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STAG Signs New Credit Facility

Zacks Equity Research

STAG Industrial, Inc. (STAG), a real estate investment trust (:REIT), has recently entered into a $350 million unsecured credit facility, which consists of $150 million term loan and $200 million unsecured revolving credit facility.

The $200 million credit facility is scheduled to mature in September 2016 with an option for a one-year extension and includes an accordion feature by virtue of which the company can increase the borrowing capacity to $300 million.

The $150 million unsecured term loan is scheduled to mature in September 2017 and replaces the company's prior $100 million secured corporate revolving credit facility. This loan also retires the remaining balance of a secured loan which was scheduled to mature in October 2013.

Under the terms of the new credit facility, STAG Industrial will incur interest at a floating rate which will be equal to the Eurodollar rate or the base rate plus a spread that depends upon its leverage ratio. As of September 13, 2012, the spread on the revolving credit facility and term loan was 1.65%. STAG Industrial had no amounts outstanding under the revolving credit facility and $100 million was outstanding under the term loan.

This is an important strategic financial arrangement for STAG Industrial as it provides additional liquidity and enhances financing flexibility. This transaction enables the company to extend its existing debt maturity and seize investment opportunities through acquisitions, which in turn is expected to boost top-line growth.

STAG Industrial is focused on the acquisition, ownership and management of single-tenant industrial properties throughout the United States. The company is focused on the acquisition of Class B, single tenant industrial properties primarily in secondary markets. Presently, the company’s portfolio consists of 129 properties in 29 states with approximately 22.1 million rentable square feet.

STAG Industrial currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. We also have a long-term Neutral recommendation on the stock. One of its competitors, First industrial Realty Trust Inc (FR) retains a Zacks #3 rank, which translates into a short term Hold rating.

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