Stag Industrial (STAG) Q2 Revenue Up 9%

Key Points

• Core FFO per share was $0.63 in Q2 2025, EPS (Non-GAAP) was $0.63, exceeding the $0.22 estimate and marking 3.3% year-over-year growth.

• Revenue (GAAP) reached $207.6 million in Q2 2025, surpassing the Q2 2025 estimate (GAAP), and rose 9.4% from Q2 2024.

• Net income per share (GAAP) decreased to $0.27 in Q2 2025, an 18.2% drop from the prior year.

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Stag Industrial (NYSE:STAG), a real estate investment trust focused on U.S. industrial properties, reported its second quarter earnings on July 29, 2025. The company posted notable increases in revenue and Core Funds From Operations (Core FFO) in Q2 2025, exceeding Wall Street estimates for both metrics. Revenue (GAAP) came in at $207.6 million, beating the analyst forecast of $206.54 million, and Core FFO per share hit $0.63, far above the $0.22 estimate. Despite the positive trends in operating metrics, net income per share (diluted, GAAP) dipped to $0.27 from $0.33 in Q2 2024. Overall, the quarter reflected strong operational progress and solid financial management but flagged some areas for investor attention, such as a modest decline in net income and slightly lower tenant retention rates.

Source: Analyst estimates for the quarter provided by FactSet.

Business Overview and Strategy

Stag Industrial operates a portfolio of warehouse and light industrial buildings across the United States. Its core business model centers on owning, acquiring, and leasing these properties to a diversified group of tenants.

The company's growth relies heavily on a disciplined acquisition strategy. By focusing on individual properties within major logistics and industrial markets rather than large portfolios, it looks to control risk and enhance value. Key measures of success include high occupancy rates, strong tenant diversification, and ability to steadily grow rental income.

Quarter in Review: Financial and Operational Highlights

The company delivered a quarter that topped market expectations for both core (non-GAAP) financial performance and operational execution. Core FFO, a metric used by real estate investment trusts to track normalized operating profitability, was $0.63 per share. This beat the consensus estimate by over 186% and rose from the $0.61 reported a year ago.

Revenue (GAAP) climbed to $207.6 million, up 11.3% from the same period last year, also exceeding forecasts. Cash Net Operating Income, which measures the direct profit from rental operations before most financing and corporate costs, rose 8.9% compared to the second quarter of 2024. Adjusted EBITDAre, an earnings measure used to evaluate real estate operations, increased 9.6% over the prior year quarter. While these growth rates highlight strong rental performance and cost control, net income per share (GAAP) slid 18.2%. The decrease reflects higher depreciation, amortization, and interest costs, as well as a lower realized gain on asset sales compared with last year.

Leasing activity stood out in the second quarter of 2025. The company signed new and renewal leases covering 4.2 million square feet, with a 24.6% average increase in cash rent and a 41.1% lift in straight-line rent for those renewals and new deals. These metrics represent the change in rent collected at the start of a new lease (cash rent change) and the average rent collected over the full lease term (straight-line rent change). Retention—meaning the percentage of expiring leases renewed—came in at 75.3%. This was down from 85.3% in the previous quarter but remains within management’s expected range of 70–75% for the year.

Portfolio occupancy held steady at 96.3%. While this is a slight decline from the end of December 2024, it remains within historical norms for the company. The weighted average lease term for new and renewal deals stood at 5.7 years. However, renewal activity remained strong and, By July 28, 2025, the company had addressed 90.8% of the year’s planned renewals and new leases.—a sign of proactive management and stable demand.

Acquisition activity remained selective. Only one building, totaling 183,200 square feet in Chicago, was acquired for $18.4 million at a 7.1% cash capitalization rate. The cap rate is calculated by dividing the company’s estimate of year one cash net operating income from the property by the GAAP purchase price plus estimated acquisition capital expenditures. Year-to-date, four buildings have been acquired for $61.7 million. The company’s disposition activity included one building sale for $9.1 million.

Status updates on development included active projects totaling approximately 2.5 million square feet across 11 buildings, with over half already leased as of Q1 2025. No significant product launches or new property types were reported in the quarter—unsurprising for a real estate-focused business. From a credit perspective, tenant risk remains low. No single tenant represents more than 2.9% of base rent, helping insulate the business from individual defaults.

Material one-time events this quarter included Moody’s upgrading the company’s credit rating to Baa2, a $550 million issuance of senior unsecured notes at a weighted average interest rate of 5.65% on June 25, 2025. This capital raise helps further diversify debt maturities and shore up liquidity, which ended Q2 2025 at $961.2 million.

Financial Outlook and What to Watch Going Forward

The company did not issue updated financial guidance for Core FFO per share, net income, or other earnings measures for the upcoming quarter or fiscal 2025. Past calls indicate management expects about a one percentage point dip in occupancy for the full year, fitting within previously tested scenarios. The company affirmed that leasing progress has de-risked much of the year’s remaining work, with most of the expected renewals and new leases addressed as of July 2025.

For investors tracking the story, ongoing metrics to monitor include occupancy rates, leasing spreads, and the pace at which tenants make new lease decisions. The modest decline in net income (GAAP), the uptick in interest expense, and slightly lower renewal rates point to areas worth watching if macroeconomic conditions become less favorable.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool recommends Stag Industrial. The Motley Fool has a disclosure policy.