STAG Industrial, Inc. (NYSE:STAG) Q3 2018 Earnings Conference Call Transcript

Nov 02, 2018 • 10:00 am ET

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STAG Industrial, Inc. (NYSE:STAG) Q3 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Greetings, and welcome to STAG Industrial's Third Quarter 2018 Earnings Conference Call. At this time all participants are in a listen-only mode, a question-and-answer session will follow the presentation.

(Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to Matts Pinard.

Executive
Matts Pinard

Thank you. Welcome to STAG Industrial's conference call covering the third quarter 2018 results. In addition, to the press release distributed yesterday, we posted an unaudited quarterly supplemental informational presentation on the Company's website at stagindustrial.com under the IR section.

(Forward-Looking Cautionary Statements)

On today's call, you will hear from Ben Butcher, our CEO; and Bill Crooker, our CFO. I will now turn the call over to Ben.

Executive
Benjamin Butcher

Thank you, Matts. Good morning, everybody. And welcome to the third quarter earnings call for STAG Industrial. We are pleased to have you join us and look forward to telling you about our third quarter results. Presenting today, in addition to myself, will be Bill Crooker, our CFO, who will discuss the bulk of the financial and operational data. Also with me today are Steve Mecke, our COO and Dave King, our Director of Real Estate Operations. They will be available to answer questions specific to their areas of focus.

The overall health of the industrial sector and the underlying strength of the STAG portfolio, combined with the continuation of the impressive countrywide execution, translated to another quarter of solid core FFO growth. It has been a very successful year for acquisitions with volume approaching $500 million acquired year-to-date with two months of our historically busy fourth quarter to go.

We are very confident we'll meet our current guidance of $600 million to $700 million for the year, with a weighted average cap rate near the midpoint of our guidance, approximately 7%. Our pipeline of assets potentially worth acquiring currently stands at $2.2 billion and contains assets similar to what we have acquired to-date in 2018.

We have recently completed our second annual comprehensive tenant survey. We conduct this survey to enhance our understanding of how tenants view our buildings, their business and the world in general. We ask questions related to the opportunities and challenges of their business, how they evaluate the locational drivers of their operations and questions focusing on broad trends in e-commerce and labor availability.

We also strive to understand how their real estate needs are being met and how they can be improved. By conducting this survey annually, we can benchmark responses and examine trends that our tenant bases use of the buildings they occupy and logistical patterns in general. This year's survey indicates increased business activity and confidence. Hiring has increased, more shifts are being run and additional lines are being added. Labor availability remains a widespread concern across both geographies and industries. E-commerce continues to be an important incremental demand driver.

36% of our portfolio's buildings are currently handling the E-commerce activity, and 47% of those respondents indicate that E-commerce activity has increased in their