Broadstone(US:BNL)2021-11-02 19:53Financial Data and Key Metrics Changes - The company reported robust investment activity totaling over $225 million during Q3 2021, with 100% rent collections [7] - Generated AFFO of $55.8 million during the quarter, or $0.33 per diluted share, remaining flat quarter-over-quarter [31] - Revised full-year AFFO guidance to a range of $1.30 to $1.32 per diluted share, representing an implied growth rate of 9.2% at the midpoint [34] Business Line Data and Key Metrics Changes - Closed 11 transactions comprising 18 properties for a total investment of $225.9 million at a weighted average cash cap rate of 6.5% [8] - Acquisitions were primarily in industrial (59%) and health care (31%) sectors, with a smaller concentration in investment-grade retail properties (10%) [8] - Sold six properties for $26.6 million, reflecting the company's disposition strategy focused on risk mitigation [21] Market Data and Key Metrics Changes - Approximately $102 million of additional assets under control, defined as under contract or executed letter of intent, primarily across industrial and retail assets [19] - The current market environment remains highly competitive, with substantial capital from both public and private buyers [19] Company Strategy and Development Direction - The company aims to maximize financial flexibility and support a defensive growth profile as it prepares for an active 2022 [7] - Focused on closing out 2021 with strong Q4 investment activity, revising full-year acquisitions guidance higher to a range of $600 million to $700 million [20] - The company continues to monitor its portfolio closely, with a strong emphasis on tenant quality and lease strength [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the current operating profile and health of tenants, with 100% base rent collections during the quarter [25] - The company is optimistic about the acquisition pace being sustainable, despite a highly competitive environment [42] - Management remains cautious about further capital deployment into the office space, monitoring each asset closely [58] Other Important Information - Established a $400 million ATM program and completed a $375 million inaugural public bond offering, enhancing access to capital [28] - Received an upgraded credit rating of Baa2 with a stable outlook from Moody's, aligning with the BBB rating from S&P [29] Q&A Session Summary Question: Acquisition volume guidance increase - Management indicated that the team is capable of supporting a higher level of acquisition volume and continues to source across a broad range of property types [40][41] Question: Seasonality in acquisition activity - Management acknowledged past seasonality but aims for more consistency quarter-to-quarter, with Q4 expected to be robust [43][44] Question: Impact of early lease terminations on AFFO growth - The early lease termination resulted in a drag on FFO per share due to the loss of ABR, but it is viewed as a timing issue [48][49] Question: Office transaction context and future exposure - Management clarified that the recent office transaction was a specific one-off situation and expressed confidence in the broader office portfolio [52][56] Question: Geographic shifts in risk-return benefits - Management noted robust pipeline activity in the Southeast and Southwest, with a focus on risk-adjusted returns in secondary and tertiary markets [60][61] Question: Sourcing of transactions in the quarter - Management highlighted the strength of sourcing capabilities, with many deals being repeat business and some low-marketed opportunities [64][66]