Broadstone(BNL)2023-08-06 15:40Financial Data and Key Metrics Changes - The company generated AFFO of 0.35 per share, reflecting a 2.9% increase in per share results quarter-over-quarter, driven by same-store portfolio growth [49] - The leverage ratio decreased to 5.0 times on a net-debt-to-annualized adjusted EBITDA basis [50] - The company maintained a dividend of 168.3 million in gross proceeds at a weighted average cash cap rate of 5.9% on tenanted properties [19][38] - Investments during the second quarter totaled 17 billion of new investment opportunities year-to-date, employing a selective approach due to misaligned cap rates and market dynamics [23][83] - Cap rates have plateaued in the high 5% to low 6% range for dispositions, with expectations for continued focus on industrial assets [69][85] Company Strategy and Development Direction - The company aims to control its destiny through disciplined capital recycling and opportunistic asset sales, especially given the current stock price [21][62] - A focus on building partnerships with tenants and developers is emphasized to navigate challenging financing conditions [25] - The company is committed to a patient and disciplined investment strategy, targeting long-term value creation for shareholders [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the tenant base despite macroeconomic challenges, with no overarching negative trends noted [30] - The company remains optimistic about the potential for growth in the second half of the year, with a larger pipeline of advanced stage opportunities [84] - Management highlighted the importance of maintaining financial flexibility to support opportunistic growth [50] Other Important Information - The company is closely monitoring the performance of tenants on its watchlist, including Red Lobster and Carvana, both of which have shown signs of recovery [31][34] - The build-to-suit project for a distribution facility leased to United Natural Foods is expected to drive significant growth in earnings, with a projected opening in Q3 2024 [44][46] Q&A Session Summary Question: Can you talk about your capital sources and growth plans for the next year? - Management indicated that they are comfortable with their current leverage and capital sources, focusing on dispositions until equity markets improve [68] Question: What is your approach to bad debt budgeting? - The company is budgeting 75 basis points against revenue for bad debt, with year-to-date experience in single-digit basis points [64] Question: Can you discuss the Green Valley Medical Center's milestones? - Management noted that while certain milestones have not been met, the financial impact for the year is minimal as rent has been collected [71][92] Question: What is the expected mix of asset types moving forward? - Management expects to maintain a focus on industrial assets, which have been a significant part of their portfolio growth over the past five years [90]