BOSTON-Single-tenant industrial specialist STAG Industrial reported on Thursday that fourth-quarter adjusted funds from operations rose 135% year-over-year to $13.1 million, while Q4 NOI saw a 72% increase to $23.4 million. The quarter also saw the Boston-based company’s largest acquisition to date, a $129-million portfolio deal for 31 properties.
“A very busy and successful fourth quarter topped off a great, first full year for STAG as a public company,” CEO Benjamin Butcher says in a release. “In 2012, we continued to move forward with our low leverage strategy for the execution of our differentiated investment thesis. I am very proud of our team and of the solid total shareholder return of 68% we delivered to our shareholders over 2012.”
That differentiated investment thesis: a focus on class B industrial assets. On its website, STAG enumerates the reasons behind its thinking. “Single-tenant properties generally require less expenditure for leasing, operating and capital costs per property than multi-tenant properties,” the company says.
Further, class B industrial properties tend toward higher return and lower volatility than their class A counterparts, while secondary markets are similarly less volatile. In addition, says STAG, “Tenants in our target properties tend to manage their properties directly, which allows us to grow our portfolio without substantially increasing the size of our asset management infrastructure.”
The company paid approximately $212.8 million, including closing costs, for the 40 properties it acquired during Q4. That tally brought the total cost of properties acquired for the year to $427 million, and increased to $552 million the price of acquisitions made since STAG Industrial’s initial public offering in April 2011.
The company’s portfolio square footage increased to 29.4 million at Dec. 31, 2012 representing a 78% increase in square footage year-over-year and a 125% increase in square footage since the IPO. Of that, the $129-million portfolio added 4.3 million square feet.
It’s 91% leased to 29 different tenants, is located in 10 different states and was purchased at a 9% plus cap rate, the company said when the acquisition was announced this past October. The largest of the newly acquired properties was an 887,044-square-foot warehouse/distribution center at 100 Papercraft Park in Pittsburgh, currently 100% occupied, according to an SEC filing.