Greetings, and welcome to the STAG Industrial, Inc. Second Quarter 2012 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brad Shepherd, VP of Investor Relations. Thank you, Mr. Shepherd, you may begin.

Thank you. Welcome to STAG Industrial's conference call covering the second quarter 2012 results. In addition to the press release distributed yesterday, we filed our second quarter report on Form 10-Q with the SEC, and 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 actual 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 represents management's estimates as of today, Tuesday, August 6, 2012. STAG Industrial will strive to keep its stockholders as current as possible on company matters, but assumes no obligation to update any forward-looking statements in the future. On today's call, we will hear from Ben Butcher, our Chief Executive Officer; and Greg Sullivan, our Chief Financial Officer. I will now turn this call over to Ben.

Thank you, Brad. Good morning, everybody, and welcome to the second quarter earnings call for STAG Industrial. We are pleased to have you join us and look forward to telling you about our second quarter results and some significant subsequent events. STAG is now well into its second year as a public company. We are proud of the progress made to date. Presenting today, in addition to myself, will be Greg Sullivan, our CFO, who will review our second quarter financial and operating results. Also with me today are Steve Mecke, our COO; Dave King, our Director of Real Estate Operations; and Bill Crooker, our Chief Accounting Officer. They will be available to answer questions specific to their areas of focus. At the end of the second quarter of 2012, the company owned 121 industrial properties, totaling 20.4 million square feet. The 12 properties acquired by the company during the second quarter represent an approximately 12% increase in the company's real estate assets over the previous quarter. As you undoubtedly know, our primary investment strategy focuses on what we perceive to be market inefficiencies in the pricing of our target properties. Our second quarter operational results provide continued validation of our investment thesis, with significant leasing and acquisition activity by the company on leasing. First, let me mention the highlights from the company's leasing activities during the second quarter of 2012. Tenant retention for leases scheduled to expire in the second quarter was 92%, above our long-term expectations of circa 80% to 85% for single-tenant industrial assets. In the second quarter, the company renewed leases for 164,909 square feet. To date, the company has renewed 76% of all the remaining leases scheduled to expire in 2012. In the quarter, we also leased 94,132 square feet of existing vacant space. The…

Thanks, Ben, and good morning, everyone. As Ben mentioned, we had another solid quarter from an acquisition and a leasing standpoint. Our Cash NOI for the second quarter was $17 million, which represented a 14% increase over the first quarter of 2012. This growth was driven by our strong acquisition activity. Our Core FFO in the second quarter was $8.8 million, a 23% increase over the first quarter. This large increase was a function of the revenue ramp described above. Consistent with our past reporting, we eliminated our above/below market rent adjustments, the majority of which was created at our IPO, as well as acquisition deal costs and other nonrecurring costs to measure our Core FFO, which we believe is a more representative measure than NAREIT FFO. You can see a detailed reconciliation of these various metrics in our press release and supplemental. Our AFFO for the quarter was $8.6 million, a 21% increase over the first quarter. In part, because of the single tenant nature of our business, our renewal leasing costs and recurring CapEx continue to be fairly modest. They were 1.7% of cash NOI in the second quarter. Once again, we had a number of acquisitions closed towards the end of the quarter. In fact, 40% of the acquisition volume was done in the last 15 days of the quarter. As a result, the run rate metrics are even better than stated. We also had some temporary earnings dilution on a per-share basis this quarter, since the proceeds from our May equity raise were invested in acquisitions towards the end of the quarter. In spite of this dilution, our Core FFO still increased from $0.30 to $0.32. I should also point out that these metrics of quarter-over-quarter growth are comparing sequential quarters since we don't yet have…

Thank you, Greg. At the risk of sounding overly exuberant, it has just kept getting better. The combination of factors continues to provide significant volume of quality and accretive opportunities for STAG to consider for acquisition, opportunities that continue to be attractive on both a relative bio and spread investing basis. In addition to the factors mentioned previously, such as limited competition and strengthening reputation of STAG, we believe that the impending tax law changes will drive supply through the remainder of the year. Whatever the reason, the end result is a very attractive acquisition environment for the company. Despite the muted recovery today, the company believes that the ongoing improvement in the general economy, combined with the recent strength in the manufacturing sector, will continue to positively impact our own portfolio in terms of occupancy levels and rental rates. The continued lack of speculative development generally across the country, and specifically in our markets, will enhance our performance on these important metrics. Thus, we continue to be optimistic about the future for our company, for our owned assets and for our investment thesis. We believe that our business plan to aggregate and operate a large portfolio of granular and diversified industrial assets will produce strong and predictable returns for our shareholders. Our second quarter operational results provide continued validation for this contention. We thank you for your continued support. We'll now take questions.

[Operator Instructions] Our first question is from the line of Evan Smith of Cantor Fitzgerald.

Given the $500 million acquisition pipeline, can you just give a sense of what you expect to close in 2012?

Yes. It's a little difficult to say. The acquisition opportunities remain very robust and we're very pleased, obviously, with what we have closed to date. Our acquisitions logged to date are about 135 versus our original expectations for the year of 160. That being said, the third quarter is generally a quiet quarter and the fourth quarter is generally an active quarter. I think we're going to certainly surpass the 160 net but we really just don't have a good concept at this time of what that total number will be for the year.

Okay. And then, also, could you touch a little bit on the vacancy that's actually in the portfolio right now, what some of the leasing prospects there look like? And then also, if there are any planned dispositions in the rest of the year of vacant assets?

Well, I'll let Dave King answer that.

The vacancy in the existing portfolio is concentrated in just a few buildings. We have activity on half of those spaces. I would consider about 10% of the space to be challenged leasing, just because it's mezzanine or it's attached to an existing lease space, so it is hard to lease in small increments. But in general, we see demand picking up. We see velocity of deal flow is certainly accelerating. We expect good results. Again, as we have reported it at 95.7%, we only have a little over 4% vacant, so it's a relatively small amount to work on in terms of increasing our occupancy.

And, Evan, it's Greg. As to the dispositions, as you know, they're fairly episodic. We are typically taking our vacant properties when they become vacant and make them available for lease or for sale. We're not inclined to sell to a value-add buyer because that's what we do, but if someone will pay us full value, a user/buyer that would basically pay us what we would've made if that property had been fully leased, then, occasionally, we are that fortunate. And sort of ironic, that one deal that we sold in this quarter was actually, for those of you who were on some of our previous calls, you may recall that, that was the property that we had a lease termination, where the tenant paid us 3 years' rent in advance. So we're able to sell that asset for full value at relatively short order.

[Operator Instructions] The next question is from the line of Mitch Germain of JMP Capital.

What are your thoughts on the Wells loan? How are those discussions going?

Yes, sure. Just as a bit of background, we have one large loan that's about $125 million of outstanding principal amount. But it's due at the end of October 2013. I have a term sheet from a syndicate of banks to refinance that probably in the next 60 days or so. And that's going to be part of a combination revolving credit facility and Term Loan Facility. The expected amount of that overall facility is about $350 million, so the revolver will actually be increasing, from $100 million to $200 million. And there will be $150 million term loan as part of that overall package. I might add that the terms and pricing on the revolver will be improving. The pricing will be reduced on the order of 40 basis points or more. The term will be 4 years on the revolver and 5 years on the term. And it is our current expectation that, that revolver and the term loan will both be unsecured facilities, which will be a significant advantage for us.

Great. And with regard, Ben, to your comments on the acquisition environment, are you seeing any additional capital flows from institutional investors bidding on similar assets to the ones that you guys are acquiring?

Our history has been that we tend to buy from small owners in this highly fragmented ownership structure that is the U.S. industrial base. And we tend to compete with small buyers. We really haven't seen any great amount of organized capital coming in to the space. The most organized capital we see remains in the sale leaseback part of our business, which is maybe 20% of our business, something like that, where there is some organized capital. There is -- at the margin, we occasionally have seen some of the public non-traded REITs looking for single tenant net-leased assets but really only at the margin of our business.

And what's the sweet spot in the acquisition market for you guys today? What is it like, $7 million to $10 million? Is that kind of what...

I'd say it continues to be sort of $5 million to $15 million. We may have edged up a little bit in the last year or so in terms of the size of the deal, perhaps as risk premiums have risen and maybe there's some slightly less competition from larger capital sources. So the sweet spot remains sort of in the, again, $5 million to $15 million, so centered around $10 million. And it remains a secondary markets, although we certainly buy in primary markets and occasionally tertiary markets. But the -- it tends to be a $10 million deal on the secondary market, with a reasonable credit and reasonable term. Sort of something around 7-year term tends to be where our averages are on those parameters.

And looking at your exploration schedule, moving forward, are there any move-outs that are expected, known at this time?

There are a couple move-outs that are expected through the balance of this year. We expect there will be offset with some leasing activity that we have in place in the portfolio. We would expect sort of same-store occupancy to be roughly where it is, probably by the end of the year.

Great. I just missed, Greg, that liquidity number available for acquisition today? What was that number again?

We -- as the most recent numbers we put out, I think, in terms of liquidity would be in our -- at the time of our follow-on offering, we have a page in that offering we discuss remaining capacity for acquisitions, at that time, we were around -- based on the size of that offering, net to the company, we were at additional capacity for acquisitions of $210 million, $105 million of liquidity combined with circa 50% leverage. Since that time, we've bought -- in quarter 2, we bought another $48 million. And in quarter 3, we bought $23 million. So if you take that $210 million, subtract those 2 pieces, we have a little under $140 million of capacity left to -- based on the proceeds of the follow-on offering. We feel that's a pretty sizable additional ramp, obviously, compared to our asset base, which is circa $800 million today, $750 million to $800 million today. And also relative to our original projection for the year of $160 million and our acquisition volume to date in 6-plus months of $135 million. So we're feeling fairly comfortable. We have a pretty substantial additional capacity to acquire from this day forward. Greg mentioned the new revolver and term loan. That, plus putting the assets that we buy onto the following base, will just increase the liquidity and flexibility of our balance sheet. So we're feeling pretty good about our capacity growth from here.

[Operator Instructions] Your next question is from the line of Michael Mueller of JPMorgan.

Most things have been answered, but just 2 quick ones. One, your cap rates of 9% on acquisitions, what's a comparable GAAP cap rate?

We're really cash people, so we don't think that way often.

It would obviously be higher. If you straight-line the rent, it's probably 50 to 75 basis points higher on a GAAP basis.

Okay. And then, can you just give us a rundown of anything related to Fuller Brush in the quarter's run rate that we need to be cognizant of for going forward?

Sure. As I explained that a couple of the previous calls, Fuller is working with their restructuring officer on an orderly sale of the business. We had expected that sale process to be completed probably this month, but they have asked for an extension through the end of October. There apparently are several interested bidders, including bidders for the going concern of the business. So they've continued to pay us rent in full, which is on the order of about $140,000. Again, we're sort of cautiously optimistic that things will work out well, that someone would want to be buy the ongoing business. And given the highly disruptive nature of moving their facility and their workforce to a different location, we expect them to stay there. We have been showing the space to other potential tenants, in the event that they choose to downsize. But at this point, they've given us no indication that they want to do that. So in the meantime, we're getting paid rent in full and we probably will continue to see that through the end of October.

There are no further questions at this time. I would like to turn the floor back to management for further comments and closing comments.

I didn't -- although I didn't sound all that exuberant in my closing comments earlier, we really are very thankful that the market has continued to be so friendly to our investment thesis. We really are seeing a lot of good opportunity. We also, as a backdrop, there's a number of things that are positively impacting the U.S. industrial and manufacturing sectors. And we think we are, both on a same-store and on prospective acquisitions, we're going to benefit from that as we move forward. So we're very optimistic about the future and we thank you all for your support.

That concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.