Broadstone(BNL)2023-11-03 15:44Financial Data and Key Metrics Changes - The company generated AFFO of 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 1.42 per share, while revising investment volume guidance from 500 million to up to 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 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 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]