Greetings and welcome to the STAG Industrial First Quarter 2014 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Brad Shepherd. Thank you, sir, please go ahead.

Thank you. Welcome to STAG Industrial’s conference call covering the first quarter 2014 results. In addition to the press release distributed yesterday, we have posted an unaudited quarterly supplemental information presentation on the company’s website at www.stagindustrial.com under the Investor Relations section. On today’s call, the company’s prepared remarks and answers to your questions will contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actually results to differ from those discussed today. Examples of forward-looking statements include those related to STAG Industrial’s revenues and operating income, financial guidance, as well as non-GAAP financial measures such as trends from operation, core FFO and EBITDA. We encourage all of our listeners to review the more detailed discussion related to these forward-looking statements, contained in the company’s filings with the SEC and the definitions and reconciliations of non-GAAP measures contained in the supplemental information package available on the company’s website. As a reminder, forward-looking statements represent management’s estimates of as today, Tuesday, May 6, 2014. STAG Industrial will strive to keep its stockholders as current as possible on company matters but assumes no obligations to update any forward-looking statements in the future. On today’s call we will hear from Ben Butcher, our Chief Executive Officer; and Bill Crooker our Chief Accounting Officer. I will now turn the call to Ben.

Thank you Brad, good morning everybody and welcome to the first quarter earnings call for Stag Industrial. We’re pleased to have you join us and look forward to telling you about our first quarter results and some significant subsequent events. We’re happy to report that 2014 is off to a good start for Stag and its properties. Presenting today in addition to myself will be Bill Crooker our Chief Accounting Officer, who’ll review our first quarter financial and operating results, also with me today are Steve Mecke our COO and Dave King our director of real estate operations. They’ll be available to answer questions to their areas and purpose. Before we get into our discussion of the quarter you might have noticed Bill Crooker our very able CAO representing today as our CFO slot is temporarily unoccupied, I am happy to report that it is likely to be a very temporary situation and the search process has produced some very qualified candidates for CFO, we expect to be in position to announce our new CFO in a matter of weeks. Our first quarter operation results show continued significantly leasing activity by the Company. Acquisition activity was as expected for the first quarter somewhat muted by seasonal realities. During the first quarter the Company acquired 12 buildings for a combined all in purchase price of approximately $37 million. With 1 million square feet acquired in the quarter increased the company’s portfolio square footage to 39 million square feet, a 25% increase in square footage in the end of the first quarter last year. The four buildings acquired in the quarter are located in four different states and represent diverse industries including automotive, revenue services and office supplies. Our acquisition phase picked up in April, the monthly acquisitions total matched the total…

As Ben mentioned, we had another solid quarter from an acquisition and operations standpoint. Our cash NOI was up 26% over the first quarter of 2013. This growth was driven primarily by our strong acquisition activity. Our core FFO increased by 23% over the first quarter of 2013. We think these non-per share metrics are important because they convey our ability to grow the business while their more typically cited per share metrics are heavily influenced by our financing and liquidity decisions. Having said that, our core FFO per share grew meaningfully, by 9% over Q1 of 2013 while maintaining our low 27% debt-to-enterprise value. Our AFFO for the quarter increased 26% over the first quarter of 2013. This is one of our key valuation benchmarks as it reflects the low CapEx nature of our portfolio. Because of the single tenant focus of our business, our leasing and CapEx cost continue to be quite modest. Tenant improvement and lease information for the 1.1 million square feet of leases signed in the first quarter below to 1% of cash NOI. Our occupancy was 95.3% at the end of this quarter compared to 95.6% at the end of the fourth quarter 2013. Year-over-year same-store occupancy decrease by 1.2% to 93.9%, this same store occupancy drop is a result of lower retention rates in the second half of 2013. Retention rates improved in the first quarter of 2014 as we see the 75% of our renewal rate on our signing leases. In addition, we signed leased with 1.1 million square feet both new and renewals. Our debt metrics continue to be quite strong. Our net debt-to-annualized adjusted EBITDA was 4.7 times at quarter end. Our interest coverage for the first quarter was 5.1 our total debt to total assets was 42% and our…

Thank you, Bill. It was another successful first quarter for the company with good leasing results and -- expect with someone need of acquisition pay sort of the outside of the year. We will continue to move forward to our lower strategy for the execution of our differentiate investment pieces. Stag continues to benefit from a combination of factors to provide a significant volume of quality and accretive opportunities for acquisitions both on a relative value and our spread of investment cases. General market conditions remain fairly and relevant while a stable interest rates continues strengthen in a leasing market and a relatively stable capital environment. Thus we continue to be optimistic about the future for our company for our owned assets and for our investment pieces. We believe that our business plan to aggregate and operate portfolio of granular and diversified industrial assets will produce strong and predictable returns for our shareholders. Our first quarter operational results provide the validation for this contention. Going forward we’ll maintain our investment discipline and focus on shareholder returns. We thank you for your continued support.

Thank you, we’ll now be conducting a question-and-answer session. (Operator Instructions). And our first question comes from the line of Sheila McGrath with Evercore. Please proceed with your questions.

Yes, good morning, Ben. I was wondering if you can talk the about the competitive landscape? Have you bumped into more competition on acquisition? And how is the pipeline looking versus the size of the pipeline versus year-end?

I think that the preponderance to our competition remains the smaller players, guys that are 1 to 10 assets. That’s again the remains (ph) of the people buy from and people we compete with primarily. We do see some margins the aggregated private funds as well as some of the public non-traded and in addition to which some of them now traded companies for instance we see occasionally in our markets. But for the most part we remain competing with the smaller players. Make note everyone is talking about the impact of rising interest rates that, should that occur and clearly that eventuated yet. We feel that would be very good for us on a competitive basis because we’re a lot leverage player than our principle competition, these smaller buyers. The pipeline running around $900 million right now is pretty consistent with where it was at year end, it’s made up mostly greater acquisition opportunities with some portfolio opportunities mixed in, and a couple of built to suite tale out opportunities but the pipeline remains very robust and we remain very confident of our ability to execute our 25% or perhaps greater ads to our portfolios throughout the course of the year.

And just one quick follow-up, on the renewal percentage that moved back up from the past couple quarters were lower, so it is back to the 75% range, as you look out over the next three quarters, do you think that kind of higher renewal percentage is sustainable?

I think that we’re and we always run through the small sample size issues, I think we’re not completely out of the woods yet in terms of getting back to sport of sustainable 80% to 85% retention that we think was a long-term sort of equilibrium number, we expect next quarter to be another moderate -- at best I think retention quarter and I think the remainder of the year as we have indicated on prior calls, the remainder of the year we expect to returning back towards the sort of that 75%, 80% and hopefully in the 50% range. The next quarter is we would not be surprised based on data we have today was another moderate retention quarter on a small size.

And other question comes from the line of Blaine Heck with Wells Fargo. Please proceed with your question.

Hey guys, good morning. On the ATM issuance was a little more than we originally expected at $78 million. Is it fair to assume maybe you guys accelerated the issuance that you expect to see or given good pricing, or do you think it can continue at that level going forward?

We were little opportunistic and some block increase, some large -- interest of some large known re-buyers to enter the stock through the ATM. So that was probably than we anticipated for the quarter. On the other hand we expect to have block increase going forward. The 80 million or 78 million the relative run rate that we need sort of to fund acquisition activity for the quarter, so I wouldn’t expect that we will run at that kind of number probably more like half of that for the remainder of the year. But what’s been demonstrated to as the ATM, ATM productivity is appears to us to be sufficient even the higher acquisition volumes sufficient to fulfill our equity needs through the year as opposed to relying on periodic follow-on offerings. And I am sure we’ve discussed over time from the company’s perspective this smaller discounts lower fees associated with ATM issuance versus the follow on issuance have to be good for the company and for our shareholders.

That's helpful. And then, Ben, can you talk a little more about the portfolio deals out on the market right now and what size you guys consider pursuing at the high end?

Well I think that in the continue portfolio deals if you move up to the levels where Blackstone or their industrial entity Indoor, has participated over time so the 250 million it still feels to us like cap rate basis and probably NIR basis as well, you’re giving up couple of 100 basis points of return. That's a trade that despite the attraction of perhaps being able to execute in those kind of volume that’s the trade we are not likely to be interested in and undertaking it would not need our return requirement for our shareholders. We feel that in a sub $100 million portfolio, say 30 to 75 million or we’re, maybe or even 50 basis points. And that may be traded some interest to it. So we continue to look at them, I think you will see it execute on some small portfolio trade, there may be add on to the ATM issuance and there’s some of these trades are likely to, and these are the possibility of OP and issuances are part of a trade. So I think you will see towards some portfolio activities this year, but it will be in the, it’s a small under the range, some 100 million most likely.

And then on the occupancy side, flipped a little bit this quarter, but from a high number. Do you have any sense of how you think the number is going to trend for the rest of the year?

You know, we kind of, we’ve said that consistently that we think not around 95% is an each delivery of number and I will even running a little above that. You know I don’t think it’s worth taking any differently, after the remainder of the year. They’re really strong leasing environment, you know expect to have some pretty good results throughout the year, leasing of currently vacant space which is the flip side of the, what has been occurred of retention, you know frankly we don’t have that much vacant space or leasing, guys don’t have that much to work on. But again, we expect to have some good results at least and throughout the year.

Great. And then this quarter a lot of your peers talked about the impact of higher than usual snow removal and utilities expense. Did you guys have any of that, and what kind of -- what was the affect on, say, same store NOI for the quarter?

Yes. The same-store NOI was down four something percent I think about half of that probably was due to weather related issues, the bad weather related issues which has non-reimbursable snow removal but also the interactive facts of tenants showing some possibly a little harder people are just starting, there’s a general ways it costs all that bad weather I think probably, I think if you listen to most of the industrial company that have reported so far, there has been intendancy to release, there has been some indication, the slower activity occupancy drops, small occupancy drops et cetera. So I think it’s pretty consistent across the landscape that’s slightly higher cost and probably a little bit immediate leasing activity during the quarter, new leasing activity during the quarter.

Our next question comes from the line of David Toti with Cantor Fitzgerald. Please proceed with your question.

I had a couple of big picture questions. We are hearing from some of our industry contacts that there is an increased interest in secondary and tertiary markets given the growing pressure on rapid delivery. Are you seeing interest in tenants in some of your more peripheral markets and peripheral assets from those types of tenants? Are you seeing more blanket distribution at the local level as well?

I’ll ask Dave King to give me his thoughts on that. I wouldn’t say that it is being a large factor anecdotally, Dave do you have any?

We are seeing a little bit of and sort of building this folks from a hub, whereas the tenancy has been for very large regional centers. And when we get closer to customers that time to recently we have looked at smaller just to release closer to population so there’s a bit of put a building out of his folks but I think the last year have changed that much.

So maybe early days. My other question has to do with obviously there is a sort of growing wave of land acquisitions spec development coming which I think you touched on in your comments. Are you seeing this potentially as competition given higher technical qualities in the new assets, bigger clearance, bigger footprints? Is that in any way connected to your retention rates at this point in the cycle?

Yes. We’ve talked about this on the last call and I think we continue in our review of tenants that have not renewed. I don’t believe we had any kind of non-renew because I want to build it with higher clear height. Different strike was type of sprinkler system or different lighting or anything like that, the lighting sprinkler system et cetera, generally door, number of doors are all addressable within the existing structure, the reason the tenant leave is generally because the building isn’t big enough for them. Because of consolidation or M&A activity or just growth of business, they’ve out grown the building to a level that it is, the building is not expandable, most of our builders have at least some incremental expansion capacity. So we’re not seeing the landscape of, tenant looking for building for their different technology, but what goes on, the technological advancement are mostly in the what goes inside the building not with the building itself. RFIV or different types of material handling the equipment et cetera are internals of the building. I was listening to an industry expert on SIOR interview, talking about obsolete buildings and then he went on to say but these can be made non obsolete by the addition of T-5 wide areas of our sprinklers, it wasn’t so much that the physical buildings were obsolete it was just the things, if you will the bells and whistles at the margin had been changed and these are addressable in older structures for the most part, I mean if you have a upper 20s or mid 20s clear eye that’s suitable for a preponderance of tenants that are off rate in the market today.

My final question has to do with pricing power and I think there is sort of a broad, modest recovery taking place in absolute rental rates given this upswing of demand. Are you seeing this in terms of your early discussions on renewals? Are you finding you have more negotiating power given the shrinkage of product in the market?

This you’ll see if our numbers this quarter were up 3.7% on cash roles in terms of new deals coming in we’re at or about prior rents and those rents tend to have grown over time to something perhaps what could be considered above market but is now becoming more market. So we’re seeing a lot more demand, a lot more interest in our spaces and should ultimately result in pricing power.

And our next question comes from the line of Michael Salinsky with RBC; please go ahead with your question.

Just going to the same store numbers. The cash decline in same store revenue, how much was due to the occupancy drop and how much was due to the burn off of the above market rents.

Yes, I’d like to, that’s Bill Crooker, the same store numbers as you see dropped 5% on a cash NOI and that was driven for a couple of factors, one being in 2013 we had some existing tenants paying cash rents which are now paying, they’re in a free rent period one of those being the Sun Prairie lease we entered into at the end of 2013. So that contributed about 2%, if you take that out it’s about 2% of the cash NOI change. The winter, the harsh winter contributed to about 1% of that change, and the other 2% really contributed to vacancy in the occupancy loss related to the low retention at the end of 2013.

That's helpful. The Sun Prairie lease and free rent rate, when does that burn off?

There’s two months of free rent in Q2. And another [Indiscernible].

Very helpful. Second of all the G&A hit, I think you mentioned for Greg's consulting agreement, what was the number in the second quarter again? And then how much should we expect since it is a one-year agreement, how much do we expect in the third and fourth quarter? So what is the run rate after the second quarter?

Right, the way the economy works on that is that it’ll all be, the whole charge will be taken in Q2, the approximate charge is about 2.8 million of which about 2.1 million is a non cash charge, on a go forward basis there will be no charges related to his consulting agreement. The only potential charge is a change in his bonus but that will be minimum.

Okay, so the …

And the final question, you talked about some deals of call it $30 million to $70 million, but under $100 million of portfolio opportunities. If you look at the pipeline today how much does that represent? How many portfolios are you looking at of that size?

We have about six portfolios in the range between 10 and 60 million, at this point I’m little guilty so.

You know 150 million of the 900 and something like that.

Okay, appreciate the color, thanks guys.

And our next question come from the line of Emil Shalmiyev with JP Morgan, please proceed with your question.

Good morning. I'm not sure if you disclosed this, but what was the tap rate on this quarter's acquisitions?

I always love the cap rate question. The cap rate was right around 9%, you know we were focused on cap rate is not a great measure of the quality of the return of the deal, so we’re although we talk about, and have talked about in the past cap rate nearly are nine cap rate acquisitions you know you could buy a transaction with above market rent or is it a two deal or was it 12, it might have bad financial returns, you can buy a 7.5 cap with a 15 year lease to a credit 10 on 2% bumps, it might actually provide pretty good returns, so we’ve tended to try and talk away from cap rate as a measure. It’s a point in time measure of return much like the dollar price of a bond that maybe is not as informative generally speaking as an IRR or some longer term measured return. So we continue to buy, because the markets like to talk about we continue to buy sort of 9% cap rate deals but our focus is really on the long term returns that can be garnered from holding these assets, and that has been and will continue to be our focus,

Right, understood and as follow up what’s the occupancy level those acquisitions.

They are 100 percent occupied.

Okay, thank you.

Great, thank you. You mentioned the GI Partners converted -- sold out their units for shares. When did that happen? I know there was a large block trade that happened a few weeks ago that I think the market assumed was an ATM offering. Was it --

s :

Got it. That wasn't additional equity that was issued. The market assumed there was a little dilution there.

Yeah.

Thanks for the clarification. And then I know we just touched on cap rates and I know your opinion on it, but just generally speaking we are hearing from other industrial REITs that cap rates in primary markets have declined. You can look at the data yourself like real capital analytics down anywhere from 25 to 50 basis points over the last two to three quarters. Are you seeing the same declines in the secondary markets more or less?

Thank you. And our next question comes from the line of Jamie Feldman with Bank of America. Please proceed with your question.

Great, thank you. So our economists are still calling for a 375 10-year treasury by the end of the year. If we hit that number, what do you think changes in your business model or your dividend growth? How would that impact your outlook?

Well, I mean the rates obviously have been moving the opposite direction of late, I fully account this that lot of economists are calling for tenure of that level. I would tell you that I think it would generally be, it would have relatively, over time in a relevant little impact on our return because we’re about 40% levered and the general history has been within small band that cap rates moving about 50% of interest rate. So if cap rates went up, talking about, if you look at base points their cap rates drop 100 basis point our overall returns given our leverage levels return to equity would not be terribly change, what we would really change is, which is touched on before is the competitive environment. We are mostly dealing with, even the larger players that we can team with the real estate five and actually fund our operative significantly higher leverage than we are. And their competiveness would be hindered by higher interest rates, far more than ours would. So we actually and as he move down the spectrum to again, our principle competition the guys along one to 10 assets they are typically offering a much higher leverage than us. And they access the capital I think would be less attractive and diminished. So I think in general, again within our moderate range and I was just cutting on patients there and how much cap rate lag the interest rate increase. I think generally speaking it could be good. Interest rise would, should be good for us.

If you go back to prior cycles, did the cap rates actually go up when interest rates increased?

Generally speaking and the answer is within normal ranges around 50 basis point. Now what’s happens -- 50% of the interest rate increase. You know I think as because, as real estate tense to de levered in total around 50% so that's where the annuity comes from but the that has been pretty through time now, whether we’re different paradigm this days, because the amount of capital chasing real estate I think the primary markets you know make rally to make it very strong the argument that cap rates and interest rates have detached from each other, there is just too much capital pursuing those market. I don’t think that arguments stands up quite as well in second market. Overall it won’t stand up any market I think the returns are, the design to maintain returns we will make cap rates follow our interest rates at some point. Again typically with the lag six months or so.

And then I know you are not really focused on the markets that are seeing a lot of new supply, but I am curious from your vantage point what your thoughts are on the broader warehouse cycle right now. I know markets getting [Indiscernible].

I think on the macro basis over riding statement but there’s a lot demand and I mean that demand is still projected to vastly exceed vast supply. On the rental basis you have to feel like, the ease which you need vacant space, to ease in which you, you have negotiations with our rental rates with existing tenants all that’s have to continue to improve as absorption, you know we’re at a 100,000 square feet, exceeds supply, which is again is projected to do this year, the anomalies are markets where you know people have land banked and permitted in our underground building buildings on spec or above the suit basis, you know I think you have read that the people paid out and actually have moved over to where supply is going to exceed absorption this year, people fact that I’ve used in some southern California markets. You know the big competition for us is really not speculative supply but again when tenants need bigger buildings, the build to suit activity is the competition that we frequently see as competition for our tenants but again it’s not because they’re moving because they want or a prettier building or a higher clear eye or some other feature of the buildings because they need a bigger building it’s almost all of the case.

But there’s certain markets where you’re not as willing to buy right now because of its supply story and building script.

Well I mean we’re happy to buy in Dallas and Houston and Southern California if we can get [Indiscernible] IRRs. The reality is it’s not likely that we’re going to be able to do that, now I think we’ll be able to find transactions in other cities in Texas and in other parts of California for the first time we’re actually pretty close to a transaction in California but not in those markets where the abundance of capital chasing those markets have driven or are continuing to drive returns now at the levels that we’re not interested in despite the fact that those markets are also the markets that have the supply risk, capital continues to chase transactions in those markets.

Our next question comes from the Dan Donlan with Ladenburg Thalmann, please proceed with your question.

Thank you. Just a couple of clarifications. Ben, when you put at the non-cap I assume you mean cash on that.

Yes.

As far as the free rent with Sun Prairie can you quantify how much of that was in the quarter?

And in this quarter it’s about $320,000 of free rent, in Q2 there’ll be a couple of 100,000 riding through as free rent, there was probably an additional 500,000 of other free rent in this quarter that will burn out the next.

And does it all fall through a straight line, right.

It does.

And then as far as just real quick on the G&A, I think your guidance last quarter was $21 million. Obviously with the consulting agreement being $2.8 million should we add the $2.8 million to the $21 million and that seems like a good run rate, or a good number for the full year?

Well I will take, quickly answer that as no, because obviously grace compensation is already in the subjects that in that 21 million number but I’ll let Bill answer more.

Yes, I mean, I think adding it to the existing 21 was a good start until we see what happens when we hire our new CFO. I think right now that’s the best we can do, that’s a good 21.

And it appears we have no further questions at this time, I’d like to turn the call back to management for closing remarks.

Sorry, I was having a conversation with Steve Mecke about something, thank you all for participating in the call today you know we appreciate your support I think that the general word from us here at Stag is the opportunity that we see in front of us continues to be very attractive both in terms of leasing our current vacancy and acquiring new buildings who’ll deliver the kind of returns that we’ve delivered to for the company along the way, we’re very encouraged about the prospects for 2014 we thank you for your support and look forward to delivering on those promises, thank you.

This concludes today’s teleconference, you may disconnect your lines at this time and thank you for your participation.