Broadstone(US:BNL)2025-07-31 20:04Part I - FINANCIAL INFORMATION Financial Statements The unaudited condensed consolidated financial statements detail the company's financial position, operations, and cash flows, reflecting asset growth and a significant net income decline Condensed Consolidated Balance Sheets Total assets increased to $5.33 billion by June 30, 2025, due to rental property investments, while liabilities rose and equity slightly decreased Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $5,326,679 | $5,216,417 | | Investment in rental property, net | $4,454,231 | $4,340,363 | | Total Liabilities | $2,290,858 | $2,074,993 | | Unsecured revolving credit facility | $197,880 | $93,014 | | Unsecured term loans, net | $994,028 | $897,201 | | Total Equity | $3,035,821 | $3,141,424 | Condensed Consolidated Statements of Income and Comprehensive Income Net income significantly declined to $37.3 million for H1 2025, primarily due to lower real estate sale gains, despite increased lease revenues Key Income Statement Data (in thousands, except per share amounts) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Lease revenues, net | $112,986 | $105,907 | $221,677 | $211,274 | | Total operating expenses | $69,088 | $56,463 | $139,873 | $135,727 | | Gain on sale of real estate | $566 | $3,384 | $971 | $62,515 | | Net income | $19,830 | $35,937 | $37,323 | $104,114 | | Diluted EPS | $0.10 | $0.19 | $0.19 | $0.53 | Condensed Consolidated Statements of Equity Total equity decreased to $3.04 billion by June 30, 2025, primarily due to $116.7 million in distributions and a decline in other comprehensive income - Distributions declared for the six months ended June 30, 2025, totaled $116.7 million ($58.9 million in Q1 and $57.9 million in Q2)13 - Accumulated other comprehensive income decreased by $31.6 million during the first half of 2025, mainly due to changes in the fair value of interest rate swap agreements13 Condensed Consolidated Statements of Cash Flows Net cash from operating activities was $150.7 million for H1 2025, with investing activities using $216.6 million, largely offset by financing inflows Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $150,739 | $145,039 | | Net cash used in investing activities | ($216,593) | ($21,423) | | Net cash provided by (used in) financing activities | $71,837 | ($124,352) | | Net increase (decrease) in cash | $5,983 | ($736) | Notes to the Condensed Consolidated Financial Statements The notes provide detailed information supporting the financial statements, including company structure, property transactions, and financing arrangements - The company is an industrial-focused, diversified net lease REIT with a portfolio of 766 commercial properties across 44 U.S. states and four Canadian provinces as of June 30, 202521 Investment Activity - Six Months Ended June 30 | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Acquisitions | | | | Number of Properties | 13 | 22 | | Acquisition Price | $161.3M | $217.1M | | Dispositions | | | | Number of Properties | 11 | 40 | | Aggregate Sale Price | $21.0M | $276.1M | | Gain on Sale | $1.0M | $62.5M | - On February 28, 2025, the company amended its credit facility and entered into a new $500 million unsecured term loan, using the proceeds to repay its $400 million 2026 term loan and reduce revolving credit facility borrowings71 - As of June 30, 2025, the company has commitments to fund six build-to-suit transactions with remaining obligations of $238.8 million, expected to be funded through August 2026102 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, highlighting a diversified and 99.1% leased portfolio, AFFO growth, and strong liquidity Overview The company, an industrial-focused REIT, outlines its growth strategy centered on portfolio performance and strong liquidity - The company's growth strategy is based on four core building blocks: (1) same-store NOI growth from rent escalations and portfolio management, (2) revenue-generating capex, (3) build-to-suit developments, and (4) a diversified acquisition pipeline116119 Real Estate Portfolio Information The company's real estate portfolio is highly diversified and 99.1% leased, with a long weighted average lease term and contractual rent escalations Portfolio Diversification by Property Type (% of ABR) | Property Type | % of ABR | | :--- | :--- | | Industrial | 60.7% | | Retail | 31.0% | | Other (Office, Clinical) | 8.3% | - The portfolio is occupied by 205 different tenants across 56 industries, with the top 10 tenants representing 21.8% of ABR120129 - Leases have a weighted average remaining term of 9.7 years, and 97.5% of leases by ABR have contractual rent escalations, averaging a 2.0% annual increase120140 Results of Operations H1 2025 lease revenues increased, but net income sharply declined due to lower property sale gains and higher interest expense Comparison of Six Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total lease revenues, net | $221,677 | $211,274 | +4.9% | | Gain on sale of real estate | $971 | $62,515 | -98.4% | | Total operating expenses | $139,873 | $135,727 | +3.1% | | Interest expense | ($41,186) | ($36,334) | +13.4% | | Net income | $37,323 | $104,114 | -64.2% | - The significant decrease in net income for H1 2025 compared to H1 2024 is primarily attributable to a $61.5 million reduction in gains from property sales161163 Liquidity and Capital Resources The company maintains a strong liquidity position with substantial credit facility capacity, a healthy leverage ratio, and no material debt maturities until 2027 - The company seeks to maintain a Leverage Ratio (Net Debt to Annualized Adjusted EBITDAre) of less than 6.0x; as of June 30, 2025, this ratio was 5.3x165204 - As of June 30, 2025, the company had $802.1 million of available capacity under its $1.0 billion unsecured revolving credit facility169 - The company has no material debt maturities until 2027171 Contractual Obligations for Remainder of 2025 (in thousands) | Obligation Type | Amount | | :--- | :--- | | Mortgages & Term Loans | $19,015 | | Interest Expense (projected) | $41,637 | | Dividends (declared) | $58,451 | | Commitments to Fund Investments | $137,209 | | Lessee Obligations | $759 | | Total | $257,071 | Non-GAAP Measures Key non-GAAP metrics show H1 2025 AFFO increased, demonstrating core operational growth and a stable leverage profile Non-GAAP Performance Metrics (in thousands) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | FFO | $146,322 | $146,861 | | Core FFO | $152,430 | $147,073 | | AFFO | $146,120 | $141,276 | Leverage Ratios as of June 30, 2025 | Ratio | Value | | :--- | :--- | | Net Debt to Annualized EBITDAre | 5.5x | | Net Debt to Annualized Adjusted EBITDAre | 5.3x | | Pro Forma Net Debt to Annualized Adjusted EBITDAre | 5.2x | Quantitative and Qualitative Disclosures About Market Risk The company manages interest rate risk on variable-rate debt through swaps, while foreign currency risk from Canadian investments is naturally hedged - A 1% increase or decrease in interest rates would result in a corresponding $0.5 million change in annual interest expense, after accounting for interest rate swaps209 - A 10% change in the USD/CAD exchange rate would lead to a $7.3 million unrealized foreign currency gain or loss on its Canadian dollar borrowings, which acts as a natural hedge against its Canadian investments211 Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period212 - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2025213 Part II - OTHER INFORMATION Legal Proceedings The company is not currently involved in any legal proceedings expected to have a material adverse effect - The company reports no material legal proceedings214 Risk Factors No material changes to previously disclosed risk factors have been identified since the last annual and quarterly reports - No material changes to risk factors have been identified since the last annual and quarterly reports215 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None218 Other Information No officers or directors adopted or terminated a Rule 10b5-1 trading plan or related trading arrangement during the period - No officers or directors adopted or terminated a Rule 10b5-1 trading plan221 Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files