STAG Industrial, Inc. Aktie

Greetings. Welcome to the STAG Industrial, Inc. First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to Steve Xiarhos, Vice President, Investor Relations. 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 section.

On today's call, the company's prepared remarks and answers to your questions will contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today. Examples of forward-looking statements include forecast 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. We encourage all listeners to review the more detailed discussion related to these forward-looking statements contained in the company's filings with the SEC and the definitions and reconciliations of non-GAAP measures contained in the supplemental information package available on the company's website. As a reminder, forward-looking statements represent management's estimates as of today. STAG Industrial 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 Mike Chase, our Chief Investment Officer; and Steve 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.

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. 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 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 150,000 to 250,000 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. 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 back half 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.

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%.

Subsequent to quarter end, we have signed two 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 45,000 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.

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 5x. Liquidity 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. This is a quarterly record in terms of total operating portfolio square feet leased.

Tenant demand is strongest in many industries, including air freight, logistics, retail and containers & packaging. 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. 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. 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.

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 we will continue to benefit from a strong balance sheet, ample liquidity and broad market diversification.

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

[Operator Instructions] Our first question comes from Craig Mailman with Citigroup.

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. 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? Because I know you guys are a little bit worried about that as a source of occupancy downside.

Yes. Thanks, Craig. Yes, 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. So activity is really strong. We're seeing it from multiple industries. We're getting a lot of RFPs. 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.

And then just a follow-up here. You mentioned, I think, 8 leases, 1.6 million square feet to data center supply tenants. What markets are you seeing that in predominantly? And do you think that this is concentrated in your portfolio or grows a little bit as just the proliferation of data centers takes hold?

Yes, it certainly feels like it's going to continue to grow. I mean, South Carolina, we're seeing a lot of it. We had 3 leases in South Carolina, 2 in the Greenville-Spartanburg market. Nashville, one of our -- the lease we signed in Nashville was a data center-related tenant. And then we saw some in the Midwest in Wisconsin, one lease there. 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, and that's where a lot of our portfolio is concentrated. So we anticipate further demand from data center-related tenants.

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

Yes. 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. We have some light assembly of racking of power conversion systems in one of them. One is manufacturing battery components. So it's a variety of things supporting data center developments and just the operations. And these are long-term leases. I mean the weighted average lease term is a little over 8 years and the leasing spreads we achieved on that 1.6 million square feet was about 35%. So good economics, long-term leases, strong credits backing these leases as well.

The next question comes from Michael Griffin with Evercore.

I appreciate the commentary around the leasing front. It seems like it's been a good start to the year. I realize you haven't -- 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. 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.

Yes. 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. 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. With respect to market rent growth, our guide was 0% to 2%. That will -- we're going to maintain that guidance as well at this time. 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.

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

Great. That's helpful. And then maybe for my follow-up, you're at about 80% of your 2026 leasing goal. It seems pretty good so far. I don't want to 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 '27 conversations would be helpful.

Yes. I mean it's a little -- it's obviously a little early for '27, but we do -- especially for renewals, we start those conversations typically 12 months in advance. So when you look at our '27 leasing plan, we're about 25% through that at this point, and that's pretty comparable to the last few years.

The next question comes from Nick Thillman with Baird.

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? 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 you're underwriting today and how that sort of trended over the last 90 days or so?

Yes. I'll let Mike jump in, in 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. 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 that we're going to shift materially into value add or materially into long-term stabilized leases. We'll acquire what meets our investment criteria at that time, but we'll look at everything.

Just one thing on the, call it, the acquisition side, sourcing side, and then I'll pass it over to Mike for more of the broader view is we did yesterday just acquire a piece of land adjacent to one of our buildings in Dallas, Texas. It's about -- the land is large enough to fit about a 340,000 square foot facility. 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 is going to be about $38 million at a 7.4% yield on cost. 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. So 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. So with that, I'll pass it over to Mike to share any more commentary on that.

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 on the land that we just bought yesterday. Just looking nationally, it was a strong end to '25. So Q4 came in from an investment sales perspective, came in pretty strong. That's carried over into Q1 of '26. So that stability and momentum in the capital markets has resulted in an increase in confidence from both buyers and sellers in the market. So that also resulted in an uptick of deal flow, more buyers coming to the -- coming off the sidelines and into the market. So there's been good deal flow that we've seen in Q1, and that's continuing into Q2.

Yes. I mean you see that in our pipeline, too. Our pipeline is $3.9 billion. About 70% of that is single transactions, 30% portfolios. And just on the seller side -- I mean, those end buyers 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.

That's helpful. And then, Bill, I know you've 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. 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 submarket focused and looking for a little bit more growth in end markets and underwriting that? I guess more commentary there would be helpful because it's something that we've talked about in the past.

Yes. 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. 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. 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. 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, 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 is probably on the development side. I mean, just this one in Dallas, it's a 7.4% yield. So that's our best use of capital. It's harder to acquire that land and takes longer to develop it. But we like the opportunity, and we'll do it either on balance sheet or with existing partners or with new partners.

The next question comes from Jason Belcher with Wells Fargo.

I guess, first, Q1 Same Store was pretty solid at 4.1%. The guidance was unchanged at 3%, suggesting 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?

Absolutely. So Cash Same Store 4.1% in the first quarter is very healthy. But really, what we need to do is talk about the economic impact to occupancy decline. In the first quarter, occupancy decline was only partially reflected in the Same Store number, meaning a good portion of the nonrenewals occurred near the end of the quarter. So basically, the second quarter is going to reflect the full impact of that vacancy. So put a different way, the 4.1% includes the impact of the 60 basis points of average occupancy loss, not the 120 basis points of actual occupancy loss at period end. So all of that's related to the first quarter. So the 4.1% does not account for the fact that the space is vacant for an entire quarter.

The first quarter Cash Same Store was fully anticipated. It was included in our guidance. As we said, we continue to expect Cash Same Store 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.

Great. 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?

Yes, 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 the 3. Anywhere in the 3% to 3.5% range, call it, 3.25% on average of the leases that we are signing. So again, just mathematically, that 2.9% will continue to increase.

The next question comes from Eric Borden with BMO.

Matts, 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 in the back end of the quarter. 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?

Yes, 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 what we've averaged as a public company and what you can see from any other institutional quality industrial portfolio. But 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. 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. So space that rolls vacant is in our budget to lease up next year, not this year.

If we think about the cadence, we expect the trough occupancy to occur in the second quarter with occupancy increasing during the second half of the year. And that basically squares with our view 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.

Great. 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 needs and credit duration just versus your traditional warehouse tenant?

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 5 years in their lease term, maybe because they plan to automate their facility more or whatnot. 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 excess power and some did not. 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? So these are functional buildings that can be used for multiple uses. We're just seeing an incremental demand driver from data center tenants.

The next question comes from Jessica Zheng with Green Street.

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 like multiple data centers in the area? And if not, do you know if they will be servicing the data centers operations after the construction is complete? Yes, I'm just curious about the kind of the sustainability of this new tailwind here.

Yes. 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 and some are servicing multiple data centers and some are servicing just one data center. But where are these warehouses are located, there's multiple demand drivers within those markets. I mean we have at least 2 of these data center leases in the Greenville-Spartanburg market, and we spoke about that market many times. 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. 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. There's just this incremental demand driver of data centers.

Great. 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 strength and weaknesses right now?

Yes. 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. Now Memphis is a little slower. Pittsburgh a little slower. I'd say our markets that have probably been improving the most, the Greenville-Spartanburg and Charlotte. And then if you want to move a little further to our best markets, Houston has been a great market, Nashville 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 and a lot of these markets are -- have very low vacancy rates for big box distribution. So that's your Columbus, your Louisvilles, your Indies.

The next question comes from Henry Newell with RBC Capital Markets.

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?

Yes. I mean, depending on the transaction, whether it's a -- I assume you're talking cap rates, just to clarify the question.

Yes.

Yes. So I mean, individual transactions, I mean, we just bought one transaction in Q1. We're close to putting a couple of others under LOI. I mean those are transacting at and around where we're buying assets, right? Sometimes 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. 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.

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

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

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.

Greetings, and welcome to the STAG Industrial, Inc. Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Steve Xiarhos, Vice President, Investor Relations. Thank you, sir. You may begin.

Thank you. Welcome to STAG Industrial's conference call covering the fourth quarter 2021 results. In addition to the press release distributed yesterday, we have posted an unaudited quarterly supplemental information presentation on the company's website at stagindustrial.com under the Investor Relations section.

On today's call, the company's prepared remarks and answers to your questions will contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address matters that are subject to risks and uncertainties and that may cause actual results to differ from those discussed today.

Examples of forward-looking statements include forecast FFO, same-store NOI, G&A, acquisition and disposition volumes, retention rates and other guidance, leasing prospects and collections, industry and economic trends and other matters. Encourage all listeners to review the more detailed discussion related to these forward-looking statements contained in the company's filings with the SEC and the definitions and reconciliations of non-GAAP measures contained in the supplemental information package available on the company's website.

As a reminder, forward-looking statements represent management's estimates as of today. STAG Industrial 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 Mike Chase, our Chief Investment Officer; and Steve Kimball, our Chief Operating Officer, who are available to answer questions specific to the areas of focus.

I'll now turn the call over to Bill.

Thanks, Steve. Good morning, everybody, and welcome to the fourth quarter for STAG Industrial. We are pleased to have you join us and look forward to discussing the fourth quarter and full year 2021 results. We will also provide our initial 2026 guidance.

As I look back on 2025, it was arguably one of our more successful year. [indiscernible] '26 to follow suit, driven by a record amount of square footage expiring in a calendar year for our company. I'm pleased to report that we have addressed 69% of the operating portfolio square feet we expect to lease in 2026.

We project cash leasing spreads of 18% to 20% and for 2026. This leasing success is a testament to the quality of our portfolio and a welcome sign of tenant engagement and commitment to their space. Q4 was the most active transaction quarter of 2025. This was due in part to less macro volatility, which brought sellers to the market in the second half of the year.

Acquisition volume for the fourth quarter totaled $285.9 million. This consisted of 7 buildings with cash and straight-line cap rates of 6.4% and and 7%, respectively. These buildings are 97% leased to strong credits with weighted average rental escalators of 3.5%. We Subsequent to quarter end, we acquired 1 building for $80.6 million with a 6.1% cash cap rate. This is a Class A building leads to a strong credit over 12 years.

In terms of our development platform, we have 3.5 million square feet of development activity or recent completions across 14 buildings as of the end of Q4. We of 3.5 million square feet are completed developments. These completed developments are 73% leased as of December 31.

In the fourth quarter, we commenced a new development that was identified within our existing portfolio by our operations team. The 186,000 square foot project is located southwest of Kansas City in Lenexa, Kansas. The project has an estimated delivery date of Q1 2027. The building will have the flexibility to demise into suites of 60,000 square feet or less in a market with healthy fundamentals.

We are projecting a cash yield of 7.2% on this project. Subsequent to quarter end, we executed a 78,000 square foot lease in 1 of our Charlotte development projects. to manufacturing and assembly company. The building is now 39% leased. We initially underwrote fully stabilized in the building in the first quarter of 2027.

Before I turn it over to Matts, I'm pleased to say that after year-end, we raised our dividend 4%, which is the largest rate we have had since 2014. This raises a result of many years of reducing our payout ratio and retaining as much free cash flow as possible. In addition to raising our dividend, we have modified the dividend payment cadence from monthly to quarterly going forward.

With that, I will turn it over to Matts, who will cover our remaining results and guidance for 2026.

Thank you, Bill. Good morning, everyone. Core FFO per share was $0.66 for the quarter and $2.55 for the year, representing an increase of 6.3% as compared to 2024. We Included in core for the quarter are 2 onetime items that contributed approximately $0.01 to core FFO per share.

During the quarter, we commenced 31 leases totaling 3 million square feet which generate cash and straight-line leasing spreads of 16.3% and 27.4%, respectively. This leasing activity included 5 fixed rate renewal options totaling 882,000 square feet, most of any quarter in 2025. Excluding these 5 fixed-rate leases, fourth quarter cash leasing spreads would have been 0.2%, an increase of 570 basis points.

For the year, we achieved cash and straight-line renting spreads of 24% and 38.2%, respectively. Same-store cash NOI growth was 5.4% for the quarter and 4.3% for the year. we incurred 22 basis points of cash credit loss in 2025. Retention was 75.8% for the quarter and 77.2% for a year. As mentioned by Bill, we've accomplished 69% of the square feet we currently expect to lease in 2026, achieving 20% cash leasing spreads.

Moving to capital market activity. On December 8, the company settled $157.4 million of proceeds related to forward ATM sales that occurred throughout 2020. Net debt to annualized run rate adjusted EBITDA was 5.0x at year-end with liquidity of $750 million. 2026 guidance can be found on Page 20 of our supplemental package, which is available in the Investor Relations section of our website. Same-store cash NOI growth is expected to range between 2.75% and 3.25%.

The components of our same-store cash no guidance include the following: intention to range between 70% and 80% and cash leasing spreads of 18% to 20%, average same-store occupancy for 2026 is expected to be between 96% and 97%. And consistent with previous years, basis points of credit losses included in our initial cash same-store guidance. Acquisition volume guidance is a range of $350 million to $650 million with a cash capitalization rate between 6.25% and 6.75%.

Acquisition timing will be more heavily weighted to the back end of the year. Disposition volume guidance is between $100 million and $200 million. G&A is expected to be between $53 million and $56 million. Finally, the increase in interest expense from our recent refinancing of our $300 million Term Loan G will be a $0.03 headwind to core FFO per share growth in 2026. Incorporating these components, we are initiating a core FFO per share range between $2.60 and $2.64 per share.

I will now turn it back over to Bill.

Thank you, Matts, and thank you to our team for their continued hard work and outperformance of our 2025 goals. We're excited about the opportunities that are in front of us here at STAG. And we look forward to building off this momentum in 2026.

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

[Operator Instructions] Our first question comes from Craig Mailman with the Citi.

Just kind of curious on the leasing front. I know, Bill, you said you guys aren't expecting vacancy nationally to peak until middle of the year. But just from commentary from peers and brokers, it feels like the leasing environment and velocity is picking up. So I'm just kind of curious, as you guys kind of contemplated the 100 basis points of occupancy decline, which I understand you guys have 20 million square feet rolling.

And so 25% of that nonrenewal is a fairly large amount. But I'm just kind of curious how you guys thought about the pace of backfill activity in guidance and kind of what could be the upside to that if the momentum that we're seeing coming out of 25% kind of hold and sustainable and maybe even ticks up a bit.

Yes. Thanks, Craig. I mean we had a really successful year in 2025 with leasing and exceeded, as I mentioned, most, if not all, of our budgeting metrics, including our leasing volume. If -- certainly, if that continues, there's -- we could lease product earlier in the year, and that would be upside. And the way we look at and prepare our budgets, I mean, we entered the year in 2026 at close to 98% occupancy rate.

And so when you have 20 million square feet rolling at our historical retentions, you've got a fair number of square feet that's going vacant. In our budgets in contemplated a 9- to 12-month lease-up period for those assets. There is a number of examples where we outperformed that in 2025.

Just 1 example. For example, we leased an asset in Savannah, Georgia. In '25 when vacant in the first quarter, we anticipated releasing that in the first quarter of 26%. We found a tenant released that asset with no downtime. That was in a market that at that time had 10% vacancy rates. So some other options for the tenants ultimately decided to go with our building. And that's something when we budget -- we're going to budget that, I think, prudently to lease up in 9 to 12 months, but we -- our outcome was 0 downtime.

There's several other examples I could give you on that, that happened in those scenarios could pan out in 2016. But the way we budget we try to be prudent, and we certainly don't budget 0 downtime for our assets, but there's those things happen some years and certainly happened a lot in '25, and we hope it continues in '26. And then just going back to our view on the overall industrial market.

I mean it's still pretty strong, right? I mean we have to choose through some of this supply. We think that happens peaks midway through 26 and it starts to really improve as you move through the back half of '26 and into '27. So overall, really happy with the way 2025 played out. really happy with the results coming into the year with some really high occupancy, some great trends.

We hope it continues as we move through 2016, but we try to be prudent when we budget for $26 million.

That's helpful. And then just on the acquisition front, you guys are -- came out of the gates with $81 million, but Matts had mentioned it's more heavily weighted to the back end. Could you just talk a little bit more about what you have visibility on today? And kind of anticipated timing versus what is speculative in the guidance for acquisitions?

Yes. I mean, right now, all we've disclosed is the $81 million. We typically don't disclose any LOI acquisitions or under contract acquisitions, things do fall out of LOI, they do fall out of contract. We have been underwriting more deals, frankly, this first quarter than we did last first quarter.

The momentum from Q4 has continued into the first quarter. a typical transaction year though is usually slower in the first quarter and then it starts to build as you move through the year. So we do expect first quarter to be slower, but we're underwriting more transactions now than we did in the first quarter of 2025. Our pipeline is strong. It stands at $3.6 billion.

Mike can certainly dive into the details of that, if you'd like. But overall, the transaction market is really healthy. And we're seeing some portfolios come to the market. There's just -- it seems to be pretty healthy. There's a call it pent-up seller demand that came to the market at the back half of 2025, and that has continued as we moved into 2026.

Our next question comes from Michael Griffin with Evercore ISI.

Bill, I appreciated the comments in your prepared remarks around sort of increased tenant activity. I was wondering if you could unpack that a little bit. Are these customers, potential tenants you've been monitoring that are looking around for a deal? Or are they really, I guess, closer to signing on the dotted line? And have you seen maybe more newer prospects come into the market that might have been holding off last year?

Yes. That's a good question, interesting question. beginning of last year, certainly, after liberation day, there was tenants hanging around the hoop looking into space, but it didn't feel like real demand this tenant activity is real demand. We're seeing tenants make decisions, lease space.

We obviously had a lot of successes in 2025 I'd say the demand is pretty broad-based. We're seeing it from 3PL. We're seeing it from food and beverage. I would say something that's a little newer, a little more nuances they're seeing a fair bit of demand from data center, tenants.

So those are tenants that are either supplying generators to data centers or even some light manufacturing of data centers, storing other things for data center developments we looked at our portfolio, we've got 3 million square feet leased to data center tenants. And these are 5-plus year leases to good credits.

In addition, we've got some prospects in some of our buildings for data center demand. So that's a newer demand. But with respect to overall tenant demand, it feels real. It doesn't feel like they're just kicking tires. These are tenants that need space and are looking for space. I think the the caveat to all of that is there's some supply that we need to chew through. So these tenants have options.

Our portfolio, when I say this a lot, is we buy buildings, we add buildings to our portfolio. We make sure those buildings fit the submarkets that they operate in and fit them well. And because of that, we have historically continued to maintain occupancy levels well above market occupancy levels. We expect that to continue.

We have been fortunate in 2025 to win deals when there were other options that tenants could have gone to, but we proved to be a very good landlord, and we proved to have very good product in our respective submarkets. So we hope that continues. And we just need to get through some of the supply, but the demand out there is real, and we expect absorption to increase as we move through the year.

Great. That's certainly some helpful context. And then maybe just going back to sort of the outlook for supply, maybe to unpack that a little bit more. I mean, look, it seems like if trends are improving into 2026, if you expect vacancies to decline in the back half of the year.

If others in the industry are seeing this as well, I guess, is there a worry that we could see a ramp back up in supply if the fundamental picture continues to improve? Or are there more governors or barriers to entry, whether it's elevated development cost that might preclude a overbuilding problem that we might have had a couple of years ago?

Yes. I mean I think the developers in industrial are generally prudent. We had a little bit of excess supply there. But I think really the story there was just a falloff in demand, right? So I think the supply was was okay. It was just the falloff in demand.

And as that picks back up and you start to -- you look at your crystal ball and underwrite more market rent growth, more developments pencil out, right? But I think those developments, if you've got a piece of land and you need a permit and title it and then build it, you're looking well into '27 before any of these things come online, right? So there's a window here where it's going to fly up. And when it starts to flip, I think it's going to flip pretty quickly in the landlord's favor here.

So with respect to new supply coming online and being a concern, I'm not concerned about our team is not concerned about. And if that supply comes back on, it's going to come back on, I think, prudently. And I think middle to late '27 or even later than that.

Our next question comes from Nick Thillman with Baird.

Bill, I just want to make sure you and Matts are on talking terms after Sunday, but we can move on to some other things. just overall, I understand there's a new organic growth story with STAG. And you had mentioned in your prior conversations looking to maybe improve on that growth rate by potentially looking to do some more strategic exits of the nutra markets that might cause some like near-term dilution would enhance the longer-term growth rate.

I guess, has there been any changes in that conversation or any recent developments on the thought process there? And is any of that baked into some of the disposition guidance that is included in 2026?

Yes. I would say it's not a material shift to what we've been executing on in the past 5 years, right? There's -- every year, there's some noncore assets we disposed of in every year, there's some opportunistic dispositions generally, we can -- we have a sense of the noncore dispositions to start the year.

We don't really have a sense of the opportunistic because oftentimes, those are reverse inquiries that come in, and we had 2 of those in 2025, 2 assets, 1 was in the first quarter, 1 was in the fourth quarter where -- and there were assets that went vacant and we love the leasing prospects and we were planning on holding those assets and leasing them up, and we got -- we sold both of those assets at what a market rate would be -- market cap rate would be -- market rent would be, and those were sold at a 4.9% cap -- so just great execution from the team, but users wanted the space and they didn't want to lease it. So great execution.

So we anticipate having some -- hopefully having some of those this year. But right now, the plan is -- what's in our guide is just some noncore dispositions, but nothing in excess of past years. I think reflecting back on our conversation, Nick, that's just when you look at the map of STAG's portfolio, there might be 1 asset in a market. And if we don't feel like we can grow into that market over time, that's an asset that we'll opportunistically dispose of, just to be a little bit more efficient on the operating side. but that's on the margin and not really that impactful to the numbers.

Very helpful. And then maybe just appetite to hold land on the balance sheet for development opportunities, understanding that that's a growing part of the business. And most of your development opportunities have been with JV partners, but just appetite on growing the land bank.

Yes, certainly not part of our 2026 plan, something that's part of our long-term development plan. We're going to step our way into that. Right now, we've got a fair amount of development. I'm very happy with how the development initiative has progressed the results we're seeing.

It's great to see that lease get signed in our Concord development. There are some good opportunities that we're looking at now with some other potential leasing on the development side. And with respect to newer development opportunities, hopefully, there are some things we can announce in the near future on that.

And then when you start to think about longer-term view of markets, the land is not in our plan, as I mentioned -- holding land right now is not in our plan for '26, but we are looking -- it's early days, but looking into some phase developments that may be an opportunity to -- for us to have a, call it, quasi land position. But we're looking at a lot of those things as we grow this platform.

Our next question comes from Blaine Heck with Wells Fargo.

Can you just talk about how you're thinking about your overall cost of capital today and the spread between your cost of debt or maybe more importantly, cost of equity in your required returns on investment?

Blaine, this is Matt. So cost of debt is pretty easy. If we were to go to the private placement market where you historically have been in short spread there anywhere between 140 and 150 basis points over -- if we go to the public bond market, which we have been evaluated and have discussed on these calls, after our inaugural issuance, we would likely -- we've been pulled receive a 25 to 30 basis point pricing benefit.

So if we think about today in the market in which we are currently operating in, it's call it 5.5% to 5.75% depending on tenor, cost equity, you can do that in many different ways from an implied cap rate basis using 1 of our sell-side analysts, rubric, we're in the low 6s. But what is important is we are retaining, and Bill mentioned in his prepared remarks, we're getting north of $100 million of cash flows after dividends as well.

So a different way to kind of go through the funding for 2016, if you look at the net acquisitions of $350 million, and that's obviously gross acquisitions less dispositions factor in the $100 million plus of retained earnings. We have the ability to operate this business plan without accessing the equity capital markets.

Our labor to be right in the midpoint of our range. Right now, we're at 5x levered. We operate this business plan for 26% at the midpoint, we'd be a 5.25 leverage.

Great. That's helpful color, Matts. Second question, you guys commented on the fixed rate renewals weighing on spreads during the fourth quarter. Can you just tell us what percentage of your leases have those fixed rate renewals incorporated in their terms and whether there are any chunky ones that we should be aware of in the coming quarters?

Yes, it's single digits. Usually, we don't even call that out playing. We just called it out in the fourth quarter because it looked like spreads were were moderating in Q4, but it was really due to that. So every year, there's a few fixed renewal options, a handful and they're just spread out throughout the year. So it's just part of our leasing plan. But because it was concentrated in the fourth quarter, that's why we called it out.

So it's single digits, and they're laddered, but the good thing is as you get through these, you work these off, it's not like there's unlimited fixed renewal options. Generally, there's one, and then you get through it and then you're just pushing out the mark-to-market opportunity. Our next question comes from Vince Lombardi with Green Street. How should we think about potential development starts in 2016? And kind of what is your appetite to start new spec projects this year.

Is it dependent on leasing current projects or just on a deal-by-deal basis. Curious how you're thinking about that and the amount that's maybe reasonable this year? Yes. Vince, I mean, given where our development portfolio sits today, we're very eager to start some new spec projects, right, especially given our outlook on the industrial market in the back half of 2016 and into 27, right? It's just -- we view it as a great time to start some projects.

So for us, it's just whether we can source more. We think we can. This year, we're a little over $100 million of kind of new projects sourced. I think that's our -- that is what we have planned for this year. Hopefully, we can we can exceed that. No, it's not going to come in day 1, right? It's going to come in throughout the year. But it's something that -- it's an initiative that I feel strongly that we continue to build on.

The team feels strongly we can continue to build on it, and we think it's something that we will be able to build on. But with respect to starting a new spec project today, very happy to do that, assuming the returns pencil out.

No, makes sense. Helpful. Helpful color. And maybe just switching gears. Could you talk a little bit broadly about kind of the concession environment in your markets? Like particularly free rent? Do you feel the free rent levels or TIs have really stabilized across the market among private players with some more vacancy potentially.

Some of your peers have called that out the near-term growth, it doesn't look like that's an issue for your same-store guide, I just love to hear color on kind of free rent trends and concessions in your market.

Yes. We think they're very stable. They've been stable really since beginning at '25. But there are instances in markets, in our markets where you'll have a private landlord. I don't see -- I don't see it really with the public peers, but you have a private landlord that has been sitting on an asset and just saying, you know what, I'm going to buy this deal, and I'm going to give them whatever they need, and I'm going to give them a bunch of free rent and that is at market, right?

I mean, if you've got 5 buildings that are competing against 10 1s willing to just give a ton of free rent and concessions. The other 4 are not. So generally, what we're seeing in a market that has vacancy rates 5% to 10%, you're seeing a half a month of free rent per year right now, but that's been stable since '25. With respect to TIs, we haven't seen a material change in TIs. What you do see sometimes is, okay, tenant wanting additional dock doors, if there isn't maybe LED lighting, generally, our buildings have that.

But if there isn't something like that, where it's more of a building upgrade, they may ask for that. In those situations, you're seeing landlords in the market, and we would be willing to do it, too, to put that capital in the building. But that's -- I don't view that as much as TI as it is like putting capital in your building, making your building more marketable and frankly, more valuable, much different than a tenant-specific TI. So I haven't seen a big uptick in tenant-specific TI packages, which are -- which is what we really view as concessions.

Our next question comes from Mike Mueller with JPMorgan.

Just a quick one. What's your '26 guide for development leasing?

Sorry, I missed that, Mike. What was that again? .

Yes, sorry. Let's take into your 2 scout for developing.

Yes. Mike, it's Steve Kimball here. We've guided for 957,000 square feet of leasing. And we've -- 1 of those is a build-to-suit that's in those numbers. we -- and Bill mentioned the Charlotte lease that was done after the quarter. So we'd have after those 2, we'd be left with 530,000 square feet of leasing. They're about 0.5 million square feet of leasing that we have projected to do in 2026.

Our next question comes from Brendan Lynch with Barclays.

Bill, maybe you could just walk through your markets and highlight which ones are particularly strong right now, which ones are lagging?

Yes. So we're seeing some really good demand in the Midwest markets. I mean -- similar to the last couple of quarters, Minneapolis remains strong, Chicago, Milwaukee, but what we've seen really in the past, I would say, 4 months is an increase in demand in some of the big bulk Midwest distribution markets, Indianapolis being 1 of them and Louisville is really strong. .

Columbus has strengthened with a lot of bulk distribution leases getting done there. Southeast has been pretty strong. I would say the -- on the other side of it, where we're seeing a little bit more weakness, it's some of the southeast port markets, frankly, it's Jacksonville, Savannah, Charleston, seeing some weakness there.

And then -- but then when you think about going down -- continuing down, you go around to Texas, Houston is really strong. Dallas is really strong. So overall, I mean, some good fundamentals, but seeing some weakness in those Southeast port markets.

Okay. Great. That's helpful. And I believe you've suggested in the past that market rent growth would be kind of 0% to 2% throughout 2026. With that context in mind, with those markets that are particularly strong, -- how much are we seeing those stronger markets deviate from that 0% to 2% average?

Yes. I don't have all the numbers right in front of me, but I would say, generally, it's a pretty tight band because you are still -- you still have some vacancy in those markets. So you're getting a couple mark the rent growth in some of those stronger markets. But like, for example, in indoor Columbus that has really strengthened lately, I don't think you're seeing a 3% rent growth there. But in Minneapolis and Milwaukee and Chicago, you might be seeing it there. And then on the other side, it's closer to that 0% to 1%.

Okay. So it's the demand that it's mostly coming through as absorption rather than pushing rents more aggressively?

Yes. I think what you're seeing -- you're going to see the rent growth really start to accelerate as you move into that dynamic is, I think why you're seeing some -- and what we're seeing, I think others are, too, is there are larger, more sophisticated tenants coming to us well in advance to try to renew their leases to try to get ahead of some of the market rent growth that is likely to come. .

Our next question comes from John Kim with BMO Capital Markets.

You've had a healthy leasing activity recently. I'm wondering if you could provide the leasing executed or signed during the quarter. And in particular, the volume versus the 3.5 million square foot average that you had last year and the lease spreads compared to your 18% to 20% guidance?

Lot there, John. I don't have the executed leases in front of me. But we with respect to what we're budgeting for this year, I think we're budgeting almost $18 million square feet of leasing for 2026. So it will be our largest just absolute square footage of leasing for the year.

So I don't -- when you look at our leasing spreads of 18% to 20%, what the stuff just from recollection, right, we see these leases getting signed, and we get notified of everything there's nothing that I see that's kind of a big deviation 1 way or the other with respect to those spreads. You might see something a little bit lower because the lease was a little closer to market or something a little bit higher because the lease was a little bit below market. But it's not like we're seeing a trend 1 way or the other. And rent bumps are holding up and we're signing rent bumps in the 3% to 3.5% range.

But just following up on that, I mean, if you expect 18 million square feet of leasing, that's almost 30% more than what you did last year, yet you're expecting occupancy to go down. So is this a lot of early renewals? Or I'm just trying to marry the activity versus the guidance.

Yes, it's because we had so much square feet rolling, that's the biggest, right? So we had initially a little over 20 million square feet rolling. And so when you have that and you've got your, call it, 75% retention rate and these leases roll throughout the year. So we budget typically a 9- to 12-month lease-up time for these. So if they roll halfway through the year and it's a nonrenewal and just the absolute square footage a little higher, but we're budgeting that at least is going to be released in '27, right?

So that's -- our occupancy guide is average. So if you -- that's what's impacting it, especially another example, if you have a nonrenewal happening March 31, a and that's going to be vacancy for 9 months of the year, right, because we're budgeting that to lease up in '27.

Now maybe there's some some -- maybe we leased up earlier. We certainly had several of those examples in 2025. I gave 1 earlier on this call. But our budget is that, that will lease up in 2017. So it really is -- it's a factor of having a large amount of square feet rolling in 2026, offset by high occupancy coming into '26. So if our occupancy was lower, there's more opportunity to backfill some of that nonrenewal. And it was just an interesting dynamic that happened in 2016, declared by your renewal High occupancy numbers, good leasing spreads, really great year some great tailwinds with respect to development.

We're seeing some good acquisition activity. I mean, I was just thrilled with how '25 went in. '26 other than some of this occupancy loss is shaping up to be -- I'm really happy with the projections that we're putting out.

And a similar renewal rates than what you've achieved in prior years.

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

Our next question comes from RichAnderson with Cantor Fitzgerald.

So just looking back, start the year last year, your same-store guidance was 3.5% to 4%. You easily beat that at 4.3%. You're starting this year at 3%, not to belabor the 20 million square feet rolling in 2026 and the 75% retention. But if you beat that retention, obviously, that's the main driver to beating your 3% same-store guidance, I assume, and you can answer that, let me just finish the thought.

Do you have a line of sight into some clarity that 25% is not going to renew? Or is that just kind of going off of your history? Do you already have a sense of that vacancy level? Just curious if you can respond to that.

Yes. So I'll answer the second question first. We have line of sight for a lot of our renewal -- or a lot of our lease expirations in the first half of the year. So there's certainly lease expirations in the back half of the year that we're saying, hey, these 3 are going to renew, and this 1 is going to vacate, right? That's how we build our budget, right? In the back half of the year, it's not -- we're not certain with what's going to happen. But our team is close to our tenants.

We have a sense. We're usually within 5% of our retention guidance every year. So -- but some of it is speculative. And with respect to outperformance or potential outperformance on same store, it's not just for pension and retention is a factor, right? If that goes up to 80% or 83%, yes, that will help same-store because you're not incurring any downtime on that additional 5% to 8%. But really, it's -- we have lease-up projections that are the new leasing is really heavily weighted to the back half of the year. S

o I think we've got about $3 million budgeted for new leasing, most of which is expected to occur in the back half of the year. So if that leasing occurred sooner, that would be a benefit to same-store NOI. The other factor to same-store NOI. I mean, really, the other components are leasing spreads. We have pretty good insight to that and bumps and leases, we've got pretty good insight to that, but the last factor is credit loss, right?

We're budgeting 50 basis points of credit loss this year in our same-store pool. Last year, we budgeted $75 million, and we achieved -- we don't achieve this the right word. We realized 20 basis points -- so there is an incremental 30 basis points that we are budgeting for 2026.

No new tenants on the watch list. It's more of a broad-based budget. It's not like we've allocated that specifically to 1 tenant like we did last year with some of our credit loss budget. So that's the other factor that could move same-store 1 way or the other.

Okay. Great color. You mentioned early in the call, delivery is down 35% versus 2024. And I think you mentioned 180 million square feet deliveries. What would that equate to in terms of a draft downward versus 2025? And where do you think this all settles next year in terms of deliveries because to -- in response to an earlier question, perhaps there'll be a reignite reignited development activity, maybe, we'll see.

But I'm just curious, what's the cadence of things to 2027 as you see it right now from a delivery standpoint?

Yes, I'll let Steve jump in on this 1 to kick it off.

Yes. So I appreciate the question. We're looking at new deliveries in 2025 of about 225 million square feet, obviously, well down from previous years. And when you go forward to 2026, as you mentioned in our remarks, we're looking at about 180 million square feet. We think of a stabilized market, more 250 million to 300 million square feet of deliveries. So deliveries are going to be well below the average at the $180 million.

And I think they start to tick back up in 2027 to some of the questions that came earlier in the call about -- is there going to be a little more activity about -- around the development world and a little more interest in going spec. And I think that's probably the case. So we probably moved back up into the million the 200-plus million square feet in 2027. But I don't think there'll be a big increase to the numbers that we saw a few years ago.

And then the build-to-suit component of that, like 40% this year.

It's moved up from 30% to the 40%, but that's not abnormal right.

Okay. And last for me, and this is something I think I'm trying to will to happen, but you mentioned the 7,000, 8,000 square foot manufacturing-oriented lease in the first quarter. Can you sort of describe that? Is that a supplier that real manufacturing? Is it -- is there any kind of power issues? Just generally, I mean, we talk a lot about your markets and being a beneficiary of onshoring and so on.

You get this question a lot, I'm sure. But I'm just wondering if there's any glimmer of manufacturing happening in your markets to a greater degree and how that might play a role longer term for STAG.

Yes, I'll let Steve answer it. And nice job sneaking in that third question there, Rich. It's late in the call. I figure the last one. You're not the last one.

I want to really appreciate the question. We do have a balance of demand, particularly in our development markets where we have a balance between distribution and manufacturing. And we saw that in Nashville, where half our building leased up to distribution, the other half of the manufacturing and that's boded well for the development pipeline.

The lease we talked about for 78,000 square feet in the Charlotte market that we just didn't that is -- they have a larger manufacturing facility that's in the submarket and they need -- and that manufacturing is growing. And it's more around automotive, but specialty automotive and government uses. And so yes, it is manufacturing related. We are seeing it grow in that market, and we are seeing it elsewhere.

And I just want to characterize the manufacturing. It's really just light manufacturing, yes.

Yes. So that's a good point. So a lot of what we're seeing is the heavy manufacturing is doing well -- these are relief valves in some case where they need to either store the raw materials or do some light assembly that is tertiary a part of their core business.

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

Our next question is from Michael Carroll with RBC Capital Markets. .

Bill, I wanted to turn back to some of your comments on the acquisition market. I guess, throughout the call, do I hear you correctly that you're seeing more deals to come across your desk right now? And if so, what is driving that increased activity? Or are there just more sellers coming back to the market? Or is Stag doing something differently going forward?

No, it's really sellers. And we saw that in the back half of $25 million everything just came to a halt a bit at the beginning of the year last year, really from April to July. So a lot of sellers come back to the market in the back half of -- that was 1 of the reasons why we had such a successful acquisition quarter in Q4 '25. And those sellers are still in the market.

And we're seeing a lot more portfolios start to come to market, even even whispers of portfolios coming to market, we're just evaluating more transactions. So really nothing that we're doing, just more opportunities that are in the market today.

And then how competitive are these deals? I mean, I guess, who are you competing with? And has that changed? And mean just looking at your acquisition cap rate guidance, I mean, 2026 is really in line with 2025. So is kind of those cap rates kind of holding steady where they were last year?

Yes. I mean depending on the product, I mean you can see -- you're seeing some cap rates compress. For us, and when we look at deals, one of the first things -- first thing is does this building fit the submarket it operates in, right, and it checks that box.

And we need to make sure these deals are accretive to our portfolio and to earnings. And -- so for us, our cap rate guidance is a little bit of a function of our cost of capital. So we bid to where we can buy deals accretively and if we don't get a deal, we're okay with that. So that's a little bit. When you think about market color, yes, we saw -- we're seeing a little bit of cap rate compression.

We're certainly seeing portfolio premiums are out there. But I would say, yes, probably similar to '25 pricing, maybe slightly lower with respect to market. But because we operate in the CBRE Tier 1 markets, there's a lot of opportunities, and we can cast a pretty wide net. So we're looking at so many opportunities and we're able to pick off the ones that fit the submarkets well, but are also accretive to our portfolio.

We have reached the end of our question-and-answer session, which means that there are no further questions at this time. I would now like to turn the floor back over to Bill Crooker for closing comments.

Yes. Thanks, everybody, again for for joining the call and then asking the questions. We look forward to another great year. I certainly really proud of the results we put forth in 2025, and we'll see you all soon at the upcoming conferences.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Greetings, and welcome to the STAG Industrial Third Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the call over to your host, Steve Xiarhos, Vice President, Investor Relations. Thank you. You may begin.

Thank you. Welcome to STAG Industrial's conference call covering the third quarter 2025 results. In addition to the press release distributed yesterday, we have posted an unaudited quarterly supplemental information presentation on the company's website at www.stagindustrial.com, under the Investor Relations section.

On today's call, the company's prepared remarks and answers to your questions will contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address matters that are subject to risks and uncertainties and may cause actual results to differ from those discussed today. Examples of forward-looking statements include forecast 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. We encourage all listeners to review the more detailed discussion related to these forward-looking statements contained in the company's filings with the SEC and the definitions and reconciliations of non-GAAP measures contained in the supplemental information package available on the company's website.

As a reminder, forward-looking statements represent management's estimates as of today. STAG Industrial assumes no obligation to update any forward-looking statements.

On today's call, you'll hear from Bill Crooker, our Chief Executive Officer; and Matts Pinard, our Chief Financial Officer. Also here with us today are Mike Chase, our Chief Investment Officer; and Steve 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.

Thank you, Steve. Good morning, everybody, and welcome to the third quarter earnings call for STAG Industrial. We're pleased to have you join us and look forward to telling you about the third quarter 2025 results.

Our year-to-date results continue to exceed internal projections. The outperformance year-to-date has allowed us to increase our core FFO guidance for the year to a range of $2.52 to $2.54 per share, a $0.03 increase at the midpoint.

Industrial fundamentals remain stable and are improving. Leasing demand is improving with increased tours and RFPs. However, lease gestation periods remain elongated.

Supply pipeline continues to decrease, and we are forecasting further decreases next year. While we expect national vacancy rates to be in and around 7% for the next 2 to 3 quarters, we anticipate those will improve materially in the back half of next year. Based on this, we believe our market rent growth for next year to be similar to the 2% market rent growth expected for 2025.

We have accomplished 99% of our forecasted leasing for 2025 at levels consistent with our initial guidance, including cash leasing spreads of approximately 24%.

Turning to next year, 2026 represents a record amount of square footage expiring in a calendar year for our company. I'm pleased to report that we have addressed approximately 52% of the operating portfolio square feet we expect to lease in 2026. This compares to 38% at the same time last year. We expect cash leasing spreads to be between 18% and 20% for 2026. This leasing success is a testament to the quality of our portfolio and a welcome sign of tenant engagement and commitment to their space.

We've seen an increase in acquisition opportunities in the market. specifically with sellers eager to close by year-end. Acquisition volume for the third quarter totaled $101.5 million. This consisted of 2 buildings with cash and straight-line cap rates of 6.6% and 7.2%, respectively. Subsequent to quarter end, we acquired one building for $49.2 million with a 6.5% cash cap rate. In addition to the $212 million of stabilized acquisitions we have closed so far this year, we have $153 million more under agreement and slated to close before year-end.

In terms of our development platform, we have 3.4 million square feet of development activity or recent completions across 13 buildings as of the end of Q3. 52% of this 3.4 million square feet are completed developments. These completed developments are 83% leased as of September 30. This includes a full building lease totaling 244,000 square feet, which commenced in Greer, South Carolina on September 1, with 3.75% annual rent escalations.

Subsequent to quarter end, we leased the remaining 91,000 square feet in our Nashville development. This project is now 100% leased with a cash stabilized yield of 9.3%. We stabilized this transaction 210 basis points higher than our initial underwriting and 6 months ahead of schedule. Including this transaction, our completed developments are currently 88% leased. I'm happy to announce a recently signed build-to-suit project on a fully entitled 40-acre parcel of land located in Union Ohio. We will develop a Class A 349,000 square foot warehouse with our development partner. The building is scheduled to be completed in Q3 2026. Upon completion, the building will be fully leased for 10 years with 3.25% annual lease escalations to a strong credit tenant. The project is estimated to cost $34.6 million and is expected to have a stabilized yield of 7%.

With that, I will turn it over to Matts who will cover our remaining results and updates to guidance.

Thank you, Bill, and good morning, everyone. Core FFO per share was $0.65 for the quarter, an increase of 8.3% as compared to last year. During the quarter, we commenced 22 leases totaling 2.2 million square feet, which generated cash and straight-line leasing spreads of 27.2% and 40.6%, respectively.

Additionally, executed leasing activity accelerated from 4.1 million square feet leased in the second quarter to 5.9 million square feet leased in the third quarter. 2025 is on track to be a record year in terms of leasing volume. Retention for the quarter was 63.4% and 78% for the year through September 30. We have accomplished 98.7% of the operating portfolio square feet we expected -- we currently expect to lease in 2025, achieving 23.9% cash leasing spreads, demonstrating the strength of our portfolio. As mentioned by Bill, we have accomplished 52% of the square feet we currently expect to lease in 20.6%, achieving 21.8% cash leasing spreads.

Same-store cash NOI grew 3.9% for the quarter and has grown 3.5% year-to-date. Included in the same-store cash NOIs, 22 basis points of cash credit loss incurred this year as of yesterday.

Moving to capital market activity. On September 15, we refinanced the $300 million Term Loan G, which was scheduled to mature in February 2026. It now matures March 15, 2030, with one 1-year extension option. The terminal impairs an aggregate fixed interest rate inclusive of interest rate swaps of 1.7% until February 5, 2026, and will then ran aggregate fixed interest rate, inclusive of interest rate swaps at 3.94% from February 5, 2026, through initial maturity.

Leverage remains low with net debt to annualized run rate adjusted EBITDA equal to 5.1x with liquidity of $904 million at quarter end.

As for guidance, we have made the following updates. We have decreased and narrowed the range of expected acquisition volume to range to $350 million to $500 million. As a reminder, the impact of external acquisition volume has always been heavily weighted to the end of the year and has a minimal impact on our core FFO guidance.

G&A expectations for the year have been reduced to a range of $51 million to $52 million, a decrease of $1 million at the midpoint. Cash same-store guidance has been increased to a range of 4% to 4.25% for the year, an increase of 25 basis points at the midpoint. These guidance changes contributed to a revised core FFO guidance range of $2.52 to $2.54 per share, an increase of $0.03 at the midpoint.

I will now turn it back over to Bill.

Thank you, Matts, and thank you to our team for their continued hard work and achievement towards our 2025 goals. We're excited about the opportunities that are in front of us here at STAG. Activity is improving across all aspects of our platform, including acquisitions, operations and development. These areas will all be key contributors to the future growth of STAG.

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

[Operator Instructions] Our first question comes from the line of Craig Mailman with Citi.

Bill, the progress on '26 here is really good, puts you guys in a good spot for next year. I'm just kind of curious, is it tenants coming to you -- could you just talk about what is driving that, I guess? Is there a higher weighting of those maturities kind of skewed towards the first half? And so you're just in that window of tenants kind of looking to get that done? Or are people coming to you early? I just kind of want a little bit more color on what's driving that. And is it -- like what's the breakout of renewals versus kind of new leasing or backfills of vacated lease expirations?

Yes. Thanks, Craig. I'll just answer the second part first. The breakout between renewals and, call it, new leasing, about 95% of that number is renewals, which makes sense just given where we are in the calendar, so 5% is renewals. And then with respect to, are they coming to us, we go to them? It really is -- it's a blend, right? We've been a little bit more proactive with our tenants, just given the larger than normal lease expirations we have in 2026. So we've been proactive. Our team has been proactive.

But then also, we've had our larger sophisticated tenants reach out to us and engage earlier than normal because I think a couple of factors. One, they like their space, they view themselves in their space for long term and they wanted to lock it up because in some instances, they have a large investment in that space. And that skews a little bit more to the bigger suite sizes. So next year, we had 5 or 6 large lease expirations, so call it anything over 400,000 square feet. So of those, we've addressed all of them except for one, which we're in active negotiations with. So that was a little bit of a different dynamic in '26 than we've had in previous years. So that also impacted the 52% versus prior year's circa 38%.

And you guys -- you talked about the build-to-suit in Ohio. You guys got Greenville done, you got Nashville done. I mean is this -- I know that everyone and you guys included in talking about sort of a thawing of the tenant decision-making. I mean is it people just feeling more comfortable, putting capital out the door? Or is there a bit of fomo in some of your markets where you don't have as much new supply as kind of where it's top heavy in a couple of markets in the U.S.? And so some things have been taken off the table and now people are rushing to make sure they secure a spot? Like can you talk a little bit about the dynamics across some of your markets and maybe point out some of the really -- kind of your best and maybe still slowest market in terms of activity?

You're good, Craig. I think that was 6 questions in one. But I'll do my best to try to address all. I'll try to address as much as I can there. With respect to our markets and developments, we haven't had the volatility that they call it the top 5 markets in the U.S. have with respect to vacancy. So our vacancy rates have held in there. Our occupancy rates in those markets have held in there a little bit better than others. So that's been beneficial to us and you can collaborate that through any third-party industry report.

Is there fomo for developing in our markets? I think to some degree, you can say that. We're certainly having a lot of success in our development platform. I've said in the past several quarters, our best use of capital than was incremental deployment of capital was developments. Really happy with the way that initiative is playing out.

And then if you think about what our messaging has been in the last 2 quarters, it's been this degree of uncertainty in the market. And our messaging now is the stability in the market. So it really has been a pretty big shift as we move into the last quarter of the year here. And that's a great thing. And we knew this was going to start the comp.

Now we see stability. But as I mentioned in prepared remarks, looking at industry reports, vacancy rates nationally around 7%. I think our numbers maybe high 6s. When does that really start to tick down and you can drive some additional market rent growth? It's probably another 2, 3 quarters. But overall, we feel really good about where our portfolio sits with respect to the markets they're in. Maybe I got 4 out of 6 there. I tried, Craig.

Our next question comes from the line of Nick Thillman with Baird.

Maybe talking on the '26 leasing and the progress there, just the sustainability of these spreads in the mid-20 is a little bit higher. You mentioned sort of the 4 large renewals. If we just look at the expiration schedule, it looks like the rents expiring here around 15% below where they were at the beginning of this year. So just curious on what we're thinking for spreads for the remainder of the expirations.

Yes. Thanks, Nick. And as I said in my prepared remarks, we're guiding to 18% to 20% cash leasing spreads for next year. And if you look at where they were a few years ago, I think 30 and then went to 24 this year, and 18 to 20 next year. And if you look at where our mark-to-market has been in those years, it's similar to what our escalators have been. So you haven't been driving additional mark-to-market opportunities. So naturally, that similar type of degradation and spreads that will happen.

And then with respect to next year and those large tenants, what we've done, those tenants early renewed, as I mentioned earlier to Craig, much ahead of time. But when you think about the spreads, what we've signed to date and what we're guiding to next year, there's a little bit of a difference there. And we usually don't get too much into the fixed renewal options, but they're part of our portfolio every year. So the remaining 48% of incremental leasing next year, almost all of our fixed renewals are in that number, which is why the spreads are a little bit lower for the remaining non-leased asset plan for next year.

No, that's very helpful. And then just on maybe Matts, on occupancy, you had a little bit of a headwind this year. As we think of building blocks for '26, good progress on the leasing. How are we feeling about sort of portfolio occupancy or potentially even growing that in the same-store pool next year?

Yes. Nick, I think as we sit here in October, we're going to provide 2026 guidance in February. So I don't think that we're prepared to start walking down the list of what guidance is going to be next year. I think Bill gave a lot of the color in terms of the change from maybe a little bit of instability in the first half of the year into the third quarter to a much more stable environment now. Again, I just pointed the fact that we did the 52% of what we expect to do last year, which is north of 10% higher than what we normally are at this point during the calendar year.

I had to try my best, Matts...

It was very obvious.

Our next question comes from the line of Eric Borden with BMO Capital Markets.

Bill, can you just talk a little bit about your appetite to lean into developments here, just given the improving demand environment and the potential for vacancy inflection in the back half of '26? Is there -- how are you feeling about potentially leaning into developments to get ahead or time up the deliveries with the improving landscape?

Yes. We're bullish on development. We're trying to sign up the right developments. We obviously are very careful with our underwriting, and we still want to achieve at least that 7% going in yield. We're really happy with the Ohio deal -- Ohio build-to-suit deal we signed up and that we signed up at a 7% yield to a very strong credit. So happy there.

There's -- we're working on some others. We're trying to get more internal developments done as well as some additional partner developments. And as we sign those up, we'll announce those. So it's certainly a great use of our capital. The market is stable now and looks to be improving and certainly in the back half of next year. But what -- one other change in terms of deploying capital, we're seeing a great opportunity to deploy capital on acquisitions right now, which is not what we saw earlier this year. So if you look at where we are from an acquisition, we did lower the top end of our guidance. But we've closed $212 million to date. We've got another $150 million under contract NOI. So to get to our midpoint, we need to sign up another, call it, $60 million between now and Thanksgiving. And we're underwriting a lot of deals. We're evaluating a lot of deals on a weekly basis. So we're hopeful that we can get to that midpoint this year. So that's been a pretty nice change that we've seen over the past couple of quarters.

I appreciate that. Just one on the guidance. You raised it -- raised guidance $0.03 at the midpoint, but it implies a sequential deceleration from the third quarter to the fourth quarter. Maybe could you just talk about some of the offsetting factors in the fourth quarter that are driving that sequential drag?

Yes, absolutely. I'd say the easiest thing to point to here is credit loss. We've been outperforming our credit loss guidance, but we're not through the rest of the year. So we do have some credit loss baked in on a specular basis for the remainder of the year, to the extent we outperform that. Again, these are unforeseen, just call it, more of a modeling number, we would be at the higher end.

Yes, you as at the midpoint, I assume, right?

Yes. That's right.

I think it depends on where we fall within that core range.

Our next question comes from the line of Blaine Heck with Wells Fargo.

Just following up on acquisitions, Bill, can you talk about what might have changed over the last 90 days to kind of pull back on your forecast, if there was anything specific that you noticed? And then this is probably difficult to forecast now. But given the trends you're seeing today that you just alluded to, how do you feel about your ability to make up for this 2025 decrease in 2026 and show a more significant increase in activity year-over-year?

That's a good one, Blaine. As Matts said, I think we'll handle all the remaining 2026 guidance in February. But certainly, if you look at the cadence throughout this year has been accelerating into year-end, what dynamics have changed? You've got a couple of things. You've got interest rates that have been stable. I think just a macroeconomic environment that's a little bit more stable.

And you've got some seller pent-up demand. So I think the spreads are -- the ask price is a little bit more reasonable. If you look at what happened last year, there was not a lot of transactions trading in the market compared to historical norms. This year, you had all the uncertainty as you move through the year.

And then lastly, with the stability that's in the market, you have a lot of sellers that want to get their deals done by year-end. So when you look at somebody like us who have a really strong reputation in closing deals and closing deals in a pretty short period of time. We're the preferred buyer in a lot of these instances and some of them were not the high bidder. There's a preference to close by year-end. So that's another driver in terms of giving us some confidence with our Q4 transactions. But I don't know if there's -- Mike, I don't know if there's anything else that you're seeing.

No. I mean, I think you hit on it. The end of Q3, we started seeing a significant increase in deals come into the market, particularly ones that wanted to close year-end. And as you said, Bill, on those deals, surety of closure is almost as important as pricing and STAG has a great reputation for surety of close. So we're seeing a lot of deals, and we're cautiously optimistic that we'll have a good Q4 here.

Yes. And we expected a lot of deals to come to market post Labor Day after the summer slowdown and the other uncertainty to happen this year. And that's exactly what we saw.

Okay. That's helpful and makes a lot of sense. Just shifting gears to leasing. Can you talk about any leases you've signed that are directly or indirectly related to manufacturing projects of near-shoring and off-shoring and any markets that you think are particularly well positioned in your portfolio to benefit from some of those trends?

Yes. I mean from the markets that are going to benefit from those trends, it's a lot of the markets we operate, right? It's what we've said before. It's Midwest, it's Southeast, and we signed that lease last year. What was earlier this year, everything is kind of blending together. But that was a direct onshoring lease. It was a building that was a local distribution -- regional distribution building that ultimately became a supplier building to a wood flooring manufacturing company that brought their operations onshore to be closer to the consumer. So we're certainly benefiting from that.

There's a couple of leases that we've signed this year that are related to solar manufacturing plants. There are some leases that we've signed that they -- one lease we've signed, actually manufacturers generators for data centers, so not just staging for data centers, but generators for that. So that was a lease that we're benefiting from in our markets that maybe does not have the same demand drivers in other markets.

Our next question comes from the line of Vince Tibone with Green Street.

For the near-term acquisitions you're looking at, are you considering any value-add deals that will require lease-up or focus more on stabilized assets? Just curious kind of where you find the best opportunity today and if there's any greater opportunities from some for sellers with some spec projects that have not gone according to their underwriting, kind of hitting the market and allowing for any interesting opportunities for yourself?

Yes. We're seeing some of them. I would say we're not seeing a lot of value-add deals come to market or at least the ones that we have a desktop review. We're not penciling the pricing out. So we don't -- they don't even make it to the full underwriting stage.

Well, we will absolutely evaluate those transactions, right? I mean it's what we do, right? We build buildings, we buy buildings, we lease buildings. So if there is a developer that wants to take some chips off the table and as a vacant asset that they don't want to try to lease or that's not their core business, we'll absolutely take a look at that transaction and put a bit to price that. But we're not seeing a lot of those. I think what we're seeing now is probably a little bit more skewed to 3, 5 and kind of longer lease term transactions. And part of it is the ones we are seeing, like I said, just don't pass that even initial desktop review with respect to where we would price those assets.

No, that's helpful color. Maybe just switching gears for a second. Just on the updated same-store guide for the year, it looks like it's implying decent acceleration in the fourth quarter. If you could just talk about kind of what's driving that? Are you expecting any sequential occupancy gains in the fourth quarter kind of what else may be at play that kind of gets things like the mid- to high 5s is what it implies for the fourth quarter, the updated same-store guide? Can you just touch on that, that would be helpful.

Yes, absolutely, Vince. Thank you for the question. So I'm going to walk you through, it's related to a tenant and some cash basis accounting. So number one, we've executed virtually all the leasing we expect this year. In the third quarter, the metrics include the impact of moving one tenant to cash basis accounting and obviously, the associated impact of writing off AR balance.

Well, after September and quite recently, we executed a repayment agreement that requires the tenant to come current during this quarter and also make the required rental payments. So a performed pursuant an agreement through today. And to the extent they become current by year-end, we'd expect to be near at the high end of our same-store guidance. So this is what I think is going to help here. Had we not written off the AR balance, the Q3 same-store would have been approximately 5% as opposed to where it is. And year-to-date, it would have been approximately 4%, right in line with our updated guidance. So it's basically it's a matter of timing.

Tenants catching up on past due payments in the fourth quarter, Q3 is lower due to the write-off. In the fourth quarter, we'll benefit from the payments being made by the tenant as they become current. Just a little background, this customer is a supplier to the automotive industry and has an incredibly strong customer roster and is profitable. So it really is timing, Vince.

No, that's super helpful. And there's any color on occupancy. I mean, should we expect same-store occupancy to be around 97% as well in the fourth quarter, given it sounds like most the leasing is done.

Yes. I mean our guidance, which we didn't change is roughly 75 basis points of occupancy loss in the same store for the full year. So we didn't change that.

Our next question comes from the line of Jon Petersen with Jefferies.

The $153 million of acquisitions that you have under agreement, can you give us a sense of the cap rates on those properties that we should be thinking about?

Yes, it's pretty consistent with what we've closed in the third quarter.

Okay. And then the new land that you bought in Union Ohio, I believe that's near Dayton. Can you just talk about that market a little bit, maybe not one, I'm super familiar with. So just what are you seeing from a demand and supply perspective that gives you confidence in doing a development there?

Yes. And just that land that we bought, that's the build-to-suit that I mentioned in the prepared remarks to a strong credit for 10 years. But I don't know, Mike or Steve, who wants to take the -- Mike, why don't you take that?

Yes. I mean, Dayton is kind of, I would say, a market that is up and coming and emerging. It's 104 million square feet. It's about 4% vacant. They have less than 1 million square feet of construction going on right now. So -- but all that said, we were very comfortable with acquiring that land and developing as we had a long-term build-to-suit lease signed up with a strong credit tenant. So that was an easy one for us to kind of take a look at.

And in this property is near the airport.

Yes, this property is located our next to International Airport, a couple of miles away from the main interstate there...

If not the best submarket in the market, one of the best submarkets, right? So the building fits the market really well. So to the extent after the 10 years, the tenant doesn't renew, we feel very comfortable with the leasability of that asset.

Okay. And then I know we're all trying to tease out 2026 same-store, so maybe I'll ask it 1 more way. Is there any known move outs that we should be thinking about as we look into '26?

All right. I'll answer that one just because you're so direct with it. Nothing material. It was -- we call out the large no move-outs, call it, anything over $400 million. As I said, I think there was 5 of them. We addressed 4 of them were in active negotiations with the last, so nothing to call out.

Our next question comes from the line of Michael Griffin with Evercore ISI.

Bill, I want to go back to your comment in your prepared remarks about lease gestation time frame remaining longer and maybe marrying that up to the execution you've had in your '26 leasing plan already. I mean whether it's new leases or renewals, like can you give us a sense, are tenants shopping around for a deal? Or does it seem like they're getting closer and closer and ready to sign on the dotted line, given the maybe greater clarity and certainty that's out in the market?

Yes. And that's -- it's a good question. Just to clarify, it's, call it, a couple of months for the negotiations that go on, maybe a little bit longer for normal negotiations with the lease historically. Those are the numbers, maybe we're a little bit longer this year. But for example, in our Nashville lease that we got done, that was done from start to finish in weeks, right? So we -- I do expect those to remain elongated for a period of time, similar to tracking with vacancy rates, right?

As I mentioned, in and around that 7% or high 6s mark for the next couple of 3 quarters. And as those vacancy rates comes down, naturally the lease gestation periods got reduced, right, because these are less options. You needed to make decisions a little quicker. In Nashville, a great example, very strong industrial market, not a ton of options, tenant needed our space. We got the deal done to start to finish in a matter of weeks.

So I think it's just a period of time for these to stay relatively, call it, elongated and then those will start to shorten as vacancy rates come down.

Appreciate the color there. And then maybe you could just give us some insights into the demand of the 4 development projects that are going to be completed in the fourth quarter? I know there's probably some time until those stabilize, but what's the traction sort of looking like on that space? And would you be willing to give on concessions in order to get the projects leased up?

Yes. I'll let Steve answer the details there. And just as a reminder, we underwrite 12 months of lease-up for our development projects, but Steve can walk through the demand that we're seeing for the ones that are going to be completed soon.

Yes, Michael, I appreciate the question. We've made good progress on the existing, but the stuff coming that we still have left to lease. I'll just walk you through the 5 markets. That's probably the easiest way to do it. We have a small amount of vacancy in Greenville, Spartanburg, just 70,000 square feet. As you probably know, the activity in that market has been very good with a lot of absorption in the last couple of quarters, and we do have activity on that 70,000. So we feel pretty good about that space. It's built out the offices there. It's ready to go, and we have users looking at it.

The next -- and that market has dropped to below 7% vacancy. And on these calls, we've talked about it being double digit for some time. So a big improvement in that market.

The next market where we have vacancy would be in Tampa. If you recall, we had the 2 buildings there. We leased one of them relatively quickly to a single user. We have one remaining at 140,000 square feet. That market as a whole is about 6.5% vacant and our submarket is below 5%. So -- and there, again, we have activity for that building. And so we feel good about the Tampa market and prospects for that building.

The next market where we'll be delivering here in the fourth quarter is two 200,000 square foot buildings into the Charlotte market. That market is about 8% vacancy with a lot of positive momentum, particularly in the larger bulk that's brought that vacancy down. So as it was alluded to earlier, 1 of the questions about developing into improving markets, I think Charlotte should be one of those stories where that market is starting to improve, and we're delivering product.

In the submarket that we're out in Concord, that's about a 5% vacancy market. And in that project, you'll recall when we've talked about it, we have some benefits on users relative to some of the peers because there are some zoning issues with sewer availability in the market. So we can do distribution and manufacturing tenants when some of our competition can't do the distribution.

Next market would be Reno where we have 2 buildings delivering, a 285,000 and a 76,000 square footer. Both of those buildings fit the North Valley submarket that we're in. That market has been slower absorption in the last probably 6 quarters. And so that little bit of headwinds there, but we expect absorption will pick up as we deliver these buildings. And we do have activity and have had activity on both buildings, but nothing to report yet.

And then the last market is Louisville, probably the one I'm personally the most bullish about. It's a 4% vacancy market. We are in a Class A park just south of the market and a very established park. We have strong activity in our building and there's very limited supply that we'll be competing with in that market. That takes you through kind of the 5 markets where we have future exposure.

I appreciate the detailed analysis there.

Our next question comes from the line of Nikita Bely with JPMorgan.

It looks like you are pretty bullish on both acquisitions and developments. Can you talk a little bit about how you rank them on a relative basis, one versus another? And as you start to ramp both of them up, it appears in 2026, how do you plan to fund it? And are we close enough to issue equity at these prices?

Nikita, it's Bill. With respect to ranking, it's hard. I mean, that was good -- I guess, I'll still say the joke, it's like ranking your children, right? They're different. I would say we evaluate opportunities for development and acquisitions. And depending on the returns, the market, et cetera, we may choose to look at one or the other. But the reality is we've got a balance sheet and liquidity to, if we like both opportunities, we can deploy capital to both opportunities. So it's not an either/or for us.

And we certainly have the process, the people and the systems internally to evaluate all those opportunities. So for us, it's not an either/or. So we don't have to force rank those 2 opportunities. But as I said, development was -- the favorite choice of deployment of capital earlier this year, and I think acquisitions is catching up, which is great to see. In terms of capitalizing those and financing those, I'll turn it over to Matts to talk about that.

Yes. Nikita, so as we sit here today, we're retaining north of $100 million of free cash flow. Our balance sheet is at the low end of our balance of our leverage target. So those are probably the [indiscernible] sources. We have $47 million of unfunded forward equity, which would be the next source. We don't anticipate any deviation from our normal leverage bands generally operating in the low 5x.

Our next question comes from the line of Brendan Lynch with Barclays.

You mentioned the fixed renewal options that are in place for some of the leases that are going to roll in 2026. Do you have a lot more of these? And are they -- they mostly reflecting acquisitions that you've made and the contracts that were put in place by the prior owners?

Yes. They're almost all based on assuming leases. And I would say they're not higher -- materially higher or lower than other years. They just happen to be in the remaining portion of the unleased space for next year. Generally, those renewal options have some sort of notice period. It could be as short as 3 months. So some of those are to the back end of next year.

Okay. That's helpful. And then maybe kind of a strategy question. You seem to have an improving view on how the market is trending. And I think there's a lot of third-party data out there to support that. When you think about the acquisitions that you have made versus the ones that you passed on, do you get the sense that you could have been more aggressive in the past to make more acquisitions? And is that changing your calculus now as the market seems to be improving?

One of the things we look at for acquisitions is we're deploying capital accretively, right? And that was part of the issue that we were seeing earlier was that we weren't able to do that with all of them. You can always -- Monday morning quarterback decisions. We try to evaluate decisions with the information that we have on hand at that point in time and make the best informed decision at that point in time.

So I think we've made a lot of good decisions this year. Really, I'm happy with the acquisitions that we've made this year and really happy with the development decisions we've made this year. So we'll continue to evaluate acquisitions and development opportunities with the information that we know and try to make the best decision we can.

Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Crooker for any final comments.

I just want to thank everybody for joining the call. And as always, the thoughtful questions. And we look forward to seeing you all soon at the upcoming conferences. Take care.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Ladies and gentlemen, Greetings, and welcome to the STAG Industrial, Inc. Second Quarter 2025 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Steve Xiarhos, Vice President, Investor Relations. Please go ahead.

Thank you. Welcome to STAG Industrial's conference call covering the second quarter 2025 results. In addition to the press release distributed yesterday, we have posted an unaudited quarterly supplemental information presentation in the company's website at www.stagindustrial.com, under the Investor Relations section.

On today's call, the company's prepared remarks and answers to your questions will contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today. Examples of forward-looking statements include forecasted for FFO, same-store NOI, G&A, acquisition and disposition volumes, retention rates and other guidance, leasing prospects, rent collections, industry and economic trends and other matters. We encourage all listeners to review the more detailed discussion related to these forward-looking statements contained in the company's filings with the SEC and the definitions and reconciliations of non-GAAP measures contained in the supplemental information package available on the company's website.

As a reminder, forward-looking statements represent management's estimates as of today. STAG Industrial assumes no obligation to update any forward-looking statements.

On today's call, you'll hear from Bill Crooker, our Chief Executive Officer; and Matts Pinard, our Chief Financial Officer. Also here with us today is Mike Chase, our Chief Investment Officer; and Steve Kimball, EVP of Real Estate Operations, who are available to answer questions specific to their areas of focus. I'll now turn the call over to Bill.

Thank you, Steve. Good morning, everybody, and welcome to the second quarter earnings call for STAG Industrial. We're pleased to have you join us and look forward to sharing the second quarter 2025 results. .

Our year-to-date results have exceeded our initial business plan for the first half of the year. We have favorable results in our operating portfolio and meaningful progress leasing our development portfolio. I'm pleased to report that we have leased 90.8% of the operating portfolio square feet, we currently expect to lease in 2025, achieving cash leasing spreads of 24.5%. This level of leasing is at a relatively similar pace to last year and consistent over the last few years.

In the first quarter, news related to the global trade war drove significant market volatility. Broadly speaking, today, the theme has shifted to a general desensitization to tariff headlines. We are witnessing businesses continue to grow and make corporate decisions in an uncertain environment, a change to the broad pause seen in the past 12 months.

While it's certainly not business as usual, users cannot delay space decisions in perpetuity, and supply chain diversification remains a priority for many companies. On the supply side, we have seen the pipeline moderate materially. New starts are down significantly from the first half of last year. The transaction market has been slow. We are seeing positive leading indicators that the transaction market is becoming more active. We have experienced an uptick in underwritten deals within the last 3 weeks and maintain a healthy deal pipeline.

In June, stay closed on 183,000 square foot building in a submarket of Milwaukee, Wisconsin for $18.4 million. This building was acquired at a cash cap rate of 7.1%. The building was a build-to-suit for the tenant. This site serves as a national distribution facility and is located less than 10 miles away from one of the tenants primary manufacturing plants. This acquisition secured a newly constructed Class A asset with a strong credit profile at an accretive level.

We had one disposition this quarter, we sold noncore building in Calhoun, Georgia for gross proceeds of $9.1 million, representing a cash cap rate of 7.4% and an [ unlevered ] IRR of 14%. In terms of our development platform, we have approximately 3 million square feet of development activity across 12 buildings in the U.S. While roughly 42% of the 3 million square feet is under construction, the remaining 58% has been delivered and is currently 69% leased. Included in these numbers is a 95, 5 joint venture we entered into in May.

We will construct a 500,000 square foot cross-dock warehouse located in a submarket of Louisville, Kentucky. This is an infill site in a supply-constrained market due to topography, entitlement and zoning difficulties. The project is estimated to cost $47 million and is expected to stabilize with a cash yield of 7.1%. The building is expected to be delivered in the second quarter of 2026.

I'm happy with the progress we've been making on development initiative. This initiative will be a key component to STAG's future growth. With that, I will turn it over to Matt who will cover our remaining results and update the guidance.

Thank you, Bill, and good morning, everyone. Core reflow per share was $0.63 for the quarter, an increase of 3.3% compared to last year. Leverage remains low, with net debt to annualized run rate adjusted EBITDA equal to 5.1x. Liquidity stood at $961 million at quarter end. During the quarter, we commenced 32 leases totaling 4.2 million square feet, which generated cash and straight-line leasing spreads were 24.6% and 41.1%, respectively.

Of the 4.2 million square feet of leases commenced, 1.6 million square feet was new leasing. This compares to 280,000 square feet of new leasing in the fourth quarter of 2024 and 280,000 square feet of new leasing in the first quarter of this year.

Retention for the quarter was 75.3%. As Bill mentioned, we have accomplished 90.8% of our operating portfolio square feet we expect to lease in 2025, achieving 24.5% cash leasing spreads, demonstrating the strength of our portfolio. We expect cash leasing spreads to be between 23% and 25% for the year.

We achieved same-store cash NOI growth of 3% for the quarter and 3.2% year-to-date. The primary drivers of our same-store growth in the first half of the year includes the leasing spreads of 26.1% and annual escalators of 2.9%, partially offset by average occupancy loss of 90 basis points.

In May, Moody's Investor Services raised SED's corporate credit rating to BAA2 with a stable outlook. Achieving this upgrade despite this year's market turmoil is a testament to the strength of the SAD platform and balance sheet.

On June 25, we funded $550 million of fixed rate senior unsecured notes from a private placement offering completed in April of this year. The notes consisted of 5-, 8- and 10-year tenures with a weighted average fixed interest rate of 5.65% and a weighted average tenures of 6.5 years. The proceeds were used to pay down the outstanding revolver balance.

This quarter, we resolved two credit situations we have discussed previously. We reached an agreement with American Tire Distributors, which resulted in the assumption of all seven of our leases. As part of this resolution, tag granted 1 month of free rent across 5 of the 7 facilities. [ Plata and Shop ] assumed they're leased with no adjustments and no credit loss incurred. Through June 30, we have experienced approximately 17 basis points of cash credit loss basis points of which was related to the free rent creating to American Tire Distributors.

Moving to guidance, we made the following updates. Our expected ending same-store portfolio occupancy losses and moderated to 75 basis points as compared to our previous guidance of 100 basis points. We have increased our retention guidance to 75% based on leases signed to date. Credit loss guidance has been reduced from 75 basis points to 50 basis points reflecting the resolution of the American Tire Distributors and [ Vitamin Shoppe ] leases.

Cash sales for guidance has been increased to a range of 3.75% to 4% for the year, an increase of 25 basis points at the low end of the range. G&A expectations for the year have been updated to a range of $52 million to $53 million, a decrease of $500,000 at the midpoint. These guidance changes result in a core FFO per share guidance revision to a range of $2.48 to $2.52 per share, an increase of $0.02 at the midpoint. I will now turn it back over to Bill.

Thank you, Matt. I want to thank our team for their continued hard work and execution in 2025. The team has done an excellent job of executing our operating plan in the first half of the year. This strong first half sets us up well for the rest of the year. With that, I will now turn it back over to the operator for questions.

[Operator Instructions]. The first question comes from the line of Craig Mailman from Citi.

Bill, I just want to touch back on leasing. You noted that things are getting better, but it's clearly not back to normal. But could you just walk through maybe what markets you're seeing better early signs of recovery versus markets that maybe are a little bit lagging at this point?

Yes, sure, Craig. Yes, I mean, this quarter was a really strong quarter for leasing, 4 million square feet leased, 1.6 million of that new leasing. And as we look at some of the leasing that we've addressed in July, I mean, we've already -- I think we're going to sign about 500,000 square feet we're going to commence about 400,000, 500,000 square feet of new leases just in July thus far. And signings executed leases in July for around 760,000 square feet, and that's about $600,000 of renewals and about another $100,000 of signed leases for new lease in July.

When you think about markets, the Midwest markets are still doing really well. Minneapolis, Milwaukee, Louisville, Detroit, Cleveland, Nashville has done really well. Houston has done really well. And then some of the weaker markets, I would say, categorize it at more kind of bulk distribution markets, [ Indi ], Columbus, Memphis, still a little bit weaker. And then you've got some markets that have some short term, I think, tariff uncertainty, some of the border markets like El Paso would be one that has a little uncertainty short term, but we really like that market kind of medium term.

That's helpful. And then just a follow-up, maybe it comes at it from two parts. But you had mentioned that the transaction market is starting to get a little bit better. We've noticed that there are definitely some users out there, particularly ones like a Samsung that is going to be opening mega plants and they're buying some assets down in Atlanta. Could you just talk about maybe some of the competition from well-funded users? And the impact that, that could have on some of your markets from a net absorption standpoint where it may not get picked up as a lease, but it's essentially a lease of some bigger companies because it will be occupied by that user?

Yes. We're seeing -- that's definitely a theme we're seeing. I mean our Q1 sale was to a user. We're we see some sales in our pipeline for dispositions that are going to be some user sales. And those are pretty attractive cap rates and pricing for those transactions. And then as you noted, it's taking some vacancy out of the market, which net-net is good for landlords in that market. And where this is happening is really, as we mentioned before, more of those onshore manufacturing markets where you got Midwest, Southeast and some Texas markets.

The next question comes from the line of Nick Thillman from bed.

Maybe I wanted to touch a little bit more on just the leasing and demand and maybe talking a little bit more on like the vacancy within the portfolio and the operating portfolio less so on the development side. And just on the assets, maybe we'll call it like stubborn vacancy or areas where you've seen just maybe more downtime. Is there any specific markets or asset types that you're seeing that particular? You guys have a broad breadth of market. So I just kind of want to get some more color there.

Yes. I mean it's a broad breadth of markets, and I would even go a step further to say it really depends on the building type in a particular market. So some markets, if you've got a 200,000 square foot building, vacancy rates could be 3.5%. But if you've got a 500,000 square foot building or above, you could be high single digits vacancy rates. So it really is a story of building end markets.

The markets I just mentioned, I think those are pretty indicative of where you're seeing some of the higher vacancy rates, but those are really on bigger boxes. So I would say overall, when you think about lease-up times or downtimes, when things were really going well there for a while. It was 3 to 6 to 9 months of lease-up time. And I think we're more in like 12 months of lease-up time for our assets. Some take a little bit longer and some are a little bit less.

I mean, in the Second quarter, we had a 500,000 square foot facility that we leased up with no downtime, right? So when you kind of take the mix of all of that, we're probably still looking at, on average, 9 to 12 months of lease-up for our assets. So we're in a really good spot. I mean we're really happy with the results we put forth to date and really happy with the guidance range we had this quarter, guidance range increase.

That's helpful. And then maybe just following up a little bit, looks from your exploration schedule that you kind of started working through some of '26, maybe like 2.7 million square feet of renewals. I guess just a little bit more color on that. Is the time line on those discussions tracking similar to what it has historically? And have you seen any sort of changes, whether it be in escalators or term when you kind of are going into those renewal discussions.

Yes. I mean that's another theme, and I'm glad you brought that up is early renewals for all large sophisticated tenants are -- they're very active. They were in active discussions with them. We've picked off a lot of the upcoming expirations in 2026. We're ahead of where we were last year and the year before with respect to addressing the next year's lease expirations. And I think that speaks to the market in that these large sophisticated tenants expect that market rent growth will start increasing probably at a little faster pace as some of this supply continues to get eaten through this year. So really happy with what we're doing with the early renewals within our portfolio.

The next question comes from the line of Eric Borden from BMO Capital Markets.

Bill, I just want to go back to your remarks on the acquisition market and how it's been improving with the underwriting picking up. But you left the guidance fairly why. So I'm just curious, what does the pipeline currently consists of in terms of maybe singles and doubles, larger, chunkier deals and portfolios today.

Mike, do you want to talk specifically about the pipeline, the makeup or...

Yes. I mean the pipeline makeup is very similar to what we've seen in the past. I think we're -- the majority of the pipeline, I'd say, 60% plus is kind of our one-off assets and then 20% to 30% in portfolios and then beyond that, some development deals. The market has come alive a little bit in the last couple of weeks, we've been seeing an underwriting and offering on more assets than we did in the second quarter. So we're cautiously optimistic about the fact that we'll have in after the second half of the year.

Yes. When you look at the pipeline from Q1 to Q2, I think it's down a couple of hundred million bucks. I think it's like $3.4 billion in Q2. But what's more important to note is the pipeline that $3.4 billion, the bid-ask spread between buyers and sellers is much narrower than it was in Q1. You're seeing more one-off transactions get done. We've been very close on pricing on a number of deals, but we're continuing to maintain our discipline, right? We're looking at transactions that we feel like are good fits for the portfolio, those buildings fit their submarket and they're good accretive transactions to us.

So we kept the range wide, but we maintained our range because our team that we have in place, we've had quarters where we've done $700 million, $800 million of acquisitions in the quarter. I think even last Q4, we did $300 million of acquisition. So we'll maintain our discipline, but it certainly feels like that market is improving and it's improving quite rapidly.

That's helpful. And then for my follow-up, just on the credit upgrade in May. Does that provide you additional debt borrowing cost savings either on the line or potential future debt races?

Eric, this is Matt. So number one, we're very happy and very pleased that we're able to achieve the upgrade, particularly with the backdrop, which I mentioned in my prepared remarks. .

Historically, been a private placement issuer. So I think, yes, on the margin, if we were to go back to the private placement market, we expect to receive some benefit. But really what the upgrade does is it allows us to take the next step towards becoming a public bond issuer. We would like to take down an S&P investment-grade rating, so we'd have the Moody's to fit and the S&P prior to go into that market. It's our expectation, we'll start working with S&P, and I can foresee in the coming 12 months that we would switch from the private to the public bond market. But again, we maintain optionality and we've been incredibly successful in the private placement market. So short answer, we're very happy. We think there's some -- maybe some modest benefit in the private placement market that absolutely sets us up for potential public loans.

The next question comes from Steve Sakwa from Evercore ISI.

[indiscernible] [ Sanket ] on for Steve. In case of like how are you guys thinking in terms of financing the deals that you are trying to close in the second half of this year on the acquisition side? And then I think you guys have $300 million of that, that's coming due in the first quarter of next year or how are you guys thinking around the financing for this?

Yes. Absolutely. This is Matt again. Why don't I take the second one first. So a $300 million term loan return early next year. And we're in the process of refinancing it. Typically, with a term loans, you start that process 6 to 9 months prior to expiration. We're in the middle of that process. We expect a successful transaction. It really is kind of down the middle rolling max term loan. So hopefully, something to announce in the next 4 to 5 weeks on that front.

In terms of financing, generally, as I mentioned, when we look at our long-term debt, we look at the private placement market, we funded our $550 million private placement in June, weighted average interest expense of 5.65% 6.5-year tenure. Those proceeds were used to retire the balances on the revolver. We have liquidity approaching $1 billion. That was the purpose. So from a financing perspective and liquidity specifically, we have roughly $1 billion of liquidity.

In terms of the way that we were finding so obviously, there'll be a portion of debt. And I always like to remember people paying attention to the sad stock, we retain north of $100 million of cash flow after dividends paid. That money can be used to finance their development platform and potential acquisitions as well. And to the extent necessary and it makes sense, incremental ATM issuance is on the table as well.

Makes sense. In terms of your development pipeline, how has been the demand on the leasing side for those assets? And how are you guys thinking in terms of timing to get those assets leased?

Yes, it's Steve here. Let me answer that one, and thanks for the question. I look at the development pipeline in three different buckets. We've got the in-service, which is 76% leased, and we really have two vacancies there. Those two vacancies are in the Greenville market, a market that we're heavily invested in. There's been notable improvements from prior calls in that market. Their vacancy is now sub 10% and there's very good activity and we have prospects on both of our vacant spaces there.

Second bucket I look at is the complete not in service, where we're 47% leased. And what we have is a single building in Tampa. It's in the Tampa East market, which is, again, a good solid market, about 5% vacancy. So the fundamentals are good there. And we have prospects looking at that building as well.

The second building in that bucket is in Nashville. We leased 200,000 of that building in the second quarter about 95,000 left. They're, again, very healthy market, very strong fundamentals out that I-40 East corridor. So we feel really good about that -- those portions.

When we get into the under construction when we're in Reno and Concord, which is Charlotte and Louisville, all good markets, all good product, but we're too early into the construction process, not a lot of leasing activity to report right now.

The next question comes from the line of Michael Carroll from RBC Capital Markets.

I guess, Bill, I wanted to circle back on your comments saying that you're starting to see an uptick in overall acquisition activity. I believe you mentioned that you're just seeing more underwritten deals in the market the past 3 weeks. Is there any driver related to that? Is it just related to tariffs concerns kind of the bating and stakeholders just getting much more comfortable bringing assets to market? Is that kind of the driver of what you're seeing the improvement over the past 3 weeks?

I mean that's certainly a component of it. I think seller expectations is a component of it, too, understanding where the capital markets are and what buyers are willing to pay. And then I think, a little bit more conviction on the buyer side, not just us, but just other buyers of, hey, what's happening in the market as time passes. I think people understand that maybe the tariff threats aren't as bad as they were initially thought to be. So I think all that helps.

And then, yes, I mean, just -- when we say underwritten deals, we evaluate a lot of deals. We evaluated a lot of deals in the first quarter. And then when we take them to further underwriting and presenting them to our internal investment community. Those are deals that we think we've got a legitimate shot of winning. And so having that uptick in the past 3 weeks has given us that conviction to maintain our guidance range for acquisitions.

I do want to know, we've said this before, and we still anticipate much more back-end weighted acquisition cadence this year. So our initial guidance included that, so very little contribution to core FFO for this year. But we still feel comfortable with the range. And the last 3 weeks of activity has given us a little bit more conviction on that.

Okay. Great. And I know activity is usually back end weighted, maybe more so this year than normal how long does it typically take? So when do you need to have a deal locked in to close it before year-end? I mean does that happen pretty quickly? Or do you need like several months to actually close the transaction? Do you need to start working on these deals now to get them done before year-end?

Yes. I'll let Mike talk specifically, but at year-end is interesting. You've got sellers that really want to close quick at year-end. So the -- when you get from price agreement to P&S to closing, it's a much more compressed time frame. But Mike can walk through a little more detail.

Yes. I mean typically, a deal from price agreement to closing can be anywhere from 30 to 45 days. and maybe 60 depending on the seller and how quickly people are responding. But at the year-end, typically, if we're within 30 days of the year end, 45 days of the year end, we can close on new transactions. So it goes up until the mid-November that we can put transactions.

I mean we kind of soft circle. Thanksgiving as kind of --- we can get a deal under price agreement by then or we're looking at deals right around Thanksgiving, I think we could still close those by year-end.

The next question comes from the line of Jason Belcher from Wells Fargo.

Just following up on the development pipeline and specifically the Greenville assets. Just wondering if you could kind of remind us what your timing is, what your convention is for the timing of capitalized interest and whether you're still capitalizing interest on those assets? And if so, when that's expected to cease?

Jason, it's Matt. So just in terms of capitalized interest, we cease capitalizing interest once the building is complete. So these buildings are complete, we are not capitalizing.

Got it. And then if you could just give us an update on how your embedded rent bumps are trending in the current environment and any shifts you might have seen there in the last few quarters and what the average is across the portfolio.

Yes, absolutely. So as we sit here today, our weighted average rental escalator across the portfolio is 2.9%. That's going to continue to tick up, just basically math. We're not seeing leases that don't begin with a 3% rental escalator. I would say, 12, 18 months ago, you would see the high 3s, 3.75, maybe even 4. We're seeing much closer to the 3 to 3.5. So there's been a slight moderation, but that's not a new trend. That's something that we've been seeing over the last 6 months. But again, if we're sitting at 2.9 today, and we're signing leases at, call it 3.25, at 2.9 is going to continue to edge up, just simply the weighted math.

The next question comes from the line of Mike Mueller from JPMorgan.

I guess following up on acquisitions, a couple of things. One, did you think at all about reducing the acquisition guidance or it just wasn't on the table because it seems like you're feeling a little bit better. And I know you said there's a little -- just a little impact to the 25% range. But if the past 3 weeks was, say, a bit of a fall start and acquisitions don't materialize, what's the sensitivity to I guess, the impact to '26, if you kind of blank the balance of the year from an acquisition standpoint?

Yes. I mean we haven't given any '26 guidance, Mike. So we could certainly run some back of the envelope math. I don't have those numbers right now. If we blank the acquisition numbers for '25, which I do not expect to happen. It's probably $0.05 to $0.075 for the year.

And with respect to guidance, I mean, every piece of guidance that we evaluate and we go through. So we want to raise same-store guidance by 25 basis points or keep it flat or raise at $50. Do we want to keep acquisition guidance or raise it or reduce it. I mean those are all conversations we have across every piece of our guidance. So I think what's important is we spend a lot of time on our guidance. We're thoughtful about it, and we're very comfortable with it.

The next question comes from the line of Jessica Zheng from Green Street.

You have a mix of multi- and single-tenant buildings in your development pipeline today. I'm just curious, this the multi-tenant category is easier to lease in the current environment? And what are some considerations when deciding which route to take when you start a development project?

Jessica, it's Steve here. I appreciate the question. I think when we set out to build these buildings, we spend a lot of time making sure that they would demise down to multi-tenant because there was greater demand in the smaller tenant space at that time, and the bulk was moving more slowly, and we want to make sure we had flexibility. What's been interesting in the lease-up of our portfolio, if you look through it is we've actually done a number of single tenant deals and larger deals. So I think the answer is we've maintained flexibility in the design of our building in order to deal with all different tenant sizes. But so far, we've been fortunate to land larger tenants than maybe we had originally underwritten.

Yes. I mean two examples of that, Jessica, is our Tampa building that's 100% leased in our Greenville building. It's 100% leased. If you look back when those are under construction, those are both identified as multi-tenant buildings. We anticipated leasing those multi-tenant. And as Steve said, we had full building users come by at least those buildings.

So when you look at the under construction or even the not-in-service buildings at a multi those could easily flip to single tenant if we find a full building user. Really, maintaining optionality is important for us.

All right. That's very helpful. And just as a follow-up, I was wondering if you can share some colors around the fundamentals in Nashville. Like in your mind, what's been driving the [ outperformance ] in that market, recently. And I know there are several rates, including yourself that have active developments in that market right now. What's the supply backdrop in Nashville today?

I'll go first on the [indiscernible]. First of all, it is often referenced as one of the more healthy markets, the Nashville market. We do have a balance there of both manufacturing with auto, and we have the distribution market as well. And we're finding in general that markets that have some balance of distribution and manufacturing have remained at a little bit better supply-demand condition. And then there's been -- the supply in Nashville was regulated relative to some of the other markets. It didn't get the attention of the large bulk markets where everyone went in and created an oversupply. So it stayed in a good balance and it has a broad range of demand.

Yes. I mean the broad range of demand, as Steve said, you have manufacturing, you get distribution, but I mean you've had population growth in that market for the past 10 years. It's a high consumption market and that's also a demand driver.

Ladies and gentlemen, as there are no further questions, I will now hand the conference over to Bill Crooker for his closing comments.

Thanks, everybody, for joining the call. As always, I appreciate the thoughtful questions, and we look forward to talking to you soon. Thank you.

Thank you. The conference of STAG Industrial has now concluded. Thank you for your participation. You may now disconnect your lines.