STAG Industrial’s Leverage Is About the Lowest the REIT Has Ever Seen

Ben Butcher, chairman, president, and CEO of STAG Industrial, Inc. (NYSE: STAG), participated in a video interview in conjunction with Nareit’s REITweek: Virtual Investor Conference (being held June 2-4).

Butcher said that because STAG does a good job of underwriting from the ground up, the coronavirus crisis ultimately doesn’t change his perception of what works and what doesn’t work within the STAG portfolio. For smaller tenants, though, the crisis will introduce some correlated risk, he said.

“Any time you have a financial crisis...you’re going to have some level of distress among your smaller tenants,” he said.

Butcher said that STAG did an equity offering in January, which took the company's leverage down to some of the lowest levels the REIT has ever had. He said STAG has been continuously deleveraging over the last few years, which puts the company in a great position to take advantage of dislocation when it should occur.

“The industrial sector obviously is a sector that’s pretty healthy, with fundamentals staying strong,” he added.

With the sector well-positioned heading into the COVID-19 crisis, compounded by the acceleration of e-commerce and home delivery trends, Butcher thinks industrial REITs may come out even stronger on the other side of the pandemic. He said square footage will likely move out of retail stores and into warehouses, and there will also likely be a continuation of a clustering of industrial uses around population centers.

“Our portfolio is well-positioned to serve the U.S. population, so we’re pretty excited about the opportunities as we move out of this crisis,” Butcher said.