Broadstone(BNL) - 2022 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported an AFFO of $60.4 million or$ 0.35 per share, representing a growth of approximately 13% year-over-year and 3% quarter-over-quarter [22] - The company ended the quarter with a leverage of 5.1x net debt to annualized adjusted EBITDAre, consistent with the previous quarter [24] - The company reiterated its AFFO per share guidance for 2022 to be between $1.38 and$ 1.42, implying a growth rate of 6.9% at the midpoint compared to 2021 [26] Business Line Data and Key Metrics Changes - During Q1, the company invested $210 million in 27 properties with a weighted average initial cash cap rate of 5.7% and a GAAP cap rate of 6.4% [11] - The acquisitions were primarily focused on restaurants (50%) and retail (37%), with industrial properties making up the remaining 13% [12] - The company increased its restaurant exposure from 13% to 15% of total ABR through two separate transactions [15] Market Data and Key Metrics Changes - The company successfully expanded its footprint into Canada with its first targeted acquisition, which included six high-quality retail locations [16] - The Canadian assets now represent 2.4% of total ADR, and the company plans to evaluate additional opportunities in Canada [17] Company Strategy and Development Direction - The company emphasized its diversified strategy, which allows it to adapt quickly to changes in the market environment and maintain a consistent flow of acquisition opportunities [9] - The management highlighted the importance of maintaining a selective approach to acquisitions while still achieving meaningful growth in earnings [10] - The company aims to continue its prudent capital allocation and maintain a conservative leverage profile of less than 6x [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current competitive transaction environment, despite challenges such as elevated inflation and rising interest rates [8] - The company is focused on carrying the momentum from Q1 into the remainder of 2022, believing that its diversified strategy will yield exceptional results [29] Other Important Information - The company declared a$ 0.27 dividend per common share, representing an increase of approximately 2% over the previous rate [27] - The company has a robust pipeline with over $164 million of opportunities under control, defined as executed contracts or letters of intent [19] Q&A Session Summary Question: What were some of the key decisions regarding the Canadian expansion? - Management highlighted the exceptional nature of the portfolio and the opportunity for scaled acquisitions as key factors in their comfort with underwriting assets in Canada [31][32] Question: Is there a difference in cap rates between the U.S. and Canada? - Management indicated that cap rates are very similar across the border, particularly in large urban markets [37] Question: Can you elaborate on the portfolio's tenant health and any potential headwinds? - Management reported strong rent collection and a stable internal watch list, focusing on potential risks related to inflation and labor pressures [40][41] Question: What are the thoughts on the capital release strategy for this year? - Management stated that there is currently no need for a debt offering this year, but they are well-positioned to pursue growth objectives without immediate market access [46] Question: Can you provide details on the disposition strategy? - Management mentioned that the disposition strategy includes portfolio pruning and the sale of a casual dining site, with plans to sell an office asset later in the year [48][49]