?

Speaker #6: Are you willing to take on with the increased demand environment? Are you willing to take a little bit more value add? Or I guess bucket the development, value add versus core acquisitions, and what your underwriting today and how that sort of trended over the last 90 days or so.

William R. Crooker: Yeah. I'll let Mike jump in on terms of kind of what we're seeing broad-based. With respect to, you know, identifying a certain profile of asset and focusing on that, I mean, we're fortunate enough that we've got the people, the processes in place and the systems in place to underwrite a large number of transactions. You know, we'll look at everything and, you know, depending on, you know, what meets our criteria and if we can meet the price, then we'll buy it. It's not like we're going to shift materially into value add or materially into, you know, long-term stabilized leases. We'll acquire what meets our investment criteria at that time, but we'll look at everything.

Bill Crooker: Yeah. I'll let Mike jump in on terms of kind of what we're seeing broad-based. With respect to, you know, identifying a certain profile of asset and focusing on that, I mean, we're fortunate enough that we've got the people, the processes in place and the systems in place to underwrite a large number of transactions. You know, we'll look at everything and, you know, depending on, you know, what meets our criteria and if we can meet the price, then we'll buy it. It's not like we're going to shift materially into value add or materially into, you know, long-term stabilized leases. We'll acquire what meets our investment criteria at that time, but we'll look at everything.

Speaker #2: Yeah, I'll let Mike jump in on terms of kind of what we're seeing broad-based. But with respect to identifying a certain profile of asset and focusing on that, I mean, we're fortunate enough that we've got the people, the processes in place, and the systems in place to underwrite a large amount, a large number of transactions.

Speaker #2: So we'll look at everything and depending on what meets our criteria and if we can meet the price, then we'll buy it. So it's not like we're going to shift materially into value add or materially into long-term stabilized leases.

Speaker #2: We'll acquire what meets our investment criteria at that time, but we'll look at everything. Just one thing on the call at the acquisition side, sourcing side, and then I'll pass over to Mike for more of the broader view.

William R. Crooker: You know, just one thing on the, call it the acquisition side, sourcing side, and then I'll pass over to Mike for more of the broader view is, you know, we did yesterday just acquire a piece of land adjacent to one of our buildings in Dallas, Texas. The land is large enough to fit about a 340,000 square foot facility. We're gonna start development of that facility shortly. It's good to put that land under contract. It's shovel-ready. That transaction's gonna be about $38 million at a 7.4% yield on cost. Excited to get that going. You know, that's just an example. We're looking at a number of development opportunities.

Bill Crooker: You know, just one thing on the, call it the acquisition side, sourcing side, and then I'll pass over to Mike for more of the broader view is, you know, we did yesterday just acquire a piece of land adjacent to one of our buildings in Dallas, Texas. The land is large enough to fit about a 340,000 square foot facility. We're gonna start development of that facility shortly. It's good to put that land under contract. It's shovel-ready. That transaction's gonna be about $38 million at a 7.4% yield on cost. Excited to get that going. You know, that's just an example. We're looking at a number of development opportunities.

Speaker #2: We did yesterday just acquire a piece of land adjacent to one of our buildings in Dallas, Texas. It's about a land is large enough to fit about a 340,000 square foot facility.

Speaker #2: So we're going to start development of that facility shortly. So it's good to put that land under contract—it's shovel-ready. That transaction's going to be about $38 million at a 7.4% yield on cost.

Speaker #2: So excited to get that going and that's just an example. And we're looking at a number of development opportunities. We're looking at a number of value add opportunities, stabilized opportunities, some small portfolios.

William R. Crooker: We're looking at a number of value add opportunities, stabilized opportunities, some small portfolios. It really depends on what meets that investment criteria. And if I didn't mention that transaction, that piece of land is in Dallas, Texas. With that, I'll pass over to Mike to share any more commentary on the-

Bill Crooker: We're looking at a number of value add opportunities, stabilized opportunities, some small portfolios. It really depends on what meets that investment criteria. And if I didn't mention that transaction, that piece of land is in Dallas, Texas. With that, I'll pass over to Mike to share any more commentary on the-

Speaker #2: So, it really depends on what meets that investment criteria. And if I didn't mention that, that transaction, that piece of land, is in Dallas, Texas.

Speaker #2: So with that, I'll pass over to Mike to share any more commentary on the.

Michael C. Chase: Sure. I think another thing just to mention on that piece of land is that that's a committed build-to-suit, where we already have a tenant committed for that building, the land that we bought yesterday. Just looking nationally, it was a strong end to 2025. Q4 came in from an investment sales perspective, came in pretty strong. That's carried over into Q1 of 2026. That stability and momentum in the capital markets has resulted in an increase in confidence from both buyers and sellers in the market. That also resulted in an uptick of deal flow, more buyers coming off the sidelines and into the market.

Mike Chase: Sure. I think another thing just to mention on that piece of land is that that's a committed build-to-suit, where we already have a tenant committed for that building, the land that we bought yesterday. Just looking nationally, it was a strong end to 2025. Q4 came in from an investment sales perspective, came in pretty strong. That's carried over into Q1 of 2026. That stability and momentum in the capital markets has resulted in an increase in confidence from both buyers and sellers in the market. That also resulted in an uptick of deal flow, more buyers coming off the sidelines and into the market. You know, there's been good deal flow that we've seen, you know, in Q1, and that's continuing into Q2.

Speaker #5: Sure. And I think another thing just to mention on that piece of land is that that's a committed build-to-suit, where we already have a tenant committed for that building—the land that we just bought yesterday.

Speaker #5: Just looking nationally, it was a strong end to 2025. So Q4 came in from an investment sales perspective, came in pretty strong. That's carried over into Q1 of 2026.

Speaker #5: So that's stability and momentum in the capital markets has resulted in an increase in confidence from both buyers and sellers in the market. So that's also resulted in an uptick of deal flow, more buyers coming to the coming off the sidelines and into the market.

Michael C. Chase: You know, there's been good deal flow that we've seen, you know, in Q1, and that's continuing into Q2.

Speaker #5: So there's been good deal flow that we've seen in Q1, and that's continuing into Q2.

William R. Crooker: Yeah. I mean, you see that in our pipeline too. Our pipeline's $3.9 billion. About 70% of that is, you know, single transactions, 30% 's portfolios.

Bill Crooker: Yeah. I mean, you see that in our pipeline too. Our pipeline's $3.9 billion. About 70% of that is, you know, single transactions, 30% 's portfolios. Just on the, on the seller side, those and buyer side bid-ask spreads are pretty tight now. We expect just the overall industrial transaction market to pick up here as we move through Q2.

Speaker #2: Yeah, I mean, you see that in our pipeline too. Our pipeline's 3.9 billion dollars, about 70% of that is single transactions, 30% is portfolios.

William R. Crooker: Just on the, on the seller side, those and buyer side bid-ask spreads are pretty tight now. We expect just the overall industrial transaction market to pick up here as we move through Q2.

Speaker #2: And just on the seller side, I mean, those and buyer side, bid-ask spreads are pretty tight now. So we expect just the overall industrial transaction market to pick up here as we move through Q2.

Nick Thillman: That's helpful. Bill, I know you've mentioned just some of these partnerships you've had with regional developers, and sounds like Dallas might be an opportunity that you just locked in here as well. I guess longer term, are you thinking about getting a little bit more concentrated now that you're building these relationships with these developers? I guess, are you guys being a little bit more sub-market focused, and looking for a little bit more growth in end markets and underwriting that? I guess more commentary there would be helpful because that's something that.

Speaker #5: That's helpful. And then, Bill, I know you mentioned just some of these partnerships you've had with regional developers. And it sounds like Dallas might be an opportunity that you just locked in here as well.

Speaker #5: But I guess longer term, are you thinking about getting a little bit more concentrated now that you're building these relationships with these developers? I guess, are you guys being a little bit more sub-market focused and looking for a little bit more growth in end markets and underwriting that?

Speaker #5: I guess more commentary there would be helpful because that's something that we've talked about in the past.

Matts Pinard: Yeah

Matts Pinard: ... talked about in the past.

William R. Crooker: Just backing up on the piece of land we bought, that was sourced by us. We had a tenant in our portfolio that's on an adjacent site that wanted to do a build-to-suit. We were able to source the land and go through all the approval process. That was done on balance sheet. That's not being partnered with anybody. With all of our developments, we look at the submarkets and make sure that those buildings fit the submarkets. I mean, these buildings that we're putting up meet the teeth of demand in these markets. That's, you know, first and foremost. We appreciate the partnerships we have with our development partners. We want to grow those. We're trying to grow those.

Bill Crooker: Just backing up on the piece of land we bought, that was sourced by us. We had a tenant in our portfolio that's on an adjacent site that wanted to do a build-to-suit. We were able to source the land and go through all the approval process. That was done on balance sheet. That's not being partnered with anybody. With all of our developments, we look at the submarkets and make sure that those buildings fit the submarkets. I mean, these buildings that we're putting up meet the teeth of demand in these markets. That's, you know, first and foremost. We appreciate the partnerships we have with our development partners. We want to grow those. We're trying to grow those.

Speaker #2: Yeah. So just backing up on the piece of land we bought, that was sourced by us. We had a tenant in our portfolio that's on an adjacent site that wanted to do a build to suit.

Speaker #2: So we were able to source the land and go through all the approval process. So that was done on balance sheet. That's not being partnered with anybody.

Speaker #2: With all of our developments, we look at the sub-markets and make sure that those buildings fit the sub-markets. I mean, these buildings that we're putting up meet the teeth of the demand in these markets.

Speaker #2: So that's first and foremost. We appreciate the partnerships we have with our development partners. We want to grow those. We're trying to grow those in some respects.

Matts Pinard: In some respects, we are growing those. There's also some opportunities to expand partnerships with new partners. All that's on the table. If you were to ask, you know, what's our best use of capital today, it's probably on the development side. I mean, just this one in Dallas, you know, it's a 7.4% yield. That's our best use of capital, is harder to acquire that land and takes longer to develop it. We like the opportunity and we'll do it either on balance sheet or with existing partners or with new partners.

Bill Crooker: In some respects, we are growing those. There's also some opportunities to expand partnerships with new partners. All that's on the table. If you were to ask, you know, what's our best use of capital today, it's probably on the development side. I mean, just this one in Dallas, you know, it's a 7.4% yield. That's our best use of capital, is harder to acquire that land and takes longer to develop it. We like the opportunity and we'll do it either on balance sheet or with existing partners or with new partners.

Speaker #2: We are growing those. And there's also some opportunities to expand partnerships with new partners, so all that's on the table. If you were to ask what's our best use of capital today, it's probably on the development side.

Speaker #2: I mean, just this one in Dallas, it's a 7.4 yield. So that's our best use of capital is harder to acquire that land and takes longer to develop it.

Speaker #2: But we like the opportunity and we'll do it either on balance sheet or with existing partners or with new partners.

Nick Thillman: Appreciate the commentary. That's it for me. Thanks, guys.

Speaker #3: I appreciate the commentary. That's it for me. Thanks, guys.

Matts Pinard: Thanks.

Operator 2: The next question comes from Jason Belker with Wells Fargo. Please proceed.

Operator: The next question comes from Jason Belker with Wells Fargo. Please proceed.

Speaker #2: Thanks.

Speaker #1: The next question comes from Jason Belker with Wells Fargo. Please proceed.

Jason Belker: Yeah. Hi, good morning. I guess first, Q1 Same-Store was pretty solid at 4.1%. The guidance was unchanged at 3%, suggesting, you know, somewhat of a possible slowdown. Just can you talk about how you expect that to take shape or how we should be thinking about the cadence of that metric for the rest of the year?

Jason Belcher: Yeah. Hi, good morning. I guess first, Q1 Same-Store was pretty solid at 4.1%. The guidance was unchanged at 3%, suggesting, you know, somewhat of a possible slowdown. Just can you talk about how you expect that to take shape or how we should be thinking about the cadence of that metric for the rest of the year?

Speaker #6: Yeah, hi, good morning. I guess, first, Q1 same store was pretty solid at 4.1%. Though guidance was unchanged at 3, suggesting somewhat of a possible slowdown.

Speaker #6: Just can you talk about how you expect that to take shape or how we should be thinking about the cadence of that metric for the rest of the year?

Matts Pinard: Yeah, absolutely. Good morning, Jason. Cash same store at 4.1% in Q1 is very healthy. Really what we need to do is talk about the economic impact to occupancy decline. In Q1, occupancy decline was only partially reflected in the same store number, meaning a good portion of the non-renewals occurred near the end of the quarter. The Q2 is going to reflect the full impact of that vacancy. Put a different way, the 4.1% includes impact of the 60 basis points of average occupancy loss, not the 120 basis points of actual occupancy loss of period end. All of that's related to Q1.

Speaker #4: Yeah, absolutely. Good morning, Jason. So cash-team store 4.1% in the first quarter is very healthy. But really what we need to do is talk about the economic impact, the occupancy decline.

Speaker #4: In the first quarter, the occupancy decline was only partially reflected in the same-store number, meaning a good portion of the non-renewals occurred near the end of the quarter.

Speaker #4: So basically, the second quarter is going to reflect the full impact of that vacancy. So put it a different way. The 4.1% includes impact to the 60 basis points of average occupancy loss.

Speaker #4: Not the 120 basis points of actual occupancy loss of period end. So all of that's related to the first quarter. So the 4.1% does not account for the fact that this space was vacant for an entire quarter.

Matts Pinard: The 4.1% does not account for the fact that the space was vacant for an entire quarter. Look, the Q1 cash flow was fully anticipated. It was included in our guidance. As you said, we continue to expect cash flow growth of 3% at the midpoint, so no change to the guidance. This was expected. It really comes down to the impact of occupancy over a full period.

Speaker #4: Look, the first quarter cash-team store was fully anticipated. It was included in our guidance. As you said, we continue to expect cash-team store growth of 3% at the midpoint.

Speaker #4: So, no change to the guidance. This was expected. It really comes down to the impact of occupancy over a full period.

Jason Belker: Great. Thank you. Secondly, could you just give us an update on where your embedded rent increases are trending for newly signed leases? Also remind us what the average escalator is across the portfolio is at this point.

Jason Belcher: Great. Thank you. Secondly, could you just give us an update on where your embedded rent increases are trending for newly signed leases? Also remind us what the average escalator is across the portfolio is at this point.

Speaker #6: Great. Thank you. And then secondly, could you just give us an update on where your embedded rent increases are trending for newly signed leases and also remind us what the average escalator is across the portfolio is at this point?

Matts Pinard: Yeah, absolutely. The weighted average escalator across the portfolio is 2.9%, almost 3%, and that's gonna increase every quarter because every lease that we're kind of coming across our desk starts with a 3. Anywhere in the 3% to 3.5% range, call it 3.25% on average of the leases that we are signing. Again, you know, just mathematically, that 2.9% will continue to increase.

Speaker #2: Yeah, absolutely. The weighted average escalator across the portfolio is 2.9%, almost 3%. And that's going to increase every quarter because every lease that we're kind of coming across our desk starts with a 3.

Speaker #2: Anywhere in the 3% to 3.5% range, call it 3 and a quarter on average, of the leases that we are signing. So again, just mathematically, that 2.9% will continue to increase.

Jason Belker: Great. Thanks again, guys.

Jason Belcher: Great. Thanks again, guys.

Speaker #6: Great. Thanks again, guys.

Operator 2: The next question comes from Eric Borden with BMO. Please proceed.

Operator: The next question comes from Eric Borden with BMO. Please proceed.

Speaker #1: The next question comes from Eric Borden with BMO. Please proceed.

Eric Borden: Hey, good morning. Thanks, guys. Matt, you just touched on this a little bit about the same store, but just on the occupancy front, you know, you started off the year with positive leasing, but you had a few known move-outs in the back end of the quarter. You know, how should we be thinking about the quarterly occupancy cadence just for the balance of 2026? As we look to the rest of the year, should we expect any additional known move-outs?

Speaker #3: Hey, good morning. Thanks, guys. Matt, you just touched on this a little bit about the same store, but just on the occupancy front—you started off the year with positive leasing, but had a few known move-outs at the back end of the quarter.

Speaker #3: How should we be thinking about the quarterly occupancy cadence just for the balance of '26? And as we look to the rest of the year, should we expect any additional known move-outs?

Matts Pinard: Yeah, exactly. With the known move-outs, you know, we didn't change our guidance. We're at 75% at the midpoint retention, which is basically spot on what we've averaged as a public company and what you're gonna see from any other institutional quality industrial portfolio. The same store experienced 60 basis points of average occupancy loss and 120 basis points of period end occupancy loss. That resulted in 96.6% occupancy in the same store. I just wanna pause here. That's a very healthy level. As Bill mentioned, our budgets assume 9 to 12 months of lease-up. Space that rolls vacant in our budget to lease up next year, not this year.

Speaker #2: Yeah, exactly. So with the known move-outs, we didn't change our guidance. We're at 75% at the midpoint retention, which is basically spot on with what we've averaged as a public company and what you can see from any other institutional-quality industrial portfolio.

Speaker #2: Look, the same store experienced 60 basis points of average occupancy loss and 120 basis points of period end occupancy loss. So that resulted in 96.6% occupancy in the same store.

Speaker #2: And I just want to pause here. That's a very healthy level. As Bill mentioned, our budgets assume 9 to 12 months of lease up.

Speaker #2: So space that rolls vacant in our budgets lease up next year, not this year. If we think about the cadence, we expect the trough occupancy to occur in the second quarter.

Matts Pinard: You know, if we think about the cadence, we expect the trough occupancy to occur in Q2, with occupancy increasing during H2 of the year. That basically squares with our view that at the end of this year we're going to start to see equilibrium in market rent growth acceleration. Again, the change in occupancy is fully anticipated. We had messaged it. It's included in our initial guidance. We continue to expect average occupancy in the Same-Store pool to be 96.5% with no change to our guidance.

Speaker #2: With occupancy increasing during the second half of the year. And that basically squares with our view that the end of this year, we're going to start to see equilibrium in market rent growth acceleration.

Speaker #2: Again, the change in occupancy is fully anticipated. We had messaged it. It's included in our initial guidance. We continue to expect average occupancy in the same store pool to be 96.5% with no change to our guidance.

Eric Borden: Great. Thank you. Then just going back to the increasing data center demand, you know, how are you guys thinking about underwriting, you know, that tenant base in terms of, you know, power availability, building specs, CapEx needs and, you know, credit duration, just versus, you know, your traditional warehouse tenant?

Speaker #3: Great. Thank you. And then just going back to the increasing data center demand, how are you guys thinking about underwriting that tenant base in terms of power availability, building specs, CapEx x needs, and credit duration just versus your traditional warehouse tenant?

William R. Crooker: I mean, one of the themes we're seeing, you know, across a lot of tenants is they want more power, right? Whether that's today or, you know, in 5 years in their lease term, maybe because they plan to automate their facility more or whatnot. Power is certainly something tenants are looking for. With respect to the spaces that we lease to data center tenants, I mean, some of them had excess power and some did not. It's your traditional warehouse that is just being used for a different use. It's, you know, the same example of we've had warehouses that were regional distribution centers, that second tenant was a light assembly tenant, and then the third tenant was warehousing, right? These are functional buildings that can be used for multiple uses.

Bill Crooker: I mean, one of the themes we're seeing, you know, across a lot of tenants is they want more power, right? Whether that's today or, you know, in 5 years in their lease term, maybe because they plan to automate their facility more or whatnot. Power is certainly something tenants are looking for. With respect to the spaces that we lease to data center tenants, I mean, some of them had excess power and some did not. It's your traditional warehouse that is just being used for a different use. It's, you know, the same example of we've had warehouses that were regional distribution centers, that second tenant was a light assembly tenant, and then the third tenant was warehousing, right? These are functional buildings that can be used for multiple uses. We're just seeing an incremental demand driver from data center tenants.

Speaker #2: I mean, one of the themes we're seeing across a lot of tenants is they want more power, right? And whether that's today or in five years in their lease term, maybe because they plan to automate their facility more or whatnot.

Speaker #2: But power is certainly something tenants are looking for. But with respect to the spaces that we lease to data center tenants, I mean, some of them had access power and some did not.

Speaker #2: So it's your traditional warehouse that is just being used for a different use. It's the same example of we've had warehouses that were regional distribution centers that second tenant was a light assembly tenant and then the third tenant was warehousing, right?

Speaker #2: So these are functional buildings that can be used for multiple uses. We're just seeing an incremental demand driver from data center tenants.

William R. Crooker: We're just seeing an incremental demand driver from data center tenants.

Eric Borden: Appreciate the time. Thank you.

William R. Crooker: Thank you.

Bill Crooker: Thank you.

Speaker #3: you.

Speaker #2: Thank you.

Operator 2: The next question comes from Jessica Zing with Green Street. Please proceed.

Operator: The next question comes from Jessica Zing with Green Street. Please proceed.

Speaker #1: The next question comes from Jessica Zing with Green Street. Please proceed.

Jessica Zing: Good morning. Just following up on the data center piece. For the construction tenants that signs the longer term leases, do you know if they're serving, like, multiple data centers in the area? If not, do you know if they will be servicing the data centers' operations after the construction completes? Yeah, I'm just curious about, you know, the kind of the sustainability of this new tailwind here.

Jessica Zheng: Good morning. Just following up on the data center piece. For the construction tenants that signs the longer term leases, do you know if they're serving, like, multiple data centers in the area? If not, do you know if they will be servicing the data centers' operations after the construction completes? Yeah, I'm just curious about, you know, the kind of the sustainability of this new tailwind here.

Speaker #5: Good morning. Just following up on the data center piece. So for the construction tenants that signs the longer-term leases, do you know if they're serving multiple data centers in the area?

Speaker #5: And if not, do you know if they will be servicing the data centers operations after the construction completes? Yeah, I'm just curious about the sustainability of this new tailwind here.

William R. Crooker: Yeah. Some of them are servicing the data centers that are already complete, and it's just servicing their ongoing operations. Some are servicing the development of it, and some are servicing multiple data centers, and some are servicing just one data center. Where these warehouses are located, there's multiple demand drivers within those markets. I mean, we have at least two of these data center leases in the Greenville Spartanburg market, and we spoke about that market many times. It's one of our, you know, one of our top markets. There's, you know, there's consumption in that market for warehousing and local distribution. There's regional distribution related to the inland port. There's now data center demand there. There's the BMW plant that creates a lot of demand there.

Bill Crooker: Yeah. Some of them are servicing the data centers that are already complete, and it's just servicing their ongoing operations. Some are servicing the development of it, and some are servicing multiple data centers, and some are servicing just one data center. Where these warehouses are located, there's multiple demand drivers within those markets. I mean, we have at least two of these data center leases in the Greenville Spartanburg market, and we spoke about that market many times. It's one of our, you know, one of our top markets. There's, you know, there's consumption in that market for warehousing and local distribution. There's regional distribution related to the inland port. There's now data center demand there. There's the BMW plant that creates a lot of demand there.

Speaker #2: Yeah. So some of them are servicing the data centers that are already complete. And it's just servicing their ongoing operations. Some are servicing the development of it.

Speaker #2: And some are servicing multiple data centers. And some are servicing just one data center. But where these warehouses are located, there's multiple demand drivers within those markets.

Speaker #2: I mean, we have at least two of these data center leases in the Greenville-Spartanburg market, and we’ve spoken about that market many times.

Speaker #2: It's one of our top markets. And there's consumption in that market for warehousing and local distribution. There's regional distribution related to the inland port.

Speaker #2: There's now data center demand there. There's the BMW plant that creates a lot of demand there. So these are functional buildings that can meet many of the demand drivers.

William R. Crooker: You know, these are functional buildings that can meet many of the demand drivers. There's just this incremental demand driver of data centers.

Bill Crooker: You know, these are functional buildings that can meet many of the demand drivers. There's just this incremental demand driver of data centers.

Speaker #2: There's just this incremental demand driver of data centers.

Jessica Zing: Great. Thank you for the color. Additionally, I was wondering if you could just kind of walk through your other markets and kind of highlight the ones with relative strengths and weaknesses right now.

Jessica Zheng: Great. Thank you for the color. Additionally, I was wondering if you could just kind of walk through your other markets and kind of highlight the ones with relative strengths and weaknesses right now.

Speaker #5: Great. Thank you for the color. And then additionally, I was wondering if you could just kind of walk through your other markets and kind of highlight the ones with relative strengths and weaknesses right now.

William R. Crooker: Yeah. I mean, if you look at kind of markets that are a little weaker, we have one asset in San Diego that's proving to be a little challenging. Now, you know, Memphis is a little slower, Pittsburgh a little slower. I'd say our markets that have probably been improving the most are Greenville Spartanburg and Charlotte. You know, if you wanna move a little further to our best markets, Houston's been a great market, Nashville. The Midwest big box distribution markets have really started to perform extremely well. I mean, that's a trend we're also seeing is big box leasing has been strong, a lot of these markets are, you know, have very low vacancy rates for big box distribution. That's your Columbus, your Louisvilles, your Indy.

Bill Crooker: Yeah. I mean, if you look at kind of markets that are a little weaker, we have one asset in San Diego that's proving to be a little challenging. Now, you know, Memphis is a little slower, Pittsburgh a little slower. I'd say our markets that have probably been improving the most are Greenville Spartanburg and Charlotte. You know, if you wanna move a little further to our best markets, Houston's been a great market, Nashville. The Midwest big box distribution markets have really started to perform extremely well. I mean, that's a trend we're also seeing is big box leasing has been strong, a lot of these markets are, you know, have very low vacancy rates for big box distribution. That's your Columbus, your Louisvilles, your Indy.

Speaker #2: Yeah. I mean, if you look at kind of markets that are a little weaker, it's we have one asset in San Diego that's proving to be a little challenging.

Speaker #2: Now, Memphis is a little slower. Pittsburgh a little slower. Let's say our markets that have probably been improving the most, Greenville, Spartanburg, and Charlotte, and then if you want to move a little further to our best markets, Houston's been a great market, Nashville.

Speaker #2: And the Midwest big box distribution markets have really started to perform extremely well. I mean, that's a trend we're also seeing is big box leasing has been strong.

Speaker #2: And a lot of these markets are have very low vacancy rates for big box distribution. So that's your Columbus, your Louisville's, your Indies.

Jessica Zing: It's very helpful color. Thank you.

Jessica Zheng: It's very helpful color. Thank you.

Speaker #5: It's very helpful color. Thank you.

William R. Crooker: Thank you.

Bill Crooker: Thank you.

Speaker #2: Thank you.

Operator 2: The next question comes from Henry Newell with RBC Capital Markets. Please proceed.

Operator: The next question comes from Henry Newell with RBC Capital Markets. Please proceed.

Speaker #1: The next question comes from Henry Newell with RBC Capital Markets. Please proceed.

Henry Newell: Yeah, good morning. Just wondering about where you're seeing underlying private market valuation trends in your specific markets, and if you're seeing them being impacted by really what's going on macroeconomically or geopolitically at the moment?

Speaker #4: Yeah, good morning. Just wondering about where you're seeing underlying private market valuation trends in your specific markets, and if you're seeing them being impacted by really what's going on macroeconomically or geopolitically at the moment.

William R. Crooker: Yeah, I mean, depending on the transaction, whether it's, you know, whether it's a, I assume you're talking cap rates. Just to clarify the question.

Bill Crooker: Yeah, I mean, depending on the transaction, whether it's, you know, whether it's a, I assume you're talking cap rates. Just to clarify the question.

Speaker #2: Yeah. I mean, depending on the transaction, whether it's a I assume you're talking cap rates. Just to clarify the question.

Henry Newell: Yeah.

Speaker #4: Yeah.

William R. Crooker: Yeah. Individual transactions, we just bought a 1 transaction in Q1. We're close to putting 2 others under LOI. Those are transacting, you know, at around where we're buying assets, right? Sometimes, you know, 25 basis points or 50 basis points inside of that, and that's why we don't win the deal, right? They're trading at cap rates a little bit lower than what we're willing to pay. Portfolios, because there's a lot of capital, you know, still chasing this asset class, we're still seeing a slight premium for portfolios. Anywhere from a 25 to 50 basis point portfolio premium on private transactions.

Bill Crooker: Yeah. Individual transactions, we just bought a 1 transaction in Q1. We're close to putting 2 others under LOI. Those are transacting, you know, at around where we're buying assets, right? Sometimes, you know, 25 basis points or 50 basis points inside of that, and that's why we don't win the deal, right? They're trading at cap rates a little bit lower than what we're willing to pay. Portfolios, because there's a lot of capital, you know, still chasing this asset class, we're still seeing a slight premium for portfolios. Anywhere from a 25 to 50 basis point portfolio premium on private transactions.

Speaker #2: Yeah. So I mean, individual transactions, I mean, we just bought one transaction in Q1. We're close to putting a couple others under LOI. I mean, those are transaction transacting added around where we're buying assets, right?

Speaker #2: Sometimes it's 25 basis points or 50 basis points inside of that. And that's why we don't win the deal, right? So, they're trading at cap rates a little bit lower than what we're willing to pay.

Speaker #2: And then portfolios because there's a lot of capital still chasing this asset class, we're still seeing a slight premium for portfolios. So anywhere from a 25 to 50 basis point portfolio premium on private transactions.

Henry Newell: Wonderful. That's good color. That's all I had on that. Thank you.

Speaker #4: Wonderful. That's good color. That's all I had on that. Thank you.

William R. Crooker: Thank you.

Bill Crooker: Thank you.

Speaker #2: Thank you.

Operator 2: Thank you. At this time, I would like to turn the floor back to Mr. Crooker for closing comments.

Operator: Thank you. At this time, I would like to turn the floor back to Mr. Crooker for closing comments.

Speaker #1: Thank you. At this time, I would like to turn the floor back to Mr. Crooker for closing comments.

William R. Crooker: Yeah, thanks everybody for participating in the call. We appreciate the questions and look forward to seeing you all soon. Thank you.

Bill Crooker: Yeah, thanks everybody for participating in the call. We appreciate the questions and look forward to seeing you all soon. Thank you.

Speaker #2: Yeah. Thanks, everybody, for participating in the call. We appreciate the questions and look forward to seeing you all soon. Thank you.

Operator 2: Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.

Operator: Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.

Speaker #1: Thank you. This does conclude today's teleconference. You may disconnect your line at this time. Thank you for your participation and have a great day.

Q1 2026 STAG Industrial Inc Earnings Call

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