Broadstone(BNL)2024-05-02 21:16Financial Data and Key Metrics Changes - The company generated AFFO of 0.36 per share, representing a year-over-year increase of 5.9% in per-share results, primarily driven by lower interest and G&A expenses [18][19] - The per-share AFFO guidance has been raised to a range of 1.43 for 2024, reflecting improved clarity on estimated results [4][19] - The company ended the quarter with a strong financial position, maintaining a net debt leverage ratio of 4.8 times, down from five times at the end of 2023 [134] Business Line Data and Key Metrics Changes - The healthcare portfolio simplification strategy has successfully reduced healthcare exposure to approximately 13% of ABR as of March 31, 2024, following the sale of 37 healthcare assets for 202 million year-to-date, with an additional 150 million of these investments through direct off-market deals [121][123] Company Strategy and Development Direction - The company aims to position itself as an alternative capital provider, focusing on sourcing off-market investments and unique capital allocation opportunities amid constraints on traditional commercial real estate lending [6][14] - The strategy includes a focus on build-to-suit transactions and maintaining a diversified investment approach, particularly in industrial and defensive retail sectors [14][130] - The company is committed to reducing healthcare exposure below 10% of ABR, which will allow for a more balanced portfolio similar to office assets [128] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current challenging environment, emphasizing the importance of operational expertise and creative deal sourcing [122][133] - The company remains vigilant regarding credit risks, particularly in sectors sensitive to discretionary consumer spending, while maintaining strong rent coverage ratios [41][80] - Management is cautiously optimistic about the future, particularly regarding the potential for new tenant leases and the overall health of the portfolio [85][86] Other Important Information - The company approved a $0.29 dividend per common share, marking a 1.8% increase from the previous quarter and a 3.6% increase over the same quarter last year [46] - The company is actively working on a significant retail investment in St. Louis, which is expected to enhance its portfolio [121][129] Q&A Session Summary Question: What is the bad debt assumption in the guidance? - The company started the year with a bad debt assumption of 75 basis points of cash revenue, maintaining this throughout the year, with 15 basis points for the quarter [84] Question: What is the status of Red Lobster in the portfolio? - The company has reduced exposure to Red Lobster from 25 assets to 18, currently representing 1.6% of ABR, and remains cautiously optimistic about its future despite anticipated bankruptcy [85][86] Question: What is the timeline for the remaining healthcare asset sales? - The company is confident it will be below 10% healthcare exposure by the end of the year, with 20% to 25% of sales expected to close in the second half of 2024 [87] Question: How does the company view the current investment environment? - The company is focused on finding direct deals and leveraging relationships, with a strong emphasis on maintaining discipline in capital allocation [137][138] Question: What is the strategy for build-to-suit opportunities? - The company is actively pursuing build-to-suit transactions, viewing them as a significant part of its growth strategy, with a robust pipeline expected to come online in the next 12 to 24 months [49][130]