STAG Industrial, Inc. (STAG)

STAG shows mixed cash flow dynamics that fall short of a stable 3-level rating. Core FFO per diluted share grew modestly to $0.65 in Q2 2026 (3.2% YoY), and year-to-date Core FFO per share reached $1.30 (4.8% YoY), indicating roughly flat-to-modest growth rather than steady expansion. The declared Q3 2026 dividend of $0.3875 per share annualizes to approximately $1.55, which against annualized Core FFO of ~$2.60 (based on Q2 run rate) suggests a payout ratio near 60% of FFO—comfortably below the 75% threshold. However, AFFO per share data is not provided, preventing full assessment against the rubric's primary metric. The company maintains a strong occupancy rate of 94.5%, positive leasing spreads (19.8% cash rent change), and has recently refinanced debt maturities, supporting dividend sustainability. The modest FFO growth and absence of AFFO visibility prevent a higher score, though the low payout ratio and operational momentum prevent a score of 1.

STAG's net debt/EBITDA of 5.2x sits at the upper boundary of the 5-anchor threshold but does not exceed it, placing the company solidly in the 4-5 range rather than the 3-anchor band (5.5–6.5x). The earnings release confirms a 'fortified balance sheet' and demonstrates proactive debt management, including a post-quarter refinance extending $350 million of term loans maturing in March 2027 to January 2032, with fixed rates of 3.53% through March 2027 and 4.79% thereafter. The company maintains $613.7 million in liquidity and has successfully laddered debt with mostly fixed-rate obligations. While coverage ratios are not explicitly provided in the data, the strong Core FFO growth (6.0% year-over-year) and consistent cash generation support adequate coverage. The 94.5% occupancy rate and 19.8% cash rent growth on new leases indicate operational strength. The primary constraint preventing a 5-score is the leverage metric at exactly 5.2x, which meets but does not clearly exceed the 5x threshold, and the absence of explicit coverage ratio confirmation.

STAG demonstrates strong operating performance with Same Store Cash NOI increasing 3.4% in Q2 2026 versus Q2 2025, exceeding the 3%+ threshold for a score of 5. Occupancy stands at 94.5% overall and 95.5% on the Operating Portfolio, meeting the 95%+ stable criterion. Leasing spreads are strongly positive with Cash Rent Change of 19.8% and Straight-Line Rent Change of 33.7% in Q2, and year-to-date Cash Rent Change of 20.3%, indicating robust pricing power. However, total portfolio occupancy at 94.5% falls slightly short of the 95%+ anchor for a perfect score, placing performance at the high end of the 3-5 range but not fully at the 5 level.

STAG operates in industrial real estate, a sector with secular tailwinds from e-commerce and supply chain modernization, supporting a score above the midpoint. The portfolio shows solid fundamentals: 94.5% occupancy, 75.7% retention on expiring leases, and weighted-average lease terms of 5.8–6.1 years across recent activity. Acquisitions demonstrate quality assets in supply-constrained markets (Greenville, Indianapolis, Kansas City, Chicago, Cleveland) with strong rent growth (19.8% cash rent change, 33.7% straight-line). However, the portfolio appears moderately concentrated in industrial/warehouse rather than diversified across multiple property types, and tenant credit quality is not explicitly detailed. The net debt-to-EBITDA of 5.2x is elevated for a REIT, suggesting leverage constraints that may limit portfolio flexibility. Overall, the company demonstrates stable execution in a favorable sector with modern, well-leased assets, but lacks the diversification and lower leverage profile of a top-tier score.

STAG demonstrates mixed capital allocation discipline with concerning dilutive issuance patterns offsetting operational execution. The company achieved 3.2% Core FFO per diluted share growth in Q2 2026 and 4.8% year-to-date, but simultaneously deployed an ATM offering program selling 3.4 million shares at $39.00 average price against a current price of $38.23, diluting existing shareholders. While acquisitions at 6.1% cash cap rates and 6.8% straight-line rates appear accretive to FFO, the forward equity issuance of $131.3 million year-to-date suggests reliance on dilutive capital raises rather than organic cash generation or debt-only funding. Management disclosure is adequate but not candid regarding dilution trade-offs; insider ownership levels are not disclosed in the materials provided. The balance sheet refinancing (extending $350 million term loans to 2032 at 4.79%) shows prudent debt management, but the combination of modest per-share growth alongside continuous equity issuance indicates capital allocation favors asset growth over per-share value creation.

Valuation unavailable — no current price ratio this pass; total computed over the 5 model categories.