Continuing with its acquisition spree,
STAG Industrial, Inc.
) recently acquired two industrial properties in separate
transactions for approximately $13.4 million. With these
transactions, the company's year-to-date acquisition volume has
surged to $357 million.
Through this strategic initiative, the company expects to enhance
the quality of its portfolio and expects it to be accretive to
earnings going forward. At the same time, the company continues
the diversification of its portfolio to maintain a mix of markets
and tenants, which in turn, will limit its exposure to any single
tenant, industry, or geographic location.
The first property is a 217,000 square feet warehouse and
distribution facility located in Springfield in Massachusetts.
The facility is 100% leased to a supermarket retailer - Big Y
Foods, Inc. The second property is a light manufacturing and
warehouse facility spanning 108,000 square feet situated in
Sterling Heights in Michigan. The facility is fully occupied by
an industrial firm, Sodecia North America Inc.
Since its inception, STAG Industrial has diligently acquired
individual Class B, single-tenant industrial properties
throughout the U.S. The company specifically focuses on the
secondary markets with purchase prices as low as $5 million.
The company's strategic investment objectives hinge upon the fact
that single-tenant properties usually require less expenditure to
lease and operate than the multi-tenant ones. In addition, Class
B industrial properties tend towards higher current returns and
lower volatility than their Class A counterparts. Furthermore,
secondary markets also generally have less occupancy and rental
rate volatility than primary markets.
Despite the challenging economic environment, STAG Industrial has
been very active on the acquisition front. Last month, the
company had acquired 13 fully leased industrial facilities
totaling approximately 3.1 million square feet and a portfolio of
31 industrial buildings spanning approximately 4.3 million square
feet. Currently, the company's portfolio consists of 167
properties in 31 states with approximately 28.1 million rentable
STAG Industrial, which competes with the likes of
Franklin Street Properties Corp.
), is expected to release its third-quarter 2012 results on
November 7. The Zacks Consensus Estimate for FFO (fund from
operations) for the quarter is currently pegged at 27 cents per
We have a long-term Neutral recommendation on STAG Industrial.
However, it holds a short-term Zacks #2 Rank (Buy).
Note: FFO, a widely accepted and reported measure of the
performance of REITs is derived by adding depreciation,
amortization and other non-cash expenses to net income.
FRANKLIN ST PPT (FSP): Free Stock Analysis
STAG INDUSTRIAL (STAG): Free Stock Analysis
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