STAG Industrial, Inc (STAG) is one such equity REIT that has a well-defined investment model built on its differentiated strength of yield. Unlike the above named “flight to quality” REITs, STAG’s competitive advantage is its focus on Class-B assets and secondary markets. Unlike many of the REITs and Institutional buyers fighting to gain stakes in larger markets with trophy assets, STAG’s strategy is to acquire properties in smaller markets where there is less competition and higher yield. And with a focus on the industrial sector, STAG aims to invest capital for higher returns in second tier markets where there is less occupancy and rent volatility. This simple, risk-averse model is built on market niche differentiation that has resulted in accretive dividend yield.
Formerly known as STAG Capital Partners, the predecessor company has been around since 2004. STAG Industrial Inc. closed on its IPO in April 2011 (just eight months ago) when it generated around $205 million (in gross proceeds). The offering included 13,750,000 shares of common stock priced at $13 per share. Since the IPO, STAG has utilized around $309 million in total debt and the company recently announced the closing of 2,760,000 shares of Series A Preferred Redeemable (at 9.0%) stock. Issued at a price of $25.00 per share, the gross proceeds of $69 million will be used to reduce the revolving credit facility (down to zero) and fund upcoming acquisitions.
Since and before STAG’s April IPO, the senior management has closed on around $1.5 billion in “big box” assets. And since the April IPO, STAG Industrial has closed on around $84 million in assets (or around 1.2 million square feet). The current asset base consists of 101 assets in 26 states. Many of the REIT’s assets are located in the Northeast, Southwest, and Midwest. Here is a snapshot of the geographic footprint.