Broadstone(US:BNL)2022-05-03 16:00Investment and Portfolio Overview - The company invested $210.0 million in 27 properties during the three months ended March 31, 2022, at a weighted average initial cash capitalization rate of 5.7%[79] - As of March 31, 2022, the portfolio comprised 752 properties, with an annualized base rent (ABR) of $347.7 million[81] - The portfolio was approximately 99.8% leased with an ABR weighted average remaining lease term of approximately 10.5 years[79] - Approximately 97.3% of leases have contractual rent escalations, with an ABR weighted average minimum increase of 2.0%[79] - The company’s properties are diversified across 56 different industries, with no single tenant accounting for more than 2.1% of the ABR[79] - The industrial property type represents 46% of the total portfolio ABR, with manufacturing and distribution & warehouse making up 14.6% and 14.1% respectively[82] - Healthcare properties account for 19.1% of the total portfolio ABR, with clinical and healthcare services comprising 7.4% and 3.6% respectively[84] - Restaurant properties make up 15.0% of the total portfolio ABR, with casual dining and quick service restaurants at 7.8% and 7.2% respectively[84] - The portfolio includes properties located in 43 U.S. states and four Canadian provinces, with no single geographic concentration exceeding 10.5% of the ABR[79] Tenant and Revenue Information - Total top 10 tenants contributed $59,529,000 in annual base rent (ABR), representing 17.1% of the total portfolio[86] - The top 20 tenants accounted for $104,215,000 in ABR, which is 30.0% of the total portfolio[86] - The largest tenant, Jack's Family Restaurants LP, has 43 properties with an ABR of $7,166,000, making up 2.1% of the total portfolio[86] - Dollar General Corporation operates 55 properties with an ABR of $5,391,000, representing 1.6% of the total portfolio[86] - The total square footage for the top 10 tenants is 4,215,000 square feet, which is 12.9% of the total portfolio[86] - The top 20 brands have a total ABR of $103,446,000, accounting for 29.8% of the total portfolio[86] - Krispy Kreme Doughnut Corporation has 27 properties with an ABR of $5,034,000, representing 1.4% of the total portfolio[86] - The largest property type by ABR is Quick Service Restaurants, contributing $12,200,000 across multiple tenants[86] - The total number of properties for the top 20 tenants is 327, with a total square footage of 7,815,000 square feet[86] - The ABR for the top 10 brands is $58,545,000, which is 16.8% of the total portfolio[86] Financial Performance - Total lease revenues for the three months ended March 31, 2022, were $93,841,000, an increase of 1.3% compared to $92,642,000 for the three months ended December 31, 2021[99] - The company recognized a gain of $1,196,000 on the sale of real estate during the three months ended March 31, 2022, compared to $3,732,000 for the three months ended December 31, 2021, representing a decrease of 68.0%[104] - Net income for the three months ended March 31, 2022, was $28,441,000, a decrease of 11.7% from $32,226,000 for the three months ended December 31, 2021[106] - The company reported a net earnings per diluted share of $0.16 for the three months ended March 31, 2022, down 15.8% from $0.19 for the three months ended December 31, 2021[106] - Operating expenses for the three months ended March 31, 2022, totaled $48,162,000, an increase of 3.2% from $46,649,000 for the three months ended December 31, 2021[101] - Depreciation and amortization expenses increased to $34,290,000 for the three months ended March 31, 2022, up 2.4% from $33,476,000 for the three months ended December 31, 2021[101] - The company experienced a $1,126,000 increase in other expenses primarily due to a $1,100,000 unrealized foreign exchange loss on CAD borrowings[105] - The company anticipates significant lease expirations in 2030, with 100 properties and an ABR of $53,209,000, accounting for 15.3% of the total portfolio[97] - The company reported a decrease in variable rental amounts earned, totaling $(1,326,000) for the three months ended March 31, 2022, a 100% decline compared to the previous period[99] - Lease revenues increased to $93.841 million for the three months ended March 31, 2022, up 13.5% from $82.698 million in the same period of 2021[108] - The net write-offs of accrued rental income increased by over 100%, from $(442,000) in 2021 to $(1.326 million) in 2022[108] - Net income rose to $28.441 million, an 18.7% increase from $23.960 million in the prior year[118] - The company reported a decrease in general and administrative expenses by 17.0%, from $10.633 million in 2021 to $8.828 million in 2022[108] Debt and Liquidity - Total debt outstanding as of March 31, 2022, was $1.8 billion, with a Net Debt to Annualized Adjusted EBITDAre ratio of 5.14x[121] - The company has a total of 745 properties in the U.S., which accounts for 97.6% of the total portfolio[91] - The company has a remaining capacity of $733.9 million on its Revolving Credit Facility as of March 31, 2022[128] - The company aims to maintain a Net Debt to Annualized Adjusted EBITDAre ratio below 6.0x on a sustained basis through the use of follow-on equity offerings and the ATM Program[126] - Cash and cash equivalents totaled $65.5 million as of March 31, 2022, an increase from $18.4 million at the same time in 2021[137] - The company had approximately $51.9 million of expected obligations due throughout the remainder of 2022, primarily consisting of $48.4 million of interest expense[123] - The company has contractual obligations totaling approximately $2,187.2 million as of March 31, 2022, including interest expenses and tenant improvement allowances[132] - Borrowings under the Revolving Credit Facility and other variable-rate debt totaled $863.6 million as of March 31, 2022, with $720.1 million swapped to a fixed rate[152] Cash Flow and Operations - Net cash provided by operating activities for the three months ended March 31, 2022, was $59,104, compared to $51,780 for the same period in 2021, representing a 14.5% increase[139] - Net cash used in investing activities was $(207,678) for the three months ended March 31, 2022, compared to $(67,661) for the same period in 2021, indicating a significant increase in investment outflows[139] - Net cash provided by financing activities was $186,352 for the three months ended March 31, 2022, compared to $(76,497) for the same period in 2021, showing a substantial improvement in financing cash flows[139] - Funds from Operations (FFO) for the three months ended March 31, 2022, was $61,504, compared to $51,929 for the same period in 2021, reflecting a 18.4% increase[141] - Adjusted EBITDAre for the three months ended March 31, 2022, was $84,440, compared to $81,453 for the same period in 2021, indicating a 3.6% growth[144] - Annualized Adjusted EBITDAre for March 31, 2022, was $337,759, compared to $325,812 for December 31, 2021, showing a 3.7% increase[144] Interest Rate and Currency Risk - The company has fixed-rate debt with a carrying value of approximately $1.7 billion and a fair value of $1.6 billion as of March 31, 2022[150] - A 1% increase in market interest rates would result in a decrease in the fair value of the company's fixed-rate debt by approximately $90.7 million[150] - The company expects a 1% increase or decrease in interest rates to correspond to a $1.4 million increase or decrease in annual interest expense[152] - The company is exposed to foreign currency exchange rate risk due to investments in Canada, funded partially through Canadian dollar borrowings[153] - Unrealized foreign currency gains and losses from Canadian dollar borrowings do not impact cash flows from operations until settled[153] - The company has not engaged in transactions in derivative financial instruments or derivative commodity instruments, except for interest rate swaps[152] - The company believes the foreign currency exchange rate risk on remaining cash flows is immaterial[153] - The company manages interest rate risk by entering into long-term fixed-rate debt and interest rate swaps[150] Accounting Policies and Estimates - There have been no significant changes to critical accounting policies and estimates during the three months ended March 31, 2022[148]