STAG Industrial, Inc.: Form 10-Q for the period ended Sep 30, 2026

You should read the following discussion with the financial statements and related notes included elsewhere in Item 1 of this report and the audited financial statements and related notes thereto included in our most recent Annual Report on Form 10-K.

As used herein, except where the context otherwise requires, “Company,” “we,” “our” and “us,” refer to STAG Industrial, Inc. and our consolidated subsidiaries and partnerships, including our operating partnership, STAG Industrial Operating Partnership, L.P. (the “Operating Partnership”).

Forward-Looking Statements

This report contains “forward-looking statements” within the meaning of the safe harbor from civil liability provided for such statements by the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). You can identify forward-looking statements by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “will,” and variations of such words or similar expressions. Forward-looking statements in this report include, among others, statements about our future financial condition, results of operations, capitalization rates on future acquisitions, our business strategy and objectives, including our acquisition strategy, occupancy and leasing rates and trends, and expected liquidity needs and sources (including capital expenditures and the ability to obtain financing or raise capital). Our forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by our forward-looking statements are reasonable, we can give no assurance that our plans, intentions, expectations, strategies or prospects will be attained or achieved and you should not place undue reliance on these forward-looking statements. Furthermore, actual results may differ materially from those described in the forward-looking statements and may be affected by a variety of risks and factors including, without limitation:

• the factors included in our Annual Report on Form 10-K for the year ended December 31, 2025, as updated elsewhere in this report, including those set forth under the headings “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations;”
• the risk of global or national recessions and international, national, regional, and local economic conditions;
• decreased economic activity due to fluctuations in trade policies, tariffs and related government actions;
• our ability to raise equity capital on attractive terms;
• the competitive environment in which we operate;
• real estate risks, including fluctuations in real estate values, the general economic climate in local markets and competition for tenants in such markets, and the repurposing or redevelopment of retail properties into industrial properties (in part or whole);
• decreased rental rates or increased vacancy rates;
• the general level of interest rates and currencies;
• potential defaults (including bankruptcies or insolvency) on or non-renewal of leases by tenants;
• acquisition risks, including our ability to identify and complete accretive acquisitions and/or failure of such acquisitions to perform in accordance with projections;
• the timing of acquisitions and dispositions;
• technological developments, particularly those affecting supply chains and logistics;
• potential natural disasters, epidemics, pandemics or outbreak of infectious disease, such as the novel coronavirus disease, and other potentially catastrophic events such as acts of war and/or terrorism (including the ongoing conflict between Ukraine and Russia and the conflict between Israel/the United States and Iran, the risk of such conflicts widening and the related impact on market volatility and macroeconomic conditions as a result of such conflicts);
• renegotiation or termination of trade agreements or treaties among the United States and foreign countries or increases to U.S. tariffs on foreign goods or to foreign tariffs on U.S. goods;
• potential changes in the law or governmental regulations and interpretations of those laws and regulations, including changes in real estate and zoning laws or real estate investment trust (“REIT”) or corporate income tax laws, and potential increases in real property tax rates;
• financing risks, including the risks that our cash flows from operations may be insufficient to meet required payments of principal and interest and we may be unable to refinance our existing debt upon maturity or obtain new financing on attractive terms or at all;
• credit risk in the event of non-performance by the counterparties to the interest rate swaps and revolving and unfunded debt;
• how and when pending forward equity sales may settle;
• lack of or insufficient amounts of insurance;
• our ability to maintain our qualification as a REIT;
• our ability to retain key personnel;
• litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; and
• possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by us.

Any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise over time, and it is not possible for us to predict those events or how they may affect us. Except as required by law, we are not obligated to, and do not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Certain Definitions

In this report:

“Cash Rent Change” means the percentage change in the base rent of the lease commenced during the period compared to the base rent of the Comparable Lease for assets included in the Operating Portfolio. The calculation compares the first base rent payment due after the lease commencement date compared to the base rent of the last monthly payment due prior to the termination of the lease, excluding holdover rent. Rent under gross or similar type leases are converted to a net rent based on an estimate of the applicable recoverable expenses.

“Comparable Lease” means a lease in the same space with a similar lease structure as compared to the previous in-place lease, excluding new leases for space that was not occupied under our ownership.

“GAAP” means generally accepted accounting principles in the United States of America.

“New Lease” means a lease that is signed for an initial term equal to or greater than 12 months for any vacant space, including a lease signed by a new tenant or an existing tenant that is expanding into new (additional) space.

“Occupancy rate” means the percentage of total leasable square footage for which either revenue recognition has commenced in accordance with GAAP or the lease term has commenced as of the close of the reporting period, whichever occurs earlier.

“Operating Portfolio” means all buildings that were acquired stabilized or have achieved Stabilization. The Operating Portfolio excludes non-core flex/office buildings, buildings contained in the Value Add Portfolio, and buildings classified as held for sale.

“Renewal Lease” means a lease signed by an existing tenant to extend the term for 12 months or more, including (i) a renewal of the same space as the current lease at lease expiration, (ii) a renewal of only a portion of the current space at lease expiration, or (iii) an early renewal or workout, which ultimately does extend the original term for 12 months or more.

“Straight-line Rent Change” means the percentage change in the average monthly base rent over the term of the lease that commenced during the period compared to the Comparable Lease for assets included in the Operating Portfolio. Rent under gross or similar type leases are converted to a net rent based on an estimate of the applicable recoverable expenses, and this calculation excludes the impact of any holdover rent.

“Stabilization” for properties under development or being redeveloped means the earlier of achieving 90% occupancy or 12 months after completion. With respect to properties acquired and immediately added to the Value Add Portfolio, (i) if acquired with less than 75% occupancy as of the acquisition date, Stabilization will occur upon the earlier of achieving 90% occupancy or 12 months from the acquisition date, or (ii) if acquired and will be less than 75% occupied due to known move-outs within two years of the acquisition date, Stabilization will occur upon the earlier of achieving 90% occupancy after the known move-outs have occurred or 12 months after the known move-outs have occurred.

“Total annualized base rental revenue” means the monthly base cash rent for the applicable property or properties as of September 30, 2026 (which is different from rent calculated in accordance with GAAP for purposes of our financial statements), multiplied by 12. If a tenant is in a free rent period as of September 30, 2026, the annualized rent is calculated based on the first contractual monthly base rent amount multiplied by 12.

“Value Add Portfolio” means our properties that meet any of the following criteria: (i) less than 75% occupied as of the acquisition date; (ii) will be less than 75% occupied due to known move-outs within two years of the acquisition date; (iii) out of service with significant physical renovation of the asset; or (iv) development.

“Weighted Average Lease Term” means the contractual lease term in years, assuming that tenants exercise no renewal options, purchase options, or early termination rights, as of the lease start date weighted by square footage. Weighted Average Lease Term related to acquired assets reflects the remaining lease term in years as of the acquisition date weighted by square footage.

Overview

We are a REIT focused on the acquisition, ownership, development, and operation of industrial properties throughout the United States. Our platform is designed to (i) identify properties for acquisition that offer relative value across CBRE-EA Tier 1 industrial property types and tenants through the principled application of our proprietary risk assessment model, (ii) provide growth through sophisticated industrial operation and an attractive opportunity set, and (iii) capitalize our business appropriately given the characteristics of our assets. We are a Maryland corporation and our common stock is publicly traded on the New York Stock Exchange under the symbol “STAG.”

We are organized and conduct our operations to maintain our qualification as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), and generally are not subject to federal income tax to the extent we currently distribute our income to our stockholders and maintain our qualification as a REIT. We remain subject to state and local taxes on our income and property and to U.S. federal income and excise taxes on our undistributed income.

Factors That May Influence Future Results of Operations

Our ability to increase revenues or cash flow will depend in part on our (i) external growth, specifically acquisition activity, and (ii) internal growth, specifically occupancy and rental rates on our portfolio, as well as development activity. A variety of other factors, including those noted below, also affect our future results of operations.

Outlook

The industrial real estate business is affected by general macro-economic trends including recent changes in interest rates, inflation, trade policies, fiscal policy, technology (e.g. artificial intelligence), and geopolitical tensions, including ongoing military conflicts in the Middle East. These factors are key drivers of financial market volatility and raise concerns about a slowing global economy. In the second quarter of 2026, U.S. real gross domestic product grew 2.2% compared to the 2.5% increase in the first quarter of 2026. The U.S. employment rate in September 2026 was 4.2% which is slightly above the 4.0% average since the beginning of 2023.

In the third quarter of 2026, the Federal Open Market Committee raised the federal funds target rate 25 basis points to a range of 3.75% to 4.00%. Going forward, the general consensus among economists is a higher risk of recession or stagflation. Trade policies, geopolitical tensions, and macro-economic conditions continue to evolve and could result in tighter credit conditions, weakening tenant cash flows, and rising vacancy rates. Given the current uncertainty and events discussed above, our acquisition activity to date in 2026 has been slow relative to our historical acquisition pace.

On the other hand, demographic/consumer trends, geopolitical uncertainty and recent legislation supporting U.S. infrastructure may accelerate trends that support stronger long-term demand for industrial space, including:

• the continued growth of e-commerce (as compared to the traditional retail store distribution model) and the concomitant demand by e-commerce industry participants for well-located, functional distribution space;
• the increasing attractiveness of the United States as a manufacturing and distribution location because of the size of the U.S. consumer market, an increase in overseas labor costs, policies that promote domestic and regional manufacturing “onshoring and nearshoring”, a desire for greater supply chain resilience and redundancy which is driving higher inventory to sales ratios and greater domestic warehouse demand over the long term (i.e. the shortening and fattening of the supply chain); and
• the general quality of the transportation infrastructure in the United States.

Overall, demand across the industrial market is gradually recovering toward the long-term average. Vacancy and availability rates are near historical standards in many markets. The supply pipeline remains active, albeit lower volume and more notably concentrated in build-to-suits. Speculative construction starts remain low as a result of both moderate demand and volatile capital markets.

Our portfolio is diversified across geographies, tenant industries and lease terms. We believe that the current economic environment, while volatile, provides us with an opportunity to demonstrate the strength of our portfolio arising from its diversification. Specifically, we believe our portfolio should benefit from competitive rental rates and strong occupancy. In addition to our diversified portfolio, we believe that certain characteristics of our business and capital structure should position us well in an uncertain environment, including our minimal floating rate debt exposure (taking into account our hedging activities), strong banking relationships and liquidity, and access to capital.

Conditions in Our Markets

The buildings in our portfolio are located in markets throughout the United States. Positive or negative changes in economic or other conditions, new supply, adverse weather conditions, natural disasters, epidemics, and other factors in these markets may affect our overall performance.

Rental Income

We receive income primarily in the form of rental income from the tenants who occupy our buildings. The amount of rental income generated by the buildings in our portfolio depends principally on occupancy and rental rates.

Future economic downturns or regional downturns affecting our submarkets that impair our ability to renew or re-lease space and the ability of our tenants to fulfill their lease commitments, as in the case of tenant bankruptcies, could adversely affect our ability to maintain or increase rental rates at our buildings. Our ability to lease our properties and the attendant rental rate is dependent upon, among other things, (i) the overall economy, (ii) the supply/demand dynamic in our markets, (iii) the quality of our properties, including age, clear height, and configuration, and (iv) our tenants’ ability to meet their contractual obligations to us.

The following table summarizes the Operating Portfolio leases that commenced during the three and nine months ended September 30, 2026. Any rental concessions in such leases are accounted for on a straight-line basis over the term of the lease.

(1) “Total Costs” means the costs for improvements of vacant and renewal spaces, as well as the contingent-based legal fees and commissions for leasing transactions. Total Costs per square foot represent the total costs expected to be incurred on the leases that commenced during the period and do not reflect actual expenditures for the period.

(2) Represents the total rental concessions for the entire lease term.

Additionally, for the three and nine months ended September 30, 2026, leases commenced totaling 560,519 and 946,172 related to the Value Add Portfolio and first generation leasing. These leases are excluded from the Operating Portfolio statistics above.

Property Operating Expenses

Our property operating expenses generally consist of utilities, real estate taxes, management fees, insurance, and site repair and maintenance costs. For the majority of our tenants, our property operating expenses are controlled, in part, by the triple net provisions in tenant leases. In our triple net leases, the tenant is responsible for all aspects of and costs related to the building and its operation during the lease term, including utilities, taxes, insurance, and maintenance costs, but typically excluding roof and building structure. However, we also have modified gross leases and gross leases, as well as leases with expense caps, in our building portfolio, which may require us to absorb certain building related expenses of our tenants. In our modified gross leases, we are responsible for certain building related expenses during the lease term, but most of the expenses are passed through to the tenant for reimbursement to us. In our gross leases, we are responsible for all expenses related to the building and its operation during the lease term. Our overall performance will be affected by the extent to which we are able to pass-through property operating expenses to our tenants.

Scheduled Lease Expirations

Our ability to re-lease space subject to expiring leases will impact our results of operations and is affected by economic and competitive conditions in our markets and by the desirability of our individual buildings. Leases that comprise approximately 7.6% of our total annualized base rental revenue will expire during the period from October 1, 2026 to September 30, 2027, excluding month-to-month leases. We assume, based upon internal renewal probability estimates, that some of our tenants will renew and others will vacate and the associated space will be re-let subject to downtime assumptions. Using the aforementioned assumptions, we expect that the rental rates on the respective new leases will be greater than the rates under existing leases expiring during the period October 1, 2026 to September 30, 2027, thereby resulting in an increase in revenue from the same space.

The following table summarizes lease expirations for leases in place as of September 30, 2026, plus available space, for each of the ten calendar years beginning with 2026 and thereafter in our portfolio. The information in the table assumes that tenants do not exercise renewal options or early termination rights.

(1) Leases previously scheduled to expire in 2026, totaling approximately 15.6 million square feet, have been amended to extend their lease expiration date as of September 30, 2026. These leases are excluded from 2026 expirations and are now reflected in the new year of expiration.

Portfolio Acquisitions

The following table summarizes our acquisitions during the three and nine months ended September 30, 2026.

(1) As defined by CBRE-EA industrial market geographies. If the building is located outside of a CBRE-EA defined market, the city and state is reflected.

(2) We acquired a vacant land parcel.

Portfolio Dispositions

During the nine months ended September 30, 2026, we sold seven buildings comprised of approximately 2.0 million rentable square feet with a net book value of approximately $69.6 million to third parties. Net proceeds from the sales of rental property were approximately $117.3 million and we recognized the full gain on the sales of rental property, net, of approximately $47.7 million for the nine months ended September 30, 2026.

Top Markets

The following table summarizes information about the 20 largest markets in our portfolio based on total annualized base rental revenue as of September 30, 2026.

(1) Market classification based on CBRE-EA industrial market geographies.

Top Industries

The following table summarizes information about the 20 largest tenant industries in our portfolio based on total annualized base rental revenue as of September 30, 2026.

(1) Industry classification based on Global Industry Classification Standard methodology.

Top Tenants

The following table summarizes information about the 20 largest tenants in our portfolio based on total annualized base rental revenue as of September 30, 2026.

(1) Includes tenants, guarantors, and/or non-guarantor parents.

Critical Accounting Policies

See “Critical Accounting Policies” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2025 for a discussion of our critical accounting policies and estimates.

Results of Operations

The following discussion of the results of our same store (as defined below) net operating income (“NOI”) should be read in conjunction with our consolidated financial statements included in this report. For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see “Non-GAAP Financial Measures” below. Same store results are useful to investors in evaluating our performance because they provide information relating to changes in building-level operating performance without taking into account the effects of acquisitions or dispositions. We encourage the reader to not only look at our same store results, but also our total portfolio results, due to historic and future growth.

We define same store properties as properties that were in the Operating Portfolio for the entirety of the comparative periods presented. The results for same store properties exclude termination fees, solar income, and other income adjustments. Same store properties exclude Operating Portfolio properties with expansions placed into service after January 1, 2025. On September 30, 2026, we owned 564 industrial buildings consisting of approximately 110.5 million square feet and representing approximately 89.8% of our total portfolio, that are considered our same store portfolio in the analysis below. Same store occupancy decreased approximately 0.7% to 97.0% as of September 30, 2026 compared to 97.7% as of September 30, 2025.

Comparison of the three months ended September 30, 2026 to the three months ended September 30, 2025

The following table summarizes selected operating information for our same store portfolio and our total portfolio for the three months ended September 30, 2026 and 2025 (dollars in thousands). This table includes a reconciliation from our same store portfolio to our total portfolio by also providing information for the three months ended September 30, 2026 and 2025 with respect to the buildings acquired and sold after January 1, 2025, Operating Portfolio buildings with expansions placed into service or transferred from the Value Add Portfolio to the Operating Portfolio after January 1, 2025, Value Add buildings, and buildings classified as held for sale.

(1) For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see “Non-GAAP Financial Measures” below.

Net Income

Net income for our total portfolio increased by approximately $22.5 million, or 45.3%, to approximately $72.2 million for the three months ended September 30, 2026 compared to approximately $49.6 million for the three months ended September 30, 2025.

Same Store Total Operating Revenue

Same store total operating revenue consists primarily of rental income from (i) fixed lease payments, variable lease payments, straight-line rental income, and above and below market lease amortization from our properties (“lease income”), and (ii) other tenant billings for insurance, real estate taxes and certain other expenses (“other billings”).

For a detailed reconciliation of our same store total operating revenue to net income, see the table above.

Same store rental income, which includes lease income and other billings as discussed below, increased by approximately $7.0 million, or 3.5%, to approximately $205.5 million for the three months ended September 30, 2026 compared to approximately $198.5 million for the three months ended September 30, 2025.

Same store lease income increased by approximately $4.8 million, or 3.0%, to approximately $167.1 million for the three months ended September 30, 2026 compared to approximately $162.3 million for the three months ended September 30, 2025. The increase was primarily due to the execution of new leases and lease renewals with existing tenants of approximately $8.1 million. Additionally, there was an increase in same store lease income of approximately $1.1 million which was primarily attributable to management’s evaluation of operating leases to determine the probability of collecting substantially all of the lessee’s remaining lease payments under the lease term. During the three months ended September 30, 2026 and 2025, certain tenants either converted from the accrual basis of accounting to the cash basis of accounting for which the respective tenants’ straight-line accrued rental balances were reversed or, from the cash basis of accounting back to the accrual basis of accounting, for which the respective tenants’ straight-line accrued rental balances were reinstated. These increases were partially offset by the reduction of base rent of approximately $4.1 million due to tenant vacancies and a net increase in the amortization of net above market leases of approximately $0.3 million.

Same store other billings increased by approximately $2.2 million, or 6.1%, to approximately $38.4 million for the three months ended September 30, 2026 compared to approximately $36.2 million for the three months ended September 30, 2025. Approximately $1.7 million was due to an increase in real estate taxes levied by the taxing authority. Additionally, there was an increase of approximately $0.5 million in expense reimbursements, which was primarily due to an increase in corresponding expenses.

Same Store Operating Expenses

Same store operating expenses consist primarily of property operating expenses and real estate taxes and insurance.

For a detailed reconciliation of our same store operating expenses to net income, see the table above.

Total same store property operating expenses increased by approximately $2.8 million, or 7.2%, to approximately $41.5 million for the three months ended September 30, 2026 compared to approximately $38.8 million for the three months ended September 30, 2025. The increase was driven by increases in real estate tax expense, repairs and maintenance, utility expense, and other expenses of approximately $1.5 million, $0.9 million, $0.2 million, and $0.6 million, respectively. These increases were partially offset by a reduction of insurance expense of approximately $0.4 million.

Acquisitions and Dispositions Net Operating Income

For a detailed reconciliation of our acquisitions and dispositions NOI to net income, see the table above.

Subsequent to January 1, 2025, we acquired 23 buildings consisting of approximately 8.2 million square feet and sold 18 buildings consisting of approximately 4.2 million square feet. For the three months ended September 30, 2026 and 2025, the buildings acquired after January 1, 2025 contributed approximately $14.3 million and $1.6 million to NOI, respectively. For the three months ended September 30, 2026 and 2025, the buildings sold after January 1, 2025 contributed approximately $(0.2) million and $3.2 million to NOI, respectively. Refer to Note 3 in the accompanying Notes to Consolidated Financial Statements for additional discussion regarding buildings acquired or sold.

Other Net Operating Income

Other assets include our Value Add Portfolio, buildings classified as held for sale, and Operating Portfolio buildings with expansions placed in service or transferred from the Value Add Portfolio to the Operating Portfolio after January 1, 2025. Other NOI also includes termination, solar, and other income adjustments from buildings in our same store portfolio.

For a detailed reconciliation of our other NOI to net income, see the table above.

These buildings contributed approximately $6.0 million and $3.0 million to NOI for the three months ended September 30, 2026 and 2025, respectively. Additionally, there was approximately $0.6 million and $1.0 million of termination, solar, and other income adjustments from certain buildings in our same store portfolio for the three months ended September 30, 2026 and 2025, respectively.

Total Other Expenses

Total other expenses consist of general and administrative, depreciation and amortization, and other expenses.

Total other expenses increased approximately $7.5 million, or 8.4%, to approximately $96.2 million for the three months ended September 30, 2026 compared to approximately $88.7 million for the three months ended September 30, 2025. The increase was primarily attributable to an increase in depreciation and amortization of approximately $4.6 million due to an increase in the depreciable asset base from net acquisitions and completed development projects placed into service after September 30, 2025. Additionally, there was an increase in general and administrative expenses by approximately $2.7 million, primarily due to increases in compensation and other payroll costs.

Total Other Income (Expense)

Total other income (expense) consists of interest and other income, interest expense, debt extinguishment and modification expenses, and gain on the sales of rental property, net. Interest expense includes interest incurred during the period as well as adjustments related to amortization of financing fees and debt issuance costs, and amortization of fair market value adjustments associated with the assumption of debt.

Total other expense decreased approximately $14.1 million, or 46.2%, to approximately $16.5 million for the three months ended September 30, 2026 compared to approximately $30.6 million for the three months ended September 30, 2025. The decrease in expense was primarily attributable an increase in the gain on the sale of rental property, net, of approximately $22.0 million. This decrease was partially offset by an increase in interest expense of approximately $7.5 million, which was primarily attributable to a higher average unsecured credit facility balance during the three months ended September 30, 2026 compared to the three months ended September 30, 2025.

Comparison of the nine months ended September 30, 2026 to the nine months ended September 30, 2025

The following table summarizes selected operating information for our same store portfolio and our total portfolio for the nine months ended September 30, 2026 and 2025 (dollars in thousands). This table includes a reconciliation from our same store portfolio to our total portfolio by also providing information for the nine months ended September 30, 2026 and 2025 with respect to the buildings acquired and disposed of and Operating Portfolio buildings with expansions placed into service or transferred from the Value Add Portfolio to the Operating Portfolio after January 1, 2025, Operating Portfolio buildings with expansions placed into service or transferred from the Value Add Portfolio to the Operating Portfolio after January 1, 2025, Value Add buildings, and buildings classified as held for sale.

(1) For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see “Non-GAAP Financial Measures” below.

Net Income

Net income for our total portfolio decreased by approximately $4.6 million, or 2.4%, to approximately $189.5 million for the nine months ended September 30, 2026 compared to approximately $194.1 million for the nine months ended September 30, 2025.

Same Store Total Operating Revenue

Same store total operating revenue consists primarily of rental income consisting of (i) fixed lease payments, variable lease payments, straight-line rental income, and above and below market lease amortization from our properties (“lease income”), and (ii) other tenant billings for insurance, real estate taxes and certain other expenses (“other billings”).

For a detailed reconciliation of our same store total operating revenue to net income, see the table above.

Same store rental income, which is comprised of lease income and other billings as discussed below, increased by approximately $22.6 million, or 3.8%, to approximately $615.3 million for the nine months ended September 30, 2026 compared to approximately $592.6 million for the nine months ended September 30, 2025.

Same store lease income increased by approximately $16.7 million, or 3.5%, to approximately $498.6 million for the nine months ended September 30, 2026 compared to approximately $481.9 million for the nine months ended September 30, 2025. The increase was primarily due to an increase in rental income of approximately $26.1 million from the execution of new leases and lease renewals with existing tenants. Additionally, there was a increase in same store lease income of approximately $0.8 million which was primarily attributable to management’s evaluation of operating leases to determine the probability of collecting substantially all of the lessee’s remaining lease payments under the lease term. During the nine months ended September 30, 2026 and 2025, certain tenants either converted from the accrual basis of accounting to the cash basis of accounting for which the respective tenants’ straight-line accrued rental balances were reversed or, from the cash basis of accounting back to the accrual basis of accounting, for which the respective tenants’ straight-line accrued rental balances were reinstated. This increase was partially offset by the reduction of base rent of approximately $9.5 million due to tenant vacancies and a net increase in the amortization of net above market leases of approximately $0.7 million.

Same store other billings increased by approximately $6.0 million, or 5.4%, to approximately $116.7 million for the nine months ended September 30, 2026 compared to approximately $110.7 million for the nine months ended September 30, 2025. The increase was attributable to an increase of approximately $4.5 million in real estate taxes levied by the taxing authority as well as an increase of approximately $1.5 million in expense reimbursements which was primarily due to an increase in corresponding expenses.

Same Store Operating Expenses

Same store operating expenses consist primarily of property operating expenses and real estate taxes and insurance.

For a detailed reconciliation of our same store operating expenses to net income, see the table above.

Total same store operating expenses increased by approximately $7.0 million, or 6.0%, to approximately $125.1 million for the nine months ended September 30, 2026 compared to approximately $118.1 million for the nine months ended September 30, 2025. This increase was driven by increases in real estate tax, repairs and maintenance, utility expense, snow removal, and other expenses of approximately $3.6 million, $2.0 million, $0.5 million, $0.1 million, and $1.9 million, respectively. These increases were partially offset by a reduction in insurance expense of approximately $1.1 million.

Acquisitions and Dispositions Net Operating Income

For a detailed reconciliation of our acquisitions and dispositions NOI to net income, see the table above.

Subsequent to January 1, 2025, we acquired 23 buildings consisting of approximately 8.2 million square feet and sold 18 buildings consisting of approximately 4.2 million square feet. For the nine months ended September 30, 2026 and September 30, 2025, the buildings acquired after January 1, 2025 contributed approximately $34.3 million and $2.9 million to NOI, respectively. For the nine months ended September 30, 2026 and September 30, 2025, the buildings sold after January 1, 2025 contributed approximately $1.4 million and $11.4 million to NOI, respectively. Refer to Note 3 in the accompanying Notes to Consolidated Financial Statements for additional discussion regarding buildings acquired or sold.

Other Net Operating Income

Our other assets include our Value Add Portfolio, buildings classified as held for sale, and Operating Portfolio buildings with expansions placed in service or transferred from the Value Add Portfolio to the Operating Portfolio after January 1, 2025. Other NOI also includes termination, solar, and other income adjustments from buildings in our same store portfolio.

For a detailed reconciliation of our other NOI to net income, see the table above.

These buildings contributed approximately $11.9 million and $5.8 million to NOI for the nine months ended September 30, 2026 and September 30, 2025, respectively. Additionally, there was approximately $3.1 million and $2.8 million of termination, solar, and other income adjustments from certain buildings in our same store portfolio for the nine months ended September 30, 2026 and September 30, 2025, respectively.

Total Other Expenses

Total other expenses consist of general and administrative, depreciation and amortization, loss on impairment, and other expenses.

Total other expenses increased approximately $20.6 million, or 7.8%, to approximately $285.3 million for the nine months ended September 30, 2026 compared to approximately $264.7 million for the nine months ended September 30, 2025. The increase was primarily attributable to an increase in depreciation and amortization expense of approximately $17.1 million due to an increase in the depreciable asset base from net acquisitions and completed development projects placed into service after September 30, 2025. Additionally there was an increase in general and administrative expenses of approximately $3.8 million, primarily due to increases in compensation and other payroll costs. These increases were partially offset by a decrease in loss on impairment of approximately $0.9 million.

Total Other Income (Expense)

Total other income (expense) consists of interest and other income, interest expense, debt extinguishment and modification expenses, gain on involuntary conversion, and gain on the sales of rental property, net. Interest expense includes interest incurred during the period as well as adjustments related to amortization of financing fees and debt issuance costs, and amortization of fair market value adjustments associated with the assumption of debt.

Total other expense increased approximately $27.0 million, or 68.6%, to approximately $66.2 million for the nine months ended September 30, 2026 compared to approximately $39.3 million for the nine months ended September 30, 2025. This increase was primarily a result of a decrease in the gain on the sales of rental property, net of approximately $10.1 million, and an increase in interest expense of approximately $14.7 million which was primarily attributable to the issuance of $550.0 million of unsecured notes on June 25, 2025. Additionally, there was a decrease in gain on involuntary conversion of approximately $1.9 million.

Non-GAAP Financial Measures

In this report, we disclose funds from operations (“FFO”) and NOI, which meet the definition of “non-GAAP financial measures” as set forth in Item 10(e) of Regulation S-K promulgated by the Securities and Exchange Commission (“SEC”). As a result, we are required to include in this report a statement of why management believes that presentation of these measures provides useful information to investors.

Funds From Operations

FFO should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance, and we believe that to understand our performance further, FFO should be compared with our reported net income (loss) in accordance with GAAP, as presented in our consolidated financial statements included in this report.

We calculate FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (“Nareit”). FFO represents GAAP net income (loss), excluding gains (or losses) from sales of depreciable operating buildings, impairment write-downs of depreciable real estate, real estate related depreciation and amortization (excluding amortization of deferred financing costs and fair market value of debt adjustment) and after adjustments for unconsolidated partnerships and joint ventures.

Management uses FFO as a supplemental performance measure because it is a widely recognized measure of the performance of REITs. FFO may be used by investors as a basis to compare our operating performance with that of other REITs.

However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our buildings that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our buildings, all of which have real economic effects and could materially impact our results from operations, the utility of FFO as a measure of our performance is limited. In addition, other REITs may not calculate FFO in accordance with the Nareit definition, and, accordingly, our FFO may not be comparable to such other REITs’ FFO. FFO should not be used as a measure of our liquidity and is not indicative of funds available for our cash needs, including our ability to pay dividends.

The following table sets forth a reconciliation of our FFO attributable to common stockholders and unit holders for the periods presented to net income, the nearest GAAP equivalent.

Net Operating Income

We consider NOI to be an appropriate supplemental performance measure to net income (loss) because we believe it helps investors and management understand the core operations of our buildings. NOI is defined as rental income, which includes billings for common area maintenance, real estate taxes and insurance, less property expenses, real estate tax expense and insurance expense. NOI should not be viewed as an alternative measure of our financial performance since it excludes expenses which could materially impact our results of operations. Further, our NOI may not be comparable to that of other real estate companies, as they may use different methodologies for calculating NOI.

The following table sets forth a reconciliation of our NOI for the periods presented to net income, the nearest GAAP equivalent.

36

Cash Flows

Comparison of the nine months ended September 30, 2026 to the nine months ended September 30, 2025

The following table summarizes our cash flows for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025.

Net cash provided by operating activities increased approximately $17.0 million to approximately $375.9 million for the nine months ended September 30, 2026 compared to approximately $358.9 million for the nine months ended September 30, 2025. The increase was attributable to fluctuations in working capital due to timing of payments and rental receipts.

Net cash used in investing activities increased approximately $258.1 million to approximately $495.0 million for the nine months ended September 30, 2026 compared to approximately $236.9 million for the nine months ended September 30, 2025. The increase was primarily attributable to an increase in the acquisition of rental property of approximately $324.0 million during the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025. This increase was partially offset by an increase in proceeds from sale of rental property, net of approximately $38.9 million during the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, as well as a decrease in cash paid for additions of land and buildings and improvements related to development and other capital expenditures of approximately $30.2 million during the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025.

Net cash provided by (used in) financing activities increased approximately $172.1 million to approximately $31.1 million net cash provided by financing activities for the nine months ended September 30, 2026 compared to approximately $141.0 million net cash used in financing activities for the nine months ended September 30, 2025. The increase was primarily attributable to an increase in net cash inflow of approximately $500.0 million under our unsecured credit facility during the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025. Additionally, there was an increase in proceeds from sales of common stock, net, of approximately $59.9 million during the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025. The increase was also attributable to a decrease of approximately $36.7 million in dividends and distributions paid, which was attributable to our change in 2026 to quarterly dividend payments, compared to monthly dividend payments in 2025. These increases were partially offset by a decrease in the net issuance of unsecured notes of $425.0 million during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.

Liquidity and Capital Resources

We believe that our liquidity needs will be satisfied through cash flows generated by operations, disposition proceeds, and financing activities. Operating cash flow from rental income, expense recoveries from tenants, and other income from operations are our principal sources of funds to pay operating expenses, debt service, recurring capital expenditures, and the distributions required to maintain our REIT qualification. We primarily rely on the capital markets (equity and debt securities and bank borrowings) to fund our acquisition activity. We seek to increase cash flows from our properties by maintaining quality building standards that promote high occupancy rates and permit increases in rental rates, while reducing tenant turnover and controlling operating expenses. We believe that our revenue, together with proceeds from building sales and equity and debt financings, will continue to provide funds for our short-term and medium-term liquidity needs.

Our short-term liquidity requirements consist primarily of funds necessary to pay for operating expenses and other expenditures directly associated with our buildings, including interest expense, interest rate swap payments, scheduled principal payments on outstanding indebtedness, property acquisitions under contract, general and administrative expenses, and capital expenditures including development projects, tenant improvements and leasing commissions.

Our long-term liquidity needs, in addition to recurring short-term liquidity needs as discussed above, consist primarily of funds necessary to pay for property acquisitions and scheduled debt maturities. We intend to satisfy our long-term liquidity needs through cash flow from operations, the issuance of equity or debt securities, other borrowings, property dispositions, or, in connection with acquisitions of certain additional buildings, the issuance of common units in our Operating Partnership.

As of September 30, 2026, we had total immediate liquidity of approximately $546.0 million, comprised of approximately $12.2 million of cash and cash equivalents and approximately $533.8 million of immediate availability on our unsecured credit facility.

In addition, we require funds to pay dividends to holders of our common stock and common units in our Operating Partnership. Any future dividends on our common stock are declared in the sole discretion of our board of directors, subject to the distribution requirements to maintain our REIT status for federal income tax purposes, and may be reduced or stopped for any reason, including to use funds for other liquidity requirements.

Indebtedness Outstanding

The following table summarizes certain information with respect to our indebtedness outstanding as of September 30, 2026.

(1) Interest rate as of September 30, 2026. At September 30, 2026, the one-month Term Secured Overnight Financing Rate (“Term SOFR”) was 3.9125%. The current interest rate is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums or discounts. The current interest rate includes the impact of interest rate swaps, which effectively fix the interest rate on certain variable rate debt.

(2) The weighted average years represents the remaining maturity in years on the principal outstanding as of September 30, 2026, and assumes that any extension options that are exercisable at our discretion, subject to certain terms and conditions, have been exercised

On July 16, 2026, we entered into an amended and restated loan agreement (the “Amended Term Loan Agreement”) with Wells Fargo Bank, National Association, and the other lenders named therein, to amend and restate our $150.0 million unsecured term loan that was set to mature on March 15, 2027 (the “Unsecured Term Loan A”). Borrowings under the Amended Unsecured Term Loan A (as defined below), at our election, bear interest based on a Base Rate, Term SOFR, or Daily Simple SOFR (each as defined in the Amended Term Loan Agreement), plus an applicable spread based on our debt rating and leverage ratio (each as defined in the Amended Term Loan Agreement). We entered into the Amended Term Loan Agreement to (i) combine the Unsecured Term Loan A and our $200.0 million unsecured term loan that was set to mature on March 23, 2029, into one senior unsecured term loan in the aggregate principal amount of $350.0 million (the “Amended Unsecured Term Loan A”), (ii) extend the maturity date to January 16, 2032 and (iii) reduce, by five basis points (but not below zero), the applicable spread based on our debt rating and leverage ratio.

On July 16, 2026, we entered into amendments (the “Amendments”) to each of our unsecured credit facility, $300.0 million unsecured term loan maturing March 14, 2031 (the “Unsecured Term Loan G”), $187.5 million unsecured term loan maturing January 25, 2028 (the “Unsecured Term Loan H”), and $187.5 million unsecured term loan maturing January 25, 2028 (the “Unsecured Term Loan I”). Borrowings under the unsecured credit facility and the Unsecured Term Loans G, H, and I, at our election, bear interest based on a Base Rate, Term SOFR, or Daily Simple SOFR (each as defined in the applicable loan agreement, as amended), plus an applicable spread based on our debt rating and leverage ratio (each as defined in the applicable loan agreement, as amended). We entered into the Amendments to reduce, by five basis points (but not below zero), the applicable spread based on our debt rating and leverage ratio. The other material terms of each of the unsecured credit facility and the Unsecured Term Loans G, H, and I remain unchanged.

On July 1, 2026, we redeemed in full at maturity $50.0 million in aggregate principal amount of unsecured notes.

The aggregate undrawn nominal commitments on our unsecured credit facility as of September 30, 2026 was approximately $533.8 million, including issued letters of credit. Our actual borrowing capacity at any given point in time may be less and is restricted to a maximum amount based on our debt covenant compliance.

Our unsecured credit facility, unsecured term loans, unsecured notes, and mortgage note are subject to ongoing compliance with a number of financial and other covenants. As of September 30, 2026, we were in compliance with the applicable financial covenants.

The following table summarizes our debt capital structure as of September 30, 2026.

(1) “Net Debt” means amounts outstanding under our unsecured credit facility, unsecured term loans, unsecured notes, and mortgage note, less cash and cash equivalents. “Real Estate Cost Basis” means the book value of rental property and deferred leasing intangibles, exclusive of the related accumulated depreciation and amortization.

We regularly pursue new financing opportunities to ensure an appropriate balance sheet position. As a result of these dedicated efforts, we are confident in our ability to meet future debt maturities and fund acquisitions. We believe that our current balance sheet is in an adequate position at the date of this filing, despite possible volatility in the credit markets.

Our interest rate exposure on our floating rate debt is managed through the use of interest rate swaps, which fix the rate of our long term floating rate debt. For a detailed discussion on our use of interest rate swaps, see “Interest Rate Risk” below.

Equity

Common Stock

Pursuant to the equity distribution agreements for our ATM common stock offering program, we may from time to time sell common stock through sales agents and their affiliates, including shares sold on a forward basis under forward sale agreements. There was no activity for the ATM common stock offering program during the three months ended September 30, 2026, except for the shares sold and settled on a forward basis, as discussed below.

The following table summarizes our ATM common stock offering program as of September 30, 2026.

(1) The ATM common stock offering program was originally implemented on February 17, 2022, and had an initial maximum aggregate offering price of $750 million. On February 13, 2025, following the filing of a new shelf registration statement, we carried forward the ATM common stock offering program to the new registration statement, at which time the remaining maximum aggregate offering price (that is, the amount carried forward) was less than $750 million.

The following table summarizes the activity for shares sold on a forward basis under the ATM common stock offering program and shares settled during the three months September 30, 2026.

(1) Upon a forward sale, the equity distribution agent typically earns a sales commission of 1% of the gross sales price.

We initially do not receive any proceeds from the sales of shares on a forward basis. We may physically settle the applicable forward sale agreements on one or more dates prior to the respective scheduled maturity dates, at which point we would receive the proceeds net of certain costs; provided, however, generally we may elect to cash settle or net share settle such forward sale agreements at any time through the respective scheduled maturity dates, which is typically one year from the respective trade dates.

Noncontrolling Interest

We own our interests in all of our properties and conduct substantially all of our business through the Operating Partnership. We are the sole member of the sole general partner of the Operating Partnership. As of September 30, 2026, we owned approximately 98.0% of the common units in the Operating Partnership, and our current and former executive officers, directors, senior employees and their affiliates, and third parties that contributed properties to us in exchange for common units in the Operating Partnership owned the remaining 2.0%.

We also own joint ventures with third parties primarily engaged in the development and eventual operation of industrial real estate properties. At September 30, 2026, we held a 97.5% interest in a joint venture located in Reno, Nevada, a 95.5% interest in a joint venture located in Concord, North Carolina, and a 97.5% interest in a joint venture located in Shepherdsville, Kentucky.

Interest Rate Risk

We use interest rate swaps to fix the rate of our variable rate debt. As of September 30, 2026, all of our outstanding variable rate debt, with the exception of our unsecured credit facility, was fixed with interest rate swaps through maturity.

We recognize all derivatives on the balance sheet at fair value. If the derivative is designated as a hedge, depending on the nature of the hedge, changes in the fair value of derivatives are either offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income (loss), which is a component of equity. Derivatives that are not designated as hedges must be adjusted to fair value and the changes in fair value must be reflected as income or expense.

We have established criteria for suitable counterparties in relation to various specific types of risk. We only use counterparties that have a credit rating of no lower than investment grade at swap inception from Moody’s Investor Services, Standard & Poor’s, or Fitch Ratings or other nationally recognized rating agencies.

The swaps are all designated as cash flow hedges of interest rate risk, and all are valued as Level 2 financial instruments. Level 2 financial instruments are defined as significant other observable inputs. As of September 30, 2026, all 22 of our interest rate swaps outstanding were in an asset position of approximately $38.6 million, including any adjustment for nonperformance risk related to these agreements.

During the nine months ended September 30, 2026, we entered into two interest rate swaps with an aggregate notional value of $150.0 million which fix Daily SOFR at 3.994% effective March 15, 2027 and mature on January 16, 2032, and two interest rate swaps with an aggregate notional value of $200.0 million which fix Daily SOFR at 3.9885% effective March 25, 2027 and mature on January 16, 2032.

As of September 30, 2026, we had approximately $1,488.0 million of variable rate debt. As of September 30, 2026, all of our outstanding variable rate debt, with the exception of our unsecured credit facility, was fixed with interest rate swaps through initial maturity. To the extent interest rates increase, interest costs on our floating rate debt not fixed with interest rate swaps will increase, which could adversely affect our cash flow and our ability to pay principal and interest on our debt and our ability to make distributions to our security holders. From time to time, we may enter into interest rate swap agreements and other interest rate hedging contracts, including swaps, caps and floors. In addition, an increase in interest rates could decrease the amounts third parties are willing to pay for our assets, thereby limiting our ability to change our portfolio promptly in response to changes in economic or other conditions.

Off-balance Sheet Arrangements

As of September 30, 2026, we had letters of credit related to development projects and certain other agreements of approximately $3.2 million. As of September 30, 2026, we had no other material off-balance sheet arrangements.

Our future income, cash flows and fair values relevant to financial instruments are dependent upon prevailing market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. The primary market risk we are exposed to is interest rate risk. We have used derivative financial instruments to manage, or hedge, interest rate risks related to our borrowings, primarily through interest rate swaps.

As of September 30, 2026, we had $1,488.0 million of variable rate debt outstanding. As of September 30, 2026, all of our outstanding variable rate debt, with the exception of our unsecured credit facility which had a balance of $463.0 million, was fixed with interest rate swaps through initial maturity. To the extent we undertake additional variable rate indebtedness, if interest rates increase, then so will the interest costs on our unhedged variable rate debt, which could adversely affect our cash flow and our ability to pay principal and interest on our debt and our ability to make distributions to our security holders. Further, rising interest rates could significantly increase our future interest expense. From time to time, we enter into interest rate swap agreements and other interest rate hedging contracts, including swaps, caps and floors. While these agreements are intended to lessen the impact of rising interest rates on us, they also expose us to the risk that the other parties to the agreements will not perform, we could incur significant costs associated with the settlement of the agreements, the agreements will be unenforceable and the underlying transactions will fail to qualify as highly-effective cash flow hedges under GAAP. In addition, an increase in interest rates could decrease the amounts third parties are willing to pay for our assets, thereby limiting our ability to change our portfolio promptly in response to changes in economic or other conditions. If interest rates increased by 100 basis points and assuming we had an outstanding balance of $463.0 million on our unsecured credit facility for the nine months ended September 30, 2026, our interest expense would have increased by approximately $3.5 million for the nine months ended September 30, 2026.

Evaluation of Disclosure Controls and Procedures

As required by SEC Rule 13a-15(b), we have evaluated, under the supervision of and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of September 30, 2026. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures for the periods covered by this report were effective to provide reasonable assurance that information required to be disclosed by the Company in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls

There was no change to our internal control over financial reporting during the quarter ended September 30, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on February 11, 2026.