Can you discuss the mix of Q2 acquisitions, the impact of cap rate compression, and how the company views portfolio versus single-asset pricing?

Q2 acquisitions were Class A assets in strong submarkets, with cash cap rates of 6.1% and straight-line cap rates of 6.8%. The company noted that portfolios sub-$500 million are pricing closer to individual assets, while $500 million to $1 billion portfolios have some premium, and those above $1 billion are losing their premium. STAG does not pay portfolio premiums. “The cash cap rates were a little bit lower. I think it was 6.1% going in, 6.8% on a straight-line basis. So decently accretive from where we could raise capital in the second quarter.”

How did Q2 leasing spreads compare to Q1, and what are the expectations for the rest of the year? Also, can the company accelerate development starts to create more value?

The company still expects 18%-20% leasing spreads for FY26, likely at the higher end. Q1 had exceptional roll-ups from long-term leases, while Q2 had one lease closer to market. Development is a strong platform with 7%+ yields, and they aim to increase the pipeline by a couple hundred million dollars, but it will take time to ramp up. “So for the year, we still expect 18% to 20% leasing spreads probably closer to the higher end of that range. So right on track to a little bit better than our original guidance.”

Is data center demand concentrated in specific markets or broad across the portfolio, and what type of services are these tenants providing?

Data center demand is broad, seen in the Midwest, Southeast, and Texas (e.g., Michigan, Wisconsin, South Carolina, Houston). It's long-term demand with a 7-year WALT and 33% rent roll-up. These tenants primarily service existing data centers by providing generators and spare parts. “It's broad. It's not across the entire portfolio, but we're seeing it a lot in the Midwest. We're seeing it in the Southeast, we're seeing in Texas.”

STAG

STAG Industrial (STAG) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Real Estate· Jul 29, 2026

Source: earnings call transcript

Executive summary

STAG Industrial, Inc. Q2 FY26 — Strong Leasing Spreads and Increased Guidance

Industrial fundamentals stabilized in Q2 FY26, driven by accelerating net absorption and a contracting development pipeline. STAG's portfolio is well-positioned, benefiting from diversified demand tailwinds including e-commerce, nearshoring, and data center operations. The company delivered strong leasing spreads and raised full-year guidance for FFO, same-store NOI, and acquisitions, reflecting confidence in the market trajectory and operational execution.

Highlights

Core FFO per share increased 3.2% to $0.65 for the quarter.
Cash and straight-line leasing spreads were 19.8% and 33.7% respectively on commenced leases.
92% of forecasted 2026 leasing has been addressed, consistent with initial guidance.
Same-store cash NOI grew 3.4% for the quarter and 3.9% year-to-date.
Full-year guidance for Core FFO per share, same-store occupancy, cash same-store NOI growth, and acquisition volume was increased.

Concerns

Volatility in rates and macro environment impacting acquisition cadence
Slower market activity in certain port markets and specific regions

Guidance & targets

Category	Target	Timeline	Confidence
Credit loss	30 basis points medium materiality	FY26 · 2026	High
Average same-store occupancy	96.25% to 97.5% medium materiality	FY26 · 2026	High
Retention rate	75% medium materiality	FY26 · 2026	High
Cash same-store NOI growth	3% to 3.5% high materiality	FY26 · 2026	High
Acquisition volume	$400 million to $700 million high materiality	FY26 · 2026	Medium
Stabilized capitalization rate on acquisitions	6% to 6.5% medium materiality	FY26 · 2026	Medium
Core FFO per share	$2.61 to $2.65 per share high materiality	FY26 · 2026	High

STAG operating KPIs by quarter

STAG operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Mar 2026 Q1 FY26	This call Jun 2026 Q2 FY26	Change vs prior quarter
Retention rate	69.5% Retention for the quarter was 69.5%, we are maintaining our retention guidance of 70% to 80% for the year. Source: earnings call transcript	75.7% Retention for the quarter was 75.7%. Source: earnings call transcript	+6.2 pt
Occupancy rate Same-store	96.6% So that resulted in 96.6% occupancy in the same store. Source: earnings call transcript	96% So our spot occupancy at the end of Q2 in our same-store pool is 96%. Source: earnings call transcript	-0.6 pt

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Development activity (not in service) 2.3 million sq ft Q2 FY26 end

9 buildings in various stages of development

Development pipeline under construction $290 million Q2 FY26 end

total value of developments under some sort of construction period, not in stabilized bucket

Acquisition opportunities under contract/LOI low Q2 FY26 end

management states 'not much under contract or LOI right now'

Deals & partnerships

Multiple Acquisition of 7 industrial buildings $287.1 million

Acquisition volume for Q2 FY26. Assets are Class A, generally at or slightly below market, with lease bumps of about 3.3%.

Multiple Disposition of 3 assets

Three assets disposed of so far this year. Two were noncore, and one was opportunistic. Expect more dispositions in the second half of the year, skewed more to noncore.

Fueling solutions provider Lease for Tampa development

Executed in May for 35,000 square feet (25% of the development), commences August 1.

E-commerce company Lease for Reno development

Executed subsequent to quarter end for 47,000 square feet (62% of one Reno development), commences September 1.

Capital programs

Dallas Build-to-suit Project (Rockwall, TX) underway

Start: Q2 2026

Benefit:343,000 square feet

Closed in April 2026, located in Northeast Dallas, Rockwall, Texas. Construction commenced in Q2 2026 with an estimated delivery date of Q2 2027 and an expected yield of 7.5%.

Phoenix Development Project (Southeast Phoenix, AZ) planned

Start: late Q3 2026

Benefit:184,000 square feet

Closed in April 2026, 12-acre site well located within the Southeast Valley submarket with immediate access to i10. Anticipate breaking ground in late Q3 2026 with an estimated delivery date of Q3 2027.

Risks & headwinds

Volatility in rates and macro environment impacting acquisition cadence balance of the year

not a lot of volatility

Mitigation:If rates stay stable and there's not a lot of volatility in the macro environment, we feel pretty confident we can keep up this pace [of acquisitions].

Slower market activity in certain port markets and specific regions current

Savannah being one, Charleston being one, they're a little bit slower. And then El Paso is a little bit slower just given the U.S. Mexico relations and Reno has been a little bit slower.

Mitigation:Overall, the portfolio is performing really well, and we're optimistic as we move into 2027.

What to watch in Q3 FY26

Acquisition cadence

H2 FY26

Current Not much under contract or LOI right now

Target Keep up this pace [of acquisitions]

Why it matters

Indicates ability to deploy capital and grow the portfolio, especially given raised guidance.

We don't have much under contract or LOI right now, which is why we only raised the guidance, I think, $50 million at the midpoint. We're seeing good activity. There's a lot of sellers out there, bid-ask spreads have tightened. And so the cadence typically Q4 is our largest acquisition quarter. But just given the volatility in rates and the macro environment, we didn't feel that confident in the cadence in the third and fourth quarter, just given what's going on in the macro environment. That being said, if rates stay stable and there's not a lot of volatility in the macro environment, we feel pretty confident we can keep up this pace.

Find out whether STAG delivers this. Inve re-checks your case every morning.

Q&A highlights

What is the expected cadence for acquisitions in the second half of 2026, given the strong Q2 and raised guidance, and what is the current state of opportunities under contract?

The company currently has limited opportunities under contract or LOI. While Q4 is typically the largest acquisition quarter, the macro environment and rate volatility make the cadence uncertain. However, if rates stabilize, they are confident in maintaining the current pace.

“We don't have much under contract or LOI right now, which is why we only raised the guidance, I think, $50 million at the midpoint. We're seeing good activity. There's a lot of sellers out there, bid-ask spreads have tightened.”

asked by Craig Mailman · answered by William Crooker

2 min read 6 chapters

Detailed narrative

Industrial Market Fundamentals and Supply Dynamics

Industrial fundamentals stabilized in Q2 FY26, with net absorption accelerating to 69 million square feet, contributing to a total of 111 million square feet in the first half, marking the best start to a year since 2022. The development pipeline has contracted by roughly half from its 2022 peak, with under-construction product now representing just 2% of total stock, 55% of which is pre-leased.

This improved supply-demand balance is expected to drive better rent growth into 2027.

Diversified Demand Tailwinds

Demand tailwinds remain intact and diversified, with e-commerce reaching a record high percentage of retail sales. Nearshoring and onshoring trends are emerging as new sources of demand for supply chain diversification. Notably, the company has leased 2.3 million square feet to data center-related tenants since early 2025, primarily for servicing existing data centers, with a weighted average lease term of 7 years and 33% rent roll-up.

Inland markets continue to outperform coastal markets in demand and net absorption.

Acquisition Strategy and Activity

Q2 FY26 acquisition volume totaled $287.1 million across 7 buildings, with cash and straight-line cap rates of 6.1% and 6.8% respectively. The company focuses on acquiring Class A assets in strong submarkets, with lease bumps around 3.3%. While portfolio premiums are observed in the $500 million to $1 billion range, STAG underwrites individual asset pricing and does not pay portfolio premiums, focusing on assets that are at or slightly below market rents.

Development Platform Expansion

The development platform is performing strongly, with 9 buildings totaling 2.3 million square feet currently in various stages of development, not yet in service, and expected stabilized yields of 7.1%. Recent projects include a 343,000 square foot build-to-suit in Dallas (7.5% yield, Q2 2027 delivery) and a 184,000 square foot project in Phoenix (Q3 2027 delivery).

The company aims to increase its development pipeline by a couple of hundred million dollars over time, leveraging internal sourcing, JV partners, and existing land.

Leasing Performance and Outlook

The company commenced 36 leases across 5.6 million square feet in Q2 FY26, generating cash and straight-line leasing spreads of 19.8% and 33.7%. Retention for the quarter was 75.7%. For the full year 2026, 92% of forecasted leasing has been addressed, with spreads expected at the higher end of the 18%-20% range.

Early renewals for FY27 are ahead of historical pace, with 35% of the plan addressed compared to a historical 26%-28% at this time.

Balance Sheet and Capital Markets Activity

Core FFO per share was $0.65, an increase of 3.2% year-over-year. Net debt to annualized run rate adjusted EBITDA was 5.2x (5.1x including unfunded forward equity). Liquidity stood at $614 million. The company issued 3.4 million shares via its ATM program for $131 million gross proceeds year-to-date, settling $59.8 million in Q2.

Debt refinancing included a $350 million term loan maturing in January 2032 at a fixed rate of 4.79% from 2027, achieving a 5 basis point savings across all bank debt.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.