Broadstone(BNL) - 2024 Q1 - Quarterly Report

Portfolio Overview - As of March 31, 2024, the company’s portfolio includes 759 properties, with an annualized base rent (ABR) of $374.1 million[95]. - The portfolio is approximately 99.2% leased, with an ABR weighted average remaining lease term of approximately 10.6 years[95]. - The total rentable square footage of the portfolio is approximately 37.6 million square feet[95]. - Total properties managed by the company amount to 759, with an Annual Base Rent (ABR) of$ 374,051,000, representing 100% of the total portfolio[101]. - The total square footage of the properties managed is 37,623,000 square feet[101]. - The total number of properties in the U.S. portfolio is 752, with an Annual Base Rent (ABR) of $365,931,000, representing 97.8% of the total portfolio[162]. - The total square footage of the U.S. portfolio is 37,193,000 square feet, with 98.9% of the total portfolio represented[162]. Tenant and Lease Information - Approximately 200 different commercial tenants occupy the properties, with no single tenant accounting for more than 4.3% of the ABR[95]. - Approximately 97.4% of leases have contractual rent escalations, with a minimum increase of 2.0%[95]. - The average annual minimum increase in base rent from lease escalations is 2.0%, with 79.3% of ABR subject to annual escalations[108]. - The top 20 tenants contribute 34% of the total ABR, with a combined ABR of$ 127,267,000[100]. - The top 10 tenants represent 20.6% of the total ABR, with a combined ABR of $77,212,000[100]. - The company has a diversified tenant base across 38 different industries, with "Other" industries contributing 26.7% of the total ABR[101]. Financial Performance - Net income for the three months ended March 31, 2024, was$ 68,177,000, an increase of $26,803,000 or 64.8% compared to$ 41,374,000 for the same period in 2023[121]. - Net earnings per diluted share increased to $0.35, up 66.7% from$ 0.21 in the prior year[121]. - Total lease revenues for the three months ended March 31, 2024, were $105,366,000, an increase of 0.3% compared to$ 104,999,000 for the three months ended December 31, 2023[110]. - Total lease revenues, net decreased by $13,626,000 or 11.5% to$ 105,366,000 for the three months ended March 31, 2024, primarily due to a decrease in lease termination income[121]. - Funds From Operations (FFO) for the three months ended March 31, 2024, was $73,135 thousand, an increase from$ 69,443 thousand in the previous quarter and a decrease from $81,177 thousand in the same period last year[147]. - Core Funds From Operations (Core FFO) for the three months ended March 31, 2024, was$ 74,072 thousand, compared to $75,275 thousand in the previous quarter and$ 74,473 thousand in the same period last year[147]. - Adjusted Funds From Operations (AFFO) for the three months ended March 31, 2024, was $70,873 thousand, slightly down from$ 71,278 thousand in the previous quarter and up from $67,485 thousand in the same period last year[147]. Impairment and Gains - The impairment charge for the first quarter of 2024 was$ 26,400,000, resulting from changes in the company's long-term hold strategy and included a $15,200,000 charge on a healthcare property[112]. - The company recognized a gain of$ 59,132,000 on the sale of 37 properties during the three months ended March 31, 2024, compared to a gain of $6,269,000 on the sale of five properties in the previous quarter[113]. - The company recognized a gain of$ 59,132,000 on the sale of real estate during the three months ended March 31, 2024, compared to a gain of $3,415,000 in the same period of 2023[119]. Debt and Liquidity - As of March 31, 2024, total debt outstanding was$ 1.9 billion, with a Net Debt to Annualized Adjusted EBITDAre ratio of 4.8x[127]. - The company had $926.2 million of available capacity under its Revolving Credit Facility as of March 31, 2024[129]. - The company aims to maintain a Leverage Ratio generally less than 6.0x to maximize risk-adjusted returns to stockholders[127]. - The company expects to meet long-term liquidity requirements primarily through borrowings under its Revolving Credit Facility, future debt and equity financings, and limited property sales[132]. - As of March 31, 2024, the total unsecured debt amounts to$ 1,815,578,000, with $900,000,000 in unsecured term loans and$ 850,000,000 in senior unsecured notes[134]. - Cash and cash equivalents totaled $222.8 million at March 31, 2024, compared to$ 19.3 million at March 31, 2023[143]. - The company had net cash used in financing activities of $(73,006,000) for the three months ended March 31, 2024, compared to$ (144,739,000) in the same period of 2023[143]. Operating Expenses - Total operating expenses increased by $19,705,000 or 33.1% to$ 79,264,000 for the three months ended March 31, 2024, driven by higher impairment charges[123]. - Operating expenses billed to tenants decreased to $5,105,000, down 7.4% from$ 5,513,000 in the previous quarter[110]. - The company reported total operating expenses of $79,264,000 for the three months ended March 31, 2024, a decrease of 6.1% compared to$ 84,456,000 for the previous quarter[165]. - The company’s general and administrative expenses increased slightly by 0.5% to $9,432,000 compared to the previous quarter[165]. Interest Rate and Currency Risk - The company has 32 interest rate swaps outstanding with an aggregate notional amount of$ 973.8 million as of March 31, 2024, aimed at managing interest rate risk[142]. - All variable-rate debt was 100% fixed via interest rate swaps as of March 31, 2024, resulting in no effect on annual interest expense from a 1% change in interest rates[174]. - A 1% increase in market interest rates would decrease the fair value of fixed-rate debt by approximately $61.8 million as of March 31, 2024[174]. - A 10% increase or decrease in the exchange rate between the Canadian dollar and USD would result in a corresponding$ 7.4 million increase or decrease in unrealized foreign currency gain or loss[174].