BNL - Earnings call transcript Q2 2021 | Broadstone Net Lease, Inc.

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Operator

Hello, and welcome to Broadstone Net Lease's Second Quarter 2021 Earnings Conference Call. My name is Andrew, and I will be your operator today. Please note that today's call is being recorded. [Operator Instructions] I will now turn the call over to Mike Caruso, Senior Vice President of Corporate Finance and Investor Relations at Broadstone. Please go ahead.

Mike Caruso

thank Quarter for XXXX and for us operator, Second Broadstone's Earnings you, you, joining everyone, today Thank Call. Albano; Chief On from today's participate Officer, in our who our hear Moragne, Ryan Financial Chief Executive Q&A. Operating call, Officer, Chris will you Officer, and John will Chief Czarnecki;

Form variety the due actual subject forward-looking factors. Before this the and date more to turn reliance to differences. of we only cause our that XXXX, uncertainties such begin, to the of year of results conference XX, forward-looking made forward-looking over not contains that undue Executive filings, you to as like that presentation I'd December for cause including detailed to Officer, statements provided to statements risks materially will differ statements, call may a for Any everyone a can I you place now caution remind following call are which refer Chris We Chief SEC and Czarnecki. are during XX-K our the the to of these on ended discussion risk call. this our factors

Chris Czarnecki

having enjoyable I we Thank where public toward the of welcome and XXXX be safe, move initial the call. joining listeners approaching half to that of the the hope are all as our markets team not year. BNL quickly are summer. and accomplished a offering. are prouder We second entering that of public has since currently the could we our we you, earnings positioned healthy It's hard our believe QX everyone and Mike, to anniversary X-year

simultaneously for our balance second on of a strengthening our BNL year. to During QX, sheet we continued execute the growth half strong position objectives to while

to due profile profile growth The the the to to I'm liquidity and season stock portfolio's remains pleased of ability accretive to the to us which affords our through to in of the XXX% of earnings operating evidenced defensive by see access external focus collection market, continue exceptionally continue further base during predictability enhances grow our as public allows and quarter, on growth. acquisitions. intently rents Our consistency and us attractive. capital

we the in in our update positioned first the but second a sheet year. half moments, to has support balance the QX offering, first executed to provide follow-on which quarter, continue an few During capital the additional on provide to like investment Ryan on activity raise successfully growth activity. I would of detail on will

properties care retail at year, change towards of of a and industrial a compared concentration first demonstrates weighted respectively. in smaller with health of were rate mix and our When type at The rent XX% strategic closed lease X.X% transactions average XX at million we a cash more during completed quarter, weighted weighted $XXX total heavily benefits the the quarter QX acquisitions of the seven average completed of to comprising cap the XX.X-year the for during and a investment weighted property During retail-dominated diversified for Acquisitions XX%, strategy. more X.X%. escalations average properties XX% a quarter term. include leases

a pivot $XX.X us affords of allows retail ensuring key levels. of also now concentration patient are and the approach and a like several the we acquired July, million opportunity assets industrial spaces on net altering be the dramatically additional I In overview segments. property core quarter-over-quarter, for basis to brief via us the would selective, investing four transactions. in completed an during second transactions the risk-adjusted lease without within the portfolio give to seven our quarter. of acquiring Our available, set This investments on best to to opportunity depending we each

X%. XX X.X% that The the an rent investment an space. diverse transaction competition in yield company. strategic term. we tight transaction into and The of for markets translating leading include $XXX.X at total leased to rate a to a our term over are continue that distribution Ryerson, are leaseback initial million sale in accretive This X.X% industrial annual a levels geographically states. properties portfolio of XX-year source our of to annual properties average and initial escalator are Releases acquired and different mission-critical industrial across XX the First, the metal complement to on operations cash a industrial a ability properties acquisitions despite processing of cap tenant's demonstrates existing in

larger tenants by only a measured our of represents amongst Ryerson tenant space. top quarter of best While the and net diversification transaction, the slightly lease XX remains our as as end, X% our in ABR

and XX a of We investing, $XX national properties vertical. and leased for to million subject as veterinary and care as for initial at during cap years. our is and an our -- The investment a a our included a core one, health attractive years, the properties properties especially diversified rehabilitation health the investing the diversification of transactions also strong strong imaging, The escalations approximately care of veterinary two and growth rate clinics during its care diagnostic tenants. the in granular are have surgery, within average care highlight ambulatory quarter weighted health weighted core transactions it health four weighted The business annual profile as portfolio, rent we've care completed adjacency given of within invested many which of care total added average view XX.X portfolio care to Both properties quarter. X.X% the lease a to well provider, X.X% health health services. urgent of cash offering through average seven regional a term space fundamentals

remain core as focused health unique differentiator for additional in We on and care BNL continue a to segment. view this sourcing opportunities property

sourced investment years located average Southeast term we weighted in and X.X%. process retail total at $XX.X of Dallas by Finally, a of and rate rent locations X.X%. have The are average average X.X properties of were escalation our weighted initial a million transaction annual nine a the lease small that added for store of investment-grade weighted cap a

ability the investment-grade bolster unique quickly process, efforts. routine Given tenants our retail transact these our streamlined sourcing help one-off efficiently have to size, of that and acquisitions a knowledge and we on acquisitions

under for are range the year, further to $XXX the the detail $XXX second million. second million. increased currently of diversified small and volume by of year-to-date Ryan during executed control pipeline retail under under bring efforts. half into includes additional of an to year investment-grade are the control, guidance or assets transaction substantial across which define our care contract million larger additional the moments. have of second raising close of momentum million provide year ensures forward to to million first With we visibility sourcing pipeline $XXX intent. will full The and letter quarter as our a These a currently a the and in expected We for our well flow solid but the opportunities assets seven commitment are Acquisitions we supplements health the $XXX industrial, in guidance under July also consistency XXXX. million. total that XXXX few of scheduled throughout and deal acquisitions half majority the $XXX currently acquisition to closed in control and revisions our months growing year of Our volume to year, regarding $XXX.X fund in bring in

portfolio X% located XX Canada, vacant a June states quarter-over-quarter property one weighted lease had XX, and we remained net of Only owned The steady rent increases. at portfolio As across U.S. weighted total quarter and end. XX.X%. with term properties our of at were years of annual XXX remaining lease XXX occupancy in XX.X average average six properties

our maturities XXXX. total X.X% over I'll Our forward in to now and continue our full ABR through to additional recent most Ryan? offering results, follow-on execution negligible the on to X.X% and XXXX ABR represent our turn lease the of and XXXX Ryan of provide be QX year outlook. a detail of just call of

Ryan Albano

Thanks, as second detail update raise provide balance full Chris, our I'm today. for and our guidance. recent our an you on positioning, us activity to thank discuss to capital quarter and results additional sheet all corresponding as well share excited year joining

shares remaining continued as index revolving price and $XXX.X all variety objectives. to most to million. proceeds profile. use follow-on opportunities. $XX of net enhances $XXX to outstanding execution underwriting see million QX, our our We growth executed we to pay defensive During due a XX, the for commissions public including a strategy market per our validates access and million of growth immediately borrowings to offering, common factors, capital, shares used on less it share discounts issuing pleased unsecured notably, the further the future momentum intend to facility external continued BNL the acceptance continued very season for of of market to successfully and I'm proceeds On inclusion down allowing in our fund our June of differentiated proceeds credit at and acquisition our under XX.X first of

the resulting offering, net X.XXx of at quarter end. EBITDAre to was net debt approximately completion billion, of $X.X in Following our the annualized adjusted debt

financial Xx to we as debt less and a year. on flexibility a leverage continue debt to capacity a from of maturities, in us We conservative opportunities robust net annualized mentality. hold from well As acquisition the Moody's the BaaX liquidity to than target near-term a second a of currently as a ample to reminder, support Limited EBITDAre rating BBB sheet accretive committed a basis. our leverage and adjusted rating growth intend pursue balance S&P to profile maintaining maximum and maintain positions to half defensive remain

the our from $X.XX the quarter of unsecured quarter share. full X.X% acquisitions represent diluted interest We $X.XX term that repricing loans quarter per or second to first first of second of the These and QX a The the the an late XXXX. was during to turning per increase million compared closed quarter driven or year. primarily savings quarter-over-quarter in quarter, AFFO share acquisition of reported diluted results. activity of during by increase when Now quarter our financial $XX results

During total million inclusive the expenses incurred quarter, $X.X cash million, $X.X of G&A. G&A of of we

like to Chris update that outlook. full acquisition of current I year to a revision the guidance and acquisition guidance the year the our that provide the In to an our our moments strength referenced reflects confidence ago, addition few would impact corresponding in to pipeline

acquisition million rate of currently XXXX, of and guidance total results $XX between $X.XX, we total to an volume between diluted XX% and the $XX AFFO midpoint following This annualized at implied $XXX on over represents and year cash million; expect $XXX is growth report million $X.XX XXXX share and between disposition $XX QX million; million. key $X.XX. between based the million and per assumptions: our which $XXX fiscal volume For G&A

to reminder, markets sensitive year. year of activity the per timing and As occurs disposition are both and capital a our for amount throughout share that the results acquisition, the

declared Board of XX, common the $X.XXX XX, July OP record unit of XX. on as distribution in held before to per October meeting or a on holders Board the at Finally, share September payable

the We Chris to for will increases XX%. it our quarterly potential to to intend continue long-term back AFFO will evaluate remarks. and with to approximately payout a I basis of over Board on target ratio that, dividend closing turn a With future

Chris Czarnecki

by in I'd conclude today's and the like heading we today positioned of to into remarks reiterating where excitement my year. second half are confidence prepared the

safe and diversification grounded operating result listeners inaugural sheet questions. exciting we Operator, can with focus, which has on forward connecting our balance pipeline resulting and our to summer, the offering on follow-on concludes of have objectives. in again hope execute of on proven our you conservative our growth industry-leading opportunities. from profile, us take defensive focus a of we profile robust a now liquidity and to predictable external and allows to relaxing growth executing This fall. look positioned an I all to has remarks. in A conclusion acquisition us Our prepared your

Operator

comes Instructions] from The with first Capital Kim BMO [Operator question Markets. John

John Kim

quarter. on a the it sale-leaseback if comment an Ryerson that seller, not or with the transaction? the the opportunity portfolio seller? made had whether I during there's transactions regardless, And on was to you do a question you Can more

Chris Czarnecki

was with Ryerson a sale-leaseback their John, transaction. done and team. was sure. Corporate It It

not started and sale And to in worked whether international national obviously, form, opportunity positive with question leaseback execution owns I view has us neighborhood with as in that's for expect lease was Ryerson there's expectation. had future reasonable which relationship a So I'm very that and a think your in basis. good them. good a an the they've would the And future might to business, If our mistaken, do think on XXX they on of somewhere or somewhere and a facilities I neighborhood activity. some our

continue one an So for that cultivate. relationship us is important to to

John Kim

on the is my question earnout. second Okay. And

like year? this looks us given of in You remind earned and share two it. the your final quarter the tranches the price your for to the expectation were what two fourth year. Can tranches you is pace in first on contemplated you It performance, guidance what's obtain

Chris Czarnecki

jump that you to Sure. one? Ryan, do want in cover and

Ryan Albano

Sure.

In the that, terms tranches today you between said, I in and end and VWAP have now year. where until the guidance, triggering those of certainly those triggering for we and open think it's are, a where of two XX-day of trigger factored points trading on we're north so. as they're And September, not based we're and

Operator

The comes Morgan from of next Stanley. question Ronald Kamdem

Ronald Kamdem

cap Just going terms just the would seeing general industrial on some back of in of I movements. market in commentary you're to assets portfolio. sort like the what and rate

compression, compressive Some maybe it's maybe cap slowed. still it of your that peers and have rate noted

seeing are sort Just out what there. of guys you curious

Chris Czarnecki

Ron. Thanks, Sure.

a earlier in year, bit well. as and persisted I industrial compression has perspective, the think from that some saw little certainly an

we're on X.XX% a segment for just our Again, call very fairly it, range to broad types. the So at us property on industrial general X.XX% industrial looking a transactions, of basis, side, is

So have little distribution we to work. bit just do warehouse to think than of differently continue pure an and investment-grade play a ability

of do some work which space, about today. processing some manufacturing food flex space, the the talked So continuing little bit see you the the space, we a transactions to in with

all And transacting is But factors and for space. us in where see where are the opportunities about that industrial new is. band contributing general those sort talking so pricing of we're into

Ronald Kamdem

your an if can just has watch anything on is just how much And -- there? us changed last give Great. Maybe list, was just just then bad debt update the thing historical the on into assume there some guidance? the but I well I sort levels, given helpful. commentary assume how baked it's to just during be would done pretty has of COVID, portfolio similar you it's

Chris Czarnecki

Yes.

the things phrased from I hand collection course rents. moment. managed It's of minimis it the that XXX% well. a just well de we're in credit That's pretty one and following ordinary well think given you is base and perspective, at that

I has think little that about is on watch more started we one last reemphasizing casual out the considering. A changed our We dining over quarter, from list/sort thing a list that at that period we're of of opportunities. In few the the transactions of last worth looking that more bit no a think perspective, a to it's have for just during quarter, the time some constructively fly the had been space. height we've open pandemic. within are there to opportunities

so sort imminent, but that moved no list And of has nothing the fly one perspective. off from our

the I'd probably highlight. that's key change So

Operator

[Operator over like Instructions] This question-and-answer I would conference remarks. closing concludes our Czarnecki to turn Chris the to any session. back for

Chris Czarnecki

stay quarter position summer everybody and concluding update and and a the Enjoy Thank Thank and well. the our to like look today. to I news the we've third to share us in to rest that would you done quarter giving on an all forward the what just at on thank I end ability of shareholders October. very of joined some the the much. of strength analysts second of you. so positive appreciate

Operator

Thank The you concluded. presentation. attending has conference today's for now

now disconnect. may You

Broadstone Net Lease (BNL) 7 Aug 212021 Q2 Earnings call transcript