Broadstone Net Lease, Inc. [BNL] Filings

10-Q 1 bnl-20220930.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2022, or

☐ Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 001-39529

BROADSTONE NET LEASE, INC.

(Exact name of registrant as specified in its charter)


Maryland	26-1516177
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

800 Clinton Square
Rochester, New York

14604

(Address of principal executive offices)

(Zip Code)

(585) 287-6500

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Common Stock, $0.00025 par value  

BNL

The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

There were 173,114,949 shares of the Registrant's Common Stock, $0.00025 par value per share, outstanding as of November 1, 2022.

BROADSTONE NET LEASE, INC.

TABLE OF CONTENTS


		Page
Part I - FINANCIAL INFORMATION		1
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets (Unaudited)	1
	Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)	2
	Condensed Consolidated Statements of Stockholders' Equity (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows (Unaudited)	5
	Notes to the Condensed Consolidated Financial Statements (Unaudited)	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	28
	Cautionary Note Regarding Forward-Looking Statements	28
	Regulation FD Disclosures	28
	Explanatory Note and Certain Defined Terms	28
	Overview	29
	Real Estate Portfolio Information	30
	Results of Operations	39
	Liquidity and Capital Resources	43
	Derivative Instruments and Hedging Activities	46
	Cash Flows	46
	Non-GAAP Measures	46
	Critical Accounting Policies and Estimates	49
	Impact of Recent Accounting Pronouncements	49
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 4.	Controls and Procedures	50
Part II - OTHER INFORMATION		51
Item 1.	Legal Proceedings	51
Item 1A.	Risk Factors	51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 3.	Defaults upon Senior Securities	51
Item 4.	Mine Safety Disclosures	51
Item 5.	Other Information	51
Item 6.	Exhibits	52

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

Broadstone Net Lease, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except per share amounts)


	September 30, 2022			December 31, 2021
Assets
Accounted for using the operating method:
Land	$	755,206		$	655,374
Land improvements		331,858			295,329
Buildings and improvements		3,650,275			3,242,618
Equipment		10,422			11,870
Total accounted for using the operating method		4,747,761			4,205,191
Less accumulated depreciation		(505,456	)		(430,141	)
Accounted for using the operating method, net		4,242,305			3,775,050
Accounted for using the direct financing method		27,128			28,782
Accounted for using the sales-type method		571			571
Investment in rental property, net		4,270,004			3,804,403
Cash and cash equivalents		75,912			21,669
Accrued rental income		129,579			116,874
Tenant and other receivables, net		791			1,310
Prepaid expenses and other assets		18,984			17,275
Interest rate swap, assets		66,602			—
Goodwill		339,769			339,769
Intangible lease assets, net		322,314			303,642
Debt issuance costs – unsecured revolving credit facility, net		6,485			4,065
Leasing fees, net		8,752			9,641
Total assets	$	5,239,192		$	4,618,648

Liabilities and equity
Unsecured revolving credit facility	$	219,537		$	102,000
Mortgages, net		94,753			96,846
Unsecured term loans, net		894,378			646,671
Senior unsecured notes, net		844,367			843,801
Interest rate swap, liabilities		—			27,171
Accounts payable and other liabilities		52,594			38,038
Dividends payable		49,886			45,914
Accrued interest payable		10,559			6,473
Intangible lease liabilities, net		64,971			70,596
Total liabilities		2,231,045			1,877,510

Commitments and contingencies (See Note 18)

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, 173,115 and 162,383 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		43			41
Additional paid-in capital		3,148,075			2,924,168
Cumulative distributions in excess of retained earnings		(369,260	)		(318,476	)
Accumulated other comprehensive income (loss)		61,834			(28,441	)
Total Broadstone Net Lease, Inc. stockholders' equity		2,840,692			2,577,292
Non-controlling interests		167,455			163,846
Total equity		3,008,147			2,741,138
Total liabilities and equity	$	5,239,192		$	4,618,648

The accompanying notes are an integral part of these condensed consolidated financial statements.

Broadstone Net Lease, Inc. and Subsidiaries

Condensed Consolidated Statements of Income and Comprehensive Income

(Unaudited)

(in thousands, except per share amounts)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2022			2021			2022			2021
Revenues
Lease revenues, net	$	103,524		$	122,777		$	295,378		$	290,234

Operating expenses
Depreciation and amortization		39,400			36,682			109,201			98,620
Property and operating expense		5,636			4,842			15,376			14,019
General and administrative		9,942			8,552			28,058			27,840
Provision for impairment of investment in rental properties		4,155			25,989			5,535			28,001
Total operating expenses		59,133			76,065			158,170			168,480

Other income (expenses)
Interest income		4			—			4			11
Interest expense		(20,095	)		(15,611	)		(54,879	)		(47,149	)
Cost of debt extinguishment		(231	)		(242	)		(231	)		(368	)
Gain on sale of real estate		61			1,220			5,328			9,791
Income taxes		(356	)		(473	)		(1,169	)		(1,187	)
Change in fair value of earnout liability		—			(1,059	)		—			(5,539	)
Other income (expenses)		4,935			(25	)		6,441			(11	)
Net income		28,709			30,522			92,702			77,302
Net income attributable to non-controlling interests		(1,600	)		(1,824	)		(5,319	)		(5,167	)
Net income attributable to Broadstone Net Lease, Inc.	$	27,109		$	28,698		$	87,383		$	72,135

Weighted average number of common shares outstanding
Basic		172,578			159,226			168,680			150,227
Diluted		182,971			169,587			179,132			161,273
Net earnings per share attributable to common stockholders
Basic and diluted	$	0.16		$	0.18		$	0.52		$	0.48

Comprehensive income
Net income	$	28,709		$	30,522		$	92,702		$	77,302
Other comprehensive income
Change in fair value of interest rate swaps		40,039			4,559			93,772			30,328
Realized loss on interest rate swaps		639			85			1,993			2
Comprehensive income		69,387			35,166			188,467			107,632
Comprehensive income attributable to non-controlling interests		(3,868	)		(2,101	)		(10,809	)		(7,313	)
Comprehensive income attributable to Broadstone Net Lease, Inc.	$	65,519		$	33,065		$	177,658		$	100,319

The accompanying notes are an integral part of these condensed consolidated financial statements.

Broadstone Net Lease, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders' Equity

(Unaudited)

(in thousands, except per share amounts)


	Common Stock		Additional Paid-in Capital			Cumulative Distributions in Excess of Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Non- controlling Interests			Total Stockholders' Equity
Balance, January 1, 2022	$	41	$	2,924,168		$	(318,476	)	$	(28,441	)	$	163,846		$	2,741,138
Net income		—		—			26,758			—			1,683			28,441
Issuance of 6,427 shares of common stock		1		136,825			—			—			—			136,826
Offering costs, discounts, and commissions		—		(2,218	)		—			—			—			(2,218	)
Stock-based compensation, net of one share of restricted stock forfeited		—		929			—			—			—			929
Retirement of 59 shares of common stock		—		(1,301	)		—			—			—			(1,301	)
Distributions declared ($0.265 per share and OP Unit)		—		—			(45,270	)		—			(2,845	)		(48,115	)
Change in fair value of interest rate swap agreements		—		—			—			32,893			2,068			34,961
Realized loss on interest rate swap agreements		—		—			—			620			39			659
Adjustment to non-controlling interests		—		(1,843	)		—

Broadstone Net Lease, Inc. [BNL] Filings
10-Q	[2022-11-03]
10-Q	[2022-08-04]
10-Q	[2022-05-04]
10-K	[2022-02-23]
10-Q	[2021-11-02]
10-Q	[2021-08-04]
10-Q	[2021-05-05]
10-K	[2021-02-25]
10-Q	[2020-11-05]
10-Q	[2020-08-04]
10-Q	[2020-05-07]
10-K	[2020-02-27]
10-Q	[2019-11-12]
10-Q	[2019-08-07]
10-Q	[2019-05-07]
10-K	[2019-03-14]
10-Q	[2018-11-05]
10-Q	[2018-08-10]
10-Q	[2018-05-08]
10-K	[2018-03-15]
10-Q	[2017-11-13]
10-Q	[2017-08-10]