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 01, 2021 |
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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 1, 2021, Broadstone Net Lease, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended September 30, 2021. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. Additionally, on November 1, 2021, 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, 2021. 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 1, 2021 |
| 99.2 | Quarterly Supplemental Information for the Quarter Ended September 30, 2021 |
| 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 1, 2021 | By: | /s/ John D. Moragne |
| Name: John D. Moragne<br>Title: Executive Vice President and Chief Operating Officer |
EX-99.1
EXHIBIT 99.1
For Immediate Release
November 1, 2021
| Company Contact:<br><br>Michael Caruso<br><br>SVP, Corporate Finance & Investor Relations<br><br>michael.caruso@broadstone.com<br><br>585.402.7842 |
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Broadstone Net Lease Announces Third Quarter 2021 Results
ROCHESTER, N.Y. – Broadstone Net Lease, Inc. (NYSE: BNL), an internally-managed real estate investment trust (“BNL,” the “Company,” “we,” “our,” or “us”), today announced its operating results for the quarter ended September 30, 2021.
THIRD QUARTER 2021 HIGHLIGHTS
- Invested $225.9 million in 18 properties at a weighted average initial cash cap rate of 6.5% with an additional $13.0 million of acquisitions that have closed subsequent to quarter end. The acquisitions included properties in industrial, healthcare, and retail asset classes. As of the date of this release, we have an additional $102.0 million of properties under control.
- Increased full year 2021 acquisition guidance range to $600 million to $700 million.
- Closed $375 million inaugural 10-year public bond offering at a fixed rate of 2.600%.
- Received upgraded credit rating of 'Baa2' with stable outlook from Moody's in September 2021.
- Established $400 million at-the-market common equity offering program ("ATM Program").
- Ended the quarter with total outstanding debt and Net Debt of $1.6 billion and a Net Debt to Annualized Adjusted EBITDAre ratio of 5.06x
- Collected 100% of base rents due for the third quarter.
- Increased occupancy 10 basis points to 99.8%.
- Incurred $8.6 million of general and administrative expenses, inclusive of $1.0 million of stock-based compensation.
- Generated net income of $30.5 million, or $0.18 per share.
- Generated AFFO of $55.8 million, or $0.33 per share.
- Narrowed 2021 AFFO guidance range to $1.30 to $1.32 per diluted share, driven primarily by the early termination of a lease with an investment-grade office tenant and corresponding sale of the underlying properties to an unrelated third party, along with incremental interest expense anticipated from accelerating the timing of our inaugural public bond offering.
- Declared a quarterly dividend on October 28, 2021, of $0.265 per share to shareholders of record as of December 31, 2021, up from $0.255 per share for the third quarter of 2021.
MANAGEMENT COMMENTARY
“We completed a very active third quarter as we continue to execute on our defensive growth strategy, further positioning ourselves as a leading net lease REIT,” said Chris Czarnecki, BNL’s Chief Executive Officer. “Our robust and diversified pipeline of attractive net-leased properties continued to accelerate, as we closed over $225 million of accretive investments during the quarter, and for the year have either closed or have under control $622 million of accretive investments in a diverse set of properties. Simultaneously, we were extremely active in the capital markets, closing our inaugural public bond issuance and opportunistically locking in $375 million of senior unsecured notes at attractive spreads and all in pricing, and establishing our $400 million ATM program to help match-fund our accretive acquisition pipeline in a highly efficient manner. These important capital markets tools will further help us fuel growth and maximize shareholder value as we work to close out a strong 2021 and prepare for an active 2022. Growth in our durable cash flows, coupled with continued strong portfolio operating performance, led to an increase in our quarterly dividend for shareholders.”
SUMMARIZED FINANCIAL RESULTS
| For the Three Months Ended | ||||
|---|---|---|---|---|
| (in thousands, except per share data) | September 30, <br>2021 | June 30, <br>2021 | ||
| Revenues | $ | 122,777 | $ | 84,759 |
| Net income, including non-controlling interests | $ | 30,522 | $ | 22,820 |
| Net earnings per share | $ | 0.18 | $ | 0.14 |
| FFO | $ | 91,947 | $ | 50,184 |
| FFO per share | $ | 0.54 | $ | 0.32 |
| AFFO | $ | 55,836 | $ | 52,024 |
| AFFO per share | $ | 0.33 | $ | 0.33 |
| Diluted Weighted Average Shares Outstanding | 169,587 | 157,430 |
FFO, AFFO, Net Debt, and Annualized Adjusted EBITDAre 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.
During the third quarter, we executed the early termination of a long-term, master lease with an investment-grade office tenant in exchange for a termination fee of $35 million. The termination fee represented approximately 117% of the remaining contractual rents owed to us under the lease, which was set to mature in April of 2028. Simultaneously, we sold the underlying vacant properties to an unrelated third party for net proceeds of approximately $15.3 million. Together with the termination fee, we received total net cash proceeds of $50.3 million. We originally acquired the property from the tenant via a sale-leaseback transaction in April of 2016 for $54.6 million, and have since collected $21.8 million in net rents. As a result of the early lease termination transaction, sale of the underlying properties, and Q3 investments made in other property types, our office portfolio exposure was reduced to 7.9% of our total portfolio ABR at September 30, 2021.
The early lease termination transaction and sale of underlying properties resulted in an increase to net income of approximately $4.0 million, representing the difference between the net cash proceeds of $50.3 million and the property net book value of $46.3 million. Due to the nature of the separate transactions, on a gross basis we recorded $33.8 million of revenue, $4.1 million of depreciation and amortization, and $25.7 million of impairment. The classifications resulted in a $33.8 million increase to FFO, but no impact to AFFO or net debt to annualized adjusted EBITDAre.
REAL ESTATE PORTFOLIO UPDATE
As of September 30, 2021, we owned a diversified portfolio of 696 individual net leased commercial properties with 695 properties located in 42 U.S. states and one property located in British Columbia, Canada, comprising approximately 31.4 million rentable square feet of operational space. As of September 30, 2021, all but four of our properties were subject to a lease, and our properties were occupied by 197 different commercial tenants, with no
single tenant accounting for more than 2.2% of ABR. Properties under leases represent 99.8% of our portfolio’s rentable square footage. The ABR weighted average annual minimum rent increases, pursuant to leases on properties in the portfolio as of September 30, 2021, was 2.0%.
During the third quarter, we invested $225.9 million, excluding capitalized acquisition costs, in 18 properties at a weighted average initial cash cap rate of 6.5%. The acquisitions included properties in industrial (59%, based on ABR), healthcare (31%), and retail (10%) asset classes located across 10 states with a weighted average initial lease term and minimum annual rent increases of 19.4 years and 1.8%, respectively. BNL continues to build and evaluate a robust pipeline of potential investment opportunities predominantly focused on industrial, healthcare, restaurants, and select retail property sectors. Subsequent to quarter end, we invested an additional $13.0 million, excluding capitalized acquisition costs, in five properties in the industrial and retail asset classes at a weighted average initial capitalization rate of 6.1%. BNL currently has $102.0 million of properties under control, which we define as under contract or executed letter of intent.
During the third quarter, we sold six properties for net proceeds of $25.5 million, recognizing a gain over carrying value of $1.2 million. The weighted average capitalization rate realized on the tenanted properties was 6.0%.
BALANCE SHEET AND CAPITAL MARKETS ACTIVITIES
On August 23, 2021, BNL established a $400 million ATM Program, including the ability to execute forward sales, which will enable BNL to set the price of shares upon pricing the offering while delaying the issuance of shares and the receipt of the net proceeds by BNL. No shares were sold during the period between August 23, 2021 and September 30, 2021.
On September 15, 2021, BNL completed its inaugural public bond offering of $375 million aggregate principal amount of 2.600% senior unsecured notes due 2031 (the “2031 Senior Unsecured Public Notes”). The public offering price for the 2031 Senior Unsecured Public Notes was 99.816% of the principal amount for an effective yield to maturity of 2.621%. The 2031 Senior Unsecured Public Notes are senior unsecured obligations of Broadstone Net Lease, LLC (the “OP”), guaranteed by Broadstone Net Lease, Inc.
As of September 30, 2021, our Net Debt was approximately $1.6 billion, providing a Net Debt to Annualized Adjusted EBITDAre ratio of 5.06x. We intend to maintain a leverage target of less than 6.0x on a Net Debt to Annualized Adjusted EBITDAre basis.
DISTRIBUTIONS
At its October 28, 2021 meeting, our board of directors declared a $0.265 distribution per common share and OP Unit to stockholders and OP Unitholders of record as of December 31, 2021, payable on or before January 15, 2022.
2021 GUIDANCE
BNL has narrowed its guidance range for the 2021 full year and currently expects to report AFFO of between $1.30 and $1.32 per diluted share, driven primarily by the early termination of a lease with an investment-grade office tenant and corresponding sale of the underlying properties to an unrelated third party, along with incremental interest expense anticipated from advancing the timing of its inaugural public bond offering.
The updated guidance range is based on the following key assumptions:
(i) investments in real estate properties between $600 million and $700 million, which has been revised higher;
(ii) dispositions of real estate properties between $100 million and $130 million, which has been revised higher to include the aforementioned early lease termination and corresponding property sale; and
(iii) total cash general and administrative expenses between $31 million and $33 million, which has been revised lower.
AFFO per share is sensitive to the timing and amount of real estate acquisitions, property dispositions, and capital markets activities during the year.
CONFERENCE CALL AND WEBCAST
The company will host its third quarter earnings conference call and audio webcast on Tuesday, November 2, 2021, at 10:00 a.m. Eastern Time.
To access the live webcast, which will be available in listen-only mode, please visit: https://events.q4inc.com/attendee/193471231. 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 848423. International callers may dial 1-929-526-1599, access code 848423.
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, please visit: https://investors.bnl.broadstone.com.
About 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. The Company utilizes an investment strategy underpinned by strong fundamental credit analysis and prudent real estate underwriting. As of September 30, 2021, BNL’s diversified portfolio consisted of 696 individual net leased commercial properties with 695 properties located in 42 U.S. states and one property located in Canada 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 2021 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, local real estate conditions, tenant financial health, property 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, 2020, filed with the SEC on February 25, 2021, 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, or FFO, Adjusted Funds from Operations, or AFFO, Net Debt, and Net Debt to Annualized Adjusted EBITDAre. We believe the use of 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 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>2020 | |||||
|---|---|---|---|---|---|
| Assets | |||||
| Accounted for using the operating method, net of accumulated depreciation | 3,674,206 | $ | 3,354,511 | ||
| Accounted for using the direct financing method | 28,830 | 29,066 | |||
| Accounted for using the sales type method | 568 | 567 | |||
| Investment in rental property, net | 3,703,604 | 3,384,144 | |||
| Cash and cash equivalents | 16,182 | 100,486 | |||
| Accrued rental income | 112,163 | 102,117 | |||
| Tenant and other receivables, net | 940 | 1,604 | |||
| Prepaid expenses and other assets | 13,819 | 22,277 | |||
| Goodwill | 339,769 | 339,769 | |||
| Intangible lease assets, net | 301,046 | 290,913 | |||
| Debt issuance costs – unsecured revolving credit facility, net | 4,658 | 6,435 | |||
| Leasing fees, net | 9,791 | 10,738 | |||
| Total assets | 4,501,972 | $ | 4,258,483 | ||
| Liabilities and equity | |||||
| Unsecured revolving credit facility | — | $ | — | ||
| Mortgages, net | 97,530 | 107,382 | |||
| Unsecured term loans, net | 646,458 | 961,330 | |||
| Senior unsecured notes, net | 843,665 | 472,466 | |||
| Interest rate swap, liabilities | 36,196 | 72,103 | |||
| Earnout liability | — | 7,509 | |||
| Accounts payable and other liabilities | 79,606 | 74,936 | |||
| Accrued interest payable | 9,895 | 4,023 | |||
| Intangible lease liabilities, net | 72,497 | 79,653 | |||
| Total liabilities | 1,785,847 | 1,779,402 | |||
| 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, 161,255 shares issued and outstanding at September 30, 2021; 440,000 shares authorized, 108,609 shares issued and outstanding at December 31, 2020 | 40 | 27 | |||
| Class A common stock, 0.00025 par value; no shares authorized, issued or outstanding at September 30, 2021; 60,000 shares authorized, 37,000 shares issued and outstanding at December 31, 2020 | — | 9 | |||
| Additional paid-in capital | 2,895,219 | 2,624,997 | |||
| Cumulative distributions in excess of retained earnings | (305,665 | ) | (259,673 | ) | |
| Accumulated other comprehensive (loss) income | (37,590 | ) | (66,255 | ) | |
| Total Broadstone Net Lease, Inc. stockholders’ equity | 2,552,004 | 2,299,105 | |||
| Non-controlling interests | 164,121 | 179,976 | |||
| Total equity | 2,716,125 | 2,479,081 | |||
| Total liabilities and equity | 4,501,972 | $ | 4,258,483 |
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)
| (Unaudited)<br>For the Three Months Ended | (Unaudited)<br>For the Nine Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, <br>2021 | June 30, <br>2021 | September 30, <br>2021 | September 30, <br>2020 | |||||||||
| Revenues | ||||||||||||
| Lease revenues, net | $ | 122,777 | $ | 84,759 | $ | 290,234 | $ | 239,346 | ||||
| Operating expenses | ||||||||||||
| Depreciation and amortization | 36,682 | 31,225 | 98,620 | 102,503 | ||||||||
| Asset management fees | — | — | — | 2,461 | ||||||||
| Property management fees | — | — | — | 1,275 | ||||||||
| Property and operating expense | 4,842 | 4,572 | 14,019 | 12,492 | ||||||||
| General and administrative | 8,552 | 8,655 | 27,840 | 18,756 | ||||||||
| Provision for impairment of investment in rental <br> properties | 25,989 | — | 28,001 | 17,399 | ||||||||
| Total operating expenses | 76,065 | 44,452 | 168,480 | 154,886 | ||||||||
| Other income (expenses) | ||||||||||||
| Interest income | — | 6 | 11 | 20 | ||||||||
| Interest expense | (15,611 | ) | (15,430 | ) | (47,149 | ) | (59,015 | ) | ||||
| Cost of debt extinguishment | (242 | ) | — | (368 | ) | (414 | ) | |||||
| Gain on sale of real estate | 1,220 | 3,838 | 9,791 | 9,725 | ||||||||
| Income taxes | (473 | ) | (301 | ) | (1,187 | ) | (1,080 | ) | ||||
| Internalization expenses | — | — | — | (3,523 | ) | |||||||
| Change in fair value of earnout liability | (1,059 | ) | (5,604 | ) | (5,539 | ) | 8,506 | |||||
| Other income | (25 | ) | 4 | (11 | ) | (22 | ) | |||||
| Net income | 30,522 | 22,820 | 77,302 | 38,657 | ||||||||
| Net income attributable to non-controlling interests | (1,824 | ) | (1,606 | ) | (5,167 | ) | (3,738 | ) | ||||
| Net income attributable to <br> Broadstone Net Lease, Inc. | $ | 28,698 | $ | 21,214 | $ | 72,135 | $ | 34,919 | ||||
| Weighted average number of common shares outstanding | ||||||||||||
| Basic | 159,226 | 146,119 | 150,227 | 108,228 | ||||||||
| Diluted | 169,587 | 157,430 | 161,273 | 119,747 | ||||||||
| Net earnings per common share | ||||||||||||
| Basic and diluted | $ | 0.18 | $ | 0.14 | $ | 0.48 | $ | 0.32 | ||||
| Comprehensive income | ||||||||||||
| Net income | $ | 30,522 | $ | 22,820 | $ | 77,302 | $ | 38,657 | ||||
| Other comprehensive income | ||||||||||||
| Change in fair value of interest rate swaps | 4,559 | (2,911 | ) | 30,328 | (59,766 | ) | ||||||
| Realized gain on interest rate swaps | 85 | (42 | ) | 2 | (125 | ) | ||||||
| Comprehensive income | 35,166 | 19,867 | 107,632 | (21,234 | ) | |||||||
| Comprehensive income attributable to <br> non-controlling interests | (2,101 | ) | (1,399 | ) | (7,313 | ) | 1,510 | |||||
| Comprehensive income attributable to <br> Broadstone Net Lease, Inc. | $ | 33,065 | $ | 18,468 | $ | 100,319 | $ | (19,724 | ) |
Reconciliation of Non-GAAP Measures
The following is a reconciliation of net income to FFO and AFFO for the three months ended September 30, 2021 and June 30, 2021 and for the nine months ended September 30, 2021 and 2020. 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>2021 | June 30, <br>2021 | September 30, <br>2021 | September 30, <br>2020 | ||||||||
| Net income | $ | 30,522 | $ | 22,820 | $ | 77,302 | $ | 38,657 | ||||
| Real property depreciation and amortization | 36,656 | 31,202 | 98,548 | 102,452 | ||||||||
| Gain on sale of real estate | (1,220 | ) | (3,838 | ) | (9,791 | ) | (9,725 | ) | ||||
| Provision for impairment on investment in rental <br> properties | 25,989 | — | 28,001 | 17,399 | ||||||||
| FFO | $ | 91,947 | $ | 50,184 | $ | 194,060 | $ | 148,783 | ||||
| Capital improvements/reserves | — | — | — | 1,662 | ||||||||
| Straight-line rent adjustment | (3,434 | ) | (4,979 | ) | (13,045 | ) | (14,706 | ) | ||||
| Lease termination fee | (35,000 | ) | — | (35,000 | ) | — | ||||||
| Adjustment to provision for credit losses | — | — | (1 | ) | (142 | ) | ||||||
| Cost of debt extinguishment | 242 | — | 368 | 414 | ||||||||
| Amortization of debt issuance costs | 962 | 956 | 2,832 | 2,528 | ||||||||
| Amortization of net mortgage premiums | (34 | ) | (37 | ) | (106 | ) | (106 | ) | ||||
| Loss (gain) on interest rate swaps and other non-cash <br> interest expense | 85 | (42 | ) | 2 | (125 | ) | ||||||
| Amortization of lease intangibles | (940 | ) | (641 | ) | (2,309 | ) | 32 | |||||
| Internalization expenses | — | — | — | 3,523 | ||||||||
| Stock-based compensation | 924 | 951 | 3,644 | 796 | ||||||||
| Severance | — | 32 | 1,275 | 26 | ||||||||
| Change in fair value of earnout liability | 1,059 | 5,604 | 5,539 | (8,506 | ) | |||||||
| Other income | 25 | (4 | ) | 11 | 22 | |||||||
| AFFO | $ | 55,836 | $ | 52,024 | $ | 157,270 | $ | 134,201 | ||||
| Diluted WASO(1) | 169,587 | 157,430 | 161,273 | 119,747 | ||||||||
| Net earnings per share(2) | $ | 0.18 | $ | 0.14 | $ | 0.48 | $ | 0.32 | ||||
| FFO per share(2) | 0.54 | 0.32 | 1.20 | 1.24 | ||||||||
| AFFO per share(2) | 0.33 | 0.33 | 0.97 | 1.12 |
1 Excludes 378 and 387 weighted average shares of unvested restricted common stock for the three months ended September 30, 2021 and June 30, 2021, respectively, and excludes 366 and 72 weighted average shares of unvested restricted common stock for the nine months ended September 30, 2021 and 2020, respectively.
2 Excludes $95 and $97 from the numerator for the three months ended September 30, 2021 and June 30, 2021, respectively, and $296 and $46 from the nine months ended September 30, 2021 and 2020, 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 and AFFO, each of which are non-GAAP measures. We believe the use of 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 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. To derive AFFO, we modify the Nareit computation of FFO to include other adjustments to GAAP net income related to certain non-cash and non-recurring revenues and expenses, including straight-line rents, the change in fair value of our earnout liability, cost of debt extinguishments, 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, realized gains or losses on foreign currency transactions, internalization expenses, stock-based compensation, severance, extraordinary items, and other specified non-cash items. We believe 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.
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 did not impact our AFFO.
We further exclude the change in fair value of our earnout liability, costs or gains recorded on the extinguishment of debt, non-cash interest expense and gains, the amortization of debt issuance costs, net mortgage premiums, and lease intangibles, realized gains and losses on foreign currency transactions, internalization expenses, stock-based compensation and severance, as these items are not indicative of ongoing operational results. We use AFFO as a measure of our performance when we formulate corporate goals.
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 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 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. FFO and AFFO may not be comparable to similarly titled measures employed by other REITs, and comparisons of our 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 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 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, 2021 and June 30, 2021:
| For the Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| (in thousands) | September 30, <br>2021 | June 30, <br>2021 | ||||
| Net income | $ | 30,522 | $ | 22,820 | ||
| Depreciation and amortization | 36,682 | 31,225 | ||||
| Interest expense | 15,611 | 15,430 | ||||
| Income taxes | 473 | 301 | ||||
| EBITDA | $ | 83,288 | $ | 69,776 | ||
| Provision for impairment of investment in rental properties | 25,989 | — | ||||
| Gain on sale of real estate | (1,220 | ) | (3,838 | ) | ||
| EBITDAre | $ | 108,057 | $ | 65,938 | ||
| Adjustment for current quarter acquisition activity (1) | 3,534 | 2,761 | ||||
| Adjustment for current quarter disposition activity (2) | (1,387 | ) | (353 | ) | ||
| Adjustment to exclude change in fair value of earnout liability | 1,059 | 5,604 | ||||
| Adjustment to exclude write-off of accrued rental income | 1,496 | — | ||||
| Adjustment to exclude cost of debt extinguishments | 242 | — | ||||
| Adjustment to exclude lease termination fee | (35,000 | ) | — | |||
| Adjusted EBITDAre | $ | 78,001 | $ | 73,950 | ||
| Annualized EBITDAre | $ | 432,221 | $ | 263,761 | ||
| Annualized Adjusted EBITDAre | $ | 311,998 | $ | 295,808 |
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>2021 | June 30, <br>2021 | ||||
|---|---|---|---|---|---|---|
| Debt | ||||||
| Revolving Credit Facility | $ | — | $ | — | ||
| Unsecured term loans, net | 646,458 | 910,994 | ||||
| Senior unsecured notes, net | 843,665 | 472,637 | ||||
| Mortgages, net | 97,530 | 105,748 | ||||
| Debt issuance costs | 10,215 | 6,625 | ||||
| Gross Debt | 1,597,868 | 1,496,004 | ||||
| Cash and cash equivalents | (16,182 | ) | (78,987 | ) | ||
| Restricted cash | (3,895 | ) | (8,021 | ) | ||
| Net Debt | $ | 1,577,791 | $ | 1,408,996 | ||
| Net Debt to Annualized EBITDAre | 3.65x | 5.34x | ||||
| Net Debt to Annualized Adjusted EBITDAre | 5.06x | 4.76x |
We define Net Debt as gross debt (total reported debt plus deferred financing 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 (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. 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, 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 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 2021 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) 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 | 14 |
| Debt Maturities | 15 |
| Acquisitions | 16 |
| Dispositions | 17 |
| Portfolio at a Glance: Key Metrics | 18 |
| Diversification: Tenants and Brands | 19-20 |
| Diversification: Property Type | 21-22 |
| Key Statistics by Property Type | 23 |
| Diversification: Tenant Industry | 24 |
| Diversification: Geography | 25 |
| Lease Expirations | 26 |
| Portfolio Occupancy | 27 |
| Definitions and Explanations | 28-29 |
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2021 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, 2021 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 quarter ended September 30, 2021, 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, 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 | © 2021 Broadstone Net Lease, LLC. All rights reserved. 3
Company Overview
Broadstone Net Lease, Inc. (NYSE:BNL) (the “Company,” “BNL,” “us,” “our” and “we”) is an internally-managed REIT, formed as a Maryland corporation in 2007 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 their 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>Kristen Duckles<br><br>Senior Vice President, Chief Administrative Officer<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>Agha S. Khan<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>250 Royall Street<br><br>Canton, Massachusetts 02021<br><br>800-736-3001 | |
| --- |
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2021 Broadstone Net Lease, LLC. All rights reserved. 4
Quarterly Financial Summary
(unaudited, dollars in thousands, except per share data)
| Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Financial Summary | |||||||||||||||
| Investment in rental property | $ | 4,110,958 | $ | 3,954,597 | $ | 3,794,850 | $ | 3,734,121 | $ | 3,666,961 | |||||
| Less accumulated depreciation | (407,354 | ) | (390,236 | ) | (369,683 | ) | (349,977 | ) | (332,057 | ) | |||||
| Investment in rental property, net | 3,703,604 | 3,564,361 | 3,425,167 | 3,384,144 | 3,334,904 | ||||||||||
| Cash and cash equivalents | 16,182 | 78,987 | 10,205 | 100,486 | 101,787 | ||||||||||
| Restricted cash | 3,895 | 8,021 | 8,145 | 10,242 | 7,200 | ||||||||||
| Total assets | 4,501,972 | 4,423,611 | 4,206,045 | 4,258,483 | 4,204,469 | ||||||||||
| Unsecured revolving credit facility | — | — | 15,000 | — | — | ||||||||||
| Mortgage and notes payable, net | 97,530 | 105,748 | 106,559 | 107,382 | 108,752 | ||||||||||
| Unsecured term loans, net | 646,458 | 910,994 | 910,732 | 961,330 | 961,115 | ||||||||||
| Senior unsecured notes, net | 843,665 | 472,637 | 472,551 | 472,466 | 472,380 | ||||||||||
| Total liabilities | 1,785,847 | 1,700,103 | 1,713,348 | 1,779,402 | 1,782,762 | ||||||||||
| Total Broadstone Net Lease, Inc. <br> stockholders' equity | 2,552,004 | 2,554,653 | 2,312,532 | 2,299,105 | 2,191,794 | ||||||||||
| Total equity (book value) | 2,716,125 | 2,723,508 | 2,492,697 | 2,479,081 | 2,421,707 | ||||||||||
| Revenues | 122,777 | 84,759 | 82,698 | 82,291 | 80,744 | ||||||||||
| General and administrative - <br> other | 7,628 | 7,704 | 8,864 | 8,039 | 6,418 | ||||||||||
| Stock based compensation | 924 | 951 | 1,769 | 1,193 | 796 | ||||||||||
| General and administrative | 8,552 | 8,655 | 10,633 | 9,232 | 7,214 | ||||||||||
| Total operating expenses | 76,065 | 44,452 | 47,963 | 46,078 | 57,496 | ||||||||||
| Interest expense | 15,611 | 15,430 | 16,108 | 17,123 | 18,511 | ||||||||||
| Net income | 30,522 | 22,820 | 23,960 | 17,619 | 9,711 | ||||||||||
| Net earnings per common share,<br> diluted | $ | 0.18 | $ | 0.14 | $ | 0.15 | $ | 0.11 | $ | 0.08 | |||||
| FFO | 91,947 | 50,184 | 51,929 | 44,198 | 54,726 | ||||||||||
| FFO per share, diluted | $ | 0.54 | $ | 0.32 | $ | 0.33 | $ | 0.28 | $ | 0.44 | |||||
| AFFO | 55,836 | 52,024 | 49,410 | 46,894 | 47,077 | ||||||||||
| AFFO per share, diluted | $ | 0.33 | $ | 0.33 | $ | 0.31 | $ | 0.30 | $ | 0.38 | |||||
| Net cash provided by operating <br> activities | 88,303 | 47,235 | 51,780 | 46,064 | 53,506 | ||||||||||
| Net cash (used in) provided by <br> investing activities | (205,667 | ) | (175,051 | ) | (67,661 | ) | (76,443 | ) | 5,469 | ||||||
| Net cash (used in) provided by <br> financing activities | 50,433 | 196,474 | (76,497 | ) | 32,120 | 40,170 | |||||||||
| Distributions declared | 43,423 | 43,484 | 39,653 | 39,299 | 20,477 | ||||||||||
| Distributions declared per diluted <br> share | $ | 0.255 | $ | 0.255 | $ | 0.250 | $ | 0.250 | $ | 0.135 | |||||
| Portfolio Metrics | |||||||||||||||
| Properties | 696 | 684 | 661 | 641 | 628 | ||||||||||
| Rentable square feet | 31.4M | 30.2M | 28.4M | 28.2M | 27.3M | ||||||||||
| Occupancy | 99.8 | % | 99.7 | % | 99.7 | % | 99.2 | % | 99.8 | % | |||||
| Weighted average remaining <br> lease term (years) | 10.6 | 10.4 | 10.6 | 10.7 | 10.8 |
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2021 Broadstone Net Lease, LLC. All rights reserved. 5
Balance Sheet
(unaudited, in thousands)
| June 30,<br>2021 | March 31,<br>2021 | December 31,<br>2020 | September 30,<br>2020 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Assets | ||||||||||||||
| Accounted for using the operating method, net of accumulated depreciation | 3,674,206 | $ | 3,534,884 | $ | 3,395,609 | $ | 3,354,511 | $ | 3,304,002 | |||||
| Accounted for using the direct financing method | 28,830 | 28,911 | 28,991 | 29,066 | 30,902 | |||||||||
| Accounted for using the sales type method | 568 | 566 | 567 | 567 | — | |||||||||
| Investment in rental property, net | 3,703,604 | 3,564,361 | 3,425,167 | 3,384,144 | 3,334,904 | |||||||||
| Cash and cash equivalents | 16,182 | 78,987 | 10,205 | 100,486 | 101,787 | |||||||||
| Accrued rental income | 112,163 | 109,278 | 105,674 | 102,117 | 97,517 | |||||||||
| Tenant and other receivables, net | 940 | 618 | 1,022 | 1,604 | 3,957 | |||||||||
| Prepaid expenses and other assets | 13,819 | 18,846 | 18,862 | 22,277 | 19,522 | |||||||||
| Interest rate swap, assets | — | — | 239 | — | — | |||||||||
| Goodwill | 339,769 | 339,769 | 339,769 | 339,769 | 339,769 | |||||||||
| Intangible lease assets, net | 301,046 | 296,134 | 288,592 | 290,913 | 288,971 | |||||||||
| Debt issuance costs – unsecured revolving credit facility, net | 4,658 | 5,250 | 5,842 | 6,435 | 7,027 | |||||||||
| Leasing fees, net | 9,791 | 10,368 | 10,673 | 10,738 | 11,015 | |||||||||
| Total assets | 4,501,972 | $ | 4,423,611 | $ | 4,206,045 | $ | 4,258,483 | $ | 4,204,469 | |||||
| Liabilities and equity | ||||||||||||||
| Unsecured revolving credit facility | — | $ | — | $ | 15,000 | $ | — | $ | — | |||||
| Mortgages and notes payable, net | 97,530 | 105,748 | 106,559 | 107,382 | 108,752 | |||||||||
| Unsecured term loans, net | 646,458 | 910,994 | 910,732 | 961,330 | 961,115 | |||||||||
| Senior unsecured notes, net | 843,665 | 472,637 | 472,551 | 472,466 | 472,380 | |||||||||
| Interest rate swap, liabilities | 36,196 | 46,335 | 43,662 | 72,103 | 81,326 | |||||||||
| Earnout liability | — | 10,063 | 6,385 | 7,509 | 13,177 | |||||||||
| Accounts payable and other liabilities | 79,606 | 75,463 | 71,072 | 74,936 | 55,339 | |||||||||
| Accrued interest payable | 9,895 | 3,885 | 9,896 | 4,023 | 9,453 | |||||||||
| Intangible lease liabilities, net | 72,497 | 74,978 | 77,491 | 79,653 | 81,220 | |||||||||
| Total liabilities | 1,785,847 | 1,700,103 | 1,713,348 | 1,779,402 | 1,782,762 | |||||||||
| Equity | ||||||||||||||
| Broadstone Net Lease, Inc. stockholders' equity: | ||||||||||||||
| Preferred stock, 0.001 par value | — | — | — | — | — | |||||||||
| Common stock, 0.00025 par value | 40 | 40 | 36 | 27 | 27 | |||||||||
| Class A Common Stock, 0.00025 par value | — | — | — | 9 | 8 | |||||||||
| Additional paid-in capital | 2,895,219 | 2,890,131 | 2,625,320 | 2,624,997 | 2,506,008 | |||||||||
| Cumulative distributions in excess of retained earnings | (305,665 | ) | (293,622 | ) | (274,140 | ) | (259,673 | ) | (239,520 | ) | ||||
| Accumulated other comprehensive income | (37,590 | ) | (41,896 | ) | (38,684 | ) | (66,255 | ) | (74,729 | ) | ||||
| Total Broadstone Net Lease, Inc. stockholders’ equity | 2,552,004 | 2,554,653 | 2,312,532 | 2,299,105 | 2,191,794 | |||||||||
| Non-controlling interests | 164,121 | 168,855 | 180,165 | 179,976 | 229,913 | |||||||||
| Total equity | 2,716,125 | 2,723,508 | 2,492,697 | 2,479,081 | 2,421,707 | |||||||||
| Total liabilities and equity | 4,501,972 | $ | 4,423,611 | $ | 4,206,045 | $ | 4,258,483 | $ | 4,204,469 |
All values are in US Dollars.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2021 Broadstone Net Lease, LLC. All rights reserved. 6
Income Statement Summary
(unaudited, in thousands, except per share data)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | December 31,<br>2020 | September 30,<br>2020 | |||||||||||
| Revenues | |||||||||||||||
| Lease revenues, net | $ | 122,777 | $ | 84,759 | $ | 82,698 | $ | 82,291 | $ | 80,744 | |||||
| Operating expenses | |||||||||||||||
| Depreciation and amortization | 36,682 | 31,225 | 30,713 | 30,182 | 31,363 | ||||||||||
| Property and operating <br> expense | 4,842 | 4,572 | 4,605 | 4,986 | 4,187 | ||||||||||
| General and administrative | 8,552 | 8,655 | 10,633 | 9,232 | 7,214 | ||||||||||
| Provision for impairment of <br> investment in rental <br> properties | 25,989 | — | 2,012 | 1,678 | 14,732 | ||||||||||
| Total operating expenses | 76,065 | 44,452 | 47,963 | 46,078 | 57,496 | ||||||||||
| Other income (expenses) | |||||||||||||||
| Interest income | — | 6 | 5 | 4 | — | ||||||||||
| Interest expense | (15,611 | ) | (15,430 | ) | (16,108 | ) | (17,123 | ) | (18,511 | ) | |||||
| Cost of debt extinguishment | (242 | ) | — | (126 | ) | (3 | ) | (392 | ) | ||||||
| Gain on sale of real estate | 1,220 | 3,838 | 4,733 | 5,260 | 1,060 | ||||||||||
| Income taxes | (473 | ) | (301 | ) | (413 | ) | 141 | (129 | ) | ||||||
| Internalization expenses | — | — | — | (182 | ) | (1,929 | ) | ||||||||
| Change in fair value of <br> earnout liability | (1,059 | ) | (5,604 | ) | 1,124 | (6,706 | ) | 6,362 | |||||||
| Other income (expenses) | (25 | ) | 4 | 10 | 15 | 2 | |||||||||
| Net income | 30,522 | 22,820 | 23,960 | 17,619 | 9,711 | ||||||||||
| Net income attributable to <br> non-controlling interests | (1,824 | ) | (1,606 | ) | (1,737 | ) | (1,357 | ) | (961 | ) | |||||
| Net income attributable to <br> Broadstone Net Lease, Inc. | $ | 28,698 | $ | 21,214 | $ | 22,223 | $ | 16,262 | $ | 8,750 | |||||
| Weighted average number of common shares outstanding | |||||||||||||||
| Basic1 | 159,226 | 146,119 | 145,338 | 143,916 | 111,155 | ||||||||||
| Diluted1 | 169,587 | 157,430 | 156,724 | 155,956 | 123,381 | ||||||||||
| Net earnings per common share2 | |||||||||||||||
| Basic and diluted | $ | 0.18 | $ | 0.14 | $ | 0.15 | $ | 0.11 | $ | 0.08 |
1 Excludes 378, 387, 334, 341 and 216 weighted average shares of unvested restricted common stock for the three months ended September 30, 2021, June 30, 2021, March 31, 2021, December 31, 2020 and September 30, 2020, respectively.
2 Excludes $95, $97, $104, $85 and $46 from the numerator for the three months ended September 30, 2021, June 30, 2021, March 31, 2021, December 31, 2020 and September 30, 2020, respectively, related to dividends declared on shares of unvested restricted common stock.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2021 Broadstone Net Lease, LLC. All rights reserved. 7
Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO)
(unaudited, in thousands, except per share data)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | December 31,<br>2020 | September 30,<br>2020 | |||||||||||
| Net income | $ | 30,522 | $ | 22,820 | $ | 23,960 | $ | 17,619 | $ | 9,711 | |||||
| Real property depreciation and <br> amortization | 36,656 | 31,202 | 30,690 | 30,161 | 31,343 | ||||||||||
| Gain on sale of real estate | (1,220 | ) | (3,838 | ) | (4,733 | ) | (5,260 | ) | (1,060 | ) | |||||
| Provision for impairment of investment <br> in rental properties | 25,989 | — | 2,012 | 1,678 | 14,732 | ||||||||||
| FFO | $ | 91,947 | $ | 50,184 | $ | 51,929 | $ | 44,198 | $ | 54,726 | |||||
| Capital improvements / reserves | — | — | — | — | 1,662 | ||||||||||
| Straight-line rent adjustment | (3,434 | ) | (4,979 | ) | (4,632 | ) | (5,125 | ) | (6,943 | ) | |||||
| Lease termination fee | (35,000 | ) | — | — | — | — | |||||||||
| Adjustment to provision for credit <br> losses | — | — | (1 | ) | (6 | ) | (15 | ) | |||||||
| Cost of debt extinguishment | 242 | — | 126 | 3 | 392 | ||||||||||
| Amortization of debt issuance costs | 962 | 956 | 914 | 917 | 819 | ||||||||||
| Amortization of net mortgage <br> premiums | (34 | ) | (37 | ) | (35 | ) | (36 | ) | (34 | ) | |||||
| Loss (gain) on interest rate swaps and <br> other non-cash interest expense | 85 | (42 | ) | (41 | ) | (41 | ) | (42 | ) | ||||||
| Amortization of lease intangibles | (940 | ) | (641 | ) | (728 | ) | (1,150 | ) | 151 | ||||||
| Internalization expenses | — | — | — | 182 | 1,929 | ||||||||||
| Stock-based compensation | 924 | 951 | 1,769 | 1,193 | 796 | ||||||||||
| Severance | — | 32 | 1,243 | 68 | — | ||||||||||
| Change in fair value of earnout liability | 1,059 | 5,604 | (1,124 | ) | 6,706 | (6,362 | ) | ||||||||
| Other (income) expenses | 25 | (4 | ) | (10 | ) | (15 | ) | (2 | ) | ||||||
| AFFO | $ | 55,836 | $ | 52,024 | $ | 49,410 | $ | 46,894 | $ | 47,077 | |||||
| Diluted weighted average shares <br> outstanding1 | 169,587 | 157,430 | 156,724 | 155,956 | 123,381 | ||||||||||
| Net earnings per diluted share2 | $ | 0.18 | $ | 0.14 | $ | 0.15 | $ | 0.11 | $ | 0.08 | |||||
| FFO per diluted share2 | 0.54 | 0.32 | 0.33 | 0.28 | 0.44 | ||||||||||
| AFFO per diluted share2 | 0.33 | 0.33 | 0.31 | 0.30 | 0.38 |
1 Excludes 378, 387, 334, 341 and 216 weighted average shares of unvested restricted common stock for the three months ended September 30, 2021, June 30, 2021, March 31, 2021, December 31, 2020 and September 30, 2020, respectively.
2 Excludes $95, $97, $104, $85 and $46 from the numerator for the three months ended September 30, 2021, June 30, 2021, March 31, 2021, December 31, 2020 and September 30, 2020, respectively, related to dividends declared on shares of unvested restricted common stock.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2021 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>2021 | June 30,<br>2021 | March 31,<br>2021 | December 31,<br>2020 | September 30,<br>2020 | |||||||||||
| Net income | $ | 30,522 | $ | 22,820 | $ | 23,960 | $ | 17,619 | $ | 9,711 | |||||
| Depreciation and amortization | 36,682 | 31,225 | 30,713 | 30,182 | 31,363 | ||||||||||
| Interest expense | 15,611 | 15,430 | 16,108 | 17,123 | 18,511 | ||||||||||
| Income taxes | 473 | 301 | 413 | (141 | ) | 129 | |||||||||
| EBITDA | $ | 83,288 | $ | 69,776 | $ | 71,194 | $ | 64,783 | $ | 59,714 | |||||
| Provision for impairment of investment in <br> rental properties | 25,989 | — | 2,012 | 1,678 | 14,732 | ||||||||||
| Gain on sale of real estate | (1,220 | ) | (3,838 | ) | (4,733 | ) | (5,260 | ) | (1,060 | ) | |||||
| EBITDAre | $ | 108,057 | $ | 65,938 | $ | 68,473 | $ | 61,201 | $ | 73,386 | |||||
| Adjustment for current quarter acquisition <br> activity 1 | 3,534 | 2,761 | 1,365 | 1,703 | — | ||||||||||
| Adjustment for current quarter disposition <br> activity 2 | (1,387 | ) | (353 | ) | (278 | ) | (318 | ) | (78 | ) | |||||
| Adjustment to exclude non-recurring and other<br> expenses 3 | — | — | 2,100 | 182 | 1,929 | ||||||||||
| Adjustment to exclude change in fair value <br> of earnout liability | 1,059 | 5,604 | (1,124 | ) | 6,706 | (6,362 | ) | ||||||||
| Adjustment to exclude write-off of accrued <br> rental income | 1,496 | — | 442 | 242 | — | ||||||||||
| Adjustment to exclude cost of debt <br> extinguishments | 242 | — | 126 | — | 392 | ||||||||||
| Adjustment to exclude lease termination <br> fees | (35,000 | ) | — | — | — | — | |||||||||
| Adjusted EBITDAre | $ | 78,001 | $ | 73,950 | $ | 71,104 | $ | 69,716 | $ | 69,267 | |||||
| General and administrative | 8,537 | 8,650 | 10,632 | 9,219 | 7,214 | ||||||||||
| Adjusted Net Operating Income ("NOI") | $ | 86,538 | $ | 82,600 | $ | 81,736 | $ | 78,935 | $ | 76,481 | |||||
| Straight-line rental revenue, net | (5,789 | ) | (5,245 | ) | (4,762 | ) | (5,339 | ) | (6,947 | ) | |||||
| Other amortization and non-cash charges | (616 | ) | (642 | ) | (737 | ) | (1,170 | ) | 1,810 | ||||||
| Adjusted Cash NOI | $ | 80,133 | $ | 76,713 | $ | 76,237 | $ | 72,426 | $ | 71,344 | |||||
| Annualized EBITDAre | $ | 432,221 | $ | 263,761 | $ | 273,888 | $ | 244,805 | $ | 293,544 | |||||
| Annualized Adjusted EBITDAre | 311,998 | 295,808 | 284,414 | 278,867 | 277,068 | ||||||||||
| Annualized Adjusted NOI | 346,145 | 330,410 | 326,944 | 315,743 | 305,924 | ||||||||||
| Annualized Adjusted Cash NOI | 320,524 | 306,863 | 304,948 | 289,704 | 285,376 |
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.
3 Amounts include $1.2 million of severance and $0.9 million of accelerated stock-based compensation associated with the departure of executive officers during the three months ended March 31, 2021, and expenses directly associated with the Internalization in 2020.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2021 Broadstone Net Lease, LLC. All rights reserved. 9
Lease Revenues Detail
(unaudited, in thousands)
| Three Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | December 31,<br>2020 | September 30,<br>2020 | |||||||||
| Contractual rental amounts billed for <br> operating leases | $ | 78,886 | $ | 75,011 | $ | 73,245 | $ | 72,558 | $ | 69,270 | |||
| Adjustment to recognize contractual <br> operating lease billings on a straight-<br> line basis | 4,942 | 4,724 | 4,367 | 4,256 | 6,768 | ||||||||
| Variable rental amounts earned | 130 | 114 | 91 | 455 | 234 | ||||||||
| Earned income from direct financing <br> leases | 726 | 728 | 730 | 756 | 757 | ||||||||
| Interest income from sales-type <br> leases | 14 | 15 | 14 | 5 | — | ||||||||
| Operating expenses billed to tenants | 4,414 | 4,196 | 4,388 | 4,389 | 3,389 | ||||||||
| Other income from real estate <br> transactions | 33,515 | 28 | 5 | (16 | ) | 64 | |||||||
| Adjustment to revenue recognized for <br> uncollectible rental amounts billed, net | 150 | (57 | ) | (142 | ) | (112 | ) | 262 | |||||
| Total Lease revenues, net | $ | 122,777 | $ | 84,759 | $ | 82,698 | $ | 82,291 | $ | 80,744 |
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2021 Broadstone Net Lease, LLC. All rights reserved. 10
Capital Structure
(unaudited, in thousands, except per share data)
| EQUITY | |||
|---|---|---|---|
| Shares of Common Stock | 161,255 | ||
| OP Units | 10,370 | ||
| Common Stock & OP Units | 171,625 | ||
| Price Per Share / Unit at September 30, 2021 | $ | 24.81 | |
| IMPLIED EQUITY MARKET CAPITALIZATION | $ | 4,258,017 | |
| % of Total Capitalization | 72.7 | % | |
| DEBT | |||
| Unsecured Revolving Credit Facility - 2023 | $ | — | |
| Unsecured Term Loan Facilities | 650,000 | ||
| Unsecured Term Loan - 2022 | 60,000 | ||
| Unsecured Term Loan - 2024 | 190,000 | ||
| Unsecured Term Loan - 2026 | 400,000 | ||
| 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 Notes - 2031 | 375,000 | ||
| Mortgage Debt - Various | 97,868 | ||
| TOTAL DEBT | $ | 1,597,868 | |
| % of Total Capitalization | 27.3 | % | |
| % of Total Capitalization Floating Rate Debt | 0.3 | % | |
| % of Total Capitalization Fixed Rate Debt | 27.0 | % | |
| ENTERPRISE VALUE | |||
| Total Capitalization | $ | 5,855,885 | |
| Less: Cash and Cash Equivalents | (16,182 | ) | |
| Enterprise Value | $ | 5,839,703 |
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2021 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, 2021 | 145,609 | 11,399 | 157,008 | ||||||
| Q1 2021 board of directors fees | 12 | — | 12 | ||||||
| Q1 2021 stock-based compensation activity | 199 | — | 199 | ||||||
| Q1 2021 retirement of common stock | (45 | ) | — | (45 | ) | ||||
| Q1 2021 OP Unit conversions | 38 | (38 | ) | — | |||||
| Balance, March 31, 2021 | 145,813 | 11,361 | 157,174 | ||||||
| Q2 2021 board of directors fees | 13 | — | 13 | ||||||
| Q2 2021 stock-based compensation activity | 1 | — | 1 | ||||||
| Q2 2021 retirement of common stock | (16 | ) | — | (16 | ) | ||||
| Q2 2021 OP Unit conversions | 1,127 | (1,127 | ) | — | |||||
| Q2 2021 Earnout tranche 1 issuance | 145 | 248 | 393 | ||||||
| Q2 2021 Public follow-on equity offering | 11,500 | — | 11,500 | ||||||
| Balance, June 30, 2021 | 158,583 | 10,482 | 169,065 | ||||||
| Q3 2021 board of directors fees | 13 | — | 13 | ||||||
| Q3 2021 retirement of common stock | (3 | ) | — | (3 | ) | ||||
| Q3 2021 forfeiture of common stock | (5 | ) | — | (5 | ) | ||||
| Q3 2021 OP Unit conversions | 1,723 | (1,723 | ) | — | |||||
| Q3 2021 Earnout tranche 2, 3, and 4 issuance | 944 | 1,611 | 2,555 | ||||||
| Balance, September 30, 2021 | 161,255 | 10,370 | 171,625 | ||||||
| Percentage ownership of OP at September 30, 2021 | 94.0 | % | 6.0 | % | 100 | % |
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2021 Broadstone Net Lease, LLC. All rights reserved. 12
Debt Outstanding
(unaudited, in thousands)
| Outstanding Balance | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | December 31, | |||||||||
| 2021 | 2020 | Interest Rate | Maturity Date | |||||||
| Unsecured revolving credit facility | $ | — | $ | — | one-month LIBOR + 1.00% | Sep. 2023 | ||||
| Unsecured term loans: | ||||||||||
| 2022 Unsecured Term Loan | 60,000 | 60,000 | one-month LIBOR + 1.00% | Feb. 2022 | ||||||
| 2023 Unsecured Term Loan | — | 265,000 | one-month LIBOR + 1.10% | Jan. 2023 | ||||||
| 2024 Unsecured Term Loan | 190,000 | 190,000 | one-month LIBOR + 1.00% | Jun. 2024 | ||||||
| 2026 Unsecured Term Loan | 400,000 | 450,000 | one-month LIBOR + 1.00% | Feb. 2026 | ||||||
| Total unsecured term loans | 650,000 | 965,000 | ||||||||
| Unamortized debt issuance costs, net | (3,542 | ) | (3,670 | ) | ||||||
| Total unsecured term loans, net | 646,458 | 961,330 | ||||||||
| 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 | — | 2.60% | Sep. 2031 | ||||||
| Total senior unsecured notes | 850,000 | 475,000 | ||||||||
| Unamortized debt issuance costs and<br> original issuance discount, net | (6,335 | ) | (2,534 | ) | ||||||
| Total senior unsecured notes, net | 843,665 | 472,466 | ||||||||
| Total unsecured debt, net | $ | 1,490,123 | $ | 1,433,796 | ||||||
| Origination | Maturity | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |
| Date | Date | Interest | September 30, | December 31, | ||||||
| Lender | (Month/Year) | (Month/Year) | Rate | 2021 | 2020 | |||||
| Wilmington Trust National Association | Apr-19 | Feb-28 | 4.92% | $ | 47,064 | $ | 47,945 | |||
| Wilmington Trust National Association | Jun-18 | Aug-25 | 4.36% | 19,657 | 19,947 | |||||
| PNC Bank | Oct-16 | Nov-26 | 3.62% | 17,196 | 17,498 | |||||
| T2 Durham I, LLC | Jul - 21 | Jul -24 | Greater of Prime + 1.25% or 5.00% | 7,500 | — | |||||
| Aegon | Apr-12 | Oct-23 | 6.38% | 6,451 | 7,039 | |||||
| Sun Life | Mar-12 | Oct-21 | 5.13% | — | 10,469 | |||||
| M&T Bank | Oct-17 | Aug-21 | one - month<br>LIBOR+3% | — | 4,769 | |||||
| Total mortgages | 97,868 | 107,667 | ||||||||
| Debt issuance costs, net | (338 | ) | (285 | ) | ||||||
| Mortgages, net | $ | 97,530 | $ | 107,382 | ||||||
| Year of Maturity | Revolving Credit Facility | Term Loans | Senior Notes | Mortgages | Total | |||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2021 | $ | — | $ | — | $ | — | $ | 707 | $ | 707 |
| 2022 | — | 60,000 | — | 2,907 | 62,907 | |||||
| 2023 | — | — | — | 7,582 | 7,582 | |||||
| 2024 | — | 190,000 | — | 9,760 | 199,760 | |||||
| 2025 | — | — | — | 20,195 | 20,195 | |||||
| Thereafter | — | 400,000 | 850,000 | 56,717 | 1,306,717 | |||||
| Total | $ | — | $ | 650,000 | $ | 850,000 | $ | 97,868 | $ | 1,597,868 |
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2021 Broadstone Net Lease, LLC. All rights reserved. 13
Net Debt Metrics
(unaudited, in thousands)
| September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | December 31,<br>2020 | September 30,<br>2020 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt | |||||||||||||||
| Revolving Credit Facility | $ | — | $ | — | $ | 15,000 | $ | — | $ | — | |||||
| Unsecured term loans, net | 646,458 | 910,994 | 910,732 | 961,330 | 961,115 | ||||||||||
| Senior unsecured notes, net | 843,665 | 472,637 | 472,551 | 472,466 | 472,380 | ||||||||||
| Mortgages and notes payable, net | 97,530 | 105,748 | 106,559 | 107,382 | 108,752 | ||||||||||
| Debt issuance costs | 10,215 | 6,625 | 6,988 | 6,489 | 6,829 | ||||||||||
| Gross Debt | 1,597,868 | 1,496,004 | 1,511,830 | 1,547,667 | 1,549,076 | ||||||||||
| Cash and cash equivalents | (16,182 | ) | (78,987 | ) | (10,205 | ) | (100,486 | ) | (101,787 | ) | |||||
| Restricted cash | (3,895 | ) | (8,021 | ) | (8,145 | ) | (10,242 | ) | (7,200 | ) | |||||
| Net Debt | $ | 1,577,791 | $ | 1,408,996 | $ | 1,493,480 | $ | 1,436,939 | $ | 1,440,089 | |||||
| Net Debt to Annualized EBITDAre | 3.65x | 5.34x | 5.45x | 5.87x | 4.91x | ||||||||||
| Net Debt to Annualized Adjusted <br> EBITDAre | 5.06x | 4.76x | 5.25x | 5.15x | 5.20x |
Covenants
(unaudited)
The following is a summary of key financial covenants for the Company’s unsecured credit facility and unsecured term loans and senior 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, 2021, the Company believes it is in compliance with the covenants.
| Covenants | Required | Revolving Credit Facility and Unsecured Term Loans | Senior Unsecured Notes Series A, B, & C | 2031 Senior Unsecured Public Notes | |||
|---|---|---|---|---|---|---|---|
| Leverage ratio | ≤ 0.60 to 1.00 | 0.34 | 0.35 | Not Applicable | |||
| Secured indebtedness ratio | ≤ 0.40 to 1.00 | 0.02 | 0.02 | Not Applicable | |||
| Unencumbered coverage ratio | ≥ 1.75 to 1.00 | 7.90 | Not Applicable | Not Applicable | |||
| Fixed charge coverage ratio | ≥ 1.50 to 1.00 | 4.29 | 4.29 | Not Applicable | |||
| Total unsecured indebtedness to <br> total unencumbered eligible <br> property value | ≤ 0.60 to 1.00 | 0.35 | 0.36 | 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 | 0.36 | |||
| Consolidated income available for <br> debt to annual debt service <br> charge | ≥ 1.50 to 1.00 | Not Applicable | Not Applicable | 4.69 | |||
| Total unencumbered assets to <br> total unsecured debt | ≥ 1.50 to 1.00 | Not Applicable | Not Applicable | 2.86 | |||
| Secured debt ratio | ≤ 0.40 to 1.00 | Not Applicable | Not Applicable | 0.02 |
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2021 Broadstone Net Lease, LLC. All rights reserved. 14
Debt Maturities
(unaudited, dollars in millions)
Debt Maturities
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 | © 2021 Broadstone Net Lease, LLC. All rights reserved. 15
Portfolio Activity
Acquisitions
(unaudited, square feet and dollars in thousands)
The following table summarizes the Company’s property acquisition activity during 2021.
| QTD Q1 2021 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Property Type | Number of Properties | Square Feet ('000s) | Weighted Average Lease Term (years) | Weighted Average Annual Rent Increase | Acquisition Price ('000s) | ||||||
| Retail | 24 | 178 | 16.3 | 1.1 | % | ||||||
| Healthcare | 4 | 51 | 11.5 | 2.0 | % | ||||||
| Restaurant 1 | — | — | 16.8 | 2.9 | % | ||||||
| Total Properties | 28 | 229 | 15.3 | 1.3 | % | ||||||
| Weighted average initial cash cap rate | % | ||||||||||
| QTD Q2 2021 | |||||||||||
| Property Type | Number of Properties | Square Feet ('000s) | Weighted Average Lease Term (years) | Weighted Average Annual Rent Increase | Acquisition Price ('000s) | ||||||
| Industrial | 12 | 1,553 | 15.5 | 1.5 | % | ||||||
| Healthcare | 11 | 136 | 10.5 | 1.7 | % | ||||||
| Retail | 11 | 218 | 9.8 | 0.4 | % | ||||||
| Total Properties | 34 | 1,906 | 13.2 | 1.4 | % | ||||||
| Weighted average initial cash cap rate | % | ||||||||||
| QTD Q3 2021 | |||||||||||
| Property Type | Number of Properties | Square Feet ('000s) | Weighted Average Lease Term (years) | Weighted Average Annual Rent Increase | Acquisition Price ('000s) | ||||||
| Industrial | 9 | 1,358 | 18.4 | 1.9 | % | ||||||
| Retail | 8 | 105 | 8.4 | 0.5 | % | ||||||
| Healthcare | 1 | 148 | 25.0 | 2.0 | % | ||||||
| Total Properties | 18 | 1,611 | 19.4 | 1.8 | % | ||||||
| Weighted average initial cash cap rate | % | ||||||||||
| YTD Q3 2021 | |||||||||||
| Property Type | Number of Properties | Square Feet ('000s) | Weighted Average Lease Term (years) | Weighted Average Annual Rent Increase | Acquisition Price ('000s) | ||||||
| Industrial | 21 | 2,911 | 17.1 | 1.7 | % | ||||||
| Healthcare | 16 | 335 | 18.2 | 1.9 | % | ||||||
| Retail | 43 | 501 | 13.0 | 0.8 | % | ||||||
| Restaurant 1 | — | — | 16.8 | 2.9 | % | ||||||
| Total Properties | 80 | 3,746 | 16.4 | 1.5 | % | ||||||
| Weighted average initial cash cap rate | % |
All values are in US Dollars.
1 Acquisition of additional land to an existing property.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2021 Broadstone Net Lease, LLC. All rights reserved. 16
Dispositions
(unaudited, square feet and dollars in thousands)
The following table summarizes the Company’s property disposition activity during 2021.
| QTD Q1 2021 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Property Type | Number of Properties | Square Feet ('000s) | Acquisition Price ('000s) | Disposition Price ('000s) | Net Book Value ('000s) | Cash Cap Rate | |||||
| Healthcare | 5 | 31 | 7.4 | % | |||||||
| Restaurant | 3 | 14 | 6.4 | % | |||||||
| Total Properties | 8 | 45 | 7.0 | % | |||||||
| QTD Q2 2021 | |||||||||||
| Property Type | Number of Properties | Square Feet ('000s) | Acquisition Price ('000s) | Disposition Price ('000s) | Net Book Value ('000s) | Cash Cap Rate | |||||
| Restaurant | 10 | 36 | 6.4 | % | |||||||
| Healthcare | 1 | 6 | N/A | 2 | |||||||
| Total Properties | 11 | 42 | 6.4 | % | 3 | ||||||
| QTD Q3 2021 | |||||||||||
| Property Type | Number of Properties | Square Feet ('000s) | Acquisition Price ('000s) | Disposition Price ('000s) | Net Book Value ('000s) | Cash Cap Rate | |||||
| Office 4 | 2 | 407 | N/A | 2 | |||||||
| Restaurant | 3 | 20 | 6.0 | % | 3 | ||||||
| Retail | 1 | 29 | N/A | 2 | |||||||
| Total Properties | 6 | 455 | 6.0 | % | 3 | ||||||
| YTD Q3 2021 | |||||||||||
| Property Type | Number of Properties | Square Feet ('000s) | Acquisition Price ('000s) | Disposition Price ('000s) | Net Book Value ('000s) | Cash Cap Rate | |||||
| Restaurant | 16 | 70 | 6.3 | % | 3 | ||||||
| Healthcare | 6 | 37 | 7.2 | % | 3 | ||||||
| Office 4 | 2 | 407 | N/A | 2 | |||||||
| Retail | 1 | 29 | N/A | 2 | |||||||
| Total Properties | 25 | 543 | 6.5 | % | 3 |
All values are in US Dollars.
2 Properties were vacant at the time of disposition.
3 Weighted average cash cap rate on tenanted properties sold.
4 During the third quarter, we executed the termination of a long-term, master lease with an investment-grade office tenant in exchange for a termination fee of $35.0 million. Simultaneously, we sold the underlying properties to an unrelated third party for gross proceeds of $16.0 million. The $35.0 million lease termination fee was recognized separately as Lease revenue, net.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2021 Broadstone Net Lease, LLC. All rights reserved. 17
Portfolio at a Glance: Key Metrics
| Properties | 696 |
|---|---|
| States | 42 |
| Canada | 1 |
| Total Rentable Sq. Footage | 31.4M |
| Tenants | 197 |
| Brands | 184 |
| Industries | 56 |
| Occupancy (based on SF) | 99.8% |
| Top Ten Tenant Concentration | 17.6% |
| Top Twenty Tenant Concentration | 30.3% |
| Investment Grade (tenant/guarantor) | 15.3% |
| Financial Reporting Coverage1 | 93.9% |
| Rent Coverage Ratio2 | 3.5x |
| Weighted Average Annual Rent Increases | 2.0% |
| Weighted Average Remaining Lease Term | 10.6 years |
1 Includes 8.8% related to tenants not required to provide financial information under the terms of our lease, but whose financial statements are available publicly.
2 Represents rent coverage ratio for Restaurant property type only.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2021 Broadstone Net Lease, LLC. All rights reserved. 18
Diversification: Tenants & Brands
(unaudited)
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 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Jack's Family Restaurants LP | Quick Service Restaurants | 43 | 2.2 | % | 147 | 0.5 | % | |||||
| Red Lobster Hospitality & Red Lobster <br> Restaurants LLC | Casual Dining | 22 | 2.1 | % | 181 | 0.6 | % | |||||
| Joseph T. Ryerson & Son, Inc | Distribution & Warehouse | 11 | 2.0 | % | 1,537 | 4.9 | % | |||||
| Axcelis Technologies, Inc. | Flex and R&D | 1 | 1.8 | % | 417 | 1.4 | % | |||||
| Hensley & Company | Distribution & Warehouse | 3 | 1.8 | % | 577 | 1.8 | % | |||||
| BluePearl Holdings, LLC | Animal Health Services | 13 | 1.6 | % | 160 | 0.5 | % | |||||
| Outback Steakhouse of Florida LLC | Casual Dining | 22 | 1.6 | % | 140 | 0.4 | % | |||||
| Krispy Kreme Doughnut Corporation | Quick Service Restaurants/<br>Food Processing | 27 | 1.5 | % | 156 | 0.5 | % | |||||
| Siemens Medical Solutions USA, Inc. <br> & Siemens Corporation | Manufacturing/Flex <br>and R&D | 2 | 1.5 | % | 545 | 1.7 | % | |||||
| Big Tex Trailer Manufacturing, Inc. | Automotive/Distribution & <br>Warehouse/Manufacturing/ Corporate Headquarters | 17 | 1.5 | % | 1,302 | 4.1 | % | |||||
| Total Top 10 Tenants | 161 | 17.6 | % | 5,162 | 16.4 | % | ||||||
| Santa Cruz Valley Hospital | Healthcare Facilities | 1 | 1.4 | % | 148 | 0.5 | % | |||||
| Nestle' Dreyer's Ice Cream Company | Cold Storage | 1 | 1.4 | % | 310 | 1.0 | % | |||||
| Tractor Supply Company | General Merchandise | 17 | 1.4 | % | 341 | 1.1 | % | |||||
| Arkansas Surgical Hospital | Surgical | 1 | 1.3 | % | 129 | 0.4 | % | |||||
| American Signature, Inc. | Home Furnishings | 6 | 1.3 | % | 474 | 1.5 | % | |||||
| Cascade Aerospace Inc. | Manufacturing | 1 | 1.2 | % | 231 | 0.7 | % | |||||
| Dollar General Corporation | General Merchandise | 40 | 1.2 | % | 371 | 1.2 | % | |||||
| Fresh Express Incorporated | Food Processing | 1 | 1.2 | % | 335 | 1.1 | % | |||||
| Aventiv Technologies, LLC | Corporate Headquarters | 1 | 1.2 | % | 154 | 0.5 | % | |||||
| Kith Kitchens | Manufacturing | 3 | 1.1 | % | 843 | 2.7 | % | |||||
| Total Top 20 Tenants | 233 | 30.3 | % | 8,498 | 27.1 | % |
All values are in US Dollars.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2021 Broadstone Net Lease, LLC. All rights reserved. 19
Top 20 Brands
(unaudited)
| 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 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Jack's Family Restaurants | Quick Service Restaurants | 43 | 2.2 | % | 147 | 0.5 | % | |||||
| Red Lobster | Casual Dining | 22 | 2.1 | % | 181 | 0.6 | % | |||||
| Ryerson | Distribution & Warehouse | 11 | 2.0 | % | 1,537 | 4.9 | % | |||||
| Axcelis | Flex and R&D | 1 | 1.8 | % | 417 | 1.4 | % | |||||
| Hensley | Distribution & Warehouse | 3 | 1.8 | % | 577 | 1.8 | % | |||||
| BluePearl Veterinary Partners | Animal Health Services | 13 | 1.6 | % | 160 | 0.5 | % | |||||
| Bob Evans Farms | Casual Dining/Food <br>Processing | 21 | 1.6 | % | 282 | 0.9 | % | |||||
| Krispy Kreme | Quick Service Restaurants/<br>Food Processing | 27 | 1.5 | % | 156 | 0.5 | % | |||||
| Siemens | Manufacturing/Flex <br>and R&D | 2 | 1.5 | % | 545 | 1.7 | % | |||||
| Big Tex Trailers | Automotive/Distribution & <br>Warehouse/Manufacturing/<br>Corporate Headquarters | 17 | 1.5 | % | 1,302 | 4.1 | % | |||||
| Total Top 10 Brands | 160 | 17.6 | % | 5,304 | 16.9 | % | ||||||
| Wendy's | Quick Service Restaurants | 31 | 1.5 | % | 88 | 0.3 | % | |||||
| Santa Cruz Valley Hospital | Healthcare Facilities | 1 | 1.4 | % | 148 | 0.5 | % | |||||
| Outback Steakhouse | Casual Dining | 20 | 1.4 | % | 126 | 0.4 | % | |||||
| Nestle' | Cold Storage | 1 | 1.4 | % | 310 | 1.0 | % | |||||
| Tractor Supply Co. | General Merchandise | 17 | 1.4 | % | 341 | 1.1 | % | |||||
| Arkansas Surgical Hospital | Surgical | 1 | 1.3 | % | 129 | 0.4 | % | |||||
| Value City Furniture | Home Furnishings | 6 | 1.3 | % | 474 | 1.5 | % | |||||
| Taco Bell | Quick Service Restaurants | 31 | 1.2 | % | 80 | 0.2 | % | |||||
| Cascade Aerospace | Manufacturing | 1 | 1.2 | % | 231 | 0.7 | % | |||||
| Dollar General | General Merchandise | 40 | 1.2 | % | 371 | 1.2 | % | |||||
| Total Top 20 Brands | 309 | 30.9 | % | 7,602 | 24.2 | % |
All values are in US Dollars.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2021 Broadstone Net Lease, LLC. All rights reserved. 20
Diversification: Property Type
(unaudited, rent percentages based on ABR)
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2021 Broadstone Net Lease, LLC. All rights reserved. 21
Diversification: Property Type (continued)
(unaudited)
| 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 | 61 | 14.8 | % | 8,715 | 27.8 | % | |||||
| Distribution & Warehouse | 44 | 14.6 | % | 9,052 | 28.8 | % | |||||
| Food Processing | 16 | 6.6 | % | 2,405 | 7.7 | % | |||||
| Flex and R&D | 7 | 5.2 | % | 1,457 | 4.6 | % | |||||
| Cold Storage | 4 | 3.9 | % | 933 | 3.0 | % | |||||
| Services | 19 | 2.4 | % | 446 | 1.4 | % | |||||
| Industrial Total | 151 | 47.5 | % | 23,008 | 73.3 | % | |||||
| Healthcare | |||||||||||
| Clinical | 50 | 7.7 | % | 1,055 | 3.4 | % | |||||
| Healthcare Services | 28 | 3.8 | % | 463 | 1.5 | % | |||||
| Animal Health Services | 27 | 3.1 | % | 405 | 1.3 | % | |||||
| Surgical | 11 | 3.0 | % | 316 | 1.0 | % | |||||
| Life Science | 9 | 2.4 | % | 549 | 1.7 | % | |||||
| Untenanted | 2 | 0.0 | % | 23 | 0.1 | % | |||||
| Healthcare Total | 127 | 20.0 | % | 2,811 | 9.0 | % | |||||
| Restaurant | |||||||||||
| Quick Service Restaurants | 148 | 7.5 | % | 505 | 1.6 | % | |||||
| Casual Dining | 82 | 6.0 | % | 527 | 1.7 | % | |||||
| Untenanted | 1 | 0.0 | % | 5 | 0.0 | % | |||||
| Restaurant Total | 231 | 13.5 | % | 1,037 | 3.3 | % | |||||
| Retail | |||||||||||
| General Merchandise | 90 | 4.9 | % | 1,178 | 3.8 | % | |||||
| Automotive | 68 | 4.0 | % | 844 | 2.7 | % | |||||
| Home Furnishings | 13 | 2.2 | % | 797 | 2.5 | % | |||||
| Untenanted | 1 | 0.0 | % | 34 | 0.1 | % | |||||
| Retail Total | 172 | 11.1 | % | 2,853 | 9.1 | % | |||||
| Office | |||||||||||
| Corporate Headquarters | 6 | 3.1 | % | 671 | 2.1 | % | |||||
| Strategic Operations | 5 | 3.0 | % | 615 | 2.0 | % | |||||
| Call Center | 4 | 1.8 | % | 391 | 1.2 | % | |||||
| Office Total | 15 | 7.9 | % | 1,677 | 5.3 | % | |||||
| Total | 696 | 100.0 | % | 31,386 | 100.0 | % |
All values are in US Dollars.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2021 Broadstone Net Lease, LLC. All rights reserved. 22
Key Statistics by Property Type
| Industrial | ||
|---|---|---|
| Number of properties | 151 | |
| Square feet (000s) | 23,008 | |
| Weighted average lease term (years) | 10.6 | |
| Weighted average annual rent escalation | 2.0 | % |
| Healthcare | ||
| Number of properties | 127 | |
| Square feet (000s) | 2,811 | |
| Weighted average lease term (years) | 9.1 | |
| Weighted average annual rent escalation | 2.2 | % |
| Restaurants | ||
| Number of properties | 231 | |
| Square feet (000s) | 1,037 | |
| Weighted average lease term (years) | 15.1 | |
| Weighted average annual rent escalation | 2.0 | % |
| Retail | ||
| Number of properties | 172 | |
| Square feet (000s) | 2,853 | |
| Weighted average lease term (years) | 10.6 | |
| Weighted average annual rent escalation | 1.6 | % |
| Office | ||
| Number of properties | 15 | |
| Square feet (000s) | 1,677 | |
| Weighted average lease term (years) | 6.7 | |
| Weighted average annual rent escalation | 2.5 | % |
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2021 Broadstone Net Lease, LLC. All rights reserved. 23
Diversification: Tenant Industry (unaudited)
| 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 | 100 | 16.0 | % | 2,022 | 6.4 | % | |||||
| Restaurants | 232 | 13.7 | % | 1,067 | 3.4 | % | |||||
| Packaged Foods & Meats | 8 | 4.4 | % | 1,404 | 4.5 | % | |||||
| Distributors | 24 | 4.3 | % | 2,519 | 8.0 | % | |||||
| Food Distributors | 7 | 4.0 | % | 1,556 | 5.0 | % | |||||
| Auto Parts & Equipment | 39 | 3.8 | % | 2,387 | 7.6 | % | |||||
| Specialized Consumer Services | 47 | 3.7 | % | 720 | 2.3 | % | |||||
| Metal & Glass Containers | 8 | 3.0 | % | 2,206 | 7.0 | % | |||||
| Healthcare Services | 18 | 2.8 | % | 515 | 1.6 | % | |||||
| Home Furnishing | 5 | 2.7 | % | 1,785 | 5.7 | % | |||||
| Specialty Stores | 21 | 2.7 | % | 1,064 | 3.4 | % | |||||
| Home Furnishing Retail | 16 | 2.7 | % | 1,149 | 3.7 | % | |||||
| Aerospace & Defense | 7 | 2.7 | % | 952 | 3.0 | % | |||||
| Electronic Components | 2 | 2.1 | % | 466 | 1.5 | % | |||||
| General Merchandise Stores | 65 | 2.1 | % | 584 | 1.9 | % | |||||
| Other (41 industries) | 93 | 29.3 | % | 10,928 | 34.8 | % | |||||
| Untenanted properties | 4 | — | 62 | 0.2 | % | ||||||
| Total | 696 | 100.0 | % | 31,386 | 100.0 | % |
All values are in US Dollars.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2021 Broadstone Net Lease, LLC. All rights reserved. 24
Diversification: Geography
(unaudited, rent percentages based on ABR)
| State | # <br>Properties | ABR('000s) | ABR as a <br>% of Total <br>Portfolio | Square Feet ('000s) | SF as a % <br>of Total <br>Portfolio | State | # <br>Properties | ABR('000s) | ABR as a <br>% of Total <br>Portfolio | Square Feet ('000s) | SF as a % <br>of Total <br>Portfolio | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| TX | 61 | 10.2 | % | 3,468 | 11.0 | % | NJ | 3 | 1.5 | % | 366 | 1.2 | % | ||||||||||
| IL | 25 | 6.2 | % | 1,986 | 6.3 | % | MO | 10 | 1.5 | % | 959 | 3.1 | % | ||||||||||
| WI | 34 | 5.7 | % | 1,884 | 6.0 | % | WA | 15 | 1.3 | % | 150 | 0.5 | % | ||||||||||
| FL | 47 | 5.0 | % | 859 | 2.7 | % | LA | 4 | 1.0 | % | 194 | 0.6 | % | ||||||||||
| CA | 12 | 4.9 | % | 1,563 | 5.0 | % | NE | 6 | 0.9 | % | 509 | 1.6 | % | ||||||||||
| OH | 36 | 4.6 | % | 1,400 | 4.5 | % | MD | 4 | 0.9 | % | 293 | 0.9 | % | ||||||||||
| MI | 34 | 4.6 | % | 1,411 | 4.5 | % | NM | 8 | 0.9 | % | 96 | 0.3 | % | ||||||||||
| AZ | 9 | 4.0 | % | 909 | 2.9 | % | MS | 8 | 0.9 | % | 334 | 1.1 | % | ||||||||||
| NC | 35 | 4.0 | % | 1,308 | 4.2 | % | IA | 4 | 0.8 | % | 622 | 2.0 | % | ||||||||||
| IN | 29 | 3.9 | % | 1,759 | 5.6 | % | WV | 16 | 0.8 | % | 109 | 0.3 | % | ||||||||||
| MN | 20 | 3.9 | % | 2,021 | 6.4 | % | SC | 13 | 0.8 | % | 308 | 1.0 | % | ||||||||||
| AL | 49 | 3.3 | % | 836 | 2.7 | % | CO | 4 | 0.7 | % | 125 | 0.4 | % | ||||||||||
| NY | 26 | 3.3 | % | 680 | 2.2 | % | UT | 3 | 0.7 | % | 280 | 0.9 | % | ||||||||||
| TN | 42 | 3.2 | % | 509 | 1.6 | % | CT | 2 | 0.5 | % | 55 | 0.2 | % | ||||||||||
| MA | 5 | 3.2 | % | 1,026 | 3.3 | % | MT | 7 | 0.5 | % | 43 | 0.1 | % | ||||||||||
| AR | 11 | 2.3 | % | 282 | 0.9 | % | NV | 2 | 0.4 | % | 80 | 0.3 | % | ||||||||||
| GA | 21 | 2.3 | % | 1,056 | 3.4 | % | DE | 4 | 0.3 | % | 133 | 0.4 | % | ||||||||||
| OK | 20 | 2.2 | % | 944 | 3.0 | % | ND | 2 | 0.3 | % | 28 | 0.1 | % | ||||||||||
| PA | 14 | 2.1 | % | 1,010 | 3.2 | % | VT | 2 | 0.1 | % | 24 | 0.1 | % | ||||||||||
| KY | 20 | 1.8 | % | 672 | 2.1 | % | WY | 1 | 0.1 | % | 21 | 0.1 | % | ||||||||||
| VA | 17 | 1.7 | % | 204 | 0.6 | % | Total US | 695 | 98.8 | % | 31,155 | 99.3 | % | ||||||||||
| KS | 10 | 1.5 | % | 639 | 2.0 | % | Total Canada | 1 | 1.2 | % | 231 | 0.7 | % | ||||||||||
| Grand Total | 696 | 100.0 | % | 31,386 | 100.0 | % |
All values are in US Dollars.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2021 Broadstone Net Lease, LLC. All rights reserved. 25
Lease Expirations
(unaudited, rent percentages based on ABR)
| Expiration Year | # Properties | ABR('000s) | ABR as a % of Total Portfolio | Square Feet ('000s) | SF as a % of Total Portfolio | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2 | 0.1 | % | 37 | 0.1 | % | |||||
| 2022 | 3 | 0.8 | % | 85 | 0.3 | % | |||||
| 2023 | 6 | 1.5 | % | 515 | 1.6 | % | |||||
| 2024 | 11 | 4.3 | % | 1,689 | 5.4 | % | |||||
| 2025 | 19 | 2.4 | % | 682 | 2.2 | % | |||||
| 2026 | 34 | 5.8 | % | 1,404 | 4.5 | % | |||||
| 2027 | 27 | 7.1 | % | 2,010 | 6.4 | % | |||||
| 2028 | 35 | 7.2 | % | 2,352 | 7.5 | % | |||||
| 2029 | 71 | 6.7 | % | 2,711 | 8.6 | % | |||||
| 2030 | 98 | 16.2 | % | 5,080 | 16.2 | % | |||||
| 2031 | 23 | 2.3 | % | 737 | 2.3 | % | |||||
| 2032 | 45 | 8.1 | % | 3,023 | 9.6 | % | |||||
| 2033 | 42 | 5.2 | % | 1,717 | 5.5 | % | |||||
| 2034 | 32 | 1.8 | % | 376 | 1.2 | % | |||||
| 2035 | 16 | 3.6 | % | 1,552 | 4.9 | % | |||||
| 2036 | 84 | 7.4 | % | 2,608 | 8.3 | % | |||||
| 2037 | 24 | 5.3 | % | 1,367 | 4.4 | % | |||||
| 2038 | 33 | 2.1 | % | 306 | 1.0 | % | |||||
| 2039 | 12 | 2.8 | % | 933 | 3.0 | % | |||||
| 2040 | 33 | 1.8 | % | 317 | 1.0 | % | |||||
| Thereafter | 42 | 7.5 | % | 1,823 | 5.8 | % | |||||
| Untenanted properties | 4 | — | 62 | 0.2 | % | ||||||
| Total | 696 | 100.0 | % | 31,386 | 100.0 | % |
All values are in US Dollars.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2021 Broadstone Net Lease, LLC. All rights reserved. 26
Portfolio Occupancy
(unaudited, based on square feet)
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2021 Broadstone Net Lease, LLC. All rights reserved. 27
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 the short-term rent deferrals and abatements agreed to as a result of tenant requests for rent relief related to the COVID-19 pandemic, and 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 last month.
Cash Cap Rate: Cash Cap Rate represents the estimated first year cash yield to be generated on a real estate investment property, 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.
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 as of 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 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) and Adjusted Funds From Operations (AFFO): FFO and AFFO are non-GAAP measures. We believe the use of 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 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 Nareit, which 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. To derive AFFO, we modify the Nareit computation of FFO to include other adjustments to GAAP net income related to certain non-cash and non-recurring revenues and expenses, including straight-line rents, the change in fair value of our earnout liability, lease termination fees, cost of debt extinguishments, 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, realized gains or losses on foreign currency transactions, internalization expenses, stock based compensation, severance, extraordinary items, and other specified non-cash items. We believe 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.
BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2021 Broadstone Net Lease, LLC. All rights reserved. 28
Definitions and Explanations (continued)
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” 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 | © 2021 Broadstone Net Lease, LLC. All rights reserved. 29