8-K
Broadstone Net Lease, Inc. (BNL)
UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
| Date of Report (Date of earliest event reported): November 02, 2022 |
|---|
BROADSTONE NET LEASE, INC.
(Exact name of Registrant as Specified in Its Charter)
| Maryland | 001-39529 | 26-1516177 |
|---|---|---|
| (State or Other Jurisdiction<br>of Incorporation) | (Commission File Number) | (IRS Employer<br>Identification No.) |
| 800 Clinton Square | ||
| Rochester, New York | 14604 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
| Registrant’s Telephone Number, Including Area Code: 585 287-6500 | ||
| --- |
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br>Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.00025 par value | BNL | The New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On November 2, 2022, Broadstone Net Lease, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended September 30, 2022. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. Additionally, on November 2, 2022, the Company made available on its website an updated presentation containing quarterly supplemental information pertaining to its operations and financial results including the quarter ended September 30, 2022. A copy of the quarterly supplemental information is attached hereto as Exhibit 99.2 and is incorporated herein by reference. The press release and quarterly supplemental information are also available on the Company’s website.
The information contained in this Item 2.02, including the information contained in the press release attached as Exhibit 99.1 hereto and quarterly supplemental information attached as Exhibit 99.2 hereto, are being “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. References to the Company’s website in this Current Report on Form 8-K and in the attached Exhibit 99.1 and Exhibit 99.2 to this Current Report on Form 8-K do not incorporate by reference the information on such website into this Current Report on Form 8-K and the Company disclaims any such incorporation by reference.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits |
|---|
INDEX TO EXHIBITS
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release dated November 2, 2022 |
| 99.2 | Quarterly Supplemental Information for the Quarter Ended September 30, 2022 |
| 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. |
| --- | --- |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| BROADSTONE NET LEASE, INC. | |||
|---|---|---|---|
| Date: | November 2, 2022 | By: | /s/ John D. Callan |
| Name: John D. Callan<br>Title: Senior Vice President, General Counsel and Secretary |
EX-99.1
EXHIBIT 99.1
For Immediate Release
November 2, 2022
| Company Contact:<br><br><br><br>Michael Caruso<br><br>SVP, Corporate Finance & Investor Relations<br><br>michael.caruso@broadstone.com<br><br>585.402.7842 |
|---|
Broadstone Net Lease Announces Third Quarter 2022 Results
ROCHESTER, N.Y. – Broadstone Net Lease, Inc. (NYSE: BNL) ("BNL," the "Company," "we," "our," or "us"), today announced its operating results for the quarter ended September 30, 2022.
THIRD QUARTER 2022 HIGHLIGHTS
| INVESTMENT ACTIVITY | •<br>Invested $204.5 million at a weighted average initial cash capitalization rate of 6.5%, including the acquisition of 27 properties with a weighted average initial term of 20.9 years and minimum annual rent increases of 2.0%. These investments were predominantly weighted towards industrial opportunities (85.8% of the quarter's volume, based on ABR), with the remaining investment activity spanning property types such as restaurant (6.6%), healthcare (4.6%) and retail (3.0%).<br><br>•<br>Subsequent to quarter end, we invested an additional $283.1 million and currently have $21.6 million of investments under control. |
|---|---|
| CAPITAL MARKETS ACTIVITY | •<br>Sold 962,200 shares of common stock for net proceeds of $20.3 million under our at-the-market common equity offering ("ATM Program").<br><br>•<br>Completed a forward equity offering of 13,000,000 shares for anticipated net proceeds of approximately $270.7 million, none of which have settled.<br><br>•<br>Entered into a $200 million, five year unsecured term loan and a $300 million, seven year unsecured term loan, the proceeds of which were used to repay in full our $190 million term loan set to mature in 2024, and a portion of the outstanding borrowings on our unsecured revolving credit facility. In addition, we entered into interest rate swaps with a total notional value of $260 million to fix the Secured Overnight Financing Rate ("SOFR") component of the borrowing rate at a weighted average fixed interest rate of 2.59% until August 1, 2029.<br><br>•<br>Ended the quarter with total outstanding debt of $2.1 billion, Net Debt of $2.0 billion, a Net Debt to Annualized Adjusted EBITDAre ratio of 5.5x, and a pro forma Net Debt to Annualized Adjusted EBITDAre ratio of 4.8x assuming settlement of the outstanding forward.<br><br>•<br>Increased our quarterly dividend to $0.275. |
| OPERATING<br><br>RESULTS | •<br>Collected 100% of base rents due for the third quarter, and our portfolio was 99.3% leased based on rentable square footage, with only three of our 790 total properties vacant and not subject to a lease as of quarter end.<br><br>•<br>Incurred $9.9 million of general and administrative expenses, inclusive of $1.5 million of stock-based compensation.<br><br>•<br>Generated net income of $28.7 million, or $0.16 per share.<br><br>•<br>Generated adjusted funds from operations ("AFFO") of $63.4 million, or $0.35 per share.<br><br>•<br>Reaffirmed the guidance range for the 2022 full year and currently expect to report AFFO of between $1.38 and $1.40 per diluted share. |
MANAGEMENT COMMENTARY
"As we highlighted in our business update in early October, we've continued to grow our portfolio through accretive acquisitions supported by our proactive capital markets strategy, and our portfolio continues to perform well with 100% rent collection and minimal vacancies given its highly diversified and defensive construction," said Chris Czarnecki, BNL’s Chief Executive Officer. "We continue to have strong conviction in our diversified strategy and its proven ability to deliver durable cash flows, while also providing us with the ability to pivot between property types and selectively pursue attractive investment opportunities as the broader market landscape evolves. While we continue to see no shortage of investment opportunities, a disconnect currently exists between the capital markets and property transaction markets. Cost of capital across the sector has considerably increased while asset pricing levels have been slower to respond. Given this disconnect, we anticipate pricing adjustments in net lease assets and believe it is prudent to take a more selective and opportunistic approach to capital deployment in the near-term."
SUMMARIZED FINANCIAL RESULTS
| For the Three Months Ended | For the Nine Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands, except per share data) | September 30,<br>2022 | June 30, <br>2022 | September 30,<br>2021 | September 30,<br>2022 | September 30,<br>2021 | |||||
| Revenues | $ | 103,524 | $ | 98,013 | $ | 122,777 | $ | 295,378 | $ | 290,234 |
| Net income, including non-controlling interests | $ | 28,709 | $ | 35,552 | $ | 30,522 | $ | 92,702 | $ | 77,302 |
| Net earnings per share | $ | 0.16 | $ | 0.20 | $ | 0.18 | $ | 0.52 | $ | 0.48 |
| FFO | $ | 72,169 | $ | 68,340 | $ | 91,947 | $ | 202,013 | $ | 194,060 |
| FFO per share | $ | 0.39 | $ | 0.38 | $ | 0.54 | $ | 1.13 | $ | 1.20 |
| Core FFO | $ | 66,677 | $ | 65,986 | $ | 59,769 | $ | 196,739 | $ | 168,191 |
| Core FFO per share | $ | 0.36 | $ | 0.37 | $ | 0.35 | $ | 1.10 | $ | 1.04 |
| AFFO | $ | 63,386 | $ | 62,804 | $ | 55,836 | $ | 186,590 | $ | 157,270 |
| AFFO per share | $ | 0.35 | $ | 0.35 | $ | 0.33 | $ | 1.04 | $ | 0.97 |
| Diluted Weighted Average Shares Outstanding | 182,971 | 180,256 | 169,587 | 179,132 | 161,273 |
FFO, Core FFO, and AFFO are measures that are not calculated in accordance with accounting principles generally accepted in the United States of America ("GAAP"). See the Reconciliation of Non-GAAP Measures later in this press release.
REAL ESTATE PORTFOLIO UPDATE
As of September 30, 2022, we owned a diversified portfolio of 790 individual net leased commercial properties with 783 properties located in 44 U.S. states and seven properties located in four Canadian provinces, comprising approximately 36.8 million rentable square feet of operational space. As of September 30, 2022, all but three of our properties were subject to a lease, and our properties were occupied by 218 different commercial tenants, with no single tenant accounting for more than 2.4% of ABR. Properties subject to a lease represent 99.3% of our portfolio's rentable square footage. The ABR weighted average annual minimum rent increase, pursuant to leases on properties in the portfolio as of September 30, 2022, was 2.0%.
During the third quarter, we invested $204.5 million in accretive acquisitions and revenue generating capital expenditures at a weighted average initial cash capitalization rate of 6.5%, including the acquisition of 27 properties located across 10 U.S. states with a weighted average initial lease term and minimum annual rent increases of 20.9 years and 2.0%, respectively. These investments were predominantly weighted towards industrial opportunities (85.8% of the quarter's volume, based on ABR), with the remaining investment activity spanning property types such as restaurant (6.6%), healthcare (4.6%) and retail (3.0%).
Subsequent to quarter end, we invested an additional $283.1 million in 15 properties and have $21.6 million of investments under control, which we define as under contract or executed letter of intent.
BALANCE SHEET AND CAPITAL MARKETS ACTIVITIES
During the third quarter, BNL sold 962,200 shares of common stock under its ATM Program at a weighted average sale price of $21.44 per share for net proceeds of $20.3 million. There was approximately $145.4 million of capacity remaining on the ATM Program as of September 30, 2022.
On August 1, 2022, we entered into two new unsecured bank term loans, including a $200 million, five year term loan that matures in 2027 (the "2027 Unsecured Term Loan"), and a $300 million, seven year term loan that matures in 2029 (the "2029 Unsecured Term Loan"). Borrowings on the new term loans bear interest at variable rates based on the SOFR as adjusted, plus a margin based on our credit rating ranging between 0.80% and 1.60% per annum for the 2027 Unsecured Term Loan, and 1.15% and 2.20% per annum for the 2029 Unsecured Term Loan. The initial applicable margin was 0.95% and 1.25% for the 2027 Unsecured Term Loan and 2029 Unsecured Term Loan, respectively. Proceeds from the loans were used to repay in full our $190 million unsecured term loan set to mature in 2024, including accrued interest, and a portion of the outstanding balance on our unsecured revolving credit facility. In addition, we entered into interest rate swaps with a total notional value of $260 million to fix the SOFR component of the borrowing rate at a weighted average fixed interest rate of 2.59% until August 1, 2029. With the addition of these interest rate swaps, our unsecured bank term loans remain entirely hedged.
In August 2022, we completed a public offering of 13,000,000 shares of common stock at a price of $21.35 per share, subject to certain adjustments, in connection with a forward sale agreement. We expect to settle the forward sale agreement by the August 2023 maturity date. As of September 30, 2022, we anticipate the forward sale agreement will provide net proceeds of approximately $270.7 million, resulting in a pro forma Net Debt to Annualized Adjusted EBITDAre ratio of 4.8x. We have not settled any part of the forward sale agreement as of September 30, 2022.
DISTRIBUTIONS
At its October 27, 2022, meeting, our board of directors declared a $0.275 distribution per common share and OP Unit to stockholders and OP unitholders of record as of December 31, 2022, payable on or before January 15, 2022.
2022 GUIDANCE
BNL has reaffirmed its guidance range for the 2022 full year and currently expects to report AFFO of between $1.38 and $1.40 per diluted share.
The guidance range is based on the following key assumptions, which is unchanged from the guidance range provided on October 4, 2022:
(i) investments in real estate properties between $900 million and $1 billion;
(ii) dispositions of real estate properties between $50 million and $75 million; and
(iii) total cash general and administrative expenses between $31 million and $33 million.
Our per share results are sensitive to both timing and amount of real estate investments, property dispositions, and capital markets activities that occur throughout the year.
The Company does not provide guidance for the most comparable GAAP financial measure, net income, or a reconciliation of the forward-looking non-GAAP financial measure of AFFO to net income computed in accordance with GAAP, because it is unable to reasonably predict, without unreasonable efforts, certain items that would be contained in the GAAP measure, including items that are not indicative of the Company's ongoing operations, including, without limitation, potential impairments of real estate assets, net gain/loss on dispositions of real estate assets, changes in allowance for credit losses, and stock-based compensation expense. These items are uncertain, depend on various factors, and could have a material impact on the Company's GAAP results for the guidance periods.
CONFERENCE CALL AND WEBCAST
The company will host its third quarter earnings conference call and audio webcast on Thursday, November 3, 2022, at 11:00 a.m. Eastern Time.
To access the live webcast, which will be available in listen-only mode, please visit: https://events.q4inc.com/attendee/395933686. If you prefer to listen via phone, U.S. participants may dial:
1-844-200-6205 (toll free) or 1-646-904-5544 (local), access code 181980. International access numbers are viewable here: https://events.q4irportal.com/custom/access/2324/.
A replay of the conference call webcast will be available approximately one hour after the conclusion of the live broadcast. To listen to a replay of the call via phone, all participants may dial: 1-866-813-9403 (toll free) or 1-929-458-6194 (local), access code 547581. The replay will be available via dial-in until Thursday, November 17, 2022. To listen to a replay of the call via the web, which will be available for one year, please visit: https://investors.bnl.broadstone.com.
About Broadstone Net Lease, Inc.
BNL is a real estate investment trust that acquires, owns, and manages primarily single-tenant commercial real estate properties that are net leased on a long-term basis to a diversified group of tenants. The Company utilizes an investment strategy underpinned by strong fundamental credit analysis and prudent real estate underwriting. As of September 30, 2022, BNL's diversified portfolio consisted of 790 individual net leased commercial properties with 783 properties located in 44 U.S. states and seven properties located in four Canadian provinces across the industrial, healthcare, restaurant, retail, and office property types.
Forward-Looking Statements
This press release contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding, among other things, our plans, strategies, and prospects, both business and financial. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as "may," "will," "should," "expect," "intend," "anticipate," "estimate," "would be," "believe," "continue," or other similar words. Forward-looking statements, including our 2022 guidance and assumptions, involve known and unknown risks and uncertainties, which may cause BNL's actual future results to differ materially from expected results, including, without limitation, risks and uncertainties related to the COVID-19 pandemic and its related impacts on us and our tenants, general economic conditions, including but not limited to increases in the rate of inflation and/or interest rates, local real estate conditions, tenant financial health, property investments and acquisitions, and the timing and uncertainty of completing these acquisitions, and uncertainties regarding future distributions to our stockholders. These and other risks, assumptions, and uncertainties are described in Item 1A "Risk Factors" of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 23, 2022, which you are encouraged to read, and is available on the SEC's website at www.sec.gov. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. The Company assumes no obligation to, and does not currently intend to, update any forward-looking statements after the date of this press release, whether as a result of new information, future events, changes in assumptions, or otherwise.
Notice Regarding Non-GAAP Financial Measures
In addition to our reported results and net earnings per diluted share, which are financial measures presented in accordance with GAAP, this press release contains and may refer to certain non-GAAP financial measures, including Funds from Operations ("FFO"), Core Funds From Operations ("Core FFO"), Adjusted Funds from Operations ("AFFO"), Net Debt, and Net Debt to Annualized Adjusted EBITDAre. We believe the use of FFO, Core FFO, and AFFO are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs. FFO, Core FFO, and AFFO should not be considered alternatives to net income as a performance measure or to cash flows from operations, as reported on our statement of cash flows, or as a liquidity measure, and should be considered in addition to, and not in lieu of, GAAP financial measures. We believe presenting Net Debt to Annualized Adjusted EBITDAre is useful to investors because it provides information about gross debt less cash and cash equivalents, which could be used to repay debt, compared to our performance as measured using Annualized Adjusted EBITDAre. You should not consider our Annualized Adjusted EBITDAre as an alternative to net income or cash flows from operating activities determined in accordance with GAAP. A reconciliation of non-GAAP measures to the most directly comparable GAAP financial measure and statements of why management believes these measures are useful to investors are included below.
Broadstone Net Lease, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except per share amounts)
| December 31,<br>2021 | |||||
|---|---|---|---|---|---|
| Assets | |||||
| Accounted for using the operating method: | |||||
| Land | 755,206 | $ | 655,374 | ||
| Land improvements | 331,858 | 295,329 | |||
| Buildings and improvements | 3,650,275 | 3,242,618 | |||
| Equipment | 10,422 | 11,870 | |||
| Total accounted for using the operating method | 4,747,761 | 4,205,191 | |||
| Less accumulated depreciation | (505,456 | ) | (430,141 | ) | |
| Accounted for using the operating method, net | 4,242,305 | 3,775,050 | |||
| Accounted for using the direct financing method | 27,128 | 28,782 | |||
| Accounted for using the sales-type method | 571 | 571 | |||
| Investment in rental property, net | 4,270,004 | 3,804,403 | |||
| Cash and cash equivalents | 75,912 | 21,669 | |||
| Accrued rental income | 129,579 | 116,874 | |||
| Tenant and other receivables, net | 791 | 1,310 | |||
| Prepaid expenses and other assets | 18,984 | 17,275 | |||
| Interest rate swap, assets | 66,602 | — | |||
| Goodwill | 339,769 | 339,769 | |||
| Intangible lease assets, net | 322,314 | 303,642 | |||
| Debt issuance costs – unsecured revolving credit facility, net | 6,485 | 4,065 | |||
| Leasing fees, net | 8,752 | 9,641 | |||
| Total assets | 5,239,192 | $ | 4,618,648 | ||
| Liabilities and equity | |||||
| Unsecured revolving credit facility | 219,537 | $ | 102,000 | ||
| Mortgages, net | 94,753 | 96,846 | |||
| Unsecured term loans, net | 894,378 | 646,671 | |||
| Senior unsecured notes, net | 844,367 | 843,801 | |||
| Interest rate swap, liabilities | — | 27,171 | |||
| Accounts payable and other liabilities | 52,594 | 38,038 | |||
| Dividends payable | 49,886 | 45,914 | |||
| Accrued interest payable | 10,559 | 6,473 | |||
| Intangible lease liabilities, net | 64,971 | 70,596 | |||
| Total liabilities | 2,231,045 | 1,877,510 | |||
| Commitments and contingencies | |||||
| Equity | |||||
| Broadstone Net Lease, Inc. stockholders' equity: | |||||
| Preferred stock, 0.001 par value; 20,000 shares authorized, no shares issued or outstanding | — | — | |||
| Common stock, 0.00025 par value; 500,000 shares authorized, 173,155 and 162,383 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively | 43 | 41 | |||
| Additional paid-in capital | 3,148,075 | 2,924,168 | |||
| Cumulative distributions in excess of retained earnings | (369,260 | ) | (318,476 | ) | |
| Accumulated other comprehensive income (loss) | 61,834 | (28,441 | ) | ||
| Total Broadstone Net Lease, Inc. stockholders' equity | 2,840,692 | 2,577,292 | |||
| Non-controlling interests | 167,455 | 163,846 | |||
| Total equity | 3,008,147 | 2,741,138 | |||
| Total liabilities and equity | 5,239,192 | $ | 4,618,648 |
All values are in US Dollars.
Broadstone Net Lease, Inc. and Subsidiaries
Condensed Consolidated Statements of Income and Comprehensive Income
(in thousands, except per share amounts)
| For the Three Months Ended | For the Nine Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30,<br>2022 | June 30, <br>2022 | September 30,<br>2022 | September 30,<br>2021 | |||||||||
| Revenues | ||||||||||||
| Lease revenues, net | $ | 103,524 | $ | 98,013 | $ | 295,378 | $ | 290,234 | ||||
| Operating expenses | ||||||||||||
| Depreciation and amortization | 39,400 | 35,511 | 109,201 | 98,620 | ||||||||
| Property and operating expense | 5,636 | 4,696 | 15,376 | 14,019 | ||||||||
| General and administrative | 9,942 | 9,288 | 28,058 | 27,840 | ||||||||
| Provision for impairment of investment in rental properties | 4,155 | 1,380 | 5,535 | 28,001 | ||||||||
| Total operating expenses | 59,133 | 50,875 | 158,170 | 168,480 | ||||||||
| Other income (expenses) | ||||||||||||
| Interest income | 4 | — | 4 | 11 | ||||||||
| Interest expense | (20,095 | ) | (17,888 | ) | (54,879 | ) | (47,149 | ) | ||||
| Cost of debt extinguishment | (231 | ) | — | (231 | ) | (368 | ) | |||||
| Gain on sale of real estate | 61 | 4,071 | 5,328 | 9,791 | ||||||||
| Income taxes | (356 | ) | (401 | ) | (1,169 | ) | (1,187 | ) | ||||
| Change in fair value of earnout liability | — | — | — | (5,539 | ) | |||||||
| Other income (expenses) | 4,935 | 2,632 | 6,441 | (11 | ) | |||||||
| Net income | 28,709 | 35,552 | 92,702 | 77,302 | ||||||||
| Net income attributable to non-controlling interests | (1,600 | ) | (2,036 | ) | (5,319 | ) | (5,167 | ) | ||||
| Net income attributable to Broadstone Net <br> Lease, Inc. | $ | 27,109 | $ | 33,516 | $ | 87,383 | $ | 72,135 | ||||
| Weighted average number of common shares outstanding | ||||||||||||
| Basic | 172,578 | 169,555 | 168,680 | 150,227 | ||||||||
| Diluted | 182,971 | 180,256 | 179,132 | 161,273 | ||||||||
| Net earnings per common share | ||||||||||||
| Basic and diluted | $ | 0.16 | $ | 0.20 | $ | 0.52 | $ | 0.48 | ||||
| Comprehensive income | ||||||||||||
| Net income | $ | 28,709 | $ | 35,552 | $ | 92,702 | $ | 77,302 | ||||
| Other comprehensive income | ||||||||||||
| Change in fair value of interest rate swaps | 40,039 | 18,772 | 93,772 | 30,328 | ||||||||
| Realized loss (gain) on interest rate swaps | 639 | 695 | 1,993 | 2 | ||||||||
| Comprehensive income | 69,387 | 55,019 | 188,467 | 107,632 | ||||||||
| Comprehensive income attributable to non-controlling <br> interests | (3,868 | ) | (3,151 | ) | (10,809 | ) | (7,313 | ) | ||||
| Comprehensive income attributable to Broadstone Net <br> Lease, Inc. | $ | 65,519 | $ | 51,868 | $ | 177,658 | $ | 100,319 |
Reconciliation of Non-GAAP Measures
The following is a reconciliation of net income to FFO, Core FFO, and AFFO for the three months ended September 30, 2022 and June 30, 2022 and for the nine months ended September 30, 2022 and 2021. Also presented is the weighted average number of shares of our common stock and OP Units used for the diluted per share computation:
| For the Three Months Ended | For the Nine Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands, except per share data) | September 30,<br>2022 | June 30, <br>2022 | September 30,<br>2022 | September 30,<br>2021 | ||||||||
| Net income | $ | 28,709 | $ | 35,552 | $ | 92,702 | $ | 77,302 | ||||
| Real property depreciation and amortization | 39,366 | 35,479 | 109,104 | 98,548 | ||||||||
| Gain on sale of real estate | (61 | ) | (4,071 | ) | (5,328 | ) | (9,791 | ) | ||||
| Provision for impairment on investment in rental <br> properties | 4,155 | 1,380 | 5,535 | 28,001 | ||||||||
| FFO | $ | 72,169 | $ | 68,340 | $ | 202,013 | $ | 194,060 | ||||
| Net write-offs of accrued rental income | — | — | 1,326 | 1,938 | ||||||||
| Lease termination fee | (791 | ) | — | (791 | ) | (35,000 | ) | |||||
| Cost of debt extinguishment | 231 | — | 231 | 368 | ||||||||
| Severance | 3 | 278 | 401 | 1,275 | ||||||||
| Change in fair value of earnout liability | — | — | — | 5,539 | ||||||||
| Other (Income) expenses(1) | (4,935 | ) | (2,632 | ) | (6,441 | ) | 11 | |||||
| Core FFO | $ | 66,677 | $ | 65,986 | $ | 196,739 | $ | 168,191 | ||||
| Straight-line rent adjustment | (5,175 | ) | (4,965 | ) | (15,075 | ) | (14,983 | ) | ||||
| Adjustment to provision for credit losses | (4 | ) | (1 | ) | (5 | ) | (1 | ) | ||||
| Amortization of debt issuance costs | 948 | 900 | 2,704 | 2,832 | ||||||||
| Amortization of net mortgage premiums | (26 | ) | (25 | ) | (78 | ) | (106 | ) | ||||
| Loss on interest rate swaps and other non-cash <br> interest expense | 639 | 695 | 1,993 | 2 | ||||||||
| Amortization of lease intangibles | (1,176 | ) | (1,167 | ) | (3,501 | ) | (2,309 | ) | ||||
| Stock-based compensation | 1,503 | 1,381 | 3,813 | 3,644 | ||||||||
| AFFO | $ | 63,386 | $ | 62,804 | $ | 186,590 | $ | 157,270 | ||||
| Diluted WASO(2) | 182,971 | 180,256 | 179,132 | 161,273 | ||||||||
| Net earnings per share(3) | $ | 0.16 | $ | 0.20 | $ | 0.52 | $ | 0.48 | ||||
| FFO per share(3) | 0.39 | 0.38 | 1.13 | 1.20 | ||||||||
| Core FFO per share(3) | 0.36 | 0.37 | 1.10 | 1.04 | ||||||||
| AFFO per share(3) | 0.35 | 0.35 | 1.04 | 0.97 |
1 Amount includes $4.9 million and $2.6 million of unrealized foreign exchange gain for the three months ended September 30, 2022 and June 30, 2022, respectively, and $6.4 million of unrealized foreign exchange gain for the nine months ended September 30, 2022, primarily associated with our Canadian dollar denominated revolving borrowings.
2 Excludes 395,441 and 377,407 weighted average shares of unvested restricted common stock for the three months ended September 30, 2022 and June 30, 2022, respectively. Excludes 381,220 and 366,477 weighted average shares of unvested restricted common stock for the nine months ended September 30, 2022 and 2021, respectively.
3 Excludes $0.1 million from the numerator for the three months ended September 30, 2022 and June 30, 2022, respectively, and $0.3 million from the numerator for the nine months ended September 30, 2022 and 2021, respectively, related to dividends paid or declared on shares of unvested restricted common stock.
Our reported results and net earnings per diluted share are presented in accordance with GAAP. We also disclose FFO, Core FFO, and AFFO, each of which are non-GAAP measures. We believe the use of FFO, Core FFO, and AFFO are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs. FFO, Core FFO, and AFFO should not be considered alternatives to net income as a performance measure or to cash flows from operations, as reported on our statement of cash flows, or as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures.
We compute FFO in accordance with the standards established by the Board of Governors of Nareit, the worldwide representative voice for REITs and publicly traded real estate companies with an interest in the U.S. real estate and capital markets. Nareit defines FFO as GAAP net income or loss adjusted to exclude net gains (losses) from sales of certain depreciated real estate assets, depreciation and amortization expense from real estate assets, gains and losses from change in control, and impairment charges related to certain previously depreciated real estate assets. FFO is used by management, investors, and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers, primarily because it excludes the effect of real estate depreciation and amortization and net gains (losses) on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions.
We compute Core FFO by adjusting FFO, as defined by Nareit, to exclude certain GAAP income and expense amounts that we believe are infrequently recurring, unusual in nature, or not related to its core real estate operations, including write-offs or recoveries of accrued rental income, lease termination fees, the change in fair value of our earnout liability, cost of debt extinguishments, unrealized and realized gains or losses on foreign currency transactions, severance, and other extraordinary items. Exclusion of these items from similar FFO-type metrics is common within the equity REIT industry, and management believes that presentation of Core FFO provides investors with a metric to assist in their evaluation of our operating performance across multiple periods and in comparison to the operating performance of our peers, because it removes the effect of unusual items that are not expected to impact our operating performance on an ongoing basis.
We compute AFFO by adjusting Core FFO for certain non-cash revenues and expenses, including straight-line rents, amortization of lease intangibles, amortization of debt issuance costs, amortization of net mortgage premiums, (gain) loss on interest rate swaps and other non-cash interest expense, stock-based compensation, and other specified non-cash items. We believe that excluding such items assists management and investors in distinguishing whether changes in our operations are due to growth or decline of operations at our properties or from other factors. We use AFFO as a measure of our performance when we formulate corporate goals, and is a factor in determining management compensation. We believe that AFFO is a useful supplemental measure for investors to consider because it will help them to better assess our operating performance without the distortions created by non-cash revenues or expenses.
Specific to our adjustment for straight-line rents, our leases include cash rents that increase over the term of the lease to compensate us for anticipated increases in market rental rates over time. Our leases do not include significant front-loading or back-loading of payments, or significant rent-free periods. Therefore, we find it useful to evaluate rent on a contractual basis as it allows for comparison of existing rental rates to market rental rates. In situations where we granted short-term rent deferrals as a result of the COVID-19 pandemic, and such deferrals were probable of collection and expected to be repaid within a short term, we continued to recognize the same amount of GAAP lease revenues each period. Consistent with GAAP lease revenues, the short-term deferrals associated with COVID-19, and the corresponding payments, did not impact our AFFO.
FFO, Core FFO, and AFFO may not be comparable to similarly titled measures employed by other REITs, and comparisons of our FFO, Core FFO, and AFFO with the same or similar measures disclosed by other REITs may not be meaningful.
Neither the SEC nor any other regulatory body has passed judgment on the acceptability of the adjustments to FFO that we use to calculate Core FFO and AFFO. In the future, the SEC, Nareit or another regulatory body may decide to standardize the allowable adjustments across the REIT industry and in response to such standardization we may have to adjust our calculation and characterization of Core FFO and AFFO accordingly.
The following is a reconciliation of net income to Annualized Adjusted EBITDAre, debt to Net Debt and Net Debt to Annualized Adjusted EBITDAre as of and for the three months ended September 30, 2022, June 30, 2022, and September 30, 2021:
| For the Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | September 30,<br>2022 | June 30, <br>2022 | September 30,<br>2021 | ||||||
| Net income | $ | 28,709 | $ | 35,552 | $ | 30,522 | |||
| Depreciation and amortization | 39,400 | 35,511 | 36,682 | ||||||
| Interest expense | 20,095 | 17,888 | 15,611 | ||||||
| Income taxes | 356 | 401 | 473 | ||||||
| EBITDA | $ | 88,560 | $ | 89,352 | $ | 83,288 | |||
| Provision for impairment of investment in rental properties | 4,155 | 1,380 | 25,989 | ||||||
| Gain on sale of real estate | (61 | ) | (4,071 | ) | (1,220 | ) | |||
| EBITDAre | $ | 92,654 | $ | 86,661 | $ | 108,057 | |||
| Adjustment for current quarter acquisition activity (1) | 2,358 | 2,780 | 3,534 | ||||||
| Adjustment for current quarter disposition activity (2) | — | (141 | ) | (1,387 | ) | ||||
| Adjustment to exclude change in fair value of earnout <br> liability | — | — | 1,059 | ||||||
| Adjustment to exclude net write-offs of accrued rental income | — | — | 1,496 | ||||||
| Adjustment to exclude realized / unrealized foreign exchange <br> (gain) loss | (4,934 | ) | (2,632 | ) | — | ||||
| Adjustment to exclude cost of debt extinguishments | 231 | — | 242 | ||||||
| Adjustment to exclude lease termination fee | (791 | ) | — | (35,000 | ) | ||||
| Adjusted EBITDAre | $ | 89,518 | $ | 86,668 | $ | 78,001 | |||
| Annualized EBITDAre | $ | 370,616 | $ | 346,642 | $ | 432,221 | |||
| Annualized Adjusted EBITDAre | $ | 358,072 | $ | 346,672 | $ | 311,998 |
1 Reflects an adjustment to give effect to all acquisitions during the quarter as if they had been acquired as of the beginning of the quarter.
2 Reflects an adjustment to give effect to all dispositions during the quarter as if they had been sold as of the beginning of the quarter.
| (in thousands) | September 30,<br>2022 | June 30, <br>2022 | September 30,<br>2021 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Debt | |||||||||
| Unsecured revolving credit facility | $ | 219,537 | $ | 320,657 | $ | — | |||
| Unsecured term loans, net | 894,378 | 587,098 | 646,458 | ||||||
| Senior unsecured notes, net | 844,367 | 844,178 | 843,665 | ||||||
| Mortgages, net | 94,753 | 95,453 | 97,530 | ||||||
| Debt issuance costs | 11,498 | 8,991 | 10,215 | ||||||
| Gross Debt | 2,064,533 | 1,856,377 | 1,597,868 | ||||||
| Cash and cash equivalents | (75,912 | ) | (16,813 | ) | (16,182 | ) | |||
| Restricted cash | (6,449 | ) | (12,163 | ) | (3,895 | ) | |||
| Net Debt | $ | 1,982,172 | $ | 1,827,401 | $ | 1,577,791 | |||
| Anticipated proceeds from forward equity agreement | (270,732 | ) | — | — | |||||
| Pro Forma Net Debt | $ | 1,711,440 | $ | 1,827,401 | $ | 1,577,791 | |||
| Net Debt to Annualized EBITDAre | 5.3x | 5.3x | 3.7x | ||||||
| Net Debt to Annualized Adjusted EBITDAre | 5.5x | 5.3x | 5.1x | ||||||
| Pro Forma Net Debt to Annualized Adjusted EBITDAre | 4.8x | 5.3x | 5.1x |
We define Net Debt as gross debt (total reported debt plus debt issuance costs) less cash and cash equivalents and restricted cash. We believe that the presentation of Net Debt to Annualized EBITDAre and Net Debt to Annualized Adjusted EBITDAre is useful to investors and analysts because these ratios provide information about gross debt less cash and cash equivalents, which could be used to repay debt, compared to our performance as measured using EBITDAre.
We compute EBITDA as earnings before interest, income taxes and depreciation and amortization. EBITDA is a measure commonly used in our industry. We believe that this ratio provides investors and analysts with a measure of our performance that includes our operating results unaffected by the differences in capital structures, capital investment cycles and useful life of related assets compared to other companies in our industry. We compute EBITDAre in accordance with the definition adopted by Nareit, as EBITDA excluding gains (losses) from the sales of depreciable property and provisions for impairment on investment in real estate. We believe EBITDA and
EBITDAre are useful to investors and analysts because they provide important supplemental information about our operating performance exclusive of certain non-cash and other costs. EBITDA and EBITDAre are not measures of financial performance under GAAP, and our EBITDA and EBITDAre may not be comparable to similarly titled measures of other companies. You should not consider our EBITDA and EBITDAre as alternatives to net income or cash flows from operating activities determined in accordance with GAAP.
We are focused on a disciplined and targeted acquisition strategy, together with active asset management that includes selective sales of properties. We manage our leverage profile using a ratio of Net Debt to Annualized Adjusted EBITDAre, each discussed further below, which we believe is a useful measure of our ability to repay debt and a relative measure of leverage, and is used in communications with our lenders and rating agencies regarding our credit rating. As we fund new acquisitions using our unsecured revolving credit facility, our leverage profile and Net Debt will be immediately impacted by current quarter acquisitions. However, the full benefit of EBITDAre from newly acquired properties will not be received in the same quarter in which the properties are acquired. Additionally, EBITDAre for the quarter includes amounts generated by properties that have been sold during the quarter. Accordingly, the variability in EBITDAre caused by the timing of our acquisitions and dispositions can temporarily distort our leverage ratios. We adjust EBITDAre ("Adjusted EBITDAre") for the most recently completed quarter (i) to recalculate as if all acquisitions and dispositions had occurred at the beginning of the quarter, (ii) to exclude certain GAAP income and expense amounts that are either non-cash, such as cost of debt extinguishments, realized or unrealized gains and losses on foreign currency transactions, or the change in fair value of our earnout liability, or that we believe are one time, or unusual in nature because they relate to unique circumstances or transactions that had not previously occurred and which we do not anticipate occurring in the future, and (iii) to eliminate the impact of lease termination fees and other items, that are not a result of normal operations. We then annualize quarterly Adjusted EBITDAre by multiplying it by four ("Annualized Adjusted EBITDAre"). You should not unduly rely on this measure as it is based on assumptions and estimates that may prove to be inaccurate. Our actual reported EBITDAre for future periods may be significantly different from our Annualized Adjusted EBITDAre. Adjusted EBITDAre and Annualized Adjusted EBITDAre are not measurements of performance under GAAP, and our Adjusted EBITDAre and Annualized Adjusted EBITDAre may not be comparable to similarly titled measures of other companies. You should not consider our Adjusted EBITDAre and Annualized Adjusted EBITDAre as alternatives to net income or cash flows from operating activities determined in accordance with GAAP.
EX-99.2
Exhibit 99.2
Q3 2022 QUARTERLY SUPPLEMENTAL INFORMATION Broadstone Net Lease, Inc. (NYSE: BNL) is a Real Estate Investment Trust (REIT) that acquires, owns, and manages single-tenant commercial real estate properties that are net leased on a long-term basis to a diversified group of tenants. www.broadstone.com
Table of Contents
| Section | Page |
|---|---|
| About the Data | 3 |
| Company Overview | 4 |
| Quarterly Financial Summary | 5 |
| Balance Sheet | 6 |
| Income Statement Summary | 7 |
| Funds From Operations (FFO), Core Funds From Operations (Core FFO), and Adjusted Funds From Operations (AFFO) | 8 |
| EBITDA, EBITDAre, and Other Non-GAAP Operating Measures | 9 |
| Lease Revenues Detail | 10 |
| Capital Structure | 11 |
| Equity Rollforward | 12 |
| Debt Outstanding | 13 |
| Net Debt Metrics | 14 |
| Covenants | 15 |
| Debt Maturities | 16 |
| Investment Activity | 17 |
| Dispositions | 18 |
| Portfolio at a Glance: Key Metrics | 19 |
| Diversification: Tenants and Brands | 20-21 |
| Diversification: Property Type | 22-23 |
| Key Statistics by Property Type | 24 |
| Diversification: Tenant Industry | 25 |
| Diversification: Geography | 26 |
| Lease Expirations | 27 |
| Portfolio Occupancy | 28 |
| Definitions and Explanations | 29-30 |
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 2
About the Data
This data and other information described herein are as of and for the three months ended September 30, 2022 unless otherwise indicated. Future performance may not be consistent with past performance and is subject to change and inherent risks and uncertainties. This information should be read in conjunction with Broadstone Net Lease, Inc.'s Quarterly Report on Form 10-Q for the three months ended September 30, 2022, including the financial statements and the management's discussion and analysis of financial condition and results of operations sections.
Forward Looking Statements
Information set forth herein contains forward-looking statements, which reflect our current views regarding our business, financial performance, growth prospects and strategies, market opportunities, and market trends. Forward-looking statements include all statements that are not historical facts. In some cases, you can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "could," "seeks," "approximately," "projects," "predicts," "intends," "plans," "estimates," "anticipates," or the negative version of these words or other comparable words. All of the forward-looking statements herein are subject to various risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions, and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results, performance, and achievements could differ materially from those expressed in or by the forward-looking statements and may be affected by a variety of risks and other factors. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from such forward-looking statements. These factors include, but are not limited to, risks and uncertainties related to the COVID-19 pandemic and its related impacts on us and our tenants, general economic conditions, including but not limited to increases in the rate of inflation and/or interest rates, local real estate conditions, tenant financial health, and property acquisitions and the timing of these acquisitions. These and other risks, assumptions, and uncertainties are described in our filings with the SEC, which are available on the SEC's website at www.sec.gov.
You are cautioned not to place undue reliance on any forward-looking statements included herein. All forward-looking statements are made as of the date of this document and the risk that actual results, performance, and achievements will differ materially from the expectations expressed or referenced herein will increase with the passage of time. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as required by law.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 3
Company Overview
Broadstone Net Lease, Inc. (NYSE:BNL) (the "Company," "BNL," "us," "our" and "we") is a real estate investment trust ("REIT") that acquires, owns, and manages primarily single-tenant commercial real estate properties that are net leased on a long-term basis to a diversified group of tenants. Since our inception, we have selectively invested in real estate across the industrial, healthcare, restaurant, retail, and office property types. We target properties with credit worthy tenants in industries characterized by positive business drivers and trends, where the properties are an integral part of the tenants' businesses and there are opportunities to secure long-term net leases. Through long-term net leases, our tenants are able to retain operational control of their strategically important locations, while allocating their debt and equity capital to fund core business operations rather than real estate ownership.
| Executive Team<br><br>Christopher J. Czarnecki<br><br>Chief Executive Officer, President, and Director<br><br>Ryan M. Albano<br><br>Executive Vice President and Chief Financial Officer<br><br>John D. Moragne<br><br>Executive Vice President and Chief Operating Officer<br><br>John D. Callan, Jr.<br><br>Senior Vice President, General Counsel, and Secretary<br><br>Michael B. Caruso<br><br>Senior Vice President, Corporate Finance & Investor Relations<br><br>Timothy D. Dieffenbacher<br><br>Senior Vice President, Chief Accounting Officer, and Treasurer<br><br>Kevin M. Fennell<br><br>Senior Vice President, Capital Markets & Credit Risk<br><br>Laurier James Lessard, Jr.<br><br>Senior Vice President, Asset Management<br><br>Roderick A. Pickney<br><br>Senior Vice President, Acquisitions<br><br>Molly Kelly Wiegel<br><br>Senior Vice President, Human Resources<br><br>Andrea T. Wright<br><br>Senior Vice President, Property Management | Board of Directors<br><br>Laurie A. Hawkes<br><br>Chairman of the Board<br><br>Christopher J. Czarnecki<br><br>Chief Executive Officer and President<br><br>Denise Brooks-Williams<br><br>Michael A. Coke<br><br>David M. Jacobstein<br><br>Shekar Narasimhan<br><br>Geoffrey H. Rosenberger<br><br>James H. Waters |
|---|---|
| Company Contact Information<br><br>Michael Caruso<br>SVP, Corporate Finance & Investor Relations<br><br>michael.caruso@broadstone.com<br><br>585-402-7842<br><br><br><br><br><br>Transfer Agent<br><br>Computershare Trust Company, N.A.<br><br>150 Royall Street<br><br>Canton, Massachusetts 02021<br><br>800-736-3001 | |
| --- |
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 4
Quarterly Financial Summary
(unaudited, dollars in thousands, except per share data)
| Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | Q3 2021 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Financial Summary | |||||||||||||||
| Investment in rental property | $ | 4,775,460 | $ | 4,594,776 | $ | 4,431,929 | $ | 4,234,544 | $ | 4,110,958 | |||||
| Less accumulated depreciation | (505,456 | ) | (479,952 | ) | (454,122 | ) | (430,141 | ) | (407,354 | ) | |||||
| Investment in rental property, net | 4,270,004 | 4,114,824 | 3,977,807 | 3,804,403 | 3,703,604 | ||||||||||
| Cash and cash equivalents | 75,912 | 16,813 | 54,103 | 21,669 | 16,182 | ||||||||||
| Restricted cash | 6,449 | 12,163 | 11,444 | 6,100 | 3,895 | ||||||||||
| Total assets | 5,239,192 | 4,979,442 | 4,852,520 | 4,618,648 | 4,501,972 | ||||||||||
| Unsecured revolving credit facility | 219,537 | 320,657 | 266,118 | 102,000 | — | ||||||||||
| Mortgage, net | 94,753 | 95,453 | 96,141 | 96,846 | 97,530 | ||||||||||
| Unsecured term loans, net | 894,378 | 587,098 | 586,884 | 646,671 | 646,458 | ||||||||||
| Senior unsecured notes, net | 844,367 | 844,178 | 843,990 | 843,801 | 843,665 | ||||||||||
| Total liabilities | 2,231,045 | 2,012,800 | 1,961,200 | 1,877,510 | 1,785,847 | ||||||||||
| Total Broadstone Net Lease, Inc. <br> stockholders' equity | 2,840,692 | 2,798,690 | 2,724,641 | 2,577,292 | 2,552,004 | ||||||||||
| Total equity (book value) | 3,008,147 | 2,966,642 | 2,891,320 | 2,741,138 | 2,716,125 | ||||||||||
| Revenues | 103,524 | 98,013 | 93,841 | 92,642 | 122,777 | ||||||||||
| General and administrative - <br> other | 8,439 | 7,907 | 7,899 | 7,501 | 7,628 | ||||||||||
| Stock based compensation | 1,503 | 1,381 | 929 | 1,025 | 924 | ||||||||||
| General and administrative | 9,942 | 9,288 | 8,828 | 8,526 | 8,552 | ||||||||||
| Total operating expenses | 59,133 | 50,875 | 48,162 | 46,649 | 76,065 | ||||||||||
| Interest expense | 20,095 | 17,888 | 16,896 | 16,997 | 15,611 | ||||||||||
| Net income | 28,709 | 35,552 | 28,441 | 32,226 | 30,522 | ||||||||||
| Net earnings per common share,<br> diluted | $ | 0.16 | $ | 0.20 | $ | 0.16 | $ | 0.19 | $ | 0.18 | |||||
| FFO | 72,169 | 68,340 | 61,504 | 62,152 | 91,947 | ||||||||||
| FFO per share, diluted | $ | 0.39 | $ | 0.38 | $ | 0.35 | $ | 0.36 | $ | 0.54 | |||||
| Core FFO | 66,677 | 65,986 | 64,076 | 62,232 | 59,769 | ||||||||||
| Core FFO per share, diluted | $ | 0.36 | $ | 0.37 | $ | 0.37 | $ | 0.36 | $ | 0.35 | |||||
| AFFO | 63,386 | 62,804 | 60,401 | 58,692 | 55,836 | ||||||||||
| AFFO per share, diluted | $ | 0.35 | $ | 0.35 | $ | 0.35 | $ | 0.34 | $ | 0.33 | |||||
| Net cash provided by operating <br> activities | 77,515 | 58,855 | 59,104 | 57,619 | 88,303 | ||||||||||
| Net cash used in investing <br> activities | (205,187 | ) | (172,293 | ) | (207,678 | ) | (133,925 | ) | (205,667 | ) | |||||
| Net cash provided by financing <br> activities | 181,057 | 76,867 | 186,352 | 83,998 | 50,433 | ||||||||||
| Distributions declared | 46,242 | 49,507 | 48,115 | 45,857 | 43,423 | ||||||||||
| Distributions declared per diluted <br> share | $ | 0.270 | $ | 0.270 | $ | 0.265 | $ | 0.265 | $ | 0.255 | |||||
| Portfolio Metrics | |||||||||||||||
| Properties | 790 | 764 | 752 | 726 | 696 | ||||||||||
| Rentable square feet | 36.8M | 34.4M | 32.8M | 32.2M | 31.4M | ||||||||||
| Occupancy | 99.3 | % | 99.8 | % | 99.8 | % | 99.8 | % | 99.8 | % | |||||
| Weighted average remaining <br> lease term (years) | 10.7 | 10.6 | 10.5 | 10.5 | 10.6 |
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 5
Balance Sheet
(unaudited, in thousands)
| June 30,<br>2022 | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Assets | ||||||||||||||
| Accounted for using the operating method: | ||||||||||||||
| Land | 755,206 | $ | 731,208 | $ | 709,962 | $ | 655,374 | $ | 616,917 | |||||
| Land improvements | 331,858 | 320,513 | 300,300 | 295,329 | 291,045 | |||||||||
| Buildings and improvements | 3,650,275 | 3,503,478 | 3,381,990 | 3,242,618 | 3,161,728 | |||||||||
| Equipment | 10,422 | 10,422 | 10,422 | 11,870 | 11,870 | |||||||||
| Total accounted for using the operating method | 4,747,761 | 4,565,621 | 4,402,674 | 4,205,191 | 4,081,560 | |||||||||
| Less accumulated depreciation | (505,456 | ) | (479,952 | ) | (454,122 | ) | (430,141 | ) | (407,354 | ) | ||||
| Accounted for using the operating method, net | 4,242,305 | 4,085,669 | 3,948,552 | 3,775,050 | 3,674,206 | |||||||||
| Accounted for using the direct financing method | 27,128 | 28,584 | 28,684 | 28,782 | 28,830 | |||||||||
| Accounted for using the sales-type method | 571 | 571 | 571 | 571 | 568 | |||||||||
| Investment in rental property, net | 4,270,004 | 4,114,824 | 3,977,807 | 3,804,403 | 3,703,604 | |||||||||
| Cash and cash equivalents | 75,912 | 16,813 | 54,103 | 21,669 | 16,182 | |||||||||
| Accrued rental income | 129,579 | 124,297 | 120,117 | 116,874 | 112,163 | |||||||||
| Tenant and other receivables, net | 791 | 2,069 | 1,160 | 1,310 | 940 | |||||||||
| Prepaid expenses and other assets | 18,984 | 22,916 | 22,525 | 17,275 | 13,819 | |||||||||
| Interest rate swap, assets | 66,602 | 26,562 | 8,944 | — | — | |||||||||
| Goodwill | 339,769 | 339,769 | 339,769 | 339,769 | 339,769 | |||||||||
| Intangible lease assets, net | 322,314 | 316,119 | 311,277 | 303,642 | 301,046 | |||||||||
| Debt issuance costs – unsecured revolving credit facility, net | 6,485 | 6,956 | 7,427 | 4,065 | 4,658 | |||||||||
| Leasing fees, net | 8,752 | 9,117 | 9,391 | 9,641 | 9,791 | |||||||||
| Total assets | 5,239,192 | $ | 4,979,442 | $ | 4,852,520 | $ | 4,618,648 | $ | 4,501,972 | |||||
| Liabilities and equity | ||||||||||||||
| Unsecured revolving credit facility | 219,537 | $ | 320,657 | $ | 266,118 | $ | 102,000 | $ | — | |||||
| Mortgages, net | 94,753 | 95,453 | 96,141 | 96,846 | 97,530 | |||||||||
| Unsecured term loans, net | 894,378 | 587,098 | 586,884 | 646,671 | 646,458 | |||||||||
| Senior unsecured notes, net | 844,367 | 844,178 | 843,990 | 843,801 | 843,665 | |||||||||
| Interest rate swap, liabilities | — | — | 1,154 | 27,171 | 36,196 | |||||||||
| Accounts payable and other liabilities | 52,594 | 42,923 | 40,611 | 38,038 | 35,732 | |||||||||
| Dividends payable | 49,886 | 49,541 | 47,682 | 45,914 | 43,874 | |||||||||
| Accrued interest payable | 10,559 | 6,086 | 9,845 | 6,473 | 9,895 | |||||||||
| Intangible lease liabilities, net | 64,971 | 66,864 | 68,775 | 70,596 | 72,497 | |||||||||
| Total liabilities | 2,231,045 | 2,012,800 | 1,961,200 | 1,877,510 | 1,785,847 | |||||||||
| Equity | ||||||||||||||
| Broadstone Net Lease, Inc. stockholders' equity: | ||||||||||||||
| Preferred stock, 0.001 par value | — | — | — | — | — | |||||||||
| Common stock, 0.00025 par value | 43 | 43 | 42 | 41 | 40 | |||||||||
| Additional paid-in capital | 3,148,075 | 3,125,377 | 3,056,560 | 2,924,168 | 2,895,219 | |||||||||
| Cumulative distributions in excess of retained earnings | (369,260 | ) | (350,127 | ) | (336,988 | ) | (318,476 | ) | (305,665 | ) | ||||
| Accumulated other comprehensive loss | 61,834 | 23,397 | 5,027 | (28,441 | ) | (37,590 | ) | |||||||
| Total Broadstone Net Lease, Inc. stockholders’ equity | 2,840,692 | 2,798,690 | 2,724,641 | 2,577,292 | 2,552,004 | |||||||||
| Non-controlling interests | 167,455 | 167,952 | 166,679 | 163,846 | 164,121 | |||||||||
| Total equity | 3,008,147 | 2,966,642 | 2,891,320 | 2,741,138 | 2,716,125 | |||||||||
| Total liabilities and equity | 5,239,192 | $ | 4,979,442 | $ | 4,852,520 | $ | 4,618,648 | $ | 4,501,972 |
All values are in US Dollars.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 6
Income Statement Summary
(unaudited, in thousands, except per share data)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30,<br>2022 | June 30,<br>2022 | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | |||||||||||
| Revenues | |||||||||||||||
| Lease revenues, net | $ | 103,524 | $ | 98,013 | $ | 93,841 | $ | 92,642 | $ | 122,777 | |||||
| Operating expenses | |||||||||||||||
| Depreciation and amortization | 39,400 | 35,511 | 34,290 | 33,476 | 36,682 | ||||||||||
| Property and operating <br> expense | 5,636 | 4,696 | 5,044 | 4,440 | 4,842 | ||||||||||
| General and administrative | 9,942 | 9,288 | 8,828 | 8,526 | 8,552 | ||||||||||
| Provision for impairment of <br> investment in rental <br> properties | 4,155 | 1,380 | — | 207 | 25,989 | ||||||||||
| Total operating expenses | 59,133 | 50,875 | 48,162 | 46,649 | 76,065 | ||||||||||
| Other income (expenses) | |||||||||||||||
| Interest income | 4 | — | — | 6 | — | ||||||||||
| Interest expense | (20,095 | ) | (17,888 | ) | (16,896 | ) | (16,997 | ) | (15,611 | ) | |||||
| Cost of debt extinguishment | (231 | ) | — | — | — | (242 | ) | ||||||||
| Gain on sale of real estate | 61 | 4,071 | 1,196 | 3,732 | 1,220 | ||||||||||
| Income taxes | (356 | ) | (401 | ) | (412 | ) | (457 | ) | (473 | ) | |||||
| Change in fair value of <br> earnout liability | — | — | — | — | (1,059 | ) | |||||||||
| Other income (expenses) | 4,935 | 2,632 | (1,126 | ) | (51 | ) | (25 | ) | |||||||
| Net income | 28,709 | 35,552 | 28,441 | 32,226 | 30,522 | ||||||||||
| Net income attributable to <br> non-controlling interests | (1,600 | ) | (2,036 | ) | (1,683 | ) | (1,935 | ) | (1,824 | ) | |||||
| Net income attributable to <br> Broadstone Net Lease, Inc. | $ | 27,109 | $ | 33,516 | $ | 26,758 | $ | 30,291 | $ | 28,698 | |||||
| Weighted average number of common shares outstanding | |||||||||||||||
| Basic1 | 172,578 | 169,555 | 163,809 | 161,545 | 159,226 | ||||||||||
| Diluted1 | 182,971 | 180,256 | 174,288 | 172,094 | 169,587 | ||||||||||
| Net earnings per common share2 | |||||||||||||||
| Basic and diluted | $ | 0.16 | $ | 0.20 | $ | 0.16 | $ | 0.19 | $ | 0.18 |
1 Excludes 395,441, 377,407, 370,539, 373,678, and 378,244, weighted average shares of unvested restricted common stock for the three months ended September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021, and September 30, 2021.
2 Excludes $0.1 million from the numerator for the three months ended September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021, and September 30, 2021, related to dividends declared on shares of unvested restricted common stock.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 7
Funds From Operations (FFO), Core Funds From Operations (Core FFO), and Adjusted Funds From Operations (AFFO)
(unaudited, in thousands, except per share data)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30,<br>2022 | June 30,<br>2022 | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | |||||||||||
| Net income | $ | 28,709 | $ | 35,552 | $ | 28,441 | $ | 32,226 | $ | 30,522 | |||||
| Real property depreciation and <br> amortization | 39,366 | 35,479 | 34,259 | 33,451 | 36,656 | ||||||||||
| Gain on sale of real estate | (61 | ) | (4,071 | ) | (1,196 | ) | (3,732 | ) | (1,220 | ) | |||||
| Provision for impairment of investment <br> in rental properties | 4,155 | 1,380 | — | 207 | 25,989 | ||||||||||
| FFO | $ | 72,169 | $ | 68,340 | $ | 61,504 | $ | 62,152 | $ | 91,947 | |||||
| Net write-offs of accrued rental income | — | — | 1,326 | — | 1,496 | ||||||||||
| Lease termination fee | (791 | ) | — | — | — | (35,000 | ) | ||||||||
| Cost of debt extinguishment | 231 | — | — | — | 242 | ||||||||||
| Severance | 3 | 278 | 120 | 29 | — | ||||||||||
| Change in fair value of earnout liability | — | — | — | — | 1,059 | ||||||||||
| Other (income) expenses1 | (4,935 | ) | (2,632 | ) | 1,126 | 51 | 25 | ||||||||
| Core FFO | $ | 66,677 | $ | 65,986 | $ | 64,076 | $ | 62,232 | $ | 59,769 | |||||
| Straight-line rent adjustment | (5,175 | ) | (4,965 | ) | (4,934 | ) | (5,321 | ) | (4,930 | ) | |||||
| Adjustment to provision for credit <br> losses | (4 | ) | (1 | ) | — | (37 | ) | — | |||||||
| Amortization of debt issuance costs | 948 | 900 | 856 | 1,022 | 962 | ||||||||||
| Amortization of net mortgage <br> premiums | (26 | ) | (25 | ) | (27 | ) | (26 | ) | (34 | ) | |||||
| Loss on interest rate swaps and <br> other non-cash interest expense | 639 | 695 | 659 | 696 | 85 | ||||||||||
| Amortization of lease intangibles | (1,176 | ) | (1,167 | ) | (1,158 | ) | (899 | ) | (940 | ) | |||||
| Stock-based compensation | 1,503 | 1,381 | 929 | 1,025 | 924 | ||||||||||
| AFFO | $ | 63,386 | $ | 62,804 | $ | 60,401 | $ | 58,692 | $ | 55,836 | |||||
| Diluted weighted average shares <br> outstanding2 | 182,971 | 180,256 | 174,288 | 172,094 | 169,587 | ||||||||||
| Net earnings per diluted share3 | $ | 0.16 | $ | 0.20 | $ | 0.16 | $ | 0.19 | $ | 0.18 | |||||
| FFO per diluted share3 | 0.39 | 0.38 | 0.35 | 0.36 | 0.54 | ||||||||||
| Core FFO per diluted share3 | 0.36 | 0.37 | 0.37 | 0.36 | 0.35 | ||||||||||
| AFFO per diluted share3 | 0.35 | 0.35 | 0.35 | 0.34 | 0.33 |
1 Amount includes ($4.9) million, ($2.6) million and $1.1 million of unrealized and realized foreign exchange (gain) loss for the three months ended September 30, 2022, June 30, 2022 and March 31, 2022, respectively, primarily associated with our Canadian dollar denominated revolver borrowings.
2 Excludes 395,441, 377,407, 370,539, 373,678, and 378,244, weighted average shares of unvested restricted common stock for the three months ended September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021, and September 30, 2021, respectively.
3 Excludes $0.1 million from the numerator for the three months ended September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021, and September 30, 2021, related to dividends declared on shares of unvested restricted common stock.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 8
EBITDA, EBITDAre, and Other-Non GAAP Operating Measures
(unaudited, in thousands)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30,<br>2022 | June 30,<br>2022 | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | |||||||||||
| Net income | $ | 28,709 | $ | 35,552 | $ | 28,441 | $ | 32,226 | $ | 30,522 | |||||
| Depreciation and amortization | 39,400 | 35,511 | 34,290 | 33,476 | 36,682 | ||||||||||
| Interest expense | 20,095 | 17,888 | 16,896 | 16,997 | 15,611 | ||||||||||
| Income taxes | 356 | 401 | 412 | 457 | 473 | ||||||||||
| EBITDA | $ | 88,560 | $ | 89,352 | $ | 80,039 | $ | 83,156 | $ | 83,288 | |||||
| Provision for impairment of investment in <br> rental properties | 4,155 | 1,380 | — | 207 | 25,989 | ||||||||||
| Gain on sale of real estate | (61 | ) | (4,071 | ) | (1,196 | ) | (3,732 | ) | (1,220 | ) | |||||
| EBITDAre | $ | 92,654 | $ | 86,661 | $ | 78,843 | $ | 79,631 | $ | 108,057 | |||||
| Adjustment for current quarter acquisition <br> activity 1 | 2,358 | 2,780 | 3,225 | 2,002 | 3,534 | ||||||||||
| Adjustment for current quarter disposition <br> activity 2 | — | (141 | ) | (79 | ) | (180 | ) | (1,387 | ) | ||||||
| Adjustment to exclude change in fair value <br> of earnout liability | — | — | — | — | 1,059 | ||||||||||
| Adjustment to exclude net write-offs of accrued <br> rental income | — | — | 1,326 | — | 1,496 | ||||||||||
| Adjustment to exclude realized / unrealized <br> foreign exchange (gain) loss | (4,934 | ) | (2,632 | ) | 1,125 | — | — | ||||||||
| Adjustment to exclude cost of debt <br> extinguishments | 231 | — | — | — | 242 | ||||||||||
| Adjustment to exclude lease termination <br> fees | (791 | ) | — | — | — | (35,000 | ) | ||||||||
| Adjusted EBITDAre | $ | 89,518 | $ | 86,668 | $ | 84,440 | $ | 81,453 | $ | 78,001 | |||||
| General and administrative | 9,942 | 9,288 | 8,825 | 8,523 | 8,537 | ||||||||||
| Adjusted Net Operating Income ("NOI") | $ | 99,460 | $ | 95,956 | $ | 93,265 | $ | 89,976 | $ | 86,538 | |||||
| Straight-line rental revenue, net | (5,750 | ) | (5,616 | ) | (5,456 | ) | (5,611 | ) | (5,789 | ) | |||||
| Other amortization and non-cash charges | (1,177 | ) | (1,167 | ) | (1,157 | ) | (847 | ) | (616 | ) | |||||
| Adjusted Cash NOI | $ | 92,533 | $ | 89,173 | $ | 86,652 | $ | 83,518 | $ | 80,133 | |||||
| Annualized EBITDAre | $ | 370,616 | $ | 346,642 | $ | 315,375 | $ | 318,526 | $ | 432,221 | |||||
| Annualized Adjusted EBITDAre | 358,072 | 346,672 | 337,759 | 325,812 | 311,998 | ||||||||||
| Annualized Adjusted NOI | 397,834 | 383,830 | 373,060 | 359,904 | 346,145 | ||||||||||
| Annualized Adjusted Cash NOI | 370,128 | 356,701 | 346,606 | 334,072 | 320,524 |
1 Reflects an adjustment to give effect to all acquisition during the quarter as if they had been acquired as of the beginning of the quarter.
2 Reflects an adjustment to give effect to all dispositions during the quarter as if they had been sold as of the beginning of the quarter.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 9
Lease Revenues Detail
(unaudited, in thousands)
| Three Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30,<br>2022 | June 30,<br>2022 | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | |||||||||
| Contractual rental amounts billed for <br> operating leases | $ | 91,208 | $ | 87,505 | $ | 84,396 | $ | 81,482 | $ | 78,886 | |||
| Adjustment to recognize contractual <br> operating lease billings on a straight-<br> line basis | 5,344 | 5,090 | 5,021 | 5,372 | 4,942 | ||||||||
| Net write-offs of accrued rental income | — | — | (1,326 | ) | — | — | |||||||
| Variable rental amounts earned | 309 | 291 | 186 | 433 | 130 | ||||||||
| Earned income from direct financing <br> leases | 719 | 721 | 723 | 725 | 726 | ||||||||
| Interest income from sales-type <br> leases | 14 | 15 | 14 | 15 | 14 | ||||||||
| Operating expenses billed to tenants | 5,061 | 4,263 | 4,735 | 4,464 | 4,414 | ||||||||
| Other income from real estate <br> transactions | 874 | 134 | 42 | 1 | 33,515 | ||||||||
| Adjustment to revenue recognized for <br> uncollectible rental amounts billed, net | (5 | ) | (6 | ) | 50 | 150 | 150 | ||||||
| Total Lease revenues, net | $ | 103,524 | $ | 98,013 | $ | 93,841 | $ | 92,642 | $ | 122,777 |
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 10
Capital Structure
(unaudited, in thousands, except per share data)
| EQUITY | |||
|---|---|---|---|
| Shares of Common Stock | 173,115 | ||
| OP Units | 10,205 | ||
| Common Stock & OP Units | 183,320 | ||
| Price Per Share / Unit at September 30, 2022 | $ | 15.53 | |
| IMPLIED EQUITY MARKET CAPITALIZATION | $ | 2,846,960 | |
| % of Total Capitalization | 58.0 | % | |
| DEBT | |||
| Unsecured Revolving Credit Facility - 2026 | $ | 219,537 | |
| Unsecured Term Loans | 900,000 | ||
| Unsecured Term Loan - 2026 | 400,000 | ||
| Unsecured Term Loan - 2027 | 200,000 | ||
| Unsecured Term Loan - 2029 | 300,000 | ||
| Senior Unsecured Notes | 850,000 | ||
| Senior Unsecured Notes - 2027 | 150,000 | ||
| Senior Unsecured Notes - 2028 | 225,000 | ||
| Senior Unsecured Notes - 2030 | 100,000 | ||
| Senior Unsecured Public Notes - 2031 | 375,000 | ||
| Mortgage Debt - Various | 94,996 | ||
| TOTAL DEBT | $ | 2,064,533 | |
| % of Total Capitalization | 42.0 | % | |
| % of Total Debt / Floating Rate Debt | 7.5 | % | |
| % of Total Debt / Fixed Rate Debt | 92.5 | % | |
| % of Total Debt / Secured Debt | 4.6 | % | |
| % of Total Debt / Unsecured Debt | 95.4 | % | |
| Total Capitalization | $ | 4,911,493 | |
| Less: Cash and Cash Equivalents | (75,912 | ) | |
| Enterprise Value | $ | 4,835,581 |
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 11
Equity Rollforward
(unaudited, in thousands)
| Shares of Common Stock | OP Units | Total Diluted Shares | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Balance, January 1, 2022 | 162,383 | 10,323 | 172,706 | ||||||
| ATM offerings | 6,273 | — | 6,273 | ||||||
| Board of directors fees | 12 | — | 12 | ||||||
| Grants of restricted stock awards | 142 | — | 142 | ||||||
| Retirement of common shares | (59 | ) | — | (59 | ) | ||||
| Forfeiture of restricted stock awards | (1 | ) | — | (1 | ) | ||||
| Balance, March 31, 2022 | 168,750 | 10,323 | 179,073 | ||||||
| ATM offerings | 3,236 | — | 3,236 | ||||||
| Board of directors fees 1 | 13 | — | 13 | ||||||
| Grants of restricted stock awards | 32 | — | 32 | ||||||
| Retirement of common shares | — | — | — | ||||||
| Forfeiture of restricted stock awards | (8 | ) | — | (8 | ) | ||||
| Balance, June 30, 2022 | 172,023 | 10,323 | 182,346 | ||||||
| ATM offerings | 962 | — | 962 | ||||||
| OP Unit conversions | 118 | (118 | ) | — | |||||
| Board of directors fees 1 | 7 | — | 7 | ||||||
| Grants of restricted stock awards | 6 | — | 6 | ||||||
| Retirement of common shares | — | — | — | ||||||
| Forfeiture of restricted stock awards | (1 | ) | — | (1 | ) | ||||
| Balance, September 30, 2022 | 173,115 | 10,205 | 183,320 | ||||||
| Percentage ownership of OP at September 30, 2022 | 94.4 | % | 5.6 | % | 100 | % |
1 Beginning in May 2022, directors receive a portion of their fees in the form of restricted stock awards.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 12
Debt Outstanding
(unaudited, in thousands)
| Outstanding Balance | ||||||||
|---|---|---|---|---|---|---|---|---|
| September 30, | December 31, | |||||||
| 2022 | 2021 | Interest Rate | Maturity Date | |||||
| Unsecured revolving credit facility | $ | 219,537 | $ | 102,000 | Applicable reference rate <br>+ 0.85%1 | Mar. 2026 | ||
| Unsecured term loans: | ||||||||
| 2022 Unsecured Term Loan | — | 60,000 | one-month LIBOR + 1.00% | Feb. 2022 | ||||
| 2024 Unsecured Term Loan | — | 190,000 | one-month LIBOR + 1.00% | Jun. 2024 | ||||
| 2026 Unsecured Term Loan | 400,000 | 400,000 | one-month LIBOR + 1.00% | Feb. 2026 | ||||
| 2027 Unsecured Term Loan | 200,000 | — | one-month adjusted SOFR + 0.95% | Aug. 2027 | ||||
| 2029 Unsecured Term Loan | 300,000 | — | one-month adjusted SOFR + 1.25% | Aug. 2029 | ||||
| Total unsecured term loans | 900,000 | 650,000 | ||||||
| Unamortized debt issuance costs, net | (5,622 | ) | (3,329 | ) | ||||
| Total unsecured term loans, net | 894,378 | 646,671 | ||||||
| Senior unsecured notes: | ||||||||
| 2027 Senior Unsecured Notes - Series A | 150,000 | 150,000 | 4.84% | Apr. 2027 | ||||
| 2028 Senior Unsecured Notes - Series B | 225,000 | 225,000 | 5.09% | Jul. 2028 | ||||
| 2030 Senior Unsecured Notes - Series C | 100,000 | 100,000 | 5.19% | Jul. 2030 | ||||
| 2031 Senior Unsecured Public Notes | 375,000 | 375,000 | 2.60% | Sep. 2031 | ||||
| Total senior unsecured notes | 850,000 | 850,000 | ||||||
| Unamortized debt issuance costs and<br> original issuance discount, net | (5,633 | ) | (6,199 | ) | ||||
| Total senior unsecured notes, net | 844,367 | 843,801 | ||||||
| Total unsecured debt, net | $ | 1,958,282 | $ | 1,592,472 |
1 At September 30, 2022, a balance of $146.5 million was subject to the one-month SOFR. The remaining balance includes $100 million CAD borrowings remeasured to $73.0 million USD, which was subject to the one-month Canadian Dollar Offered Rate.
| Origination | Maturity | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Date | Date | Interest | September 30, | December 31, | |||||
| Lender | (Month/Year) | (Month/Year) | Rate | 2022 | 2021 | ||||
| Wilmington Trust National Association | Apr-19 | Feb-28 | 4.92% | $ | 45,834 | $ | 46,760 | ||
| Wilmington Trust National Association | Jun-18 | Aug-25 | 4.36% | 19,254 | 19,557 | ||||
| PNC Bank | Oct-16 | Nov-26 | 3.62% | 16,782 | 17,094 | ||||
| T2 Durham I, LLC1 | Jul - 21 | Jul -24 | Greater of Prime + 1.25% or 5.00% | 7,500 | 7,500 | ||||
| Aegon | Apr-12 | Oct-23 | 6.38% | 5,626 | 6,249 | ||||
| Total mortgages | 94,996 | 97,160 | |||||||
| Debt issuance costs, net | (243 | ) | (314 | ) | |||||
| Mortgages, net | $ | 94,753 | $ | 96,846 |
1 Mortgage was paid in full on October 6, 2022.
| Year of Maturity | Revolving <br>Credit Facility | Term Loans | Senior Notes | Mortgages | Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | $ | — | $ | — | $ | — | $ | 743 | $ | 743 |
| 2023 | — | — | — | 7,582 | 7,582 | |||||
| 2024 | — | — | — | 9,760 | 9,760 | |||||
| 2025 | — | — | — | 20,195 | 20,195 | |||||
| 2026 | 219,537 | 400,000 | — | 16,843 | 636,380 | |||||
| Thereafter | — | 500,000 | 850,000 | 39,873 | 1,389,873 | |||||
| Total | $ | 219,537 | $ | 900,000 | $ | 850,000 | $ | 94,996 | $ | 2,064,533 |
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 13
Net Debt Metrics
(unaudited, in thousands)
| September 30,<br>2022 | June 30,<br>2022 | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt | |||||||||||||||
| Unsecured revolving credit facility | $ | 219,537 | $ | 320,657 | $ | 266,118 | $ | 102,000 | $ | — | |||||
| Unsecured term loans, net | 894,378 | 587,098 | 586,884 | 646,671 | 646,458 | ||||||||||
| Senior unsecured notes, net | 844,367 | 844,178 | 843,990 | 843,801 | 843,665 | ||||||||||
| Mortgages, net | 94,753 | 95,453 | 96,141 | 96,846 | 97,530 | ||||||||||
| Debt issuance costs | 11,498 | 8,991 | 9,419 | 9,842 | 10,215 | ||||||||||
| Gross Debt | 2,064,533 | 1,856,377 | 1,802,552 | 1,699,160 | 1,597,868 | ||||||||||
| Cash and cash equivalents | (75,912 | ) | (16,813 | ) | (54,103 | ) | (21,669 | ) | (16,182 | ) | |||||
| Restricted cash | (6,449 | ) | (12,163 | ) | (11,444 | ) | (6,100 | ) | (3,895 | ) | |||||
| Net Debt | $ | 1,982,172 | $ | 1,827,401 | $ | 1,737,005 | $ | 1,671,391 | $ | 1,577,791 | |||||
| Anticipated proceeds from forward<br> equity agreement | (270,732 | ) | — | — | — | — | |||||||||
| Pro Forma Net Debt | $ | 1,711,440 | $ | 1,827,401 | $ | 1,737,005 | $ | 1,671,391 | $ | 1,577,791 | |||||
| Net Debt to Annualized EBITDAre | 5.3x | 5.3x | 5.5x | 5.3x | 3.7x | ||||||||||
| Net Debt to Annualized Adjusted <br> EBITDAre | 5.5x | 5.3x | 5.1x | 5.1x | 5.1x | ||||||||||
| Pro Forma Net Debt to Annualized <br> Adjusted EBITDAre | 4.8x | 5.3x | 5.1x | 5.1x | 5.1x |
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 14
Covenants
(unaudited)
The following is a summary of key financial covenants for the Company's revolving credit facility and unsecured term loans and senior unsecured notes. The covenants associated with the Revolving Credit Facility, Unsecured Term Loans with commercial banks, and the Series A-C Senior Unsecured Notes, are reported to the lenders via quarterly covenant reporting packages. The covenants associated with the 2031 Senior Unsecured Public Notes are not required to be reported externally to third parties, and are instead calculated in connection with borrowing activity and for financial reporting purposes only. These calculations, which are not based on U.S. GAAP measurements, are presented to investors to show that as of September 30, 2022, the Company believes it is in compliance with the covenants.
| Covenants | Required | Revolving Credit Facility and Unsecured Term Loans | Senior Unsecured <br>Notes Series <br>A, B, & C | 2031 Senior Unsecured Public Notes | |||
|---|---|---|---|---|---|---|---|
| Leverage ratio | ≤ 0.60 to 1.00 | 0.36 | 0.37 | Not Applicable | |||
| Secured indebtedness ratio | ≤ 0.40 to 1.00 | 0.02 | 0.02 | Not Applicable | |||
| Unencumbered coverage ratio | ≥ 1.75 to 1.00 | 4.91 | Not Applicable | Not Applicable | |||
| Fixed charge coverage ratio | ≥ 1.50 to 1.00 | 3.89 | 3.89 | Not Applicable | |||
| Total unsecured indebtedness to <br> total unencumbered eligible <br> property value | ≤ 0.60 to 1.00 | 0.38 | 0.40 | Not Applicable | |||
| Dividends and other restricted <br> payments | Only applicable <br>in case of default | Not Applicable | Not Applicable | Not Applicable | |||
| Aggregate debt ratio | ≤ 0.60 to 1.00 | Not Applicable | Not Applicable | 0.39 | |||
| Consolidated income available for <br> debt to annual debt service <br> charge | ≥ 1.50 to 1.00 | Not Applicable | Not Applicable | 4.91 | |||
| Total unencumbered assets to <br> total unsecured debt | ≥ 1.50 to 1.00 | Not Applicable | Not Applicable | 2.57 | |||
| Secured debt ratio | ≤ 0.40 to 1.00 | Not Applicable | Not Applicable | 0.02 |
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 15
Debt Maturities
(unaudited, dollars in millions)
The Company utilizes diversified sources of debt capital including unsecured bank debt, unsecured notes, and secured mortgages (where appropriate).
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 16
Portfolio Activity
Investment Activity
(square feet and dollars in thousands)
The following tables summarize the Company's investment activity during 2022.
| Q1 2022 | Q2 2022 | Q3 2022 | YTD 2022 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Acquisitions: | ||||||||||||
| Number of transactions | 6 | 11 | 8 | 25 | ||||||||
| Number of properties | 27 | 15 | 27 | 69 | ||||||||
| Square feet | 619 | 1,514 | 2,427 | 4,560 | ||||||||
| Acquisition price | $ | 209,973 | $ | 164,995 | $ | 203,926 | $ | 578,894 | ||||
| Initial cash cap rate | 5.7 | % | 6.5 | % | 6.5 | % | 6.2 | % | ||||
| Initial GAAP cap rate | 6.4 | % | 8.2 | % | 7.9 | % | 7.4 | % | ||||
| Weighted avg. lease term (years) | 19.3 | 20.0 | 20.9 | 20.1 | ||||||||
| Weighted average annual rent increase | 1.5 | % | 2.2 | % | 2.0 | % | 1.9 | % | ||||
| Revenue generating capital expenditures: | ||||||||||||
| Number of properties1 | - | 1 | 1 | 2 | ||||||||
| Investments2 | - | $ | 17,387 | $ | 600 | $ | 17,987 | |||||
| Initial cash cap rate | - | 5.8 | % | 8.1 | % | 5.9 | % | |||||
| Weighted avg. lease term (years) | - | 19.3 | 14.0 | 19.0 | ||||||||
| Weighted average annual rent increase | - | 1.8 | % | 3.5 | % | 1.8 | % | |||||
| Total investments | $ | 209,973 | $ | 182,382 | $ | 204,526 | $ | 596,881 | ||||
| Total initial cash cap rate | 5.7 | % | 6.4 | % | 6.5 | % | 6.2 | % | ||||
| Total weighted average lease term (years) | 19.3 | 19.9 | 20.8 | 20.1 | ||||||||
| Total weighted average annual rent increase | 1.5 | % | 2.1 | % | 2.0 | % | 1.9 | % |
1 Number of properties includes revenue generating capital expenditures on existing properties.
2 Total unfunded investment commitments at September 30, 2022 were $8.3 million
| QTD Q3 Acquisitions: | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Property Type | Number of Properties | Square Feet | Weighted Average Lease Term (years) | Weighted Average Annual Rent Increase | Acquisition <br>Price | ||||||
| Industrial | 19 | 2,354 | 21.7 | 2.1 | % | $ | 175,250 | ||||
| Restaurant | 3 | 16 | 20.0 | 1.2 | % | 12,823 | |||||
| Healthcare | 1 | 15 | 14.6 | 2.0 | % | 9,219 | |||||
| Retail | 4 | 42 | 7.1 | 0.0 | % | 6,634 | |||||
| Total Properties | 27 | 2,427 | 20.9 | 2.0 | % | $ | 203,926 | ||||
| YTD 2022 Acquisitions: | |||||||||||
| Property Type | Number of Properties | Square Feet | Weighted Average Lease Term (years) | Weighted Average Annual Rent Increase | Acquisition <br>Price | ||||||
| Industrial | 29 | 3,921 | 21.8 | 2.2 | % | $ | 334,433 | ||||
| Restaurant | 19 | 148 | 19.6 | 1.1 | % | 112,410 | |||||
| Retail | 19 | 435 | 16.6 | 1.6 | % | 110,365 | |||||
| Healthcare | 2 | 56 | 11.9 | 2.6 | % | 21,686 | |||||
| Total Properties | 69 | 4,560 | 20.1 | 1.9 | % | $ | 578,894 |
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 17
Dispositions
(square feet and dollars in thousands)
The following table summarizes the Company's property disposition activity during 2022.
| QTD Q1 2022 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Property Type | Number of Properties | Square Feet | Acquisition Price | Disposition Price | Net Book <br>Value | ||||||
| Restaurant | 1 | 8 | $ | 3,891 | 5,212 | $ | 3,824 | ||||
| Total Properties | 1 | 8 | $ | 3,891 | $ | 5,212 | $ | 3,824 | |||
| Weighted average cash cap rate | 5.7 | % | |||||||||
| QTD Q2 2022 | |||||||||||
| Property Type | Number of Properties | Square Feet | Acquisition Price | Disposition Price | Net Book <br>Value | ||||||
| Restaurant | 3 | 13 | $ | 7,792 | $ | 11,889 | $ | 7,311 | |||
| Total Properties | 3 | 13 | $ | 7,792 | $ | 11,889 | $ | 7,311 | |||
| Weighted average cash cap rate | 5.1 | % | |||||||||
| QTD Q3 2022 | |||||||||||
| Property Type | Number of Properties | Square Feet | Acquisition Price | Disposition Price | Net Book <br>Value | ||||||
| Retail | 1 | 34 | $ | 6,901 | $ | 1,650 | $ | 1,557 | |||
| Total Properties | 1 | 34 | $ | 6,901 | $ | 1,650 | $ | 1,557 | |||
| Weighted average cash cap rate | N/A1 | ||||||||||
| 1 Property was vacant at the time of disposition. | |||||||||||
| YTD 2022 | |||||||||||
| Property Type | Number of Properties | Square Feet | Acquisition Price | Disposition Price | Net Book <br>Value | ||||||
| Restaurant | 4 | 21 | $ | 11,683 | $ | 17,101 | $ | 11,135 | |||
| Retail | 1 | 34 | $ | 6,901 | $ | 1,650 | $ | 1,557 | |||
| Total Properties | 5 | 55 | $ | 18,584 | $ | 18,751 | $ | 12,692 | |||
| Weighted average cash cap rate | 5.3 | % |
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 18
Portfolio at a Glance: Key Metrics
| September 30,2022 | June 30,2022 | March 31,2022 | December 31,2021 | September 30,2021 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Properties | ||||||||||
| U.S. States | ||||||||||
| Canadian Provinces | ||||||||||
| Total Annualized Base Rent | 371.9M | 360.0M | 347.7M | 334.1M | 324.6M | |||||
| Total Rentable Sq. Footage | 36.8M | 34.4M | 32.8M | 32.2M | 31.4M | |||||
| Tenants | ||||||||||
| Brands | ||||||||||
| Industries | ||||||||||
| Occupancy (based on SF) | % | % | % | % | % | |||||
| Top Ten Tenant Concentration | % | % | % | % | % | |||||
| Top Twenty Tenant Concentration | % | % | % | % | % | |||||
| Investment Grade (tenant/guarantor) | % | % | % | % | % | |||||
| Financial Reporting Coverage1 | % | % | % | % | % | |||||
| Rent Coverage Ratio2 | 3.1x | 3.3x | 3.2x | 3.2x | 3.5x | |||||
| Weighted Average Annual Rent Increases | % | % | % | % | % | |||||
| Weighted Average Remaining Lease Term | 10.7 years | 10.6 years | 10.5 years | 10.5 years | 10.6 years | |||||
| Master Leases (based on ABR) | ||||||||||
| Total Portfolio | % | % | % | % | % | |||||
| Retail Portfolio | % | % | % | % | % | |||||
| Restaurant Portfolio | % | % | % | % | % |
All values are in US Dollars.
1 Includes 8.8%, 9.0%, 9.1%, 9.4%, and 8.8% related to tenants not required to provide financial information under the terms of our lease, but whose financial statements are available publicly at September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021, and September 30, 2021.
2 Represents rent coverage ratio for Restaurant property type only.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 19
Diversification: Tenants & Brands
Top 20 Tenants
| Tenant | Property Type | # <br>Properties | ABR('000s) | ABR as a <br>% of Total <br>Portfolio | Square <br>Feet <br>('000s) | SF as a <br>% of Total <br>Portfolio | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| AHF, LLC | Distribution & Warehouse/<br>Manufacturing | 9 | 2.4 | % | 2,014 | 5.5 | % | |||||
| Jack's Family Restaurants LP | Quick Service Restaurants | 43 | 1.9 | % | 147 | 0.4 | % | |||||
| Joseph T. Ryerson & Son, Inc | Distribution & Warehouse | 11 | 1.8 | % | 1,537 | 4.2 | % | |||||
| Red Lobster Hospitality & Red Lobster Restaurants LLC | Casual Dining | 20 | 1.7 | % | 166 | 0.5 | % | |||||
| J. Alexander's, LLC | Casual Dining | 16 | 1.6 | % | 132 | 0.4 | % | |||||
| Axcelis Technologies, Inc. | Flex and R&D | 1 | 1.6 | % | 417 | 1.0 | % | |||||
| Dollar General Corporation | General Merchandise | 60 | 1.6 | % | 562 | 1.5 | % | |||||
| Hensley & Company | Distribution & Warehouse | 3 | 1.6 | % | 577 | 1.6 | % | |||||
| BluePearl Holdings, LLC | Animal Health Services | 13 | 1.5 | % | 165 | 0.4 | % | |||||
| Tractor Supply Company | General Merchandise | 21 | 1.4 | % | 417 | 1.1 | % | |||||
| Total Top 10 Tenants | 197 | 17.1 | % | 6,134 | 16.6 | % | ||||||
| Outback Steakhouse of Florida LLC | Casual Dining | 22 | 1.4 | % | 140 | 0.4 | % | |||||
| Krispy Kreme Doughnut Corporation | Quick Service Restaurants/Food Processing | 27 | 1.4 | % | 156 | 0.4 | % | |||||
| Big Tex Trailer Manufacturing Inc. | Automotive/Distribution & Warehouse/Manufacturing/ Corporate Headquarters | 17 | 1.4 | % | 1,302 | 3.5 | % | |||||
| Siemens Medical Solutions USA, Inc. & Siemens Corporation | Manufacturing/Flex and R&D | 2 | 1.3 | % | 545 | 1.5 | % | |||||
| Santa Cruz Valley Hospital1 | Healthcare Facilities | 1 | 1.2 | % | 148 | 0.4 | % | |||||
| Carvana, LLC | Industrial Services | 2 | 1.2 | % | 230 | 0.6 | % | |||||
| Klosterman Bakery | Food Processing | 11 | 1.2 | % | 549 | 1.5 | % | |||||
| Nestle' Dreyer's Ice Cream Company2 | Cold Storage | 1 | 1.2 | % | 309 | 0.8 | % | |||||
| Arkansas Surgical Hospital | Surgical | 1 | 1.2 | % | 129 | 0.4 | % | |||||
| American Signature, Inc. | Home Furnishings | 6 | 1.2 | % | 474 | 1.3 | % | |||||
| Total Top 20 Tenants | 287 | 29.8 | % | 10,116 | 27.4 | % |
All values are in US Dollars.
1 Tenant’s ABR in effect at September 30, 2022. Effective October 3, 2022, we signed a new lease with a new tenant, which will be reflected in our December 31, 2022 ABR figures.
2 Nestle's ABR excludes $1.6 million of rent paid under a sub-lease for an additional property, which will convert to a prime lease no later than August, 2024
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 20
Top 20 Brands
| Brand | Property Type | # <br>Properties | ABR('000s) | ABR as a <br>% of Total <br>Portfolio | Square <br>Feet <br>('000s) | SF as a <br>% of Total <br>Portfolio | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| AHF Products | Distribution & Warehouse/<br>Manufacturing | 9 | 2.4 | % | 2,014 | 5.5 | % | |||||
| Jack's Family Restaurants | Quick Service Restaurants | 43 | 1.9 | % | 147 | 0.4 | % | |||||
| Ryerson | Distribution & Warehouse | 11 | 1.7 | % | 1,537 | 4.2 | % | |||||
| Red Lobster | Casual Dining | 20 | 1.7 | % | 166 | 0.5 | % | |||||
| Axcelis | Flex and R&D | 1 | 1.6 | % | 417 | 1.1 | % | |||||
| Dollar General | General Merchandise | 60 | 1.6 | % | 562 | 1.5 | % | |||||
| Hensley | Distribution & Warehouse | 3 | 1.6 | % | 577 | 1.6 | % | |||||
| BluePearl Veterinary Partners | Animal Health Services | 13 | 1.5 | % | 165 | 0.4 | % | |||||
| Bob Evans Farms | Casual Dining/Food Processing | 21 | 1.4 | % | 281 | 0.8 | % | |||||
| Tractor Supply Co. | General Merchandise | 21 | 1.4 | % | 417 | 1.1 | % | |||||
| Total Top 10 Brands | 202 | 16.8 | % | 6,283 | 17.1 | % | ||||||
| Krispy Kreme | Quick Service Restaurants/<br>Food Processing | 27 | 1.4 | % | 156 | 0.4 | % | |||||
| Big Tex Trailers | Automotive/Distribution & <br>Warehouse/Manufacturing/<br>Corporate Headquarters | 17 | 1.3 | % | 1,302 | 3.5 | % | |||||
| Siemens | Manufacturing/Flex <br>and R&D | 2 | 1.3 | % | 545 | 1.5 | % | |||||
| Santa Cruz Valley Hospital | Healthcare Facilities | 1 | 1.2 | % | 148 | 0.4 | % | |||||
| Outback Steakhouse | Casual Dining | 20 | 1.2 | % | 126 | 0.3 | % | |||||
| Carvana | Industrial Services | 2 | 1.2 | % | 230 | 0.6 | % | |||||
| Klosterman Baking Company | Food Processing | 11 | 1.2 | % | 549 | 1.5 | % | |||||
| Nestle | Cold Storage | 1 | 1.2 | % | 309 | 0.8 | % | |||||
| Arkansas Surgical Hospital | Surgical | 1 | 1.2 | % | 129 | 0.4 | % | |||||
| Wendy's | Quick Service Restaurants | 29 | 1.2 | % | 84 | 0.2 | % | |||||
| Total Top 20 Brands | 313 | 29.2 | % | 9,861 | 26.7 | % |
All values are in US Dollars.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 21
Diversification: Property Type
(rent percentages based on ABR)
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 22
Diversification: Property Type (continued)
| Property Type | # Properties | ABR('000s) | ABR as a % <br>of Total <br>Portfolio | Square Feet ('000s) | SF as a % <br>of Total <br>Portfolio | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Industrial | |||||||||||
| Manufacturing | 75 | 16.1 | % | 11,481 | 31.2 | % | |||||
| Distribution & Warehouse | 48 | 14.2 | % | 9,772 | 26.6 | % | |||||
| Food Processing | 28 | 7.7 | % | 3,279 | 8.9 | % | |||||
| Flex and R&D | 7 | 4.7 | % | 1,457 | 4.0 | % | |||||
| Cold Storage | 4 | 3.4 | % | 933 | 2.5 | % | |||||
| Industrial Services | 22 | 2.9 | % | 587 | 1.6 | % | |||||
| Untenanted | 1 | 0.0 | % | 122 | 0.3 | % | |||||
| Industrial Total | 185 | 49.0 | % | 27,631 | 75.1 | % | |||||
| Healthcare | |||||||||||
| Clinical | 52 | 7.2 | % | 1,090 | 3.0 | % | |||||
| Healthcare Services | 29 | 3.6 | % | 478 | 1.3 | % | |||||
| Animal Health Services | 27 | 2.8 | % | 405 | 1.1 | % | |||||
| Surgical | 12 | 2.8 | % | 329 | 0.9 | % | |||||
| Life Science | 9 | 2.1 | % | 549 | 1.5 | % | |||||
| Untenanted | 1 | — | 18 | 0.0 | % | ||||||
| Healthcare Total | 130 | 18.5 | % | 2,869 | 7.8 | % | |||||
| Restaurant | |||||||||||
| Casual Dining | 104 | 7.5 | % | 692 | 1.9 | % | |||||
| Quick Service Restaurants | 146 | 6.7 | % | 499 | 1.4 | % | |||||
| Restaurant Total | 250 | 14.2 | % | 1,191 | 3.3 | % | |||||
| Retail | |||||||||||
| General Merchandise | 130 | 6.5 | % | 1,844 | 5.0 | % | |||||
| Automotive | 66 | 3.3 | % | 770 | 2.1 | % | |||||
| Home Furnishings | 13 | 1.9 | % | 797 | 2.2 | % | |||||
| Retail Total | 209 | 11.7 | % | 3,411 | 9.3 | % | |||||
| Office | |||||||||||
| Corporate Headquarters | 7 | 2.8 | % | 679 | 1.8 | % | |||||
| Strategic Operations | 5 | 2.6 | % | 615 | 1.7 | % | |||||
| Call Center | 3 | 1.2 | % | 346 | 0.9 | % | |||||
| Untenanted | 1 | — | 46 | 0.1 | % | ||||||
| Office Total | 16 | 6.6 | % | 1,686 | 4.5 | % | |||||
| Total | 790 | 100.0 | % | 36,788 | 100.0 | % |
All values are in US Dollars.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 23
Key Statistics by Property Type
| Industrial | ||
|---|---|---|
| Number of properties | 185 | |
| Square feet (000s) | 27,631 | |
| Weighted average lease term (years) | 11.2 | |
| Weighted average annual rent escalation | 2.0 | % |
| Healthcare | ||
| Number of properties | 130 | |
| Square feet (000s) | 2,869 | |
| Weighted average lease term (years) | 8.2 | |
| Weighted average annual rent escalation | 2.2 | % |
| Restaurant | ||
| Number of properties | 250 | |
| Square feet (000s) | 1,191 | |
| Weighted average lease term (years) | 14.8 | |
| Weighted average annual rent escalation | 1.8 | % |
| Retail | ||
| Number of properties | 209 | |
| Square feet (000s) | 3,411 | |
| Weighted average lease term (years) | 10.5 | |
| Weighted average annual rent escalation | 1.6 | % |
| Office | ||
| Number of properties | 16 | |
| Square feet (000s) | 1,686 | |
| Weighted average lease term (years) | 6.1 | |
| Weighted average annual rent escalation | 2.5 | % |
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 24
Diversification: Tenant Industry
| Industry | # Properties | ABR('000s) | ABR as a % <br>of Total <br>Portfolio | Square Feet ('000s) | SF as a % <br>of Total <br>Portfolio | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Healthcare Facilities | 103 | 14.7 | % | 2,044 | 5.6 | % | |||||
| Restaurant | 253 | 14.3 | % | 1,233 | 3.4 | % | |||||
| Packaged Foods & Meats | 22 | 6.0 | % | 2,463 | 6.7 | % | |||||
| Distributors | 27 | 4.3 | % | 2,695 | 7.3 | % | |||||
| Food Distributors | 8 | 4.0 | % | 1,786 | 4.9 | % | |||||
| Specialty Stores | 31 | 3.7 | % | 1,338 | 3.6 | % | |||||
| Auto Parts & Equipment | 39 | 3.4 | % | 2,398 | 6.5 | % | |||||
| Home Furnishings Retail | 18 | 3.4 | % | 1,858 | 5.1 | % | |||||
| Specialized Consumer Services | 47 | 3.3 | % | 722 | 2.0 | % | |||||
| Metal & Glass Containers | 8 | 2.7 | % | 2,206 | 6.0 | % | |||||
| General Merchandise Stores | 94 | 2.5 | % | 859 | 2.3 | % | |||||
| Industrial Machinery | 20 | 2.5 | % | 515 | 1.4 | % | |||||
| Healthcare Services | 18 | 2.5 | % | 1,949 | 5.3 | % | |||||
| Forest Products | 9 | 2.4 | % | 2,014 | 5.5 | % | |||||
| Aerospace & Defense | 6 | 2.0 | % | 746 | 2.0 | % | |||||
| Other (41 industries) | 84 | 28.3 | % | 11,713 | 31.7 | % | |||||
| Untenanted properties | 3 | — | 249 | 0.7 | % | ||||||
| Total | 790 | 100.0 | % | 36,788 | 100.0 | % |
All values are in US Dollars.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 25
Diversification: Geography
(rent percentages based on ABR)
| State / <br>Province | # <br>Properties | ABR('000s) | ABR as<br>a % of <br>Total <br>Portfolio | Square <br>Feet <br>('000s) | SF as a <br>% of <br>Total <br>Portfolio | State / <br>Province | # <br>Properties | ABR('000s) | ABR as<br>a % of <br>Total <br>Portfolio | Square <br>Feet <br>('000s) | SF as a <br>% of <br>Total <br>Portfolio | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| TX | 72 | 10.6 | % | 3,924 | 10.7 | % | LA | 4 | 0.9 | % | 194 | 0.5 | % | ||||||||||
| IL | 32 | 6.4 | % | 2,424 | 6.6 | % | NE | 6 | 0.9 | % | 509 | 1.3 | % | ||||||||||
| WI | 35 | 5.6 | % | 2,163 | 5.9 | % | NM | 10 | 0.8 | % | 115 | 0.3 | % | ||||||||||
| OH | 45 | 4.8 | % | 1,715 | 4.7 | % | MD | 4 | 0.8 | % | 293 | 0.8 | % | ||||||||||
| MI | 48 | 4.6 | % | 1,599 | 4.3 | % | MS | 8 | 0.8 | % | 334 | 0.9 | % | ||||||||||
| FL | 42 | 4.3 | % | 844 | 2.3 | % | IA | 4 | 0.7 | % | 622 | 1.7 | % | ||||||||||
| CA | 10 | 4.2 | % | 1,493 | 4.1 | % | SC | 13 | 0.7 | % | 308 | 0.8 | % | ||||||||||
| IN | 32 | 4.2 | % | 1,906 | 5.2 | % | WV | 16 | 0.7 | % | 109 | 0.3 | % | ||||||||||
| MN | 22 | 4.2 | % | 2,505 | 6.8 | % | CO | 4 | 0.7 | % | 126 | 0.3 | % | ||||||||||
| TN | 50 | 4.1 | % | 1,103 | 3.0 | % | UT | 3 | 0.6 | % | 280 | 0.7 | % | ||||||||||
| NC | 37 | 3.7 | % | 1,435 | 3.9 | % | CT | 2 | 0.5 | % | 55 | 0.1 | % | ||||||||||
| AZ | 9 | 3.6 | % | 909 | 2.5 | % | MT | 7 | 0.4 | % | 43 | 0.1 | % | ||||||||||
| AL | 53 | 3.2 | % | 873 | 2.4 | % | NV | 2 | 0.4 | % | 81 | 0.2 | % | ||||||||||
| GA | 33 | 3.1 | % | 1,576 | 4.3 | % | DE | 4 | 0.3 | % | 133 | 0.3 | % | ||||||||||
| MA | 5 | 2.8 | % | 1,026 | 2.8 | % | ND | 2 | 0.3 | % | 28 | 0.1 | % | ||||||||||
| KY | 26 | 2.5 | % | 1,148 | 3.1 | % | VT | 2 | 0.1 | % | 24 | 0.1 | % | ||||||||||
| NY | 26 | 2.5 | % | 680 | 1.8 | % | WY | 1 | 0.1 | % | 21 | 0.1 | % | ||||||||||
| PA | 21 | 2.4 | % | 1,715 | 4.7 | % | OR | 1 | 0.0 | % | 9 | 0.0 | % | ||||||||||
| AR | 12 | 2.4 | % | 544 | 1.5 | % | SD | 1 | 0.0 | % | 9 | 0.0 | % | ||||||||||
| OK | 21 | 2.1 | % | 977 | 2.7 | % | Total US | 783 | 98.0 | % | 36,358 | 98.8 | % | ||||||||||
| MO | 12 | 1.6 | % | 1,138 | 3.1 | % | BC | 2 | 1.2 | % | 253 | 0.7 | % | ||||||||||
| KS | 11 | 1.5 | % | 648 | 1.8 | % | ON | 3 | 0.5 | % | 101 | 0.3 | % | ||||||||||
| VA | 17 | 1.5 | % | 204 | 0.6 | % | AB | 1 | 0.2 | % | 51 | 0.1 | % | ||||||||||
| NJ | 3 | 1.3 | % | 366 | 1.0 | % | MB | 1 | 0.1 | % | 25 | 0.1 | % | ||||||||||
| WA | 15 | 1.1 | % | 150 | 0.4 | % | Total Canada | 7 | 2.0 | % | 430 | 1.2 | % | ||||||||||
| Grand Total | 790 | 100.0 | % | 36,788 | 100.0 | % |
All values are in US Dollars.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 26
Lease Expirations
(rent percentages based on ABR)
| Expiration Year | # Properties | # Leases | ABR('000s) | ABR as a % of Total Portfolio | Square Feet ('000s) | SF as a % of Total Portfolio | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 1 | 1 | 0.0 | % | 11 | 0.0 | % | ||||||
| 2023 | 6 | 7 | 1.3 | % | 517 | 1.4 | % | ||||||
| 2024 | 11 | 11 | 3.8 | % | 1,689 | 4.6 | % | ||||||
| 2025 | 20 | 23 | 2.3 | % | 698 | 1.9 | % | ||||||
| 2026 | 35 | 32 | 5.2 | % | 1,413 | 3.8 | % | ||||||
| 2027 | 30 | 30 | 6.4 | % | 2,079 | 5.7 | % | ||||||
| 2028 | 35 | 34 | 6.4 | % | 2,253 | 6.1 | % | ||||||
| 2029 | 71 | 40 | 6.0 | % | 2,724 | 7.4 | % | ||||||
| 2030 | 101 | 57 | 14.5 | % | 5,110 | 13.9 | % | ||||||
| 2031 | 33 | 28 | 2.3 | % | 805 | 2.2 | % | ||||||
| 2032 | 60 | 45 | 8.3 | % | 3,448 | 9.4 | % | ||||||
| 2033 | 49 | 23 | 4.9 | % | 1,575 | 4.3 | % | ||||||
| 2034 | 33 | 22 | 1.7 | % | 409 | 1.1 | % | ||||||
| 2035 | 17 | 13 | 3.4 | % | 1,927 | 5.2 | % | ||||||
| 2036 | 87 | 22 | 7.0 | % | 2,931 | 8.0 | % | ||||||
| 2037 | 23 | 9 | 4.5 | % | 1,124 | 3.1 | % | ||||||
| 2038 | 33 | 29 | 1.9 | % | 306 | 0.8 | % | ||||||
| 2039 | 11 | 6 | 1.9 | % | 803 | 2.2 | % | ||||||
| 2040 | 31 | 8 | 1.6 | % | 312 | 0.8 | % | ||||||
| 2041 | 40 | 8 | 5.3 | % | 1,731 | 4.7 | % | ||||||
| Thereafter | 60 | 14 | 11.3 | % | 4,674 | 12.7 | % | ||||||
| Untenanted <br> properties | 3 | — | — | 249 | 0.7 | % | |||||||
| Total | 790 | 462 | 100.0 | % | 36,788 | 100.0 | % |
All values are in US Dollars.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 27
Occupancy at September 30, 2022
Occupancy by Rentable Square Footage
Change in Occupancy
| Number of properties | |||
|---|---|---|---|
| Vacant properties at January 1, 2022 | 2 | ||
| Lease expirations1 | 1 | ||
| Leasing activities | (1 | ) | |
| Vacant dispositions | — | ||
| Vacant properties at March 31, 2022 | 2 | ||
| Lease expirations1 | 2 | ||
| Leasing activities | (2 | ) | |
| Vacant dispositions | — | ||
| Vacant properties at June 30, 2022 | 2 | ||
| Lease expirations1 | 4 | ||
| Leasing activities | (2 | ) | |
| Vacant dispositions | (1 | ) | |
| Vacant properties at September 30, 2022 | 3 |
1 Includes scheduled and unscheduled expirations (including leases rejected in bankruptcy), as well as future expirations resolved in the periods indicated above.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 28
Definitions and Explanations
Adjusted NOI, Annualized Adjusted NOI, Adjusted Cash NOI and Annualized Adjusted Cash NOI: Our reported results and net earnings per diluted share are presented in accordance with accounting principles generally accepted in the United States of America (GAAP). Adjusted NOI and Adjusted Cash NOI are non-GAAP financial measures that we believe are useful to assess property-level performance. We compute Adjusted NOI by adjusting Adjusted EBITDAre (defined below) to exclude general and administrative expenses incurred at the corporate level. Given the net lease nature of our portfolio, we do not incur general and administrative expenses at the property level. To compute Adjusted Cash NOI, we adjust Adjusted NOI to exclude non-cash items included in total revenues and property expenses, such as straight-line rental revenue and other amortization and non-cash items, based on an estimate calculated as if all investment and disposition activity that took place during the quarter had occurred on the first day of the quarter. We then annualize quarterly Adjusted NOI and Adjusted Cash NOI by multiplying each amount by four to compute Annualized Adjusted NOI and Annualized Adjusted Cash NOI, respectively, which are also non-GAAP financial measures. We believe Adjusted NOI and Adjusted Cash NOI provide useful and relevant information because they reflect only those income and expense items that are incurred at the property level and present such items on an unlevered basis. We believe that the exclusion of certain non-cash revenues and expenses from Adjusted Cash NOI is a useful supplemental measure for investors to consider because it will help them to better assess our operating performance without the distortions created by non-cash revenues or expenses. You should not unduly rely on Annualized Adjusted NOI and Annualized Adjusted Cash NOI as they are based on assumptions and estimates that may prove to be inaccurate. Our actual reported Adjusted NOI and Adjusted Cash NOI for future periods may be significantly different from our Annualized Adjusted NOI and Annualized Adjusted Cash NOI. Additionally, our computation of Adjusted NOI and Adjusted Cash NOI may differ from the methodology for calculating these metrics used by companies in our industry, and, therefore, may not be comparable to similarly titled measures reported by other companies.
Annualized Base Rent (ABR): We define ABR as the annualized contractual cash rent due for the last month of the reporting period, excluding the impacts of short-term rent deferrals, abatements, free rent, or discounted rent periods, and adjusted to remove rent from properties sold during the month and to include a full month of contractual cash rent for investments made during the month.
Cash Cap Rate: Cash Cap Rate represents the estimated first year cash yield to be generated on a real estate investment, which was estimated at the time of investment based on the contractually specified cash base rent for the first full year after the date of the investment, divided by the purchase price for the property excluding capitalized acquisitions costs.
EBITDA, EBITDAre, Adjusted EBITDAre, and Annualized Adjusted EBITDAre: EBITDA, EBITDAre, Adjusted EBITDAre, and Annualized Adjusted EBITDAre are non-GAAP financial measures. We compute EBITDA as earnings before interest, income taxes and depreciation and amortization. EBITDA is a measure commonly used in our industry. We believe that this ratio provides investors and analysts with a measure of our performance that includes our operating results unaffected by the differences in capital structures, capital investment cycles and useful life of related assets compared to other companies in our industry. We compute EBITDAre in accordance with the definition adopted by Nareit. Nareit defines EBITDAre as EBITDA excluding gains (loss) from the sales of depreciable property and provisions for impairment on investment in real estate. We believe EBITDA and EBITDAre are useful to investors and analysts because they provide important supplemental information about our operating performance exclusive of certain non-cash and other costs. Adjusted EBITDAre represents EBITDAre, adjusted to reflect revenue producing acquisitions and dispositions for the quarter as if such acquisitions and dispositions had occurred at the beginning of the quarter, and to exclude certain GAAP income and expense amounts that are either non-cash, such as cost of debt extinguishments, realized or unrealized gains and losses on foreign currency transactions, or the change in fair value of our earnout liability, or that we believe are one time, or unusual in nature because they relate to unique circumstances or transactions that had not previously occurred and which we do not anticipate occurring in the future, and to eliminate the impact of lease termination fees, and other items that are not a result of normal operations. We then annualize quarterly Adjusted EBITDAre by multiplying it by four to compute Annualized Adjusted EBITDAre. Our reported EBITDA, EBITDAre, Adjusted EBITDAre, and Annualized Adjusted EBITDAre may not be comparable to similarly titled measures of other companies. You should not consider these measures as alternatives to net income or cash flows from operating activities determined in accordance with GAAP.
Funds From Operations (FFO), Core Funds From Operations (Core FFO), and Adjusted Funds From Operations (AFFO): FFO, Core FFO, and AFFO are non-GAAP measures. We believe the use of FFO, Core FFO, and AFFO are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs. FFO, Core FFO, and AFFO should not be considered alternatives to net income as a performance measure or to cash flows from operations, as reported on our statement of cash flows, or as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures. We compute Core FFO by adjusting FFO to exclude certain GAAP income and expense amounts that we believe are infrequently recurring, unusual in nature, or not related to its core real estate operations, including write-offs or recoveries of accrued rental income, lease termination fees, the change in fair value of our earnout liability, cost of debt extinguishments, unrealized and realized gains or losses on foreign currency transactions, severance, and other extraordinary items. We compute AFFO by adjusting Core FFO for certain non-cash revenues and expenses, including straight-line rents, amortization of lease intangibles, amortization of debt issuance costs, amortization of net mortgage premiums, (gain) loss on interest rate swaps and other non-cash interest expense, stock-based compensation, and other specified non-cash items.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 29
Definitions and Explanations (continued)
GAAP Cap Rate: GAAP Cap Rate represents the estimated first year GAAP yield to be generated on a real estate investment, which was computed at the time of investment based on the first full year of rental income computed in accordance with GAAP, divided by the purchase price including capitalized acquisition costs for the property.
Gross Debt: We define Gross Debt as total debt plus debt issuance costs and original issuance discount.
Net Debt: Net Debt is a non-GAAP financial measure. We define Net Debt as our Gross Debt less cash and cash equivalents and restricted cash.
Occupancy: Occupancy or a specified percentage of our portfolio that is "occupied" or "leased" means as of a specified date the quotient of (1) the total rentable square footage of our properties minus the square footage of our properties that are vacant and from which we are not receiving any rental payment, and (2) the total square footage of our properties.
Rent Coverage Ratio: Rent Coverage Ratio means the ratio of tenant-reported or, when available, management's estimate, based on tenant-reported financial information, of annual earnings before interest, taxes, depreciation, amortization, and cash rent attributable to the leased property (or properties, in the case of a master lease) to the annualized base rental obligation as of a specified date.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2022 Broadstone Net Lease, LLC. All rights reserved. 30