8-K
Broadstone Net Lease, Inc. (BNL)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, 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): July 13, 2020
BROADSTONE NET LEASE, INC.
(Exact name of registrant as specified in its charter)
| Maryland | 000-55774 | 26-1516177 |
|---|---|---|
| (State or other jurisdiction of<br>incorporation or organization) | (Commission File Number) | (I.R.S. Employer<br>Identification No.) |
| 800 Clinton Square, Rochester, New York | 14604 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
(585) 287-6500
(Registrant’s telephone number, including area code)
N/A
(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 Exchange Act:
| Title of each class | Trading<br><br><br>Symbol(s) | Name of each exchange on which registered |
|---|
None
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 7.01 Regulation FD Disclosure
On July 13, 2020, Broadstone Net Lease, Inc. (the “Company”) issued a press release providing an update on its portfolio, the impacts of the COVID-19 pandemic on its business and results of operations and capital markets activities for the six months ended June 30, 2020. The Company also announced its anticipated filing date of August 6, 2020 for its Quarterly Report on Form 10-Q for the quarter ended June 30, 2020. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information set forth in this item 7.01 and in the attached Exhibit 99.1 is being "furnished" and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of Section 18, nor shall such information be deemed to be incorporated by reference in any filing pursuant to the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in any such filing.
Item 9.01 Financial Statements and Exhibits
(d)Exhibits
INDEX TO EXHIBITS
| Exhibit No. | Description |
|---|---|
| 99.1 | Press release dated July 13, 2020 |
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 hereunto duly authorized.
| BROADSTONE NET LEASE, INC. |
|---|
| /s/ John D. Moragne |
| Name: John D. Moragne<br><br><br>Title: Executive Vice President, Chief Operating Officer, and Secretary |
Date: July 13, 2020
ck1424182-ex991_54.htm
Exhibit 99.1
For Immediate Release
July 13, 2020
| Company Contact:<br><br><br>Daniel P. Blasi<br><br><br>Vice President, Investor Relations<br><br><br><br><br><br>[email protected]<br><br><br>585.287.6504 |
|---|
Broadstone Net Lease, Inc. Provides Second Quarter Company Update and Announces Second Quarter 2020 Earnings Release Date
ROCHESTER, N.Y. – Broadstone Net Lease, Inc. (“BNL,” ”we,” “our,” or ”us”), an internally-managed real estate investment trust (“REIT”), today provided a preliminary update on its portfolio, the impacts of the COVID-19 pandemic on its business and results of operations, and capital markets activities through the second quarter and July 2020.
Q2 2020 HIGHLIGHTS
| – | As of the date of this release, cash collections totaled approximately 93% of both second quarter and July base rents due, prior to taking into account any agreed upon COVID-19 rent relief. |
|---|---|
| – | Resolved all active tenant requests for rent relief received to date, agreeing to short-term partial deferrals with 15 tenants representing 3% of rents due and partial rent abatement with one tenant representing 1.1% of rents due. |
| --- | --- |
| – | Successfully re-tenanted six properties previously leased to Art Van Furniture, LLC (“Art Van”) under new long-term leases. |
| --- | --- |
| – | As of quarter end, 99.6% of our properties were subject to a lease and were 99.5% occupied (based on rentable square footage). |
| --- | --- |
| – | Repaid a net $105 million on our senior unsecured revolving credit facility during the quarter, resulting in lower leverage while maintaining financial flexibility. |
| --- | --- |
| – | Sold 13 properties in the first half of 2020, for gross proceeds of $47.7 million. |
| --- | --- |
| – | As of June 30, 2020, BNL’s portfolio consisted of 632 properties in 41 states and one property in Canada. |
| --- | --- |
COVID-19 PANDEMIC AND RENT COLLECTIONS UPDATE
As of the date of this release, we have successfully resolved all active tenant requests for rent relief. The following chart summarizes our second quarter 2020 quarter-to-date rent collections:
Base Rent Received 93.0% Base Rent Outstanding 7.0% Deferred 3.0% Abated 1.1% Bankruptcy^1^ 2.9%
^1^ Relates to post-petition rents due from Art Van.
As of June 30, 2020:
| – | Other than Art Van, all but one tenant paid their rent due for the second quarter, either in full or in accordance with the terms of the agreed-upon rent relief. Uncollected base rent not subject to deferment, abatement, or bankruptcy, represents less than 0.02% of base rents due. |
|---|---|
| – | We granted partial rent relief requests to 15 tenants related to 93 properties whose total base rents represent 9.7% of June annualized base rent (“ABR”)^*^, compared with total requests received from 59 tenants related to 295 properties whose total base rents represented 33.7% of June ABR. |
| --- | --- |
| – | We collected 100% of rents due from tenants we declined to provide relief to or who withdrew or ceased pursuing their deferral requests. |
| --- | --- |
| – | Deferrals granted range in length between two and ten months, with a weighted average deferral of 3.8 months. |
| --- | --- |
| – | Payback periods range from three months to one year, with a weighted average payback period of 6.1 months beginning in July 2020. |
| --- | --- |
| – | Agreed to a partial abatement of rent with one tenant for rents over a nine-month period with the minimum required rent payable increasing during the period. In exchange, we negotiated a three-year lease term extension and an upside percentage rent clause during the abatement period, which provide us with long-term value accretion. Additionally, as of June 30, 2020, we had received payment for the base amounts due for the second and third quarters of 2020 under the agreement. |
| --- | --- |
| – | Approximately 2.9% of outstanding base rent relates to Art Van, which is currently subject to Chapter 7 bankruptcy proceedings. |
| --- | --- |
The following tables present information concerning our second quarter rent collections by tenant industry and property type:
| % Base Rent Collected | % Q2 Base Rent Not Collected | |||||||
|---|---|---|---|---|---|---|---|---|
| Tenant Industry | % of June ABR | April | May | June | Q2 | Deferred | Abated | Bankruptcy |
| Movies & Entertainment | 1.1% | 100.0% | 50.0% | 50.0% | 66.7% | 33.3% | 0.0% | 0.0% |
| Specialty Stores | 2.2% | 68.3% | 68.3% | 68.3% | 68.3% | 31.7% | 0.0% | 0.0% |
| Home Furnishings | 1.8% | 72.9% | 72.9% | 72.9% | 72.9% | 27.1% | 0.0% | 0.0% |
| Life Sciences Tools & Services | 1.4% | 81.8% | 81.8% | 81.8% | 81.8% | 18.2% | 0.0% | 0.0% |
| Industrial Machinery | 1.9% | 84.6% | 84.6% | 84.6% | 84.6% | 15.4% | 0.0% | 0.0% |
| Home Furnishing Retail | 3.3% | 26.9% | 26.9% | 26.9% | 26.9% | 4.8% | 0.0% | 68.3% |
| Restaurants | 15.8% | 97.0% | 84.0% | 83.9% | 88.7% | 4.4% | 6.9% | 0.0% |
| All Other | 72.5% | 100.0% | 100.0% | 100.0% | 100.0% | 0.0% | 0.0% | 0.0% |
| Grand Total | 100.0% | 94.7% | 92.1% | 92.1% | 93.0% | 3.0% | 1.1% | 2.9% |
| % Base Rent Collected | % Q2 Base Rent Not Collected | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Property Type | % of June ABR | April | May | June | Q2 | Deferred | Abated | Bankruptcy |
| Industrial | 44.0% | 96.2% | 95.0% | 95.0% | 95.4% | 4.6% | 0.0% | 0.0% |
| Healthcare | 19.9% | 98.6% | 98.6% | 98.6% | 98.6% | 1.4% | 0.0% | 0.0% |
| Restaurant | 15.6% | 97.0% | 83.8% | 83.7% | 88.4% | 4.5% | 7.1% | 0.0% |
| Office | 10.0% | 100.0% | 100.0% | 100.0% | 100.0% | 0.0% | 0.0% | 0.0% |
| Retail | 8.8% | 69.9% | 69.9% | 69.9% | 69.9% | 0.0% | 0.0% | 30.1% |
| Other | 1.7% | 100.0% | 100.0% | 100.0% | 100.0% | 0.0% | 0.0% | 0.0% |
| Grand Total | 100.0% | 94.7% | 92.1% | 92.1% | 93.0% | 3.0% | 1.1% | 2.9% |
LIQUIDITY UPDATE
Given the strength of our rent collections, better-than-expected liquidity in the financial markets, and careful expense management, we repaid $105 million on our senior unsecured revolving credit facility during Q2, resulting in an outstanding balance of $248.3 million as of June 30, 2020.
TENANT CONCENTRATION UPDATE
On March 8, 2020, Art Van, a home furnishings store and BNL’s largest tenant as of March 31, 2020 (representing 2.9% of ABR at the time), filed for bankruptcy protection. At the time, BNL leased 10 properties to Art Van, representing approximately 665,000 square feet of operational retail space, with nine properties located in Michigan and one property located in Illinois. On June 30, 2020, at our request the bankruptcy court rejected seven of these leases, and we successfully re-leased six of these properties (representing approximately 71.3% of our portfolio’s square footage leased to Art Van) to American Signature, Inc. (“American Signature”), the owner of the American Signature and Value City furniture brands, for a ten year term with rents equivalent to approximately 71.5% of amounts previously received from Art Van. As a result of these developments, American Signature represents BNL’s thirteenth largest tenant as of June 30, 2020 based on ABR, and Art Van is no longer among our top twenty tenants.
REAL ESTATE PORTFOLIO UPDATE
As of June 30, 2020, we owned a diversified portfolio of 632 individual net leased commercial properties comprising 27.4 million rentable square feet of operational space that are located in
41 U.S. states and one property located in British Columbia, Canada. As of June 30, 2020, our properties were occupied by 182 different commercial tenants, with no single tenant accounting for more than 2.5% of ABR. As of June 30, 2020, our portfolio was approximately 99.6% leased and approximately 99.5% occupied, based on rentable square footage.
During the six months ended June 30, 2020, we sold 13 properties representing 1.1% of our December 31, 2019 portfolio asset value, realizing $47.7 million in gross proceeds. This included the sale of three properties during the three months ended June 30, 2020, for gross proceeds of $10.5 million.
SECOND-QUARTER EARNINGS RELEASE
The Company intends to file its second quarter Form 10-Q with the Securities and Exchange Commission (“SEC”) and to issue a press release concerning second-quarter operating performance on August 6, 2020.
About Broadstone Net Lease, Inc.
Broadstone Net Lease, Inc. (“BNL”) is an internally-managed 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. We utilize an investment strategy underpinned by strong fundamental credit analysis and prudent real estate underwriting. As of June 30, 2020, BNL’s diversified portfolio consisted of 632 properties in 41 U.S. states and one property in Canada across the industrial, healthcare, restaurant, office, and retail property types, with an aggregate gross asset value of approximately $4.0 billion. For additional information about BNL, please visit its corporate website at http://investors.bnl.broadstone.com.
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 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, local real estate conditions, tenant financial health, property acquisitions and the timing of these acquisitions, the availability of capital to finance planned growth, and BNL’s success in its deleveraging efforts. These and other risks, assumptions, and uncertainties are described in Item 1A “Risk Factors” of BNL’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which we filed with the SEC on February 27, 2020. These documents, which you are encouraged to read, are 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. BNL expressly disclaims any current intention to update publicly any forward-looking statement after the distribution of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
^*^ We calculate ABR as annualized contractual cash rent due for the last month of the reporting period (excluding the impacts of short-term rent deferrals and abatements agreed to as a result of COVID-19 tenant requests for rent relief, discussed above), adjusted to remove rent from properties sold during the month and to include a full month of contractual cash rent for properties acquired during the month.
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