Broadstone(US:BNL)2023-02-22 16:00Portfolio Composition - As of December 31, 2022, approximately 51.5% of the company's ABR (Annual Base Rent) came from industrial properties, 17.1% from healthcare properties, 13.5% from restaurant properties, 11.5% from retail properties, and 6.5% from office properties[32]. - The company owns a total of 804 properties with an ABR of $389,094,000, covering 39,139,000 square feet[12]. - The company targets specific acquisition opportunities in industrial, healthcare, restaurant, and retail property types, aiming for no single tenant to represent more than 5% of ABR[20]. - A significant portion of the company's portfolio is leased to tenants relying on discretionary consumer spending, making it sensitive to economic downturns[42]. - The top 10 tenants represented approximately 19.0% of the company's Annual Base Rent (ABR) as of December 31, 2022, with the largest tenant, Roskam Baking Company, accounting for about 4.0% of the ABR[62]. Financial Performance - Pro forma revenues for the year ended December 31, 2020, were $321.637 million, with a net income of $60.783 million[49]. - The company reported net cash provided by operating activities of $255.9 million for the year ended December 31, 2022, compared to $244.9 million in 2021[251]. - Net income attributable to Broadstone Net Lease, Inc. for 2022 was $122,115,000, up 19.2% from $102,426,000 in 2021[299]. - Basic and diluted net earnings per share increased to $0.72 in 2022 from $0.67 in 2021, representing a growth of 7.5%[299]. - Comprehensive income attributable to Broadstone Net Lease, Inc. for 2022 was $209,849,000, compared to $139,748,000 in 2021, marking a substantial increase of 50.1%[299]. Expenses and Liabilities - The company incurred $3.7 million in non-recurring costs associated with the Internalization during the year ended December 31, 2020[50]. - The company experienced $20.5 million in expenses related to the Internalization, including general and administrative expenses and interest expenses[50]. - Total operating expenses for 2022 were $219,490,000, slightly up from $215,129,000 in 2021, indicating a marginal increase of 1.1%[299]. - Interest expense rose to $78,652,000 in 2022 from $64,146,000 in 2021, reflecting an increase of 22.6%[299]. - The company has approximately $2.0 billion principal balance of indebtedness outstanding, which may expose it to the risk of default under its debt obligations[76]. Risk Factors - The company faces risks related to market conditions that could pressure total returns on investments, potentially leading to lower yield characteristics for future acquisitions[27]. - The company acknowledges that property vacancies could result in significant capital expenditures and illiquidity, particularly for specialty properties[33]. - The company faces risks from tenant bankruptcies or defaults, which could materially affect rental income[56]. - Changes in market interest rates could increase interest costs on existing and future debt, adversely affecting the company's stock price[58]. - Climate change poses risks to the company's properties, potentially increasing costs and impacting tenant operations[44]. Compliance and Regulations - Effective internal controls over financial reporting are necessary to prevent fraud and ensure reliable financial reports[38]. - The company is subject to numerous federal, state, and local laws and regulations that may require substantial capital expenditures for compliance[46]. - The company has elected to be taxed as a REIT since the taxable year ended December 31, 2008, and intends to maintain this status to avoid significant tax consequences[85]. - To qualify as a REIT, the company must distribute at least 90% of its REIT taxable income annually, or face U.S. federal corporate income tax on undistributed income[86]. - The company may face penalties for failing to satisfy REIT requirements, with a minimum penalty of $50,000 per failure[86]. Capital Structure and Financing - The company has the authority to issue up to 520,000,000 shares of stock, with no preemptive rights for Common Stock holders[80]. - The company relies on distributions from the Operating Partnership (OP) to meet obligations and pay dividends, indicating structural subordination of stockholder claims[83]. - The company has a leverage ratio target of ≤ 0.60 to 1.00 and a fixed charge coverage ratio of ≥ 1.50 to 1.00[247]. - The company entered into two new unsecured bank term loans totaling $500 million, with variable interest rates based on credit ratings[246]. - The company has $145.4 million of available capacity under its ATM Program as of December 31, 2022, allowing for gross sales of up to $400 million[243]. Asset Management and Valuation - The fair value of the Company's interest rate swap assets was $63,390,000 as of December 31, 2022, while the liabilities were $27,171,000[114]. - The Company's long-term debt had a carrying amount of $2,034,076,000 and a fair value of $1,841,381,000 as of December 31, 2022[114]. - The fair value of the Company's net asset value per diluted share was estimated at $21.30, based on the fair value of its real estate investment portfolio[112]. - The company recognized an earnout liability of $7,509,000 at the beginning of 2021, with a change in fair value of $5,539,000 during the year[114]. - The company evaluated goodwill for impairment and concluded that goodwill was not impaired as of November 30, 2022[284]. Acquisition and Investment Strategy - The company focuses on acquiring freestanding, single-tenant commercial real estate properties that are under lease and fully occupied at the time of acquisition[20]. - The company may pursue opportunistic investments that do not meet its diversification criteria if they present compelling risk-adjusted returns[20]. - The company acquired $878.4 million of real estate during the year ended December 31, 2022, excluding capitalized acquisition costs[292]. - Total outstanding borrowings increased by $334.9 million to partially fund acquisitions, with approximately 93.5% of total indebtedness fixed or hedged against interest rate fluctuations[239]. - The company achieved all four earnout milestones related to the Internalization, resulting in a total earnout consideration of $75 million, paid in cash, common stock, and OP Units[134].