STAG INDUSTRIAL TO ISSUE $450 MILLION OF SENIOR UNSECURED NOTES AND REFINANCES TERM LOAN

Rhea-AI Summary

STAG Industrial, Inc. announces a note purchase agreement for $450 million of fixed rate senior unsecured notes with varying terms and interest rates. The company also refinanced a $200 million unsecured term loan, extending the maturity date and adjusting the interest rates.

Insights

Financial Analyst

The issuance of $450 million in fixed rate senior unsecured notes by STAG Industrial is a strategic move to secure long-term financing, diversify the company's capital structure and potentially finance its growth initiatives or refinance existing debt. With interest rates set between 6.05% and 6.30%, the debt cost reflects current market conditions and the company's creditworthiness. Investors should note the term structure of the notes, which indicates a staggered maturity schedule that can help STAG manage its debt obligations over time without facing a significant burden at any single point.

However, the interest rates for the new notes are higher than the refinanced term loan, which has a fixed rate of 2.94% until January 2025 and then 4.83% until March 2027. This difference suggests a premium for the longer-term and unsecured nature of the notes, which could increase the company's interest expenses in the short term. The refinancing of the $200 million unsecured term loan also indicates proactive debt management, potentially improving financial flexibility by extending the maturity and locking in a relatively low interest rate before a speculated rise in market rates.

Market Research Analyst

STAG Industrial's recent financial activities could be interpreted as a response to anticipated interest rate trends and capital market conditions. By locking in fixed interest rates, the company is hedging against the risk of rising interest rates, which is a concern for many businesses in the current economic climate. The private placement of notes also suggests that STAG Industrial is tapping into a specific investor base that is comfortable with the company's risk profile and is seeking fixed income opportunities.

From a market perspective, this move could be seen as a vote of confidence from institutional investors in STAG's business model and future prospects. The company operates in the industrial real estate sector, which has been experiencing growth due to the rise of e-commerce and the need for distribution centers. Therefore, the ability to secure long-term financing at fixed rates may position STAG favorably to capitalize on market opportunities.

Credit Analyst

The unregistered nature of the notes indicates a private placement, which is typically offered to a select group of sophisticated investors. This approach can offer quicker access to funds and lower issuance costs compared to public offerings. However, it also requires investors to perform their due diligence, as the notes will not have the same level of public disclosure as registered securities.

Credit analysts would closely examine STAG Industrial's credit ratings, interest coverage ratios and leverage metrics to assess the risk associated with the new debt. The refinancing of the term loan with a lower interest rate until 2025 provides temporary relief on interest payments, but the subsequent rate increase will require careful financial planning. The extension options on the term loan add a layer of flexibility, but they are contingent on meeting certain conditions, which have not been disclosed. These factors must be weighed when evaluating the company's credit risk and overall financial health.

BOSTON, March 26, 2024 /PRNewswire/ -- STAG Industrial, Inc. (the "Company") (NYSE: STAG) today announced that it entered into a note purchase agreement to issue $450 million of fixed rate senior unsecured notes in a private placement offering with a weighted average fixed interest rate of 6.17%. The transaction consists of $175 million of 6.05% notes with a five-year term maturing on May 28, 2029; $125 million of 6.17% notes with a seven-year term maturing on May 28, 2031; and $150 million of 6.30% notes with a ten-year term maturing on May 28, 2034.

The Company anticipates closing the offering on May 28, 2024.

The notes have not been and will not be registered under the Securities Act of 1933 or the securities laws of any state or other jurisdiction and may not be offered or sold in the United States or any other jurisdiction absent registration or an exemption from the registration requirements of the Securities Act of 1933 and the applicable securities laws of any state or other jurisdiction.

In addition, the Company refinanced a $200 million unsecured term loan that was set to mature in January 2025. The term loan now matures March 25, 2027, with two one-year extension options, subject to certain conditions. The term loan bears an aggregate fixed interest rate, inclusive of interest rate swaps, of 2.94% until January 15, 2025 and will bear an aggregate fixed interest rate, inclusive of interest rate swaps, of 4.83% from January 15, 2025 through March 25, 2027.

For the unsecured term loan previously maturing in 2025, Wells Fargo Securities, LLC served as Left Lead Arranger and Bookrunner, with BofA Securities, Inc., BMO Capital Markets Corp, and U.S. Bank, N.A. serving as Joint Lead Arrangers. Other lenders include PNC Bank, N.A., TD Bank, N.A., Raymond James Bank, Regions Bank, and Truist Bank.

About STAG Industrial, Inc.

STAG Industrial, Inc. is a real estate investment trust focused on the acquisition, ownership, and operation of industrial properties throughout the United States. As of December 31, 2023, the Company's portfolio consists of 569 buildings in 41 states with approximately 112.3 million rentable square feet.

For additional information, please visit the Company's website at www.stagindustrial.com.

Forward-Looking Statements

This press release, together with other statements and information publicly disseminated by the Company, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe the Company's future plans, strategies and expectations, are generally identifiable by use of the words "believe," "will," "expect," "intend," "anticipate," "estimate," "should," "project" or similar expressions. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond the Company's control and which could materially affect actual results, performances or achievements. Factors that may cause actual results to differ materially from current expectations include, but are not limited to, the risk factors discussed in the Company's annual report on Form 10-K for the year ended December 31, 2023, as updated by the Company's quarterly reports on Form 10-Q. Accordingly, there is no assurance that the Company's expectations will be realized. Except as otherwise required by the federal securities laws, the Company disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in the Company's expectations with regard thereto or any change in events, conditions, or circumstances on which any such statement is based.

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SOURCE STAG Industrial, Inc.

FAQ

What is the total value of the fixed rate senior unsecured notes issued by STAG Industrial, Inc.?

STAG Industrial, Inc. issued $450 million of fixed rate senior unsecured notes.

What are the different terms and interest rates of the notes issued by STAG Industrial, Inc.?

The notes consist of $175 million of 6.05% notes maturing in 2029, $125 million of 6.17% notes maturing in 2031, and $150 million of 6.30% notes maturing in 2034.

How much was the unsecured term loan refinanced by STAG Industrial, Inc.?

STAG Industrial, Inc. refinanced a $200 million unsecured term loan.

What is the new maturity date of the unsecured term loan after refinancing?

The term loan now matures on March 25, 2027.

Which banks were involved in the refinancing of the unsecured term loan by STAG Industrial, Inc.?

Wells Fargo Securities, , BofA Securities, Inc., BMO Capital Markets Corp, U.S. Bank, N.A., PNC Bank, N.A., TD Bank, N.A., Raymond James Bank, Regions Bank, and Truist Bank were involved in the refinancing.

When is the anticipated closing date for the offering of the fixed rate senior unsecured notes by STAG Industrial, Inc.?

The offering is anticipated to close on May 28, 2024.