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| Statement |
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| Located in the spark submarket of Reno, Nevada, the building benefits from both its central infill location within Reno as well as close proximity to I-80, with a weighted average lease term of 1.9 years and approximately 33% below market rents, the building offers a high-growth mark-to-market opportunity within a low vacancy submarket |
| So I think we can still drive some pretty strong CAD growth and CAD per share growth going forward |
| STAG is extremely well positioned for sustained growth through our operating and acquisition platform |
| We produced record leasing spreads and record cash same-store NOI |
| Same-store cash NOI grew 6.8% for the quarter and 5.6% for the year, representing another annual same-store cash NOI growth record for STAG |
| Recent retail sales prints have been strong, especially in e-commerce, indicating that consumer health remains intact |
| Secular tailwinds, including near-shoring and on-shoring, have contributed to a boom in domestic manufacturing requirements, which grew by 60% in 2023 |
| And then the way our buildings fit the submarket, we feel really confident about their ability to lease and drive good strong rental growth |
| It gives us more confidence than we did last year |
| As mentioned by Bill, we continue to see healthy dynamics across the portfolio |
| And for my second question, the core operations ended in a very solid place |
| So, we feel pretty good about where our same-store is coming in at the initial guide here |
| So this was a good opportunity for them to make some return on their investment without taking any leasing risk |
| These leasing spreads and same-store NOI growth were driven by continued market rent growth in our portfolio |
| So there's really good activity on that |
| But we're really excited about where we are today |
| But for this year, our same-store cash NOI came in at 5.6%, which was a record for us |
| That was a unique opportunity |
| The acquisition market appears to be heading in a positive direction as we start 2024 |
| 2023 was one of the best operational years we had as a public company |
| Our team continues to drive value in all macro environments |
| We are proud to report cash and straight-line leasing spreads of 31% and 44% in 2023 |
| And that's where we were able to add our value |
| What's great about our platform is we have the ability to invest across that spectrum |
| There's good activity on the second 233,000 square foot building, which has an expected construction completion date in the second quarter of 2024 |
| Activity remains healthy, and we anticipate leasing a meaningful amount of the space in the first half of 2024 |
| These are markets that we have a strong presence in |
| So, it is a ground-up analysis that our team spends a lot of time reviewing and we have a lot of confidence in it |
| So by having those type of assets, we're able to push rents because demand is really high |
| Some of the largest markets for manufacturing space in the U.S., including Chicago, Detroit, Minneapolis and Greenville, experienced some of the highest rent growth last year |
| Statement |
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| We experienced 13 basis points of credit loss in 2023, well below our initial guidance of 50 basis points |
| Average same-store portfolio occupancy is expected to decline by 50 basis points |
| So -- but with all that, it becomes additional risk and additional time |
| So, I think it's -- when you look across the markets, it really is the big box distribution markets are a little bit slower, market rent growth versus some of the other markets |
| From an -- we look at it on occupancy, average occupancy, average occupancy in our same-store pool last year was down 30 bps |
| But as we look to the bottom line and adjust for noncash-related items to get you to your cash available for distribution, this came in about 5% lower than the sell side was expecting |
| And you guys kind of touched a little bit on weakness in big box demand |
| In addition, forecast for 2024 and 2025 deliveries are expected to decrease to just 2.2% of stock |
| But development starts are down 65% year-over-year |
| While supply remains elevated, new construction starts have declined nationally by approximately 65% on a year-over-year basis as of Q4 of 2023 |
| And we're guiding to average occupancy in 2024 down 50 bps |
| So the dynamic that persisted in 2023 still exists today, with really first-gen big box leasing being very slow and in other space sizes, having more activity or demand |
| Consistent with our previous messaging, the dividend payout ratio continues to moderate, declining from 78% at year-end 2022 to 75% at year-end 2023 |
| With all that being said, we are expecting acquisitions to be more back-end weighted, just given some of the uncertainty in the market |
| Like I said, we do have a little bit more confidence than we did last year |
| That was a deal that was under contract with another buyer, ultimately, that buyer wasn't able to perform |
| Samir Khanal I guess, Bill or Matts, on the shifting to the internal growth guide here on same-store, I mean 5% is still a good number, but it is slowing a little bit |
| So, you take that and then you take a look at the balance sheet, it's under-levered compared to our -- to a range of 5 to 5.5 |
| But the riskier of the project, obviously, it impacts the capital a little bit more than a build-to-suit with very limited rights for the tenant to bow out of that |
| I mean, it's certainly less than some of our peers just as we're ramping up that opportunity |
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