Stag Industrial Posts Strong Quarterly Results and Raises Outlook

Stag Industrial, a real estate investment trust specializing in industrial properties, has delivered a standout third-quarter performance, surpassing market expectations and demonstrating the continued strength of the industrial real estate sector. The company’s robust rental income and a subsequent upgrade to its full-year forecast highlight its operational momentum.

Robust Financial Performance Exceeds Forecasts

The company’s financial results for the quarter were notably strong. Revenue climbed to $211.12 million, exceeding analyst projections. Net income showed a significant increase, reaching $48.6 million compared to $41.8 million in the same period last year. A key metric for REITs, Core Funds From Operations (FFO), came in at $0.65 per share, decisively beating the consensus estimate of $0.63 per share.

Bolstered by these results, management has raised its full-year guidance. The company now anticipates Core FFO per share to land between $2.52 and $2.54, signaling strong confidence in its ongoing operational health.

Strategic Growth and Portfolio Management

An aggressive acquisition strategy continues to fuel Stag Industrial’s expansion. During the third quarter, the company acquired two properties totaling one million square feet for $101.5 million. Year-to-date, its investment volume has reached $163.2 million.

Concurrently, the company is actively optimizing its portfolio through strategic divestments. It sold one property for $6.1 million, underscoring a focus on capital recycling to fund higher-value growth opportunities. The full-year acquisition guidance remains unchanged at $350 to $500 million.

Should investors sell immediately? Or is it worth buying Stag Industrial?

Industrial Real Estate Demand Remains Strong

The fundamental demand for industrial and logistics space appears unbroken, as evidenced by Stag’s impressive leasing metrics:

• The operating portfolio saw 2.2 million square feet of new leases executed.
• Rental rates on new leases surged by a substantial 27.2%.
• The overall portfolio occupancy rate stood firm at 95.8%.

A particular highlight was the complete leasing of a newly developed project in South Carolina, encompassing 243,642 square feet. Looking ahead, the company forecasts rental rate growth to continue in the 18% to 20% range through 2026.

Solid Financial Footing and Market Sentiment

Strengthening its balance sheet, Stag Industrial recently refinanced a $300 million loan, extending its maturity to March 2030. For income-focused investors, the company offers a monthly dividend of $0.1242 per share, providing an attractive yield of 3.9%.

Institutional investor activity has been mixed, with some reducing their stakes while others significantly increased their holdings. Analyst ratings generally converge around a “Hold” recommendation with an average price target of $38.13. However, Evercore ISI recently stood out by raising its price target to $42 and assigning an “Outperform” rating. The company’s strategic moves and strong fundamentals suggest it is well-positioned to maintain its growth trajectory in the coming quarters.