Broadstone Net Lease Provides an Update on Recent Business Activity and Announces Participation at Nareit’s REITWeek: 2024 Investor Conference

Rhea-AI Summary

Broadstone Net Lease (BNL) announced its recent business activities up to May 31, 2024. The company invested $255.4 million in total, including $193.6 million in new properties and $58.8 million in development fundings. Sales of 40 properties generated $276.1 million in gross proceeds. BNL's portfolio maintains a 99.3% lease rate, with a 99.8% rent collection rate. Despite Red Lobster's chapter 11 bankruptcy, BNL's 18 Red Lobster locations remain operational. The company will present at Nareit's REITweek: 2024 on June 4, 2024. CEO John Moragne emphasized growth through portfolio rent escalations, revenue-generating capital expenditures, and a diversified acquisition pipeline.

Positive

• Invested $255.4 million through May 31, 2024.
• New property investments total $193.6 million.
• Generated $276.1 million in gross proceeds from property sales.
• Closed deals worth $82.5 million in acquisitions under control.
• Maintained 99.3% portfolio lease rate.
• Collected 99.8% of base rents.
• Announced participation in Nareit's REITweek: 2024.
• Focused on maximizing earnings through diverse strategies.

Negative

• Red Lobster filed for chapter 11 bankruptcy affecting 1.6% of ABR.
• Only 3 of 774 properties are vacant but not leased.
• Potential financial risk due to tenant credit events despite strong portfolio performance.

Insights

Financial Analyst

Broadstone Net Lease's investment activity through May 31, 2024, indicates a strong focus on expanding and optimizing its portfolio. The company invested $255.4 million in new properties, development funding and capital expenditures. Notably, the split between industrial properties ($96.5 million) and restaurant/retail ($97.1 million) reflects a balanced approach to diversification.

The sale of 40 properties for gross proceeds of $276.1 million at a 7.8% capitalization rate is a positive move, particularly the healthcare portfolio simplification strategy. This suggests a strategic shift towards more profitable or manageable assets.

The collection of 99.8% of base rents and a 99.3% occupancy rate are strong indicators of portfolio stability and effective property management. However, the bankruptcy of Red Lobster, affecting 1.6% of ABR, is a notable risk factor that requires close monitoring.

For investors, the recent business activity underscores Broadstone's robust investment strategy and portfolio management capabilities, despite market challenges.

Market Research Analyst

Broadstone Net Lease's recent investments reflect a strategic positioning within the industrial and retail/restaurant sectors. The substantial allocation towards industrial properties aligns with broader market trends favoring logistics and warehousing due to e-commerce growth. On the other hand, investments in retail properties, including a significant $84.5 million in a retail center, signal confidence in select retail markets.

The sale of healthcare properties indicates a strategic realignment, possibly to reduce exposure to a sector with high regulatory and operational risks. The 7.8% capitalization rate on these sales is competitive, suggesting strong demand for these assets.

Operational metrics such as the 99.8% rent collection and 99.3% occupancy rate highlight the resilience of Broadstone's portfolio. However, the Red Lobster bankruptcy is a concern, though its impact appears limited for now.

Overall, these moves reflect a tactical approach to portfolio management, balancing risk and opportunity in a dynamic market.

Real Estate Expert

Broadstone Net Lease's activities through May 2024 showcase effective asset management and strategic growth. The new property investments and development fundings are indicative of a proactive approach to capturing market opportunities, especially within industrial and retail sectors. This aligns with market demand trends and can potentially enhance portfolio value.

The high rent collection rate of 99.8% and nearly full occupancy at 99.3% demonstrate superior tenant management and property selection. These metrics are important indicators of the company's operational efficiency and portfolio health.

The Red Lobster bankruptcy, while concerning, represents only a small portion of the overall portfolio at 1.6% of ABR. Management's engagement with Red Lobster is a prudent step towards mitigating potential losses.

For stakeholders, these business activities suggest a well-managed portfolio with a focus on long-term value creation and risk mitigation.

VICTOR, N.Y.--(BUSINESS WIRE)-- Broadstone Net Lease, Inc. (NYSE: BNL) (“Broadstone,” “BNL,” the “Company,” “we,” “our,” or “us”), today provided an update on its recent business activity through the month ended May 31, 2024. Additionally, the Company announced that BNL’s CEO, John Moragne, and CFO, Kevin Fennell, will make a presentation regarding the Company at Nareit’s REITweek: 2024 Investor Conference in New York, NY, on Tuesday, June 4, 2024, at 3:45 PM Eastern Time.

MAY 2024 BUSINESS UPDATE

• Through May 31st, we invested $255.4 million, including $193.6 million in new properties, $58.8 million in development fundings, and $3.0 million in revenue generating capital expenditures. The new property investments consist of $96.5 million in industrial properties and $97.1 million in restaurant and retail, including $84.5 million investment in a retail center inclusive of a $52.0 million in transitional capital.

• As of May 31st, we have $143.0 million of committed investments, including $82.5 million in acquisitions under control, $52.5 million of commitments to fund developments, and $8.0 million of commitments to fund revenue generating capital expenditures with existing tenants. The $82.5 million in acquisitions under control, which we define as under contract or executed letter of intent, include $68.5 million in industrial properties and $14.0 million in retail properties.

• Through May 31st, we sold 40 properties for gross proceeds of $276.1 million at a weighted average capitalization rate of 7.8% on tenanted properties. We sold 38 of the properties as part of our healthcare portfolio simplification strategy for gross proceeds of $262.2 million at a weighted average capitalization rate of 7.8%.

• Through May 31st, we collected 99.8% of base rents due for all properties under lease excluding Green Valley Medical Center. Additionally, our portfolio was 99.3% leased based on rentable square footage, with only three of our 774 total properties vacant and not subject to a lease as of quarter end.

• On May 19, 2024, Red Lobster filed for chapter 11 bankruptcy. All of our 18 Red Lobster locations, representing 1.6% of our ABR as of March 31, 2024, remain operational. We remain in close contact with members of the Red Lobster team as we work towards a mutually beneficial path forward for this brand when it emerges from bankruptcy.

MANAGEMENT COMMENTARY

“We continue to focus on maximizing current and future earnings through our four building blocks of growth: best-in-class portfolio rent escalations, revenue generating capital expenditures with existing tenants thanks to our industrial focus, development funding opportunities provided by the distressed lending environment, and a diversified acquisition pipeline,” said John Moragne, BNL's Chief Executive Officer. “Our portfolio also continues to perform well despite recent tenant credit events, we maintain a fortified and flexible balance sheet, and we remain focused on operational real estate expertise that’s critical in today’s macroeconomic environment.”

About Broadstone Net Lease, Inc.
BNL is an industrial-focused, diversified net lease REIT that invests in primarily single-tenant commercial real estate properties that are net leased on a long-term basis to a diversified group of tenants. Utilizing an investment strategy underpinned by strong fundamental credit analysis and prudent real estate underwriting, as of May 31, 2024, BNL’s diversified portfolio consisted of 774 individual net leased commercial properties with 767 properties located in 44 U.S. states and seven properties located in four Canadian provinces across the industrial, restaurant, healthcare, 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 “outlook,” “potential,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “projects,” “predicts,” “expect,” “intends,” “anticipates,” “estimates,” “plans,” “would be,” “believes,” “continues,” or the negative version of these words or other comparable words. Forward-looking statements, including our 2024 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 general economic conditions, including but not limited to increases in the rate of inflation and/or interest rates, local real estate conditions, tenant financial health, property investments and acquisitions, and the timing and uncertainty of completing these property investments and 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, 2023, which was filed with the SEC on February 22, 2024, which you are encouraged to read, and will be 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240603603666/en/

Company Contact:

Brent Maedl

Director, Corporate Finance & Investor Relations

brent.maedl@broadstone.com

585.382.8507

Source: Broadstone Net Lease, Inc.

FAQ

What recent investments did BNL make as of May 31, 2024?

BNL invested $255.4 million, including $193.6 million in new properties and $58.8 million in development fundings.

How much did BNL generate from property sales through May 31, 2024?

BNL generated $276.1 million in gross proceeds from selling 40 properties.

What is BNL's portfolio lease rate as of May 31, 2024?

BNL's portfolio lease rate is 99.3%, with only three of 774 properties vacant.

How much rent did BNL collect through May 31, 2024?

BNL collected 99.8% of base rents due for all properties under lease.

What impact did Red Lobster's bankruptcy have on BNL?

Red Lobster's chapter 11 bankruptcy affects 1.6% of BNL's ABR, but all 18 locations remain operational.

When will BNL present at Nareit's REITweek: 2024?

BNL will present at Nareit's REITweek: 2024 on June 4, 2024, at 3:45 PM Eastern Time.