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STAG Industrial Announces First Quarter 2017 Results

Company Release - 5/2/2017 4:05 PM ET

BOSTON, May 2, 2017 /PRNewswire/ -- STAG Industrial, Inc. (the "Company") (NYSE: STAG), a real estate investment trust focused on the acquisition and operation of single-tenant, industrial properties throughout the United States, today announced its financial and operating results for the first quarter of 2017.   

"The Company built upon the achievements of 2016 with an impressive first quarter of 2017," said Ben Butcher, Chief Executive Officer of the Company. "STAG continues to benefit from the persisting opportunity to execute on its proven investment thesis and the solid execution by our seasoned team."

First Quarter 2017 Highlights

  • Reported $(0.03) of net loss per basic and diluted share for the first quarter of 2017, as compared to $0.13 of net income per basic and diluted share for the first quarter of 2016, a decrease in net income of 123.1%. Reported $(2.4) million of net loss attributable to common stockholders for the first quarter of 2017 compared to net income attributable to common stockholders of $8.8 million for the first quarter of 2016, a decrease in net income of 126.7%.
  • Achieved $0.41 of Core FFO per diluted share for the first quarter of 2017, an increase of 5.1% compared to the first quarter of 2016. Generated Core FFO of $35.1 million compared to $27.7 million for the first quarter of 2016, an increase of 26.6%.
  • Generated Cash NOI of $56.5 million compared to $49.4 million for the first quarter of 2016, an increase of 14.4%.
  • Acquired 11 buildings in the first quarter of 2017, consisting of 2.3 million square feet, for $99.8 million with a weighted average Capitalization Rate of 8.2%.
  • Sold one building in the first quarter of 2017, consisting of 113,379 square feet for $4.1 million.
  • Achieved occupancy of 94.8% on the total portfolio and 95.8% on the Operating Portfolio as of March 31, 2017.
  • Executed Operating Portfolio leases for 3.6 million square feet for the first quarter of 2017. Experienced a cash rent change and GAAP Rent Change of 4.1% and 9.8%, respectively, for the quarter's Operating Portfolio leasing activity.
  • Experienced 51.3% Retention for 1.2 million square feet of leases expiring in the quarter. Achieved an increase in cash rent change and GAAP Rent Change of 13.4% and 23.6%, respectively, for these renewals.
  • Raised gross proceeds of $68.5 million of equity through the Company's at-the-market offering ("ATM") program for the first quarter of 2017. Subsequent to quarter end and through May 2, 2017, raised gross proceeds of $135.0 million through the ATM program.

Please refer to the Non-GAAP Financial Measures and Other Definitions section at the end of this release for definitions of capitalized terms used in this release.

The Company will host a conference call tomorrow, May 3, 2017 at 10:00 a.m. (Eastern Time), to discuss the quarter's results and provide information about acquisitions, operations, capital markets and corporate activities. Details of the call can be found at the end of this release.

Key Financial Measures

FIRST QUARTER 2017 KEY FINANCIAL MEASURES



Three months ended
March 31,





2017


2016


% Change

(in millions, except per share data)







Net income (loss) attributable to common stockholders


$(2.4)


$8.8


(126.7)%

Net income (loss) per share — basic


$(0.03)


$0.13


(123.1)%

Net income (loss) per share — diluted


$(0.03)


$0.13


(123.1)%

Cash NOI


$56.5


$49.4


14.4%

Adjusted EBITDA


$49.4


$43.3


14.1%

Core FFO


$35.1


$27.7


26.6%

Core FFO per share / unit — basic


$0.41


$0.39


5.1%

Core FFO per share / unit — diluted


$0.41


$0.39


5.1%

AFFO


$35.7


$28.6


24.8%

Definitions of the above mentioned non-GAAP financial measures, together with reconciliations to net income (loss) in accordance with GAAP, appear at the end of this release. Please also see the Company's supplemental information package for additional disclosure.

Acquisition and Disposition Activity

For the three months ended March 31, 2017, the Company acquired 11 buildings for $99.8 million with an Occupancy Rate of 100% upon acquisition. The chart below details the acquisition activity for the quarter:

FIRST QUARTER 2017 ACQUISITION ACTIVITY

Location (CBSA)

Date
Acquired

Square Feet

Buildings

Purchase
Price ($MM)

Weighted
Average Lease
Term (Years)

Capitalization
Rate

Jacksonville, FL

1/17/2017

1,025,720

4

$34.2

6.5


Reno, NV

1/20/2017

174,763

1

8.4

7.5


Charlotte-Concord-Gastonia, NC-SC

1/26/2017

288,000

1

8.3

4.3


New York-Newark-Jersey City, NY-NJ-PA

1/31/2017

183,000

1

12.8

3.4


New Haven-Milford, CT

2/23/2017

200,000

1

12.8

10.0


Cleveland-Elyria, OH

3/10/2017

173,034

1

7.6

6.6


Detroit-Warren-Dearborn, MI

3/20/2017

290,105

2

15.7

4.9


Total / weighted average


2,334,622

11

$99.8

6.2

8.2%

The chart below details the 2017 acquisition activity and pipeline through May 2, 2017:

2017 ACQUISITION ACTIVITY AND PIPELINE DETAIL


Square
Feet

Buildings

Purchase
Price ($MM)

Weighted
Average Lease
Term (Years)

Capitalization
Rate

Q1

2,334,622

11

$99.8

6.2

8.2%

2017 closed acquisitions

2,334,622

11

$99.8

6.2

8.2%







As of May 2, 2017






Subsequent to quarter-end acquisitions

488,043

3

$20.6









Pipeline

39.2 million

174

$2,115.6



The chart below details the disposition activity for the three months ended March 31, 2017:

FIRST QUARTER 2017 DISPOSITION ACTIVITY

Year

Square Feet

Buildings

Sale Price ($MM)

Q1

113,379

1

$4.1

Total

113,379

1

$4.1


Operating Portfolio Leasing Activity

For the three months ended March 31, 2017, the Company executed 18 leases for approximately 3.6 million square feet. The chart below details the leasing activity for leases signed during the quarter for the Operating Portfolio:

FIRST QUARTER 2017 LEASING ACTIVITY

Lease Type

Square
Feet

W.A.
Lease
Term
(Years)

Cash
Base
Rent
$/SF

GAAP
Base Rent
$/SF

Lease
Commissions 
$/SF

Tenant
Improvements
$/SF

Total
Costs $/SF

Cash
Rent
Change

GAAP
Rent
Change

New leases

898,905

4.7

$4.21

$4.35

$1.29

$0.78

$2.07

6.6%

10.8%

Renewal leases

2,675,965

5.1

3.61

3.75

0.27

0.11

0.38

3.2%

9.4%

Total / weighted average

3,574,870

5.0

$3.76

$3.90

$0.52

$0.28

$0.80

4.1%

9.8%

The chart below details the Retention activity for the three months ended March 31, 2017:

2017 RETENTION

Quarter

Expiring
Square
Footage

Retained Square
Footage

W.A. Lease
Term (Years)

Retention

Cash Rent
Change

GAAP Rent
Change

Q1

1,185,453

607,608

3.4

51.3%

13.4%

23.6%

Total / weighted average

1,185,453

607,608

3.4

51.3%

13.4%

23.6%

The Occupancy Rate of the Operating Portfolio as of March 31, 2017 was 95.8%.

Liquidity and Capital Market Activity

As of March 31, 2017, the Company had total Debt Capacity of $376 million and liquidity of $383 million, comprised of $7 million of cash and $376 million of Immediate Availability on the Company's unsecured credit facility and unsecured term loans.

The chart below details the ATM program activity for the three months ended March 31, 2017:

2017 ATM ACTIVITY

ATM

Shares
Issued

Price per Share
(Weighted Avg)

Gross
Proceeds
$(MM)

Net
Proceeds
$(MM)

Q1

2,843,907

$24.10

$68.5

$67.6

Total / weighted average

2,843,907

$24.10

$68.5

$67.6

Subsequent to March 31, 2017, the Company sold 5,344,543 shares under its ATM program for gross proceeds of $135.0 million.

Dividends

Subsequent to quarter end, on May 1, 2017, the Company's Board of Directors increased the monthly common stock dividend to $0.1175 per share for the months of July, August and September 2017. This represents an annual dividend of $1.41 per share. The chart below details the common dividends declared during and subsequent to the first quarter:

SECOND & THIRD QUARTER 2017 COMMON DIVIDENDS

Month


Record Date


Payment Date


Dividend

April 2017


April 28, 2017


May 15, 2017


$0.116667

May 2017


May 31, 2017


June 15, 2017


$0.116667

June 2017


June 30, 2017


July 17, 2017


$0.116667

July 2017


July 31, 2017


August 15, 2017


$0.117500

August 2017


August 31, 2017


September 15, 2017


$0.117500

September 2017


September 29, 2017


October 16, 2017


$0.117500

Subsequent to quarter end, on May 1, 2017, the Company's Board of Directors declared the following second quarter preferred stock dividends:

SECOND QUARTER 2017 PREFERRED DIVIDENDS DECLARED

Series

Record Date

Payment Date

Quarterly
Dividend

Series B - 6.625% Cumulative Redeemable Preferred Stock (NYSE: STAG Pr B)

June 15, 2017

June 30, 2017

$0.4140625

Series C - 6.875% Cumulative Redeemable Preferred Stock (NYSE: STAG Pr C)

June 15, 2017

June 30, 2017

$0.4296875

The Company's dividend policy is set by the Board of Directors, which considers, among other factors, REIT distribution requirements and recurring, distributable, cash income.

Conference Call

The Company will host a conference call tomorrow, Wednesday, May 3, at 10:00 a.m. (Eastern Time) to discuss the quarter's results.  The call can be accessed live over the phone toll-free by dialing (877) 407-4018, or for international callers, (201) 689-8471.  A replay will be available shortly after the call and can be accessed by dialing (844) 512-2921, or for international callers, (412) 317-6671.  The passcode for the replay is 13658346.

Interested parties may also listen to a simultaneous webcast of the conference call by visiting the Investor Relations section of the Company's website at www.stagindustrial.com, or by clicking on the following link:

http://ir.stagindustrial.com/corporateprofile.aspx?iid=4263385

Supplemental Schedule

The Company has provided a supplemental information package to provide additional disclosure and financial information on its website (www.stagindustrial.com) under the "Presentations" tab in the Investor Relations section.

Additional information is also available on the Company's website at www.stagindustrial.com.

 

 

CONSOLIDATED BALANCE SHEETS

STAG Industrial, Inc.

(unaudited, in thousands, except share data)



March 31, 2017


December 31, 2016

Assets




Rental Property:




Land

$

281,756



$

272,162


Buildings and improvements, net of accumulated depreciation of $202,095 and $187,413, respectively

1,607,608



1,550,141


Deferred leasing intangibles, net of accumulated amortization of $251,089 and $237,456, respectively

289,275



294,533


Total rental property, net

2,178,639



2,116,836


Cash and cash equivalents

7,082



12,192


Restricted cash

8,720



9,613


Tenant accounts receivable, net

26,555



25,223


Prepaid expenses and other assets

26,224



20,821


Interest rate swaps

2,378



1,471


Assets held for sale, net

1,607




Total assets

$

2,251,205



$

2,186,156


Liabilities and Equity




Liabilities:




Unsecured credit facility

$

71,000



$

28,000


Unsecured term loans, net

446,766



446,608


Unsecured notes, net

398,033



397,966


Mortgage notes, net

151,452



163,565


Accounts payable, accrued expenses and other liabilities

30,639



35,389


Interest rate swaps

1,985



2,438


Tenant prepaid rent and security deposits

17,537



15,195


Dividends and distributions payable

10,149



9,728


Deferred leasing intangibles, net of accumulated amortization of $11,443 and $10,450, respectively

19,674



20,341


Total liabilities

1,147,235



1,119,230


Equity:




Preferred stock, par value $0.01 per share, 15,000,000 shares authorized,




Series B, 2,800,000 shares (liquidation preference of $25.00 per share) issued and outstanding at March 31, 2017 and December 31, 2016

70,000



70,000


Series C, 3,000,000 shares (liquidation preference of $25.00 per share) issued and outstanding at March 31, 2017 and December 31, 2016

75,000



75,000


Common stock, par value $0.01 per share, 150,000,000 shares authorized, 83,378,593 and 80,352,304 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively

833



804


Additional paid-in capital

1,360,951



1,293,706


Common stock dividends in excess of earnings

(442,329)



(410,978)


Accumulated other comprehensive loss

(336)



(1,496)


Total stockholders' equity

1,064,119



1,027,036


Noncontrolling interest

39,851



39,890


Total equity

1,103,970



1,066,926


Total liabilities and equity

$

2,251,205



$

2,186,156







 

 

CONSOLIDATED STATEMENTS OF OPERATIONS

STAG Industrial, Inc.

(unaudited, in thousands, except share data)



Three months ended March 31,


2017


2016(1)

Revenue




Rental income

$

59,222



$

51,349


Tenant recoveries

10,185



9,442


Other income

73



81


Total revenue

69,480



60,872


Expenses




Property

13,276



12,655


General and administrative

8,771



11,019


Property acquisition costs

740



552


Depreciation and amortization

35,953



29,749


Loss on involuntary conversion

330




Other expenses

194



260


Total expenses

59,264



54,235


Other income (expense)




Interest income

5



3


Interest expense

(10,477)



(10,847)


Loss on extinguishment of debt



(1,134)


Gain on the sales of rental property, net

325



17,673


Total other income (expense)

(10,147)



5,695


Net income

$

69



$

12,332


Less: income (loss) attributable to noncontrolling interest after preferred stock dividends

(103)



482


Net income attributable to STAG Industrial, Inc.

$

172



$

11,850


Less: preferred stock dividends

2,448



2,912


Less: amount allocated to participating securities

83



100


Net income (loss) attributable to common stockholders

$

(2,359)



$

8,838


Weighted average common shares outstanding — basic

81,807,883



67,889,217


Weighted average common shares outstanding — diluted

81,807,883



67,964,559


Net income (loss) per share — basic and diluted




Net income (loss) per share attributable to common stockholders — basic

$

(0.03)



$

0.13


Net income (loss) per share attributable to common stockholders — diluted

$

(0.03)



$

0.13







(1) In the fourth quarter of 2016, the Company revised the prior period rental property depreciation and amortization expense amounts and accumulated building and improvements depreciation amounts. Refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2016, for a detailed discussion of the revision.


 

 

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

STAG Industrial, Inc.

(unaudited, in thousands)



Three months ended March 31,


2017


2016(1)

NET OPERATING INCOME RECONCILIATION




Net income

$

69



$

12,332


Asset management fee income

(30)



(41)


General and administrative

8,771



11,019


Property acquisition costs

740



552


Depreciation and amortization

35,953



29,749


Interest income

(5)



(3)


Interest expense

10,477



10,847


Loss on involuntary conversion

330




Loss on extinguishment of debt



1,134


Other expenses

194



260


Gain on the sales of rental property, net

(325)



(17,673)


Net operating income

$

56,174



$

48,176






Net operating income

$

56,174



$

48,176


Straight-line rent adjustments, net

(1,224)



(397)


Straight-line termination income adjustments, net

256



(54)


Intangible amortization in rental income, net

1,296



1,666


Cash net operating income

$

56,502



$

49,391






Cash net operating income

$

56,502




Cash NOI from acquisitions' and dispositions' timing

844




Cash termination income

(564)




Run Rate Cash NOI

$

56,782








ADJUSTED EBITDA RECONCILIATION




Net income

$

69



$

12,332


Intangible amortization in rental income, net

1,296



1,666


Straight-line rent adjustments, net

(1,223)



(370)


Non-cash compensation expense

2,387



2,041


Termination income

(308)



(54)


Property acquisition costs

740



552


Depreciation and amortization

35,953



29,749


Interest income

(5)



(3)


Interest expense

10,477



10,847


Severance costs



3,063


Loss on involuntary conversion

330




Loss on extinguishment of debt



1,134


Gain on the sales of rental property, net

(325)



(17,673)


Adjusted EBITDA

$

49,391



$

43,284






Adjusted EBITDA

$

49,391




Adjusted EBITDA from acquisitions' and dispositions' timing

844




Run Rate Adjusted EBITDA

$

50,235








(1) In the fourth quarter of 2016, the Company revised the prior period rental property depreciation and amortization expense amounts and accumulated building and improvements depreciation amounts. Refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2016, for a detailed discussion of the revision.


 

 

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

STAG Industrial, Inc.

(unaudited, in thousands, except share data)



Three months ended March 31,


2017


2016(1)

CORE FUNDS FROM OPERATIONS RECONCILIATION




Net income

$

69



$

12,332


Rental property depreciation and amortization

35,879



29,700


Gain on the sales of rental property, net

(325)



(17,673)


Funds from operations

$

35,623



$

24,359


Preferred stock dividends

(2,448)



(2,912)


Other expenses



(100)


Funds from operations attributable to common stockholders and unit holders

$

33,175



$

21,347






Funds from operations attributable to common stockholders and unit holders

$

33,175



$

21,347


Intangible amortization in rental income, net

1,296



1,666


Termination income

(308)



(54)


Property acquisition costs

740



552


Loss on extinguishment of debt



1,134


Severance costs



3,063


Loss on involuntary conversion

330




Gain on swap ineffectiveness

(156)




Core funds from operations

$

35,077



$

27,708






Weighted average common shares, participating securities, performance units and other units




Weighted average common shares outstanding

81,807,883



67,889,217


Weighted average participating securities outstanding

239,827



241,929


Weighted average units outstanding

3,702,237



3,680,206


Weighted average common shares, participating securities, and other units - basic

85,749,947



71,811,352


Weighted average performance units

437,527



11,813


Dilutive common share equivalents



75,342


Weighted average common shares, participating securities, performance and other units - diluted

86,187,474



71,898,507


Core funds from operations per share / unit - basic

$

0.41



$

0.39


Core funds from operations per share / unit - diluted

$

0.41



$

0.39






ADJUSTED FUNDS FROM OPERATIONS RECONCILIATION




Core funds from operations

$

35,077



$

27,708


Non-rental property depreciation and amortization

74



49


Straight-line rent adjustments, net

(1,223)



(370)


Recurring capital expenditures

(225)



(469)


Renewal lease commissions and tenant improvements

(889)



(731)


Non-cash portion of interest expense

501



379


Non-cash compensation expense

2,387



2,041


Adjusted funds from operations (2)

$

35,702



$

28,607






(1) In the fourth quarter of 2016, the Company revised the prior period rental property depreciation and amortization expense amounts and accumulated building and improvements depreciation amounts. Refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2016, for a detailed discussion of the revision.

(2) Excludes Non-Recurring Capital Expenditures of approximately $2,662 and $2,257 and new leasing commissions and tenant improvements of approximately $1,192 and $690 for the three months ended March 31, 2017 and March 31, 2016, respectively.

 

Non-GAAP Financial Measures and Other Definitions

Acquisition Capital Expenditures: We define Acquisition Capital Expenditures as Recurring and Non-Recurring Capital Expenditures identified at the time of acquisition and underwritten to occur in the first 12 months. Acquisition Capital Expenditures also include new lease commissions and tenant improvements for space that was not occupied under the Company's ownership.

Adjusted Earnings before Interest, Taxes, Depreciation, and Amortization (Adjusted EBITDA), and Run Rate Adjusted EBITDA: We define Adjusted EBITDA as net income (loss) (computed in accordance with GAAP) before interest, tax, depreciation and amortization, property acquisition costs, gain on the sales of rental property, termination income, straight-line rent adjustments, non-cash compensation, intangible amortization in rental income, loss on impairments, loss on involuntary conversion, loss on extinguishment of debt and other non-recurring items.

We define Run Rate Adjusted EBITDA as Adjusted EBITDA plus incremental Adjusted EBITDA related to acquisitions acquired in each quarter for which a full quarter's results were not reflected less Adjusted EBITDA related to the quarter's dispositions.  Run Rate Adjusted EBITDA does not reflect the Company's historical results and does not predict future results, which may be substantially different.

Adjusted EBITDA and Run Rate EBITDA should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance, and we believe that to understand our performance further, Adjusted EBITDA and Run Rate Adjusted EBITDA should be compared with our reported net income or net loss in accordance with GAAP, as presented in our consolidated financial statements.  We believe that Adjusted EBITDA and Run Rate Adjusted EBITDA are helpful to investors as supplemental measures of the operating performance of a real estate company because they are direct measures of the actual operating results of our properties. We also use these measures in ratios to compare our performance to that of our industry peers.  

Capitalization Rate: We define Capitalization Rate as the estimated weighted average cash capitalization rate, calculated by dividing (i) the Company's estimate of year one cash net operating income from the applicable property's operations stabilized for occupancy (post-lease-up for vacant properties), which does not include termination income, miscellaneous other income, capital expenditures, general and administrative costs, reserves, tenant improvements and leasing commissions, credit loss, or vacancy loss, by (ii) the purchase price plus estimated Acquisition Capital Expenditures. These capitalization rate estimates are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control, including those risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2016.

Comparable Lease: We define a Comparable Lease as a lease with a similar lease structure as compared to the previous in-place lease, excluding new leases for space that was not occupied under our ownership, leases on space with downtime in excess of two years, leases with materially different lease structures, leases associated with known vacates at the time of acquisition, and leases with credit-related modifications.

Core Based Statistical Area (CBSA): We define Core Based Statistical Area ("CBSA") as a U.S. geographic area defined by the Office of Management and Budget that consists of one or more counties (or equivalents) anchored by an urban center of at least 10,000 people plus adjacent counties that are socioeconomically tied to the urban center by commuting.

Debt Capacity: We define Debt Capacity as the aggregate undrawn nominal commitments under the Company's unsecured debt instruments. 

Funds from Operations (FFO), Core FFO, and Adjusted FFO (AFFO): We define FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts ("NAREIT"). FFO represents net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, impairment write-downs of depreciable real estate, real estate related depreciation and amortization (excluding amortization of deferred financing costs and fair market value of debt adjustment) and after adjustments for unconsolidated partnerships and joint ventures. Core FFO and AFFO exclude property acquisition costs, lease termination income, intangible amortization in rental income, loss on extinguishment of debt, loss on involuntary conversion, gain on swap ineffectiveness, and non-recurring other expenses. AFFO also excludes non-rental property depreciation and amortization, straight-line rent adjustments, non-cash portion of interest expense, non-cash compensation expense and deducts recurring capital expenditures and lease renewal commissions and tenant improvements.

None of FFO, Core FFO or AFFO should be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance, and we believe that to understand our performance further, these measurements should be compared with our reported net income or net loss in accordance with GAAP, as presented in our consolidated financial statements.  We use FFO as a supplemental performance measure because it is a widely recognized measure of the performance of REITs.  FFO may be used by investors as a basis to compare our operating performance with that of other REITs.  We and investors may use Core FFO and AFFO similarly as FFO.

However, because FFO, Core FFO and AFFO exclude, among other items, depreciation and amortization and capture neither the changes in the value of our buildings that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our buildings, all of which have real economic effects and could materially impact our results from operations, the utility of these measures as measures of our performance is limited. In addition, other REITs may not calculate FFO in accordance with the NAREIT definition as we do, and, accordingly, our FFO may not be comparable to such other REITs' FFO. Similarly, our calculations of Core FFO and AFFO may not be comparable to similarly titled measures disclosed by other REITs.

GAAP: U.S. generally accepted accounting principles.

GAAP Rent Change: We define GAAP Rent Change as the percentage change in the average base rent over the contractual lease term (excluding above/below market lease amortization) of the Comparable Lease.

Immediate Availability: We define Immediate Availability as the amount of Debt Capacity the Company could immediately borrow consistent with the financial covenants in its debt instruments.

Net operating income (NOI), Cash NOI, and Run Rate Cash NOI: We define NOI as rental income, including reimbursements, less property expenses and real estate taxes, which excludes depreciation, amortization, loss on impairments, general and administrative expenses, interest expense, interest income, corporate sub-lease rental income, asset management fee income, property acquisition costs, loss on involuntary conversion, loss on extinguishment of debt, gain on sales of rental property, and other expenses.

We define Cash NOI as NOI less straight-line rent adjustments and less intangible amortization in rental income.

We define Run Rate Cash NOI as Cash NOI plus Cash NOI adjusted for a full period of acquisitions and dispositions, less cash termination income.   Run Rate Cash NOI does not reflect the Company's historical results and does not predict future results, which may be substantially different.

We consider NOI, Cash NOI and Run Rate Cash NOI to be appropriate supplemental performance measures to net income because we believe they help us and investors understand the core operations of our buildings.  None of these measures should be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance, and we believe that to understand our performance further, these measurements should be compared with our reported net income or net loss in accordance with GAAP, as presented in our consolidated financial statements.  Further, our calculations of NOI, Cash NOI and Run Rate NOI may not be comparable to similarly titled measures disclosed by other REITs.

Non-Recurring Capital Expenditures:  We define Non-Recurring Capital Expenditures as capital items for upgrades or items that previously did not exist at a building or capital items which have a longer useful life, such as roof replacements.  

Occupancy Rate:  We define Occupancy Rate as the percentage of total leasable square footage for which the lease term has commenced as of the close of the reporting period.

Operating Portfolio: We define our Operating Portfolio as including all warehouse and light manufacturing assets and excluding non-core flex/office assets and assets under redevelopment. Our Operating Portfolio also excludes billboard, parking lot and cell tower leases.

Pipeline: We define Pipeline as a point in time measure that includes all of the transactions under consideration by the Company's acquisitions group that have passed the initial screening process.  The pipeline also includes transactions under contract and transactions with non-binding LOIs.

Recurring Capital Expenditures:  We define Recurring Capital Expenditures as capital items required to sustain existing systems and capital items which generally have a shorter useful life. 

Renewal Lease: We define a Renewal Lease as a lease signed by an existing tenant to extend the term for twelve months or more, including (i) a renewal of the same space as the current lease at lease expiration, (ii) a renewal of only a portion of the current space at lease expiration and (iii) an early renewal or workout, which ultimately does extend the original term for twelve months or more.

Retention: We define Retention as the percentage determined by taking Renewal Lease square footage commencing in the period divided by square footage of leases expiring in the period. Neither the Renewal Leases nor leases expiring include Temporary Leases or License Agreements. Retention excludes leases associated with known vacates at the time of acquisition, leases with credit-related modifications, and early terminations.

Temporary Leases/License Agreements: We define a Temporary Lease or a License Agreement as any lease that is signed for an initial term of less than twelve months; this includes short-term new leases and short-term renewal leases.

Weighted Average Lease Term: We define Weighted Average Lease Term as the contractual lease term in years as of the lease start date weighted by square footage. Weighted Average Lease Term related to acquired assets reflects the remaining lease term in years as of the acquisition date weighted by square footage.

 

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SOURCE STAG Industrial, Inc.