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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)
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Maryland |
26-1516177 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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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:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
Common Stock, $0.00025 par value |
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BNL |
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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.
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Large accelerated filer |
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☒ |
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Accelerated filer |
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☐ |
Non-accelerated filer |
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☐ |
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Smaller reporting company |
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☐ |
Emerging growth company |
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☐ |
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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
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)
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September 30, 2022 |
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December 31, 2021 |
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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.
1
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.
2
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 |
) |
|
|
— |
|
|