Business Context and Reporting Period
This Form 8-K filing by Broadstone Net Lease, Inc. covers events occurring on July 31, 2018. The Company is a net lease real estate investment trust (REIT) incorporated in Maryland. The report details the completion of a monthly private equity offering and a significant transaction involving the sale of preferred units in its affiliated property manager.
Key Financial Metrics and Transactions
- Equity Offering Proceeds: Sold 231,232.559 shares of common stock at a weighted average price of $83.00 per share, generating aggregate proceeds of $19,192,303.00.
- Subscription Queue: Approximately $9,323,695.15 in subscriptions were held in queue for subsequent closings at a price of $83.00 per share.
- Investment Cap: The Company maintains a $20.0 million monthly cap on new and additional investments (excluding DRIP and UPREIT transactions).
- Preferred Unit Sale: Sold 100,000 non-voting convertible preferred units of Broadstone Real Estate, LLC (the Manager) to Trident BRE, LLC for an aggregate price of $18,500,000.
- DRIP Activity: Issued 53,856.983 shares via the Distribution Reinvestment Plan on July 13, 2018, generating $4,380,721.35 at $81.34 per share.
- Outstanding Equity: As of July 31, 2018, there were 20,524,162.468 shares of common stock issued and outstanding.
Material Changes and Capital Structure
The filing reports a material change in the Company's capital structure through the issuance of new common stock and the divestiture of preferred units in its Manager. The sale of the Preferred Units to Trident BRE, an affiliate of Stone Point Capital LLC, alters the ownership structure of the Manager, which provides property and asset management services to the Company. The Company intends to use net proceeds from the equity offering, supplemented by borrowings, to invest in additional net leased properties and for general corporate purposes.
Outlook, Risks, and Management Commentary
Management indicated that the equity offering is ongoing with monthly closings. The sale of the Preferred Units was approved by the Board of Directors and the Independent Directors Committee. The filing notes that the equity sales were conducted under the exemption from registration provided by Rule 506(c) under Regulation D. No specific forward-looking guidance regarding future revenue or profit margins was provided in this specific report, as it focuses on discrete capital events.
Key Facts for Investor Verification
- Verify the use of the $19.2 million in equity proceeds and the $18.5 million from the Preferred Unit sale in subsequent quarterly reports.
- Confirm the impact of the Preferred Unit sale on the Company's relationship and fee structure with the Manager and Asset Manager.
- Monitor the status of the $9.3 million in queued subscriptions to assess near-term capital raising capacity.
- Review the Company's leverage ratios in upcoming filings to understand the "additional borrowings" mentioned for property acquisitions.