Business Context and Reporting Period
Company: Broadstone Net Lease, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: July 23, 2019
Event: Entry into a Material Definitive Agreement (Partial Assignment and Assumption of Purchase Agreement).
Key Financial Metrics and Transaction Details
This filing details a specific acquisition transaction rather than reporting periodic financial results (e.g., revenue or net income). Key metrics related to the transaction include:
- Aggregate Purchase Price: Approximately $735.7 million (excluding capitalized acquisition expenses).
- Asset Portfolio: 23 industrial and office/flex properties located in 14 U.S. states and British Columbia, Canada.
- Property Size: 6.9 million rentable square feet.
- Tenant Profile: Fully leased to 19 different tenants.
- Lease Terms: Weighted average remaining lease term of approximately 11.7 years; weighted average annual rent increases of approximately 2.23%.
- Concentration Risk: Post-transaction, no single tenant is expected to account for more than 2.8% of contractual rental revenue over the next 12 months.
- Initial Deposit: $10 million delivered to escrow.
Material Changes and Funding Strategy
The Company entered into a Partial Assignment to acquire the "Broadstone Properties" from CF Alpha & Golf Propco entities. The transaction is subject to customary conditions and a due diligence period ending July 29, 2019. The Company anticipates funding the $735.7 million consideration through a combination of sources:
- Proceeds from an ongoing private offering of common stock (no cap on new investments for the July 31, 2019 closing).
- $150 million from delayed draw provisions of an existing $450 million seven-year unsecured term loan (maturing February 2026).
- $300 million from a new incremental term loan facility (commitments already obtained).
- Balance funded from the existing senior unsecured revolving credit facility.
Outlook, Management Commentary, and Risks
Closing Timeline: The acquisition is currently planned for late August 2019, though closing is not guaranteed and is subject to conditions.
Leverage Strategy: Following the closing, the Company intends to reduce its leverage profile in the near term using proceeds from equity offerings and increased disposition activity. The Company plans to reinstitute a cap on monthly equity closings once it is comfortably within the leverage range of its investment-grade rating.
Risks and Contingencies:
- Termination Rights: The Assignee may terminate the agreement for any reason prior to the expiration of the Due Diligence Period (July 29, 2019) with a refund of the deposit (less escrow fees).
- Default Remedies: If Assignors default, the Assignee may terminate, seek specific performance, or waive the default. Termination due to Assignor default includes reimbursement of up to $500,000 in out-of-pocket costs and attorneys' fees.
- Forward-Looking Statements: The filing contains forward-looking statements regarding plans and strategies subject to risks and uncertainties detailed in the Company's Form 10-K.
Investor Verification Checklist
- Verify the successful completion of the due diligence period ending July 29, 2019.
- Confirm the actual closing date and final purchase price adjustments (prorations) in late August 2019.
- Monitor the execution of the $300 million incremental term loan and the ongoing private equity offering.
- Track the Company's leverage ratio post-acquisition to assess the timeline for reinstating equity closing caps.
- Review subsequent filings for any termination of the Partial Assignment or changes to the property portfolio.