Broadstone Net Lease, Inc. · NYSE:BNL
Broadstone Net Lease — Q1 2024 Earnings Presentation
35 slides from Broadstone Net Lease's earnings presentation, May 2, 2024
Slide 1: Investor Presentation May 2024
May 2024 Investor Presentation Broadstone Net Lease, Inc. | NYSE: BNL
Slide 2: Disclaimer
DISCLAIMER CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS This presentation contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding, among other thing
Slide 3: Broadstone At-a-Glance
BROADSTONE AT-A-GLANCE 3 INVESTOR PRESENTATION MAY 2024
Slide 4: Broadstone At-a-Glance
BROADSTONE AT-A-GLANCE $374.1 Million 37.6 Million Annualized Base Rent Rentable Square Footage 54.2% Industrial 14.2% Restaurant 13.4% Healthcare 11.9% Retail 99.2% Occupancy 1 6.3% Office 99.0% 10.6 Years WALT 2 Rent Collections in Q4 2.0% Annual Escalation 95.3% Financial Reporting3,4 $202.4 Mill
Slide 5: Investment Thesis
INVESTMENT THESIS Established REIT with Longstanding Track Record of Success Delivering Shareholder Value 15+ year operating history pursuing a diversified net lease strategy with a leading team, now proven through two cycles Publicly traded on the NYSE (BNL) with experience operating under subs
Slide 6: Broadstone Net Lease Track Record and Employee Tenure
BROADSTONE NET LEASE (NYSE: BNL) Longstanding operating history and track record of success delivering results to shareholders ($mm) AVERAGE EMPLOYEE TENURE: 5.5 YEARS ESTIMATED GROWTH IN GROSS ASSET VALUE SINCE INCEPTION1 5+ 56% $5,516 Employee Tenure $5,427 $5,391 4 10% (Years) 3 4% 2 $4,572 11% <
Slide 7: Q1 2024 At-a-Glance
Q1 2024 AT-A-GLANCE Our diversified portfolio continues to generate consistent results and steady same-store growth PORTFOLIO OVERVIEW KEY OPERATING METRICS $374.1 Million 759 37.6 Million 99.2% 99.0% Annualized Base Rent Properties Square Footage Occupancy Rent Collection $4.7 billion 44 + 4 Enterp
Slide 8: Portfolio Diversification
PORTFOLIO DIVERSIFICATION TOP 20 TENANTS PROPERTY TYPE DIVERSIFICATION (BY ABR) ABR as a # of Tenant Property Type % of Total Properties Portfolio Industrial 54.2% Roskam Foods* Industrial 7 4.3% Manufacturing 17.5% AHF Products* Industrial 8 2.5% Distribution & Warehouse 14.0% Ryerson Industrial 11
Slide 9: Top Tenant Descriptions
TOP 10 TENANT DESCRIPTIONS TENANT BUSINESS DESCRIPTION Founded in 1923 and headquartered in Grand Rapids, Michigan, Roskam Baking Company is a food manufacturer with over 2 million square feet of manufacturing space and over 30 manufacturing and packaging lines. Roskam manufactures a diverse product
Slide 10: Top Tenant Descriptions (Cont.)
TOP 10 TENANT DESCRIPTIONS (CONT.) TENANT BUSINESS DESCRIPTION J. Alexander’s is a contemporary American restaurant, known for its high-quality dining experience and wood-fired cuisine. J. Alexander’s operates 37 locations spanning 15 states. In 2021, SPB Hospitality acquired J. Alexander’s Holdings
Slide 11: Update: Healthcare Portfolio Simplification Strategy
Update: Healthcare Portfolio Simplification Strategy 11 INVESTOR PRESENTATION MAY 2024
Slide 12: Simplifying Composition of Healthcare Portfolio
SIMPLIFYING COMPOSITION OF HEALTHCARE PORTFOLIO Strategic Decision to Sell Clinically-Oriented Healthcare and Focus on Core Net Lease Assets While clinical, surgical, and traditional medical office building (MOB) assets add an additional layer of diversification, they also have characteristics tha
Slide 13: Pro Forma Portfolio Composition
PRO FORMA PORTFOLIO COMPOSITION Significantly reduces exposure to clinical, surgical, and traditional MOB assets December 2023 April 2024 Post-Assets to be Sold Portfolio Concentration 5.9% 6.3% 6.6% 13.5% Industrial 14.3% 15.2% Healthcare Year-to-date 11.4% Assets to Retail 51.5% Completed 12.0% 12
Slide 14: Diversified Portfolio
DIVERSIFIED PORTFOLIO 14 INVESTOR PRESENTATION MAY 2024
Slide 15: Portfolio At-a-Glance: Industrial
PORTFOLIO AT-A-GLANCE: INDUSTRIAL PROPERTY TYPE BREAKDOWN PROPERTY TYPE OVERVIEW 192 $203mm 29.5mm Industrial Properties ABR SF Services Cold Storage 6% 6% Manufacturing 95 2.0% Wtd. Avg. 11.5 Years Flex and 32% Tenants Rent Escalations WALT R&D 8% Industrial exposure has grown from 31.2% at YE 2018
Slide 16: Remaining Portfolio At-a-Glance
REMAINING PORTFOLIO AT-A-GLANCE TOP TENANTS KEY STATISTICS PROPERTY TYPE BREAKDOWN ABR % | $: 14.2% | $53mm RESTAURANT Properties: 248 Square Feet: 1.2mm 14.2% QSR Casual Dining ABR 49% WALT: 13.6 years 51% Wtd Avg. Annual 1.8% Rent Escalation: Life Science Clinical ABR % | $: 13.4% | $50mm 16% 40%
Slide 17: Significant Geographic Diversity
SIGNIFICANT GEOGRAPHIC DIVERSITY TOTAL PROPERTIES: 759 TOTAL STATES/PROVINCES: 44 + 4 Canadian provinces ABR as a % of State Total Portfolio 1 TX 9.3% 2 MI 8.9% 3 IL 6.0% 4 WI 5.4% 5 CA 5.3% 6 OH 4.4% 7 MN 4.2% 8 FL 4.0% 9 TN 4.0% 10 IN 3.9% Top 10 States 55.4% Data as of March 31, 2024 17 INVESTOR
Slide 18: Significant Cross-Diversification
SIGNIFICANT CROSS-DIVERSIFICATION Significant Geographic, Property Type, and Industry Diversification Helps to Mitigate State Specific Risk STATE EXPOSURE AT-A-GLANCE ($ in millions) State: Texas Dallas Concentration: 1 $5.2 Houston $1.0 ABR: % | $ 9.3% | $34.9mm Austin $1.1 $11.0 Tenants: 34 Sherma
Slide 19: Top-Tier Portfolio Metrics
TOP-TIER PORTFOLIO METRICS RENT COLLECTION RENT ESCALATION 1 99.9% 100.0% 99.9% 99.9% 99.2% 99.0% 2.5% 2.4% Contractual Fixed Increases 84.9% Portfolio, 2.0% 2.0% 1.8% CPI- Related 1.3% 12.5% Flat 2.6% Healthcare Restaurant Office Retail Industrial Q4 Q1 Q2 Q3 Q4 Q1 79.3% Leases with 2022 2023 2024
Slide 20: Top-Tier Portfolio Metrics
TOP-TIER PORTFOLIO METRICS Portfolio composition and underlying metrics rank toward the top of the net lease space INDUSTRIAL EXPOSURE WEIGHTED AVERAGE LEASE TERM REMAINING 98.3% 14.1 12.2 10.6 10.0 9.8 63.0% 9.2 54.2% 8.2 7.6 5.9 14.7% 3.4% 0.0% 0.0% 0.0% 0.0% PORTFOLIO RENT ESCALATIONS LEASE ROLLO
Slide 21: Attractive Relative Valuation
ATTRACTIVE RELATIVE VALUATION 2024E AFFO MULTIPLE DIVIDEND YIELD Discounted valuation despite Annual Dividend CAGR 2021 – 2023 of company’s performance and position ~4.5% 15.1x 14.6x 13.9x 13.7x 7.7% 13.4x Peer Average, 13.4x 7.4% 12.9x 12.1x 11.7x 6.0% 10.4x 5.8% 5.7% Peer Average, 5.6% 5.5% 5.1% 4
Slide 22: Investment Strategy
INVESTMENT STRATEGY 22 INVESTOR PRESENTATION MAY 2024
Slide 23: Differentiated Investment Approach
DIFFERENTIATED INVESTMENT APPROACH Agile Investment Strategy Enables Identification of Attractive Investment Opportunities Diversified Core Attractive Capital Proven Property Sectors Allocation Investment Strategy A decade plus of experience Flexibility to identify adjacent property ✔ Increased
Slide 24: Systematic Investment Approach
SYSTEMATIC INVESTMENT APPROACH INVESTMENT TEAMS: INDUSTRIAL RESTAURANT HEALTHCARE RETAIL CURRENT BROKERAGE DEVELOPMENT TENANT PRIVATE SOURCING CHANNELS: UPREIT OWNERS NETWORK PARTNERS RELATIONSHIPS EQUITY INVESTMENT TYPE DESCRIPTION SALE Acquire single-tenant property with a simultaneous new long-
Slide 25: Proven & Disciplined Investment Approach
PROVEN & DISCIPLINED INVESTMENT APPROACH Recent investment activity heavily weighted to industrial opportunities given attractive trends and risk- adjusted returns, but maintain acquisition flexibility to execute on diversified pipeline of assets Volume ($mm) Industrial Investments 2019 – 2023 $2.1
Slide 26: Balance Sheet Management
BALANCE SHEET MANAGEMENT 26 INVESTOR PRESENTATION MAY 2024
Slide 27: Conservative Balance Sheet & Prudent Capital Allocation
CONSERVATIVE BALANCE SHEET & PRUDENT CAPITAL ALLOCATION 1 Defensive leverage profile with broad access to diversified capital sources 2 Carefully constructed platform built to deliver accretive external growth 3 Specialized, national sourcing model with robust pipeline of opportunities 4 Diversified
Slide 28: Well Capitalized Balance Sheet
WELL CAPITALIZED BALANCE SHEET Investment Grade Credit Rated Balance Sheet with Well Laddered Maturities and Strong Liquidity TOTAL CAPITALIZATION DETAIL TOTAL CAPITALIZATION ON MARCH 31, 2024 ($ in thousands)4 March 31, 2024 1.6% 1.5% Equity Common Stock Common Stock 188,435 OP Units 17.0% OP Units
Slide 29: Emphasis Placed on Liquidity
EMPHASIS PLACED ON LIQUIDITY Conservative Leverage Profile & Ample Liquidity to Navigate Current and Future Economic Uncertainly KEY CREDIT METRICS AS OF MARCH 31, 2024 LEVERAGE PROFILE EVOLUTION2 5.1x 5.0x 5.0x 4.8x 4.6x BBB / Baa2 4.9x 4.8x Net Debt / Annualized Fixed Charge Issuer Ratings Adjuste
Slide 30: Corporate Governance
CORPORATE GOVERNANCE 30 INVESTOR PRESENTATION MAY 2024
Slide 31: Corporate Responsibility
CORPORATE RESPONSIBILITY Commitment to Corporate Responsibility We are committed to being a responsible corporate citizen by conducting our operations in a sustainable and ethical manner. We strive to foster a culture that is inclusive, collaborative, and based on trust, and invest heavily in the he
Slide 32: Board of Directors & Governance
BOARD OF DIRECTORS & GOVERNANCE BOARD OF DIRECTORS KEY GOVERNANCE HIGHLIGHTS Name, tenure Experience Laurie Hawkes (Chairman) Co-Founder, American Residential Properties Director since 2016 Director, Appreciate Holdings, Inc. (NASDAQ: 50-60 Chairman since 2021 SFR) 22% 33% 40-50 89% John Moragne
Slide 33: Appendix
Appendix Broadstone Net Lease, Inc. | NYSE: BNL
Slide 34: GAAP Reconciliations
GAAP RECONCILIATIONS FUNDS FROM OPERATIONS (FFO), CORE FFO, AND ADJUSTED FUNDS FROM OPERATIONS (AFFO) Three Months Ended March 31, December 31, (in thousands) 2024 2023 Net income $ 68,177 $ 6,797 Real property depreciation and amortization 37,690 39,115 Gain on sale of real estate (59,132) (6,270)
Slide 35: GAAP Reconciliations
GAAP RECONCILIATIONS EBITDA, EBITDAre, ADJUSTED EBITDAre, NET DEBT TO ANNUALIZED ADJUSTED EBITDAre As of (in thousands) March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 Debt Unsecured revolving credit facility $ 73,820 $ 90,434 $ 74,060 $ 122,912 $ 108,330 Unsecured t