Broadstone Net Lease Announces First Quarter 2021 Results
05/04/2021 - 04:05 PM
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 March 31, 2021.
FIRST QUARTER 2021 HIGHLIGHTS
2021 AFFO guidance range raised to $1.28 t o $1.34 per diluted share.
Invested $87.3 million in 28 properties at a weighted average initial cash cap rate of 6.4% with an additional $206.5 million of acquisitions under control.
Collected 99.8% of base rents due for the first quarter.
Occupancy increased 50 basis points to 99.7% .
Incurred $10.6 million of general and administrative expenses, inclusive of $1.8 million of stock-based compensation, and $1.2 million of severance primarily related to the departure of an executive officer during the quarter.
Received initial credit rating of ‘BBB’ with stable outlook from S&P, reducing the applicable margin on our bank loans and Revolving Credit Facility by 25 basis points and 20 basis points, respectively.
Moody’s reaffirmed our ‘Baa3’ credit rating and updated their outlook from ‘stable’ to ‘positive’.
Repriced our 2026 Unsecured Term Loan, reducing the applicable margin by 60 basis points.
Generated net income of $24.0 million , or $0.15 per share.
Generated AFFO of $49.4 million , or $0.31 per share.
Ended the quarter with total outstanding debt and Net Debt of $1.5 billion and a Net Debt to Annualized Adjusted EBITDAre ratio of 5.25x.
Declared a quarterly dividend on April 30, 2021, of $0.255 per share to shareholders of record as of June 30, 2021. This represents a 2.0% increase in the dividend from the first quarter of 2021.
Announced that Denise Brooks-Williams and Michael A. Coke were nominated to serve as new Independent Directors commencing with the Company’s upcoming annual meeting.
MANAGEMENT COMMENTARY
“BNL completed a highly productive first quarter that positions us well to meet our full year growth goals that we shared with the market in February,” said Chris Czarnecki, BNL’s Chief Executive Officer. “We invested over $87 million in accretive acquisitions and continued to build a robust pipeline of attractive investment opportunities in the industrial, healthcare, and select retail property sectors with approximately $206.5 million of additional properties currently under control. Simultaneously, we continued to reap the benefits of strengthening our leverage and liquidity profile through our 2020 IPO and meaningfully reducing our cost of debt capital resulting from S&P’s BBB initial credit rating and a repricing of an existing bank term note. Together with market leading portfolio performance, we recognized a meaningful growth in AFFO per share over the fourth quarter which was our baseline post IPO. Ultimately, strong performance in all facets of the business supported an increase in our quarterly dividend for our shareholders.”
SUMMARIZED FINANCIAL RESULTS
For the Three Months Ended
(in thousands, except per share data)
March 31,
2021
December 31,
2020
Revenues
$
82,698
$
82,291
Net income, including non-controlling interests
$
23,960
$
17,619
Net earnings per share
$
0.15
$
0.11
FFO
$
51,929
$
44,198
FFO per share
$
0.33
$
0.28
AFFO
$
49,410
$
46,894
AFFO per share
$
0.31
$
0.30
Diluted Weighted Average Shares Outstanding
156,724
155,956
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.
REAL ESTATE PORTFOLIO UPDATE
As of March 31, 2021, we owned a diversified portfolio of 661 individual net leased commercial properties with 660 located in 41 U.S. states and one property located in British Columbia, Canada, and comprising approximately 28.4 million rentable square feet of operational space. As of March 31, 2021, all but six of our properties were subject to a lease, and our properties were occupied by 185 different commercial tenants, with no single tenant accounting for more than 2.4% of ABR. Properties under leases represent 99.7% 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 March 31, 2021, was 2.1% .
During the first quarter, we invested $87.3 million , excluding capitalized acquisition costs, in 28 properties at a weighted average initial cash cap rate of 6.4% . The acquisitions included properties in healthcare and select retail asset classes located across 11 states with a weighted average initial lease term and minimum annual rent increases of 15.3 years and 1.3% , respectively. BNL continues to build and evaluate a robust pipeline of potential investment opportunities predominantly focused on industrial, healthcare, quick-service restaurant, and select retail property sectors. BNL currently has $206.5 million of properties under control which we define as under contract or executed letter of intent.
During the first quarter, we sold eight properties for net proceeds of $22.1 million , recognizing a gain over carrying value and original purchase price of $4.7 million and $3.5 million , respectively. The weighted average capitalization rate realized on the tenanted properties was 7.0% .
During the quarter, we successfully re-leased three properties with new tenants which increased occupancy by 50 basis points.
BALANCE SHEET AND CAPITAL MARKETS ACTIVITIES
As announced on January 21, 2021, S&P Global Ratings (“S&P”) assigned the Company an initial credit rating of 'BBB' with a stable outlook. As a result of this credit rating, the margin of our existing bank loans was reduced by 25 basis points beginning in February 2021, the applicable margin on borrowings under our Revolving Credit Facility was reduced by 20 basis points, and is expected to expand our access to a diverse set of advantageous funding sources.
On March 12, 2021, we amended our $450 million 2026 Unsecured Term Loan, reducing the applicable margin an additional 60 basis points based on our current credit rating. In connection with the amendment, we repaid in full the outstanding commitments for two lenders and elected to repay an additional $10 million in outstanding principal, bringing the outstanding balance to $400 million as of March 31, 2021.
As of March 31, 2021, our Net Debt was approximately $1.5 billion , providing a Net Debt to Annualized Adjusted EBITDAre ratio of 5.25x. We intend to maintain a leverage target of less than 6.0x on a Net Debt to Annualized Adjusted EBITDAre basis.
DISTRIBUTIONS
At its April 30, 2021 meeting, our board of directors declared a $0.255 distribution per common share and OP Unit to stockholders and OP Unit holders of record as of June 30, 2021, payable on or before July 15, 2021. This represents an increase of 2.0% as compared to the first quarter dividend.
2021 GUIDANCE
The Company is updating its 2021 AFFO per share guidance by raising both the lower and upper ends of the expected range. The Company currently expects 2021 AFFO per share to be within a range of $1.28 t o $1.34, up from $1.27 t o $1.33 as initially presented in February 2021, due to an increased level of confidence in our ability to execute on our growth objectives supported by a robust pipeline of attractive acquisition opportunities along with the favorable repricing or our largest unsecured term loan. Our expected level of investments and dispositions of real estate properties, and total cash general and administrative expenses, remains consistent with previously issued guidance. 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 first quarter earnings conference call and audio webcast on Wednesday, May 5, 2021, at 1:30 p.m. Eastern Time.
To access the live webcast, which will be available in listen-only mode, please visit: https://services.choruscall.com/links/bnl210225.html . If you prefer to listen via phone, please dial: 1-888-349-0109 and request to join the Broadstone Net Lease, Inc. call. International callers may dial 1-412-542-4109, and Canadian participants may dial 1-855-669-9657.
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 .
ANNUAL MEETING
The company will host its 2021 Annual Meeting of Stockholders (the “Annual Meeting”) on Thursday, May 20, 2021, at 3:00 p.m. Eastern Time. The Annual Meeting will be conducted as a “virtual meeting” of stockholders. In order to attend the Annual Meeting, stockholders must register in advance at www.proxydocs.com/BNL prior to the deadline of Monday, May 17, 2021 at 5:00 p.m. Eastern Time. Upon completing the registration, registrants will receive further instructions via email that they must follow in order to attend the Annual Meeting.
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 March 31, 2021, BNL’s diversified portfolio consisted of 661 individual net leased commercial properties with 660 located in 41 U.S. states and one property located in Canada across the industrial, healthcare, restaurant, office, and retail 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, 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)
March 31,
2021
December 31,
2020
Assets
Accounted for using the operating method, net of accumulated depreciation
$
3,395,609
$
3,354,511
Accounted for using the direct financing method
28,991
29,066
Accounted for using the sales type method
567
567
Investment in rental property, net
3,425,167
3,384,144
Cash and cash equivalents
10,205
100,486
Accrued rental income
105,674
102,117
Tenant and other receivables, net
1,022
1,604
Prepaid expenses and other assets
18,862
22,277
Interest rate swap, assets
239
—
Goodwill
339,769
339,769
Intangible lease assets, net
288,592
290,913
Debt issuance costs – unsecured revolving credit facility, net
5,842
6,435
Leasing fees, net
10,673
10,738
Total assets
$
4,206,045
$
4,258,483
Liabilities and equity
Unsecured revolving credit facility
$
15,000
$
—
Mortgages, net
106,559
107,382
Unsecured term notes, net
1,383,283
1,433,796
Interest rate swap, liabilities
43,662
72,103
Earnout liability
6,385
7,509
Accounts payable and other liabilities
71,072
74,936
Accrued interest payable
9,896
4,023
Intangible lease liabilities, net
77,491
79,653
Total liabilities
1,713,348
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, 145,813 shares issued and outstanding at March 31, 2021; 440,000 shares authorized, 108,609 shares issued and outstanding at December 31, 2020
36
27
Class A common stock, $0.00025 par value; no shares authorized, issued or outstanding at March 31, 2021; 60,000 shares authorized, 37,000 shares issued and outstanding at December 31, 2020
—
9
Additional paid-in capital
2,625,320
2,624,997
Cumulative distributions in excess of retained earnings
(274,140
)
(259,673
)
Accumulated other comprehensive (loss) income
(38,684
)
(66,255
)
Total Broadstone Net Lease, Inc. stockholders’ equity
2,312,532
2,299,105
Non-controlling interests
180,165
179,976
Total equity
2,492,697
2,479,081
Total liabilities and equity
BNL Rankings
#3309 Ranked by Stock Gains
BNL Stock Data
Industry
Investment Advice
Sector
Finance and Insurance
Tags
Finance, Real Estate Investment Trusts
About BNL
broadstone is a sponsor and manager of diversified real estate investment offerings for investors and institutions seeking income-oriented alternatives to the public equity markets. boasting a heritage of commercial and residential real estate expertise and a ten-year track record under the broadstone masthead, the company currently serves 2,500+ shareholders of its two privately offered real estate investment trusts (reits). broadstone’s reits are extensively utilized by rias, trust companies, and other wealth management practices on a non-commission basis. both offerings remain open for investment by accredited investors on a monthly basis. shares are offered via private placement.
