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Broadstone(BNL) - 2022 Q3 - Quarterly Report
BNLBroadstone(BNL)2022-11-02 16:00
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Investment and Portfolio Overview - The company invested 596.9millionduringtheninemonthsendedSeptember30,2022,ataweightedaverageinitialcashcapitalizationrateof6.2596.9 million during the nine months ended September 30, 2022, at a weighted average initial cash capitalization rate of 6.2%[105] - As of September 30, 2022, the portfolio comprised 790 properties, with an annualized base rent (ABR) of 371.9 million[107] - Approximately 99.3% of the portfolio was leased, with an ABR weighted average remaining lease term of approximately 10.7 years[105] - The company acquired properties in various sectors, with industrial assets accounting for 49% of the total volume acquired[108] - The portfolio is diversified across 44 U.S. states and four Canadian provinces, with no single geographic concentration exceeding 10.6% of ABR[105] - The total number of properties in the portfolio is 790, with a total ABR of 371,906,000[116]−Thetotalsquarefootageoftheportfoliois36,788,000squarefeet[116]LeaseandTenantInformation−Approximately94.1371,906,000[116] - The total square footage of the portfolio is 36,788,000 square feet[116] Lease and Tenant Information - Approximately 94.1% of tenants provide financial reporting, with 85.3% required to provide specified financial information periodically[105] - The company targets properties integral to tenants' businesses, allowing them to secure long-term net leases[105] - 97.2% of leases have contractual rent escalations, with an ABR weighted average minimum increase of 2.0%[105] - Total ABR (Annual Base Rent) from the top 10 tenants is 63,760,000, accounting for 17.1% of the total portfolio[112] - The top 20 tenants contribute a total ABR of 110,717,000,representing29.8110,717,000, representing 29.8% of the total portfolio[112] - The healthcare sector represents 18.5% of the total portfolio based on ABR[110] - The restaurant sector accounts for 14.2% of the total portfolio based on ABR, with casual dining and quick service restaurants being significant contributors[110] - The healthcare facilities industry has 103 properties with an ABR of 54,541,000, which is 14.7% of the total portfolio[116] - The restaurant industry consists of 253 properties with an ABR of 53,326,000,makingup14.353,326,000, making up 14.3% of the total portfolio[116] - The packaged foods and meats industry has 22 properties with an ABR of 22,220,000, representing 6.0% of the total portfolio[116] - The healthcare services industry has 18 properties with an ABR of 9,211,000,whichis2.59,211,000, which is 2.5% of the total portfolio[116] Financial Performance - Net income for the three months ended September 30, 2022, was 28.7 million, a decrease of 19.2% from 35.6millionforthethreemonthsendedJune30,2022[140]−TotalleaserevenuesforthethreemonthsendedSeptember30,2022,were35.6 million for the three months ended June 30, 2022[140] - Total lease revenues for the three months ended September 30, 2022, were 103.5 million, representing a 5.6% increase from 98.0millionforthethreemonthsendedJune30,2022[131]−Thecompanyreportedanetincomeof98.0 million for the three months ended June 30, 2022[131] - The company reported a net income of 92.7 million for the nine months ended September 30, 2022, up 19.9% from 77.3millionin2021[151]−FundsFromOperations(FFO)fortheninemonthsendedSeptember30,2022,was77.3 million in 2021[151] - Funds From Operations (FFO) for the nine months ended September 30, 2022, was 202.0 million, compared to 194.1millionforthesameperiodin2021[171]−CoreFundsFromOperations(CoreFFO)reached194.1 million for the same period in 2021[171] - Core Funds From Operations (Core FFO) reached 196.7 million for the nine months ended September 30, 2022, compared to 168.2millionintheprioryear[171]−AdjustedFundsFromOperations(AFFO)was168.2 million in the prior year[171] - Adjusted Funds From Operations (AFFO) was 186.6 million for the nine months ended September 30, 2022, compared to 157.3millionforthesameperiodin2021[171]−TheincreaseinAFFOreflectsthecompany′sabilitytomanagenon−cashrevenuesandexpenseseffectively[171]DebtandLiquidity−AsofSeptember30,2022,totaloutstandingdebtwas157.3 million for the same period in 2021[171] - The increase in AFFO reflects the company's ability to manage non-cash revenues and expenses effectively[171] Debt and Liquidity - As of September 30, 2022, total outstanding debt was 2.1 billion, with a Net Debt to Annualized Adjusted EBITDAre ratio of 5.5x[153] - The company aims to maintain a Net Debt to Annualized Adjusted EBITDAre ratio generally less than 6.0x to ensure financial stability[153] - The company has 1.97billionintotalunsecureddebtasofSeptember30,2022,whichincludes1.97 billion in total unsecured debt as of September 30, 2022, which includes 900 million in unsecured term loans and 850millioninseniorunsecurednotes[160]−ThecompanycompletedapublicofferinginAugust2022,selling13millionsharesat850 million in senior unsecured notes[160] - The company completed a public offering in August 2022, selling 13 million shares at 21.35 per share, expected to provide net proceeds of approximately 270.7million[159]−Thecompanyhas270.7 million[159] - The company has 780.5 million of available capacity under its Revolving Credit Facility[156] - The company expects to meet long-term liquidity requirements primarily from borrowings under the Revolving Credit Facility, future debt and equity financings, and limited property sales[156] - The company has a total of 2.5billionincontractualobligationsasofSeptember30,2022,whichincludesinterestexpenseprojectionsbasedonoutstandingborrowings[165]OperationalExpensesandImpairments−Operatingexpensesincreasedby16.22.5 billion in contractual obligations as of September 30, 2022, which includes interest expense projections based on outstanding borrowings[165] Operational Expenses and Impairments - Operating expenses increased by 16.2% to 59.1 million for the three months ended September 30, 2022, compared to 50.9millionforthethreemonthsendedJune30,2022[132]−Thecompanyrecognized50.9 million for the three months ended June 30, 2022[132] - The company recognized 4.2 million of impairment on investments in rental properties during the three months ended September 30, 2022, compared to 1.4millionforthepreviousquarter[134]−Theprovisionforimpairmentofinvestmentinrentalpropertiesdecreasedsignificantlyto1.4 million for the previous quarter[134] - The provision for impairment of investment in rental properties decreased significantly to 5.5 million from 28.0million,an80.228.0 million, an 80.2% reduction[144] Interest and Borrowing Costs - Interest expense increased by 12.3% to 20.1 million for the three months ended September 30, 2022, compared to 17.9millionforthepreviousquarter[136]−Interestexpenseincreasedto17.9 million for the previous quarter[136] - Interest expense increased to 54.9 million, a 16.4% rise from 47.1millioninthepreviousyear,attributedtohigheraverageborrowings[147]−Theweightedaveragecostofborrowingsincreased,withapproximately47.1 million in the previous year, attributed to higher average borrowings[147] - The weighted average cost of borrowings increased, with approximately 154.0 million, or 7.5%, of total outstanding indebtedness of 2.1billionbeingvariable[137]−Thecompanyhas32interestrateswapsoutstandingwithanaggregatenotionalamountof2.1 billion being variable[137] - The company has 32 interest rate swaps outstanding with an aggregate notional amount of 973 million to manage interest rate risk on variable-rate borrowings[167] Strategic Focus and Future Plans - The company plans to continue expanding its real estate portfolio to drive future growth and revenue[168] - The company is focused on a disciplined acquisition strategy and active asset management, including selective property sales[173] - The company’s acquisition growth strategy relies on obtaining acquisition financing on favorable terms while maintaining an appropriate mix of debt and equity capitalization[158]