Broadstone(US:BNL)2024-10-31 20:03Portfolio Overview - As of September 30, 2024, the portfolio includes 773 properties, with 766 located in 44 U.S. states and 7 in four Canadian provinces[87]. - The total number of properties in the portfolio is 773, with a total square footage of 39,708,000[94]. - The company has a diversified portfolio across various sectors, including retail (12.5%) and office (5.8%)[93]. - The industrial property type constitutes 57.8% of the total portfolio ABR, with manufacturing at 17.5% and distribution & warehouse at 14.1%[94]. - The healthcare sector accounts for 10.5% of the total ABR, with animal health services at 2.8% and surgical at 2.0%[94]. - The largest tenant industry is Restaurants, comprising 256 properties and generating an ABR of $54,381,000, which is 13.7% of the total portfolio[97]. - The Other category, encompassing 40 industries, contributes the highest ABR at $103,144,000, accounting for 25.7% of the total portfolio[97]. - Texas has the highest concentration of properties at 67, with an ABR of $37,631,000, representing 9.5% of the total portfolio[98]. - The healthcare facilities sector has 58 properties, generating an ABR of $27,600,000, which is 6.9% of the total portfolio[97]. Lease and Rental Information - The portfolio is approximately 99.0% leased with an annualized base rent (ABR) weighted average remaining lease term of approximately 10.3 years[88]. - Approximately 97.4% of leases have contractual rent escalations, with an ABR weighted average minimum increase of 2.0%[88]. - As of September 30, 2024, leases contributing 97.4% of the company's ABR provide for annual increases generally ranging from 1.5% to 3.0%, with a weighted average annual minimum increase of 2.0%[102]. - The company’s occupancy rate based on rentable square footage was 98.7% as of September 30, 2024, with a quarterly rent collection rate of 95.2%[106]. Financial Performance - The company reported a net income of $37.27 million for the three months ended September 30, 2024, reflecting an increase of $1.33 million or 3.7% from the previous quarter[113]. - Net income for the nine months ended September 30, 2024, was $141.4 million, a decrease of $15.1 million, or 9.7%, from $156.5 million in 2023[121]. - Total lease revenues, net for the three months ended September 30, 2024, increased by $2.49 million or 2.4% to $108.4 million compared to the previous quarter[108]. - Total lease revenues, net decreased by $18.2 million, or 5.4%, to $319.7 million for the nine months ended September 30, 2024, primarily due to a decrease in lease termination income and an increase in write-offs of accrued rental income[115]. - The company recognized a $72.5 million gain on the sale of real estate and incurred $60.1 million in impairment charges through the date of this filing[89]. - The company recognized a gain of $65.0 million on the sale of 46 properties during the nine months ended September 30, 2024, compared to a gain of $48.0 million on the sale of nine properties in the same period of 2023, representing a 35.2% increase[120]. Investment and Capital Expenditures - Total investments for the nine months ended September 30, 2024, amounted to $381.86 million, with an initial cash capitalization rate of 7.3%[90]. - The total project investment is estimated at $204.8 million, with $185.9 million funded[91]. - The company has committed to fund up to an additional $7.8 million of preferred capital as part of its transitional capital investments[105]. - The company plans to expand its investment in industrial properties, which currently make up 79.2% of the total square footage[94]. Debt and Liquidity - As of September 30, 2024, total debt outstanding was $2.0 billion, with a Net Debt to Annualized Adjusted EBITDAre ratio of 5.0x[123]. - The company aims to maintain a Leverage Ratio generally less than 6.0x, with a Pro Forma Net Debt to Annualized Adjusted EBITDAre ratio of 4.9x as of September 30, 2024[123]. - The company has approximately $175.2 million of expected obligations due throughout the remainder of 2024, including $99.1 million for investments, $57.2 million in declared dividends, and $18.3 million in projected interest expense[125]. - As of September 30, 2024, the company has $874.5 million of available capacity under its Revolving Credit Facility[125]. - The company expects to meet long-term liquidity requirements primarily from borrowings under its Revolving Credit Facility, future debt and equity financings, and proceeds from limited property sales[127]. Operational Efficiency - Operating expenses for the three months ended September 30, 2024, totaled $54.81 million, a decrease of $1.65 million or 2.9% from the previous quarter[109]. - Operating expenses increased by $23.1 million, or 13.8%, to $190.5 million, driven by a significant increase in the provision for impairment of investment in rental properties, which rose by $29.8 million[116]. - The company experienced a decrease in depreciation and amortization expenses by $6.2 million, or 5.2%, primarily due to the timing of property dispositions[116]. Market Conditions - The current macroeconomic conditions have led to a challenging lending environment, impacting transaction volumes and earnings growth rates compared to historical periods[89]. - The company operates in a diversified geographic market, with properties spread across multiple states, ensuring risk mitigation[98]. Shareholder Returns - The company sold 2,187,700 shares of common stock at a weighted average price of $18.29 per share during the nine months ended September 30, 2024[128]. - The company replaced its prior ATM Program with a new program allowing for gross sales of up to $400.0 million, with $39.0 million estimated net proceeds from forward sales agreements as of September 30, 2024[128].