VICTOR, N.Y.--(BUSINESS WIRE)--Broadstone Net Lease, Inc. (NYSE: BNL) (“BNL”, the “Company”, “we”, “our”, or “us”), today announced its operating results for the year and quarter ended December 31, 2023, and its healthcare portfolio simplification strategy. MANAGEMENT COMMENTARY “ I am incredibly proud of our 2023 results, which we were able to deliver despite significant economic headwinds and capital market volatility through the year. We thoughtfully navigated a challenging environment by intentionally ...

Financial Performance and Condition - The company recorded impairment charges related to certain properties for the years ended December 31, 2023, 2022, and 2021, which may impact future financial results [2]. - As of December 31, 2023, total mortgages amounted to $79.173 million, down from $86.754 million in 2022, reflecting a decrease of approximately 8.2% [4]. - The company has a total investment in rental property of $120.5 million pledged as collateral against its mortgages [5]. - Tax protection agreements covering three properties could trigger a liability of approximately $10.4 million based on values as of December 31, 2023 [7]. - As of December 31, 2023, the company had approximately $1.9 billion in outstanding principal balance of indebtedness, which may expose it to default risks under its debt obligations [20]. - The total unsecured debt, net, as of December 31, 2023, is $1,831.7 million, a decrease from $1,936.6 million in 2022 [34]. - The weighted average interest rate on all outstanding borrowings as of December 31, 2023, is 5.33% [35]. - The company has a total of $900.0 million in unsecured term loans as of December 31, 2023, with varying interest rates based on one-month adjusted SOFR [34]. - The company has a total of $850.0 million in senior unsecured notes, with varying interest rates and maturities [34]. Risks and Liabilities - The company may face significant environmental liabilities associated with properties, which could adversely affect its financial condition and results of operations [12]. - The company may engage in development or expansion projects, which could expose it to additional risks, including construction delays and cost overruns [13]. - The departure of key personnel could adversely affect the company's business and investment opportunities [14]. - The company is subject to various economic risks, including high inflation and rising interest rates, which could adversely affect tenants' ability to make rental payments and overall financial performance [16]. - The company faces risks related to climate change, which could lead to increased costs and decreased demand for certain properties, impacting overall business operations [18]. - Increased competition for real property investments may affect the company's ability to acquire new properties and maintain existing tenants [16]. - The company may incur mortgage debt on properties, which increases the risk of loss and potential foreclosure actions by lenders [23]. - The company may face a 100% penalty tax on net income from prohibited transactions, which could limit its ability to engage in certain sales [31]. - The company may be liable for tax obligations of certain members of the OP, which could limit the economic feasibility of selling properties [38]. Compliance and Regulatory Issues - Changes in accounting standards may materially and adversely affect the company's reported financial condition and results of operations [3]. - Compliance with new laws and regulations may require significant expenditures, potentially reducing returns for stockholders [19]. - The company must distribute at least 90% of its REIT taxable income each year to maintain its REIT status, which may require raising funds if cash flow is insufficient [30]. - Compliance with REIT requirements may force the company to liquidate or forgo attractive investments, potentially reducing income and increasing tax liabilities [37]. - The company inherited any unpaid tax liabilities from the Blocker Corps, which could impact its financial position [39]. - Changes to U.S. federal income tax laws could adversely affect the company's tax treatment and stockholder interests [40]. Debt and Financing - As of December 31, 2023, the company has future mortgage obligations totaling $1.92 billion, with the largest portion due in 2026 at $507.277 million [6]. - The company’s mortgages have varying interest rates, with the highest being 6.38% and the lowest at 3.62% [4]. - The company is monitoring risks associated with transitioning its Canadian dollar-denominated debt to a new alternative rate following the recommendation to cease CDOR publication after June 30, 2024 [23]. - The company intends to maintain a level of Net Debt generally less than 6.0x its Annualized Adjusted EBITDAre, although this ratio may exceed 6.0x from time to time [24]. - The company’s financial covenants require it to maintain certain financial ratios, and failure to comply could result in accelerated repayment obligations [22]. - Disruptions in financial markets could hinder the company's ability to obtain debt financing on favorable terms, impacting its investment strategy [21]. - The company is in compliance with all loan covenants as of December 31, 2023, which is crucial to avoid defaults that could restrict dividend payments [34]. Market and Stock Performance - The market price and trading volume of the company's common stock may be volatile, influenced by factors unrelated to its operating performance [41]. - Future offerings of debt or preferred equity securities may adversely affect the market price of the company's common stock and dilute existing stockholders' interests [44]. - The company may not be able to make expected cash distributions to stockholders due to insufficient cash flow from properties or restrictions from debt agreements [43]. - A 1% increase in market interest rates would result in a decrease in the fair value of fixed-rate debt by approximately $65.9 million [122]. - A 10% increase or decrease in the exchange rate between the Canadian dollar and USD would result in a $7.5 million increase or decrease in unrealized foreign currency gain or loss [122]. Corporate Governance - The company’s Charter restricts ownership by one person or entity to no more than 9.8% of the value of its outstanding shares, which may deter potential takeover offers [24]. - The company’s Board of Directors has the authority to issue up to 520,000,000 shares of stock and may amend the Charter without stockholder approval, potentially diluting common stock value [24]. - The company’s ability to recover damages from directors and officers is limited under Maryland law, which may reduce stockholders' rights [25]. - The company relies on distributions from the Operating Partnership (OP) to meet obligations and pay dividends, making it structurally subordinated to the OP's liabilities [28]. Litigation and Legal Risks - The company may face substantial costs and management distractions from potential securities class action litigation following stock price volatility [41]. - The company estimates a built-in gain of approximately $56.4 million related to the Blocker Corps' assets, which could trigger corporate income tax if disposed of in a taxable transaction within five years [39]. - The company must distribute earnings and profits accumulated in a non-REIT year before the end of the taxable year following the acquisition of a C corporation [39].

Financial Performance - Net income for Q4 2023 was $6.797 million, a decrease from $52.145 million in Q3 2023[14] - EBITDA for Q4 2023 was $64.779 million, down from $110.447 million in the previous quarter, representing a decline of approximately 41.4%[14] - Adjusted EBITDAre for Q4 2023 was $94.049 million, slightly down from $94.217 million in Q3 2023[14] - Funds From Operations (FFO) for Q4 2023 totaled $39.278 million, compared to $38.533 million in Q3 2023, indicating a growth of 1.9%[14] - Total revenues for Q4 2023 were $105,000, a decrease of 4.5% compared to Q3 2023's $109,543[28] - Net income for Q4 2023 was $6,797, significantly lower than Q3 2023's $52,145, reflecting a decline of 87.0%[28] - Funds from operations (FFO) for Q4 2023 were $69,443, down 8.6% from $75,478 in Q3 2023[28] - Total assets decreased to $5,268,735 in Q4 2023 from $5,335,043 in Q3 2023, a decline of 1.2%[28] - Cash and cash equivalents dropped to $19,494 in Q4 2023 from $35,061 in Q3 2023, a decrease of 44.5%[28] - Total liabilities increased slightly to $2,074,394 in Q4 2023 from $2,059,570 in Q3 2023, an increase of 0.7%[28] Debt and Leverage - The company’s total debt outstanding as of December 31, 2023, was $900 million, a decrease from $1.919 billion in the previous year[18] - The company has a leverage ratio of 0.32, well below the required maximum of 0.60 to 1.00[21] - The fixed charge coverage ratio stands at 4.48, significantly above the minimum requirement of 1.50[21] - Total unencumbered assets to total unsecured debt ratio is 2.87, exceeding the required minimum of 1.50[21] - Aggregate debt ratio is 0.35, which is within the acceptable limit[21] - The company has a total unsecured indebtedness to total unencumbered eligible property value ratio of 0.34[21] - As of December 31, 2023, the company's net debt stands at $1,898,974,000, an increase from $1,853,290,000 in the previous quarter[40] - The gross debt is reported at $1,919,606,000, compared to $1,903,787,000 as of September 30, 2023[40] - The net debt to annualized EBITDA ratio is 5.4x, up from 4.9x in the previous quarter[40] Property and Portfolio Management - The portfolio occupancy rate remained stable at 98% as of the end of Q4 2023[14] - Broadstone Net Lease, Inc. is a diversified net lease REIT focused on single-tenant commercial real estate properties[25] - The company targets properties with creditworthy tenants in industries with positive business drivers[25] - The company has selectively invested in various property types including industrial, healthcare, and retail[25] - The company aims to secure long-term net leases to allow tenants to focus on core business operations[25] - The company has a total of 2 properties under construction as of December 31, 2023, with a focus on market expansion[49] - Total acquisitions in 2023 amounted to $25.605 million across 4 properties, with an initial cash capitalization rate of 7.3%[70] - The company reported a total of 14 dispositions in 2023, generating $200.072 million in disposition price against an acquisition price of $165.114 million[75] - The total development funding opportunities reached $97.173 million, with cumulative investments at $165.587 million[70] Tenant and Sector Analysis - The healthcare sector represents 18% of the total annualized base rent, with 7% from clinical services[82] - The industrial property type constitutes 52% of the total portfolio, with manufacturing at 17% and distribution & warehouse at 13%[82] - The top 20 tenants account for 32.3% of the total portfolio, up from 32.0% in the previous quarter[77] - The average rent coverage ratio for tenants is estimated to be strong, ensuring stable rental income[105] Future Outlook and Strategy - The company plans to continue its market expansion strategy by targeting new tenants and diversifying its property types in 2024[14] - Future projections indicate a steady growth in ABR, with a focus on maintaining a balanced lease expiration schedule to mitigate risks[100] - The company plans to continue its market expansion strategy, focusing on sectors with high growth potential, such as healthcare and specialty retail[96] - Forward-looking statements indicate potential growth opportunities but are subject to uncertainties that could impact actual results[110]

Jeng_Niamwhan/iStock via Getty Images Interest rate speculation continues to wreak havoc across the net lease sector and real estate. Since the sector reached a bottom in October, net lease REITs have rallied as investors remained optimistic that near term rate cuts were a possibility. The sector speculated and priced in interest rate relief in the early part of 2024. However, recent news from the Federal Reserve indicates that near term interest rate cuts are unlikely. This past week, Powell signaled a ...

VICTOR, N.Y.--(BUSINESS WIRE)--Broadstone Net Lease, Inc. (NYSE: BNL) (“BNL” or the “Company”) today announced the income tax allocation of 2023 common stock dividends, as shown in the table below. Stockholders are encouraged to consult with their own tax advisors regarding their specific tax treatment of any BNL dividends received. Common Stock – CUSIP number 11135E203 FORM 1099-DIV Box 1a Box 2a Box 2b Box 2f Box 3 Box 5 Record Date Payment Date Distribution Per Shar ...

VICTOR, N.Y.--(BUSINESS WIRE)--Broadstone Net Lease, Inc. (NYSE: BNL) (“BNL” or the “Company”) today announced that it will release its financial and operating results for the quarter and year ended December 31, 2023, after the market closes on Wednesday, February 21, 2024. The Company will host its earnings conference call and audio webcast on Thursday, February 22, 2024, at 11:00 a.m. Eastern Time. Conference Call and Webcast Details To access the live webcast, which will be available in listen-only mod ...

Financial Data and Key Metrics Changes - The company generated AFFO of $70 million, or $0.36 per share, representing a 1.3% increase in per share results quarter-over-quarter [27] - The leverage ratio ended the quarter at 4.9 times, down from five times at the end of the previous quarter [29] - The company maintained its 2023 AFFO guidance range of $1.40 to $1.42 per share, while revising investment volume guidance from $300 million - $500 million to up to $250 million [32] Business Line Data and Key Metrics Changes - The real estate portfolio achieved 99.9% rent collections and 99.4% occupancy as of September 30, 2023, with only two of 800 properties vacant [10] - The company sold two properties for gross proceeds of $62.3 million at a weighted average cash cap rate of 6.2% [14] - Year-to-date, the company sold 11 properties for gross proceeds of $189.1 million at a weighted average cash cap rate of 6% [19] Market Data and Key Metrics Changes - The company evaluated over $10 billion of potential new acquisitions, but the number of investment opportunities that met their criteria was minimal due to rising interest rates [8] - The transaction market saw a 66% decline in overall transaction closings compared to Q3 of the previous year [57] - Bid-ask spreads have widened, with some cases seeing spreads of 25 to 200 basis points [55] Company Strategy and Development Direction - The company is focused on a prudent and selective approach to capital allocation to maximize long-term shareholder value [7] - The strategy includes opportunistic asset sales to mitigate risk and build liquidity for future investments [12][15] - The company aims to maintain operational expertise and financial flexibility in a higher interest rate environment [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current challenging environment, emphasizing the importance of operational expertise and durable cash flows [13] - The company anticipates that 2024 will resemble 2023, with a focus on self-funding and controlling capital deployment [38] - Management acknowledged the ongoing challenges with the Green Valley medical center, indicating it has been a significant distraction [39] Other Important Information - The company approved a $0.285 dividend per common share, marking a 1.8% increase compared to the previous quarter [30] - The company is revising its total disposition volume guidance to approximately $200 million [33] - The company is exploring various options for the Green Valley asset, including potential re-tenanting and sale [78] Q&A Session Summary Question: Insights on industrial asset dispositions - Management indicated that dispositions are driven by both risk mitigation and market demand, particularly for industrial assets [35][36] Question: Future funding growth and property sales - Management expressed confidence in the ability to sell properties and self-fund growth, anticipating a similar market environment in 2024 [37][38] Question: Green Valley asset evaluation - Management acknowledged that Green Valley has been a distraction and is evaluating all options to address the situation [39][40] Question: Impact of nurses' strike on healthcare tenants - Management confirmed that while the strike may not directly impact operations, it does create challenges for healthcare tenants [45][46] Question: Adjustments to tenant credit criteria - Management stated that they have tightened their criteria for new tenant credits in response to current market conditions [48][49] Question: Dividend policy and growth balance - Management discussed the importance of balancing dividend payouts with retained cash flow for future growth, especially in the current cost of capital environment [63][64] Question: Opportunities in broken development projects - Management indicated they are exploring alternative opportunities, including broken developments and mezzanine financing [66][67]

B R O A D S T O N E NET LEASE, INC. PRESENTATION NOVEMBER 2023 This presentation 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," "inte ...

Portfolio Overview - As of September 30, 2023, the company’s portfolio includes 800 properties, with an annualized base rent (ABR) of $390 million[9] - The portfolio is approximately 99.4% leased, with a weighted average remaining lease term of about 10.5 years[9] - The total number of properties in the portfolio is 800, with a total ABR of $390,021,000[17] - The total square footage of the properties is 38,240,000 square feet[17] - The company operates in 44 U.S. states and four Canadian provinces, with no single geographic concentration exceeding 9.9% of ABR[9] Lease Structure - Approximately 97.3% of leases have contractual rent escalations, with a weighted average minimum increase of 2.0%[9] - The company has a weighted average annual minimum increase of 2.0% for its leases, providing organic revenue growth and inflation protection[29] - 80.3% of the ABR is subject to annual lease escalations, contributing to revenue stability[29] Tenant Composition - Total ABR from the top 10 tenants is $75,443,000, representing 19.3% of the total portfolio[15] - The top 20 tenants contribute $124,956,000 in ABR, accounting for 32.0% of the total portfolio[15] - The largest tenant, Roskam Baking Company, has an ABR of $15,605,000, making up 4.0% of the total portfolio[17] - Approximately 93.7% of tenants provide financial reporting, with 86.2% required to submit specified financial information periodically[9] Sector Diversification - The company’s properties are diversified across various sectors, with 51% in industrial, 18% in healthcare, 14% in restaurants, and 11% in retail[11] - The industrial sector includes 193 properties, accounting for 51.2% of total ABR, with manufacturing representing 16.8%[14] - The healthcare sector comprises 129 properties, contributing 17.6% to total ABR, with clinical properties at 7.0%[14] - The restaurant sector consists of 248 properties, making up 13.7% of total ABR, with casual dining and quick service restaurants each at 7.1% and 6.6% respectively[14] Financial Performance - Total lease revenues, net for the three months ended September 30, 2023, were $109,543,000, representing a slight increase of 0.2% compared to $109,353,000 for the previous quarter[31] - Net income for the three months ended September 30, 2023, was $52,145,000, a decrease of 17.2% from $62,996,000 in the previous quarter[38] - Net earnings per diluted share decreased to $0.26, down 18.8% from $0.32 in the previous quarter[38] - The company recognized a gain of $15,163,000 on the sale of real estate during the three months ended September 30, 2023, compared to a gain of $29,462,000 in the previous quarter, reflecting a decrease of 48.5%[35] - Interest income increased by 54.9%, from $82,000 in the previous quarter to $127,000[35] - Total operating expenses for the three months ended September 30, 2023, were $54,383,000, an increase of 1.6% from $53,502,000 in the previous quarter[33] Lease Expirations - Lease expirations in 2030 represent 13.9% of total ABR, amounting to $54,288,000[26] - The company has 73 properties with lease expirations in 2029, representing 6.1% of total ABR[26] - The total ABR for properties expiring in 2024 is $6,438,000, which is 1.7% of the total portfolio[26] - The company has 12 properties with lease expirations categorized as "Thereafter," contributing $12,733,000 or 3.3% of total ABR[26] Other Financial Commitments - The company has a $1.0 billion unsecured revolving credit facility established on January 28, 2022[8] - The company has commitments to fund two build-to-suit transactions with remaining obligations of $157.3 million expected to fund through October 2024[199] - The company executed a ten-year lease for new corporate office space with total expected future lease payments of $8.9 million[200] Adjustments and Expenses - Operating expenses billed to tenants increased by $587,000, or 12.8%, from $4,594,000 in the previous quarter to $5,181,000[31] - The adjustment to revenue recognized for uncollectible rental amounts billed, net improved by $141,000, or 59.7%, from $(236,000) in the previous quarter to $(95,000)[31] - The company has 2 untenanted properties, which do not contribute to the ABR[26]

BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2023 Broadstone Net Lease, LLC. All rights reserved. 5 BROADSTONE NET LEASE, INC. | www.broadstone.com | © 2023 Broadstone Net Lease, LLC. All rights reserved. 8 This data and other information described herein are as of and for the three months ended June 30, 2023 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 conju ...