Broadstone Net Lease, Inc. Q1 FY2020 Earnings Call

Hello and welcome to Broadstone Net Lease's quarterly update call, recapping the first quarter of 2020. My name is Dan Blasi, and I serve as Vice President of Investor Relations here at Broadstone Net Lease or BNL. As a reminder for today, the following presentation may contain forward-looking statements regarding, among other things, our plans, strategies, and prospects, both business and financial. Although we believe that our plans, intentions, and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize those objectives. We caution you not to place undue reliance on these forward-looking statements, which speak only as of the dates indicated. The information included in this presentation and covered during this call is based on the information and disclosures contained in BNL's quarterly report on Form 10-Q and earnings release for the quarter ended March 31, 2020, which was filed with the SEC on Thursday, May 7, and is available on BNL's corporate website at investors.bnl.broadstone.com or by request. In a moment, I will hand the reins over to our Chief Executive Officer, Chris Czarnecki, who will deliver a recap of BNL's first quarter of 2020. After Chris, you will hear from Executive Vice President and Chief Financial Officer, Ryan Albano, who will discuss our financial results. We invite you to submit questions through the webcast interface, which we will address at the close of the presentation, along with questions that we have received in advance of today's call. Without further ado, here is BNL's CEO, Chris Czarnecki.

Thank you, Dan, and thank you to everyone joining this important Broadstone Net Lease update call. We are grateful for your continued support as we work through this difficult time. Our remarks today will briefly focus on Q1 results along with an update on key portfolio and balance sheet metrics as of the end of the quarter. The remainder of the presentation will focus on updates related to our portfolio's performance in April and May and our response to the COVID-19 crisis. The presentation was crafted to be a stand-alone document for those that are unable to attend this afternoon's call and is available for download on the BNL website and was filed with the SEC this morning. As with most in the net lease space, Q1 collections and occupancy results were strong and consistent, with the timing of COVID-related impacts beginning to fully manifest themselves in April and May. During Q1, the BNL portfolio was over 99% leased, and we collected over 98% of the rent due to us. The 98% figure was slightly below our historical averages, and the difference arose from the bankruptcy of one of our large tenants, Art Van Furniture. This tenant event was unrelated to COVID and began to unfold in February and March of 2020. Gross AFFO increased 20.2% over the first quarter of last year. This was mainly reflective of the contribution provided by the large industrial portfolio acquisition that we closed during the third quarter of 2019, combined with the effects of annual rent escalations on our same-property portfolio and the cost savings that we began recognizing during this quarter under our new internalized structure. Q1 2020 AFFO came in at $1.41 per share in OP Units. The major milestone for the quarter was the completion of the previously announced internalization of management. The transaction closed on February 7, and 71 skilled professionals joined the company as employees. The transaction also led to an immediate cash savings for the REIT, which will continue to grow over time. We will discuss this in more detail in the next slide. As the COVID crisis began to unfold, the team focused on several key defensive measures to help prepare BNL to weather the storm. One of the key items was a focus on enhancing BNL's liquidity. Through several important steps, cash on hand increased to $93.2 million by quarter's end, with additional capacity on our unsecured line of credit. Total available liquidity at quarter's end was approximately $144 million. Ryan will discuss our continued focus on enhancing liquidity and maximizing financial flexibility later in the presentation. On Thursday of last week, we hosted BNL's 2020 Annual Shareholder Meeting via webcast. This meeting was brief, as we were unable to gather in person this year. All of the items in the official business were approved, and the Board has been elected to serve for another 1-year term. Thank you to everyone that voted your shares this year. In addition, management provided a brief recap of 2019 activity, as it was a robust year in BNL's history. We also reviewed the considerations associated with the decision to pursue an initial public offering in early 2020. The replay of the meeting is available on our website, and shareholders are encouraged to listen and review at their leisure. We have also included a link to the replay meeting at the bottom of this page. Now let's dig a little deeper into the internalization transaction, which was previously announced in November of 2019 and closed on February 7, 2020. It was an important strategic step for BNL and a very natural one, given the company's size and scale. Most REITs of BNL's size are internally managed. The transaction, while complicated, has several important benefits for shareholders in both the short and long term. First, the transaction simplifies the structure of the company. Management has now become employees of the REIT, and the corporate structure is more transparent and streamlined. BNL now controls all of its key functions and no longer outsources these to a third-party manager. The second and most important rationale for the transaction relates to the financial benefits to the company and its shareholders. The transaction provides immediate savings to the REIT by allowing it to operate with an internalized cost structure and no longer having to pay management or transaction fees for these services. Prior to the internalization, BNL paid management fees to Broadstone Real Estate in exchange for management services, with all the personnel residing at the Broadstone Real Estate level. The savings have already begun to accrue in Q1 after the closing of the transaction in February and will be further evident in future full quarters of operations. In addition, these financial benefits will only improve as the REIT continues to grow its asset base, which will further enhance the economies of scale. Our FP&A team did a great job building out the graphic in the middle of the page to better demonstrate how impactful the savings are. The box on the left is a pro forma analysis of what BNL's G&A expense load would have been had the company operated under the external management structure for the entirety of the first quarter. We performed this analysis because the transaction closed almost exactly at the midpoint of the quarter, which makes quantifying the savings challenging from our financial statements alone. Under the external G&A load, the expenses borne by the REIT would have totaled approximately $11.1 million, which is broken down into asset management fees and property management fees, along with operating G&A, which represents expenses that exist no matter the structure. These expenses include things such as legal and accounting costs, directors' fees, and other expenses. Moving to the right side of the page, we have included a waterfall chart to bridge from the full quarter external G&A figures to the Q1 actual G&A expenses reported in the financials. Here, you can see that the REIT saved approximately $1.5 million during this quarter. From this point, we have bridged to a Q1 pro forma G&A as if we had been internalized for the entire quarter. As you can see, if we had been operating in this structure for the entire quarter, BNL would have saved approximately $3.7 million in total expenses compared to the original external management structure. These savings will only continue to improve as the company grows its asset base and benefits from further economies of scale. It is also important to note that the expense savings outlined here only relate to expenses that run through BNL's income statement. The REIT has seen additional cash flow savings by no longer paying acquisition and disposition fees to a third-party manager when the company buys or sells a property. Under GAAP accounting rules, these costs were capitalized as part of the transaction, so they did not run through the income statement. But the cash flow savings are important from an operational standpoint. This is another significant source of savings for BNL over the long term. Finally, the transaction provides for continuity of management, with the 71 team members joining BNL as employees for the long term. We carefully crafted the team to be prepared to manage the portfolio we have today and be ready to tackle tomorrow's growth. BNL now has fully dedicated employees that focus entirely on the management of the REIT. Hopefully, this slide helps demonstrate why all parties involved in this complicated transaction believe it is highly beneficial for shareholders today and should continue to produce accretive benefits over the long term as the company grows. This next slide was created for a different presentation, but we decided to include it to help explain a little bit more about the team that is now fully dedicated to serving BNL. It also helps demonstrate the depth of the organization that may not otherwise be appreciated. One of the things that our executive team is most proud of is the tremendous talent we've been able to recruit to the company over the years. We've utilized our national network of contacts to hire professionals that we have had direct personal connections and prior working relationships with to ensure that we have a team that is built to succeed and integrates well with the existing culture of the organization. We have certainly hired many talented and important team members outside of our network as well. This slide is meant to demonstrate some of the connections that have brought our company together. In addition, our senior leadership team has long-dated experience both working for the company and together as a group. This is very important during difficult times such as today, as we can rely on our long-standing connections to help deal with complicated issues. While the internalization is first and foremost a financial decision, the onboarding of an experienced team now fully dedicated to Broadstone Net Lease is another important attribute. With that, I will pass the presentation over to Ryan to give a portfolio update and more information on our financial and liquidity profile. I will then pick up the presentation after that and dive into more detailed matters from April and May. Ryan?

Thank you, Chris, and good afternoon, everyone. Before I begin, I'd like to thank all of you for joining us on today's call. I hope that all of you are safe while we continue to navigate through these challenging times. I'd also like to take a moment to recognize all of our employees for their excellent work during this difficult time. It is truly remarkable that over a weekend, roughly 8 weeks ago, we converted to an almost entirely remote work environment and have not missed a beat. Today, I will begin with a brief review of our first quarter operating results and important portfolio activity, and finish with a review of our balance sheet and liquidity profile. From there, I will turn it back over to Chris for further discussion related to COVID-19 and some post-quarter end matters. Looking at our first quarter, we reported strong quarterly results with AFFO of $41.1 million, representing an increase of $6.9 million or 20.2% compared to Q1 of 2019. This is mainly driven by the contribution provided by the large industrial portfolio acquisition that we closed during the third quarter of 2019, combined with the effects of annual rent escalations on our same-property portfolio and the cost savings that we began recognizing during this quarter under our new internalized structure. On an AFFO per share basis, we were slightly down by $0.01 per share when compared to the same period last year. This decrease was primarily due to the short-term dilution caused by the immediate increase in BNL's weighted average shares outstanding resulting from the consideration paid in conjunction with the internalization this quarter. Upon confirmation of the transaction in February, BNL began recognizing cash flow and AFFO benefits due to the immediate cost savings achieved by operating a REIT with an internalized management structure as compared to the recurring management fees and transaction-based fees incurred under its previous externally managed structure. Although the full dilutive effect of the shares outstanding was recognized at the time of the transaction, we expect the continued cost savings to be substantial and translate into accretive results on a per-share basis over time as the cash flow and AFFO benefits continue to be recognized. Further, we expect this accretion will continue to increase as we grow our portfolio and recognize additional economies of scale. Given the timing of COVID-19 outbreak and the related business disruption, there was very minimal impact on our first quarter results and portfolio metrics. As such, we've collected substantially all cash rent due from tenants for the month of March. After my prepared remarks are complete, I'll turn it back over to Chris for further discussion related to the impacts of COVID-19 on our tenant base and certain portfolio metrics to bring us up to date for April and, in some cases, the beginning of May. On this slide, we have highlighted our portfolio diversification with more granularity. As you are all aware, a diversified approach to building and managing the BNL portfolio has been the cornerstone of our strategy and will continue to be into the future. Having a high degree of diversification by property type and industry and tenant provides a host of benefits, some of which Chris will touch on in more detail during his update regarding the COVID-19 pandemic. These diversification benefits de-risk our earnings profile and, in turn, provide strength and flexibility to our balance sheet and liquidity management. With that said, I will now shift our focus to BNL's balance sheet and current liquidity profile. As of Q1, our total capitalization stood at $4.7 billion, with market-based leverage at 45.7%. We continue to employ a mostly unsecured balance sheet, with only $111 million of our $2.1 billion in total debt consisting of secured mortgage debt. This provides us significant flexibility during periods of uncertainty. During the quarter, BNL's balance sheet activity mostly centered around the internalization transaction. As consideration in the internalization, we issued a combination of common shares and OP Units, totaling approximately 2.1 million shares and OP Units, and paid $31 million in cash, translating into an aggregate consideration of approximately $209.5 million, plus the assumption of approximately $90.5 million in debt. Concurrent with closing, we refinanced $60 million of the assumed debt with a new term loan and repaid the remaining $30.5 million using borrowings from our revolving line of credit. After quarter end, on May 5, we provided notice to our lenders of our intention to exercise the first of two 6-month extension options available under the terms of our 2020 unsecured term loan agreement effective as of August 2, 2020. Subject to customary conditions and in exchange for a 5 basis point fee, this will extend the maturity date of the loan to February 2021. During late March and early April, we took certain balance sheet measures to strengthen our liquidity position and preserve financial flexibility. These measures included proactively drawing $75 million on our revolving line of credit as well as reverting roughly $30 million of cash residing in 1031 exchange accounts to our operating account. With the incremental borrowings and other liquidity-enhancing moves, BNL has enough cash on hand to cover operating expenses and interest payments on all of the REIT's debt for the next four quarters prior to collecting another dollar of rents after March. In a few moments, Chris will discuss the strong rent collection activity that we are seeing for April and May, further bolstering our liquidity position as we continue to operate through these uncertain times. Our robust liquidity profile, coupled with our almost entirely unencumbered portfolio, with secured indebtedness at 2.76%, provides BNL with significant flexibility as we progress forward. Now, turning our attention to BNL's leverage profile. Historically, we have been operating with leverage in the low 6x range on a net debt to adjusted EBITDA RE basis. During Q3 of last year, we closed a large industrial portfolio acquisition and temporarily raised our leverage profile above the 7x level. As you will hear from Chris in a few moments, the additional scale and diversification that the portfolio added to BNL have proven beneficial during the recent economic stress exhibited by the current global pandemic. On the heels of closing this acquisition, BNL implemented a deleveraging plan focused on maintaining our investment-grade credit rating and bringing our leverage back inside the 7x. As discussed previously, our deleveraging plan included repaying debt with proceeds from both asset dispositions and new equity raises. At quarter end, only one quarter after closing the industrial transaction and implementing our deleveraging strategy, we were pacing well ahead of the plan, with leverage coming in a touch over 7x. While in the process of executing our deleveraging plan, BNL made a significant strategic decision to internalize, as announced in November of last year. As Chris discussed during the Annual Meeting held last week and in his commentary earlier today, BNL completed the internalization transaction during Q1, immediately providing many benefits to the REIT, including a very meaningful cost savings that Chris outlined at the beginning of the presentation. The benefits of this transaction were also highlighted as a credit positive by Moody's in an issuer comment published when the transaction closed in February where, in addition to the cost savings that I had mentioned, Moody's noted that the transaction provides a more simplified structure, eliminating potential conflicts of interest with the manager and enhancing its transparency. That said, you can see from this chart that BNL's leverage increased in conjunction with closing the internalization during Q1 to roughly 7.25x after giving pro forma effects to the full quarter of cost savings recognized by operating the REIT on an internalized basis. We believe the medium- and long-term cost savings and credit positives of the internalization far outweigh the short-term and relatively modest increase in our leverage profile. We are also focused on evaluating potential near-term actions to provide for deleveraging the balance sheet inside the 7x level nearly observed at year-end. Finally, in the absence of any other actions, the temporary suspension of BNL's dividend will naturally reduce leverage inside of 7x in the near term. In closing, while we are pleased with our Q1 results, and as you will hear in a moment from Chris, encouraged by our April rent collections, we continue to be cautious about the future impacts of this unprecedented pandemic and are constructively working with our tenants to protect long-term shareholder value. Given our balance sheet strength and significant diversification within our portfolio, we believe that we are well-positioned for a range of market environments ahead. With that, I'll turn it back over to Chris for a discussion related to the impacts of COVID-19 on our tenants, information on BNL's determined share value, and other strategic matters.

Thank you, Ryan. I'm now going to turn the presentation to updates on the second quarter portfolio performance. We believe the BNL portfolio has performed well given the current conditions across the country, with many states still on mandatory lockdowns or with significant restrictions on commerce. The reason we believe we've enjoyed success to date is our highly diversified strategy and approach to portfolio construction. As Ryan discussed, the portfolio is very diversified across a variety of property types, geographies, and tenant industries, all of which help lessen the impact that any one industry, tenant, or asset has on our overall portfolio performance. Through last night, we have received more than 88% of April rents, which is a very strong result. In addition, based upon ongoing discussions with tenants, we have line of sight to that figure climbing above 90% in the coming week. Our May rent collections sit at approximately 81.8%, which is also very strong given that most industry experts anticipate that May would bring worse results than April as the crisis is more fully realized. For some perspective, it took us until April 27 to exceed 80% rent collected for that month. As you'll see on the following slides, this performance is very strong relative to our peer set and does give us optimism for the months to come. At the same time, our management team and Board are cautious, as there remain many unknown variables that may play out in the coming months. We do not know if and how a second wave of the virus will impact the country and potentially cause additional shelter-in-place restrictions. With respect to our tenants, many came into the crisis with reasonable liquidity and strong inventory backlogs that allowed them to continue to operate their businesses during this period of disruption. If the crisis continues, these conditions will likely change and potentially significantly impact their businesses. Finally, government stimulus plans are set to expire over the summer, and this may materially impact the American consumer and correspondingly, our tenants. All these risks and others give us pause and keep the team hyper-focused on downside risk mitigation and maintaining maximum flexibility. The charts at the bottom of the page provide summary data on the status of the rent relief requests received to date. Since the start of the crisis, we have received rent relief requests from approximately 36.3% of the portfolio as measured on an annualized base rent, or ABR basis. Our cross-functional teams of property specialists carefully evaluate each of these requests and make recommendations to our executive team on appropriate next steps. Each tenant situation is unique, and we are taking a disciplined, thoughtful, and diligent approach to reviewing each request and discussions with the tenant. To date, we have declined to provide relief on 14.3% of the requests on an ABR basis and granted some form of negotiated relief to 7.3% of the portfolio, also on an ABR basis. To date, these short-term deferrals equate to approximately $1.6 million of rent, with the majority of this being required to be paid back by year-end under the terms of the agreements. The remaining 14.7% of the requests are under negotiation or have gone inactive. We have qualified inactive requests as one in which the tenant has not followed up on their initial request for some time and rent has continued to be paid as agreed. It is important to note that, to date, we have not agreed to any rent forgiveness or full abatement. All of the agreements we have executed to date have generally been short-term partial deferrals of rent, mostly in the 3-month range. The deferred rent amounts are then required to be paid back in installments over a period of time. In certain circumstances, and where appropriate, we have also discussed and negotiated with tenants the early exercise of a renewal option, the restructuring and extension of a lease or a blend-and-extend, as it's known in the real estate space, or other lease enhancements. We've included in this next slide our reported rent collections for April for the net lease peer set to help better illustrate what is taking place across the space. As you can see, BNL has performed well, which management attributes to our highly diversified portfolio. Others in the space that have enjoyed high levels of rent collections have one or several of the following characteristics: a highly diversified portfolio across a number of different asset types, similar to that of BNL; a high concentration of investment-grade tenants; a high concentration of industrial or office assets; and finally, a high concentration of what is deemed to be essential retail assets, such as grocery, pharmacy, or other retail tenants that have continued to operate and maybe even thrived during the pandemic. Those that have experienced more difficulty during this time tend to have portfolios comprised of high concentrations of nonessential retail assets that rely on social gatherings to be successful. Examples include fitness facilities, movie theaters, casual dining, and education facilities. Ultimately, net lease is still viewed by most industry analysts and investors as a defensive investment and one that can perform well during difficult economic times. As the country begins to reopen, I'm hopeful that BNL and its peer set will begin to see improving portfolio performance. We have updated this table to show investors what industries our rent relief requests have arisen from over the past 7 or 8 weeks. As you would expect, the requests have been heaviest in the restaurant space, as these properties rely on social gatherings to generate the bulk of their business. In addition, we have seen inbound requests from other consumer-facing industries, either directly from the retail side or from companies that support some part of the retail value chain. On the right-hand side of the page, we've attempted to summarize some of the key data points regarding our portfolio that we track in connection with evaluating rent relief requests and to answer some of the most common questions we have received from investors. The first key area is properties with social gathering exposure. BNL has approximately 17% of its portfolio in these types of assets. Most of the social gathering exposure is in the restaurant space, either quick-service restaurants or casual dining. Next, we have attempted to categorize our properties based upon essential versus nonessential classifications that are important for determining if a business is able to stay open or not during the crisis. The definitions certainly vary by state, but we estimate that almost 70% of our tenants' businesses fall into the essential category. Finally, we've worked to estimate what percentage of the portfolio is open or closed. This is based on research by the team and discussions with tenants about their current status. Again, this represents an estimated figure, as tenants with large national footprints may not be disclosing the status of every site in their network. Here, the team estimates that approximately 2/3 of the portfolio is open and 1/3 is either closed or partially closed. These are point-in-time estimates with the results being updated daily. On Slide 14, we've cut the data a different way to show rent relief requests by asset or property type. Here you can clearly see that 75% of our restaurants have submitted a rent relief request. While each tenant is different, the requests have come more heavily from the casual dining side of the business. Industry experts estimate that sales declined approximately 65% to 75% in the casual dining space as most of the business was conducted on-premise. Operators in the space have pivoted quickly, and online ordering with delivery or curbside pickup has been increasing rapidly on a week-over-week basis to help stem the losses. In the quick-service space, sales declines have been more controlled, with many operators experiencing 20% to 30% declines in sales since the crisis began. These operators have been able to continue to utilize their drive-thru windows to maintain sales but have suffered from a reduction in their breakfast and coffee service given fewer people out on the roads each morning. Rent relief requests have been more balanced across the remainder of our property types, as evidenced by the thermometer charts on the bottom right side of the page. Finally, on Slide 15, we have plotted our rent relief requests on a geographic basis to help show where the bulk of the requests are coming from. We've also color-coded the map to highlight which states have announced plans for or are in the process of reopening. As you can see, a high concentration of our sites with rent relief requests is in states that are in process of reopening. This makes sense, given most of our properties are located in the Southeast, Texas, and the Midwest, which has not seen as strong an impact from COVID-19 to date as compared to New York and other highly impacted markets.

Moving on to this quarter's determined share value or DSV slide. I want to first remind investors of our standard valuation policy and procedures, which have been in place for many years. BNL's approach to studying our DSV is, first and foremost, a data-driven exercise in real estate valuations. Our efforts include management-prepared valuations, third-party appraisals, and oversight and valuation support from Cushman & Wakefield. When conducting property-level valuations, management and our third-party consultants and appraisers utilize available sales data, such as purchase price from transactions involving comparable assets. Sales comps from Q1 do not reflect the impacts from the COVID crisis. Most of these transactions were negotiated around year-end or in very early 2020, before the impacts of COVID-19 began to materialize in U.S. markets. As such, our real estate valuations this quarter do not include impacts from the COVID pandemic. Given the current economic downturn and significant reduction in real estate transactions, it is likely that it will take several quarters for comparable sales data to catch up. Since March 31, there has been very little commercial real estate transaction activity across the nation. At the moment, the transaction market is quiet. And I believe that transaction activity will remain slow because of the following three items: a lack of debt financing availability for commercial real estate; an inability for principals and third-party experts to visit sites and conduct appropriate levels of due diligence; and a lack of visibility into rents and rental income viability in the short term. That being said, all of these factors will lessen over time, and the market will transact at higher volumes, which will assist us in assessing COVID's impact on our portfolio valuations. I invite investors to review the Q1 2020 Form 10-Q and earnings release, which contain more detailed and important disclosures around COVID and its impact on determined share value. Many of you have closely followed the public net lease market for indications of value. The market has been extremely volatile, with daily prices often changing 10-plus percent up or down, depending on the day, and the market's current view of when the country will reopen for business. It is worth noting that many of the public REITs were trading at substantial premiums above their NAVs prior to the crisis, some by as much as 40%. Much of the declines over the past 8 weeks have been giving some or all of those premiums back. Some REITs have also begun to trade below their NAV. As a private company, BNL has always strived to market shares as close to NAV as possible, with a consistent and data-driven process being employed each quarter. So what is included in this quarter's DSV? The downward marks on real estate assets were reflective of known tenant concerns and issues in Q1. Most of the downward valuation adjustments were made related to the Art Van Furniture bankruptcy that was announced in early March. This flows through to the increase in retail cap rates reflected on the right-hand side of the page. The other asset classes did not experience meaningful cap rate changes based upon the available Q1 data. Finally, as interest rates plummeted during the quarter, BNL also saw a meaningful increase in the liability associated with its interest rate swaps that appear on our balance sheet each quarter. I'll close the valuation section by stating that the Board of Directors will continue to utilize all available valuation information when setting the DSV in the future periods as the impacts of COVID-19 pandemic on real estate asset values continue to unfold.

At our Board meeting last week, the directors made the difficult decision to temporarily suspend their monthly distribution payments. This is not a decision that the Board or management took lightly, as our history of consistent distribution payments and growth is one of the primary reasons that investors entrust capital to BNL. At the same time, we all have deep conviction that this is the appropriate short-term step to protect and strengthen the company for the long term. We believe it is best for BNL to have maximum financial flexibility in the short term and to be able to manage our leverage profile and liquidity as tightly as possible. To achieve these objectives, the company needs to build cash on hand to ensure that we have as much optionality as possible to weather the storm. The Board also reviewed investor liquidity inquiries and decided it was not the appropriate time to reopen the share redemption program, as this is the most conservative approach to focus on maintaining maximum liquidity and financial flexibility. Given the portfolio performance to date, we carefully considered simply reducing the distribution to a lower level. But after a careful review and deliberation, we decided to take this step out of an abundance of caution and a desire to operate with maximum flexibility. We also did not want to whipsaw investors with multiple distribution changes if additional unanticipated events impact our performance. At the May 7 Board meeting, we devoted a substantial amount of time to discussing what impacts COVID-19 might have on the country during the second half of the year, particularly the potential impacts from a second wave of the virus and rolling shelter-in-place orders going into effect throughout the fall, potentially. In addition, we had a robust discussion around changes in consumer behavior after the restrictions are lifted and once the current government stimulus programs end this summer, as there is no guarantee that these programs will be extended or a new stimulus will be put in place. All of these open questions and the lack of clarity in the future guided our thinking that BNL should operate with an abundance of caution at this time. Clearly, this is a matter of judgment, and the directors carefully considered the facts available to them and humbly acknowledge the many unknowns in our world today. We understand that others may see the situation differently, but we feel that our approach is reasonable given the current circumstances. As a reminder, our directors and executive officers are collectively substantial shareholders in the company and a decision to temporarily suspend the dividend impacts the group as well. Across our 19 executive officers and directors, we hold approximately 8.5% of BNL's total equity on a shares in OP Unit-basis. Our directors and executive officers have all made substantial personal investments in the company, in addition to directors being paid principally in stock for their services. We only have one class of common shares and no preferred shares, so everyone is impacted the same by the decision. Although it was a difficult and painful decision to make and one that entailed direct financial impacts on the people making the decision, we believe that this is the best course of action for BNL today in light of the current economic circumstances. I recognize that a temporary suspension of the distribution will not be welcome news to everyone on this call. I can assure you that this short-term decision will position BNL as strongly as possible coming out of the current crisis. The Board will revisit the distribution and shareholder liquidity matters at its August 2020 meeting, and we will provide further updates to shareholders at that time. We intend to make all distributions necessary to maintain REIT status in 2020 and can consider special distributions later in the year to achieve this goal if necessary.

I want to conclude today with a few words on key areas of focus for the team at BNL over the coming months. Virtually, the entire team is now involved in the asset management process and working to keep rent collections strong. It is vitally important that we evaluate each rent relief request on a case-by-case basis and apply our best judgment when deciding when to offer relief. If we do agree to additional deferrals, we will continue to ensure that we limit the payback periods and look at ways to increase long-term shareholder value during the negotiations. We want to maintain consistent and clear communication with all stakeholders and hope that today's presentation is a continuation of that theme. Today represents our third shareholder communication in as many months, and we are committed to ensuring investors remain abreast of all important corporate developments. Finally, we will closely monitor markets for signs of healing and opportunity. The Board and management are continuously engaging in strategic dialogue on the best next steps for BNL. We are focused on all the important topics you would expect, including managing leverage, maximizing liquidity, considerations around the dividend, sources of additional capital, the capital markets, shareholder redemptions and liquidity needs, along with asset management practices and future acquisition strategies. While there are no formal announcements on these topics today, we are active and planning for the future, and we'll be ready to communicate with shareholders when the time is right. The group leading BNL has always been cautious by nature, and we are proceeding in a calm and thoughtful manner as we plot the next steps for the REIT. This concludes the formal portion of our presentation and investor update. We will now move into the Q&A portion of our meeting.

The team greatly appreciates all of the questions we have received in advance of this call, and we'll start with these first. As a reminder, we are conducting this presentation from our individual homes and working on Skype to facilitate, so it may take us a few extra minutes to work through this piece of the meeting. Also, please note that the team is merging similar questions to promote greater efficiency. Please understand if we do not read your question verbatim as it is likely highly similar to another question being put forth. With that, I will turn it to Chris in case he has any final comments.

Thank you, Dan. Yes, we've kept you longer than we intended, and we appreciate your tremendous interest. It's fantastic to see that we had such a good turnout with around 400 shareholders. I hope you found all the information very informative. The team worked hard to provide you with a clear picture of where BNL stands at the moment. As Dan mentioned, we will maintain transparent and consistent communication as we move forward. Dan Blasi and Nicole Calcagni from our Investor Relations teams are here to help and will follow up if there are questions we didn't address. I want to express my deep gratitude for your ongoing support for Broadstone Net Lease. We wish you all the best and look forward to speaking with you soon. Have a great afternoon. Goodbye.