Broadstone(US:BNL)2024-07-31 20:02Portfolio Overview - As of June 30, 2024, the company’s portfolio includes 777 properties, with an annualized base rent (ABR) of $385.5 million and a weighted average remaining lease term of approximately 10.4 years[78][81]. - Approximately 99.3% of the portfolio is leased, with 97.4% of leases having contractual rent escalations, averaging a minimum increase of 2.0%[78]. - The portfolio is diversified across various property types, with 54.6% in industrial, 14.0% in restaurants, and 12.7% in healthcare as of June 30, 2024[81]. - Total portfolio ABR is $385,485,000, representing 100.0% of the total portfolio[85]. - Industrial properties account for 54.6% of total ABR, with an ABR of $210,396,000[82]. - Healthcare properties contribute 12.7% to total ABR, totaling $48,849,000[82]. - Retail properties make up 12.6% of total ABR, amounting to $48,772,000[82]. - The top 10 tenants represent 20.2% of total ABR, with $77,926,000[84]. - The largest tenant, Roskam Baking Company, contributes $15,917,000, accounting for 4.1% of total ABR[84]. - Restaurants sector has an ABR of $54,827,000, which is 14.2% of total ABR[85]. - Packaged Foods & Meats sector contributes $45,974,000, representing 11.9% of total ABR[85]. - Total square footage of the portfolio is 38,450,000 square feet, with industrial properties comprising 78.4% of this total[82]. - Untenanted properties account for 0.7% of total square footage, totaling 267,000 square feet[85]. - Texas has the highest number of properties at 67, contributing $36,578,000 in ABR, which is 9.5% of the total portfolio[86]. - California has 18 properties with an ABR of $24,334,000, representing 6.4% of the total portfolio[86]. - The highest ABR percentage from a single state outside Texas is from Michigan, with 8.5% and an ABR of $32,805,000[86]. - The lease expirations for 2030 account for 12.8% of the total ABR, with 93 properties and an ABR of $49,180,000[87]. - 79% of the ABR is subject to annual lease escalations, with a weighted average annual minimum increase of 2.2%[88]. - The lease expirations for 2024 represent only 0.6% of the total ABR, with just 1 property[87]. - The total square footage of the portfolio is 38,450,000 square feet, with 99.3% leased[87]. - The company has a total of 774 leased properties contributing to 100% of the ABR[87]. Financial Performance - The company reported a net income of $35,937 for the three months ended June 30, 2024, a decrease of $32,240 or 47.3% from $68,177 for the three months ended March 31, 2024[96]. - Lease revenues, net for the three months ended June 30, 2024, increased by $541, reaching $105,907, compared to $105,366 for the three months ended March 31, 2024, representing a 0.5% increase[92]. - Total operating expenses for the three months ended June 30, 2024, were $56,463, a decrease of $22,801 or 28.8% from $79,264 for the three months ended March 31, 2024[93]. - The company recognized a gain of $3,384 on the sale of real estate during the three months ended June 30, 2024, compared to a gain of $59,132 during the three months ended March 31, 2024, reflecting a 94.3% decrease[95]. - The provision for impairment of investment in rental properties was $3,852 for the three months ended June 30, 2024, significantly lower than $26,400 for the three months ended March 31, 2024, indicating an 85.4% decrease[93]. - The company reported a decrease in lease termination income, with no income recorded for the six months ended June 30, 2024, compared to $7.5 million for the same period in 2023[97]. - Net income for the six months ended June 30, 2024, was $104.1 million, a slight decrease of 0.2% from $104.4 million in the same period in 2023[104]. Debt and Financing - The total debt outstanding as of June 30, 2024, was $1.9 billion, with a Net Debt to Annualized Adjusted EBITDAre ratio of 5.1x[105]. - The company has $920.9 million of available capacity under its Revolving Credit Facility as of June 30, 2024[107]. - The company did not raise any equity from its ATM Program during the six months ended June 30, 2024, maintaining $400.0 million of capacity under the new program[110]. - The average outstanding borrowings decreased by $46.0 million since June 30, 2023, primarily through proceeds from dispositions[101]. - The one-month SOFR rate increased to 5.34% as of June 30, 2024, compared to 5.14% a year earlier[101]. - As of June 30, 2024, total unsecured debt amounted to $1,821,357,000, consisting of $900,000,000 in unsecured term loans and $850,000,000 in senior unsecured notes[112]. - The company’s interest expense for the six months ended June 30, 2024, was projected at $35,678,000[116]. - The company’s total cash flow from financing activities for the six months ended June 30, 2024, was a net outflow of $124,352,000, compared to a net outflow of $191,725,000 in 2023[119]. - The company believes it was in compliance with all covenants on outstanding borrowings as of June 30, 2024[113]. Investment Strategy - The company has sold 38 healthcare properties for gross proceeds of $262.2 million, representing about 50% of the planned healthcare portfolio simplification strategy[79]. - The first tranche of a portfolio sale of clinically-oriented healthcare assets generated gross proceeds of $30.8 million, with a second tranche expected to close in October 2024 for $49.5 million[79]. - The company recognized a $64.3 million gain on the sale of real estate and incurred $59.7 million in impairment charges related to the healthcare portfolio simplification strategy[79]. - The company’s strategic decision to sell clinically oriented healthcare properties aims to redeploy proceeds into core investment verticals without diluting per share results[79]. - The company is focused on a disciplined investment strategy and active asset management, including selective sales of properties[124]. Cash Flow and Dividends - The company had a net cash provided by operating activities of $145,039,000 for the six months ended June 30, 2024, compared to $136,604,000 for the same period in 2023, reflecting an increase due to a decrease in interest expense[119]. - Cash and cash equivalents totaled $19,900,000 as of June 30, 2024, down from $36,300,000 at the same date in 2023[119]. - The company paid dividends of $56,938,000 as of June 30, 2024, with a declared amount of $0.29 per common share and OP Unit[116]. Interest Rate and Currency Risk - The company entered into nine forward-starting interest rate swaps with a total notional amount of $460,000,000 during the three months ended June 30, 2024, to manage interest rate risk[118]. - A 1% increase in market interest rates would result in a decrease in the fair value of fixed-rate debt by approximately $61.8 million[133]. - A 1% increase or decrease in interest rates would lead to a corresponding $0.06 million increase or decrease in annual interest expense[133]. - A 10% increase or decrease in the exchange rate between the Canadian dollar and USD would result in a $7.3 million increase or decrease in unrealized foreign currency gain or loss[133]. - The company has not engaged in transactions in derivative financial instruments or derivative commodity instruments, except for interest rate swaps[133]. - The Canadian dollar borrowings under the Revolving Credit Facility act as a natural hedge against Canadian dollar investments[133]. - Unrealized foreign currency gains and losses do not impact cash flows from operations until settled[133]. - The company's Canadian investments are recorded at historical exchange rates, thus not impacted by changes in the value of the Canadian dollar[133]. - Interest rate swaps are designated as cash flow hedges for accounting purposes and reported at fair value[133].