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What changed in Broadstone Net Lease, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Broadstone Net Lease, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+303 added−264 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-22)

Top changes in Broadstone Net Lease, Inc.'s 2024 10-K

303 paragraphs added · 264 removed · 223 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

52 edited+28 added−16 removed47 unchanged
Biggest changeDiversification by Industry Tenant Industry # Properties ABR (’000s) ABR as a % of Total Portfolio Square Feet (’000s) SF as a % of Total Portfolio Healthcare Facilities 104 $ 54,973 14.0 % 2,062 5.4 % Restaurants 251 53,973 13.8 % 1,207 3.2 % Packaged Foods & Meats 29 41,046 10.5 % 4,713 12.3 % Distributors 27 17,477 4.5 % 2,757 7.2 % Auto Parts & Equipment 44 15,599 4.0 % 2,710 7.1 % Specialty Stores 31 14,362 3.7 % 1,338 3.5 % Food Distributors 8 14,206 3.6 % 1,712 4.5 % Home Furnishing Retail 18 12,914 3.3 % 1,858 4.9 % Specialized Consumer Services 45 11,842 3.0 % 709 1.9 % Metal & Glass Containers 8 10,229 2.6 % 2,206 5.8 % General Merchandise Stores 96 9,716 2.5 % 880 2.3 % Industrial Machinery 20 9,654 2.5 % 1,949 5.1 % Forest Products 8 9,378 2.4 % 2,284 6.0 % Healthcare Services 18 9,371 2.4 % 515 1.3 % Internet & Direct Marketing Retail 3 7,057 1.8 % 447 1.2 % Other (38 industries) 84 100,404 25.4 % 10,700 27.7 % Untenanted properties 2 — — 224 0.6 % Total 796 $ 392,201 100.0 % 38,271 100.0 % 8 Diversification by Geographic Location State # Properties ABR (’000s) ABR as a % of Total Portfolio Square Feet (’000s) SF as a % of Total Portfolio State # Properties ABR (’000s) ABR as a % of Total Portfolio Square Feet (’000s) SF as a % of Total Portfolio TX 69 $ 38,110 9.7 % 3,603 9.4 % WA 15 $ 4,384 1.1 % 150 0.4 % MI 55 33,060 8.4 % 3,810 10.0 % LA 4 3,407 0.9 % 194 0.5 % IL 32 24,383 6.2 % 2,424 6.3 % MS 11 3,370 0.9 % 430 1.1 % WI 35 23,096 5.9 % 2,163 5.7 % NE 6 3,286 0.8 % 509 1.3 % CA 13 19,617 5.0 % 1,718 4.5 % SC 13 2,986 0.8 % 308 0.8 % FL 42 16,319 4.2 % 840 2.2 % IA 4 2,819 0.7 % 622 1.6 % OH 47 16,308 4.2 % 1,582 4.1 % NM 9 2,779 0.7 % 107 0.3 % IN 32 16,240 4.1 % 1,906 5.0 % CO 4 2,545 0.6 % 126 0.3 % MN 21 15,668 4.0 % 2,500 6.5 % UT 3 2,492 0.6 % 280 0.7 % TN 49 15,225 3.9 % 1,093 2.9 % MD 3 2,174 0.6 % 205 0.5 % NC 36 12,491 3.2 % 1,135 3.0 % CT 2 1,837 0.5 % 55 0.1 % AL 53 12,418 3.2 % 873 2.3 % ND 3 1,726 0.4 % 48 0.1 % AZ 9 11,929 3.0 % 909 2.4 % MT 7 1,582 0.4 % 43 0.1 % GA 33 11,894 3.0 % 1,576 4.1 % DE 4 1,180 0.3 % 133 0.3 % KY 24 9,832 2.5 % 962 2.5 % VT 2 426 0.1 % 20 0.1 % PA 22 9,807 2.5 % 1,836 4.8 % WY 1 307 0.1 % 25 0.1 % NY 26 9,467 2.4 % 680 1.8 % NV 1 272 0.1 % 6 0.0 % OK 24 8,415 2.1 % 990 2.6 % OR 1 136 0.0 % 9 0.0 % AR 11 7,855 2.0 % 283 0.7 % SD 1 81 0.0 % 9 0.0 % MA 3 6,548 1.7 % 444 1.2 % Total U.S. 789 $ 383,657 97.8 % 37,841 98.8 % MO 12 6,231 1.6 % 1,138 3.0 % BC 2 4,992 1.2 % 253 0.7 % VA 17 5,550 1.4 % 204 0.5 % ON 3 2,168 0.6 % 101 0.3 % KS 10 5,495 1.4 % 643 1.7 % AB 1 1,027 0.3 % 55 0.1 % WV 17 4,997 1.3 % 884 2.3 % MB 1 357 0.1 % 21 0.1 % NJ 3 4,913 1.3 % 366 1.0 % Total Canada 7 $ 8,544 2.2 % 430 1.2 % Grand Total 796 $ 392,201 100.0 % 38,271 100.0 % 9 Our Leases We typically lease our properties pursuant to long-term net leases with initial terms of 10 years or more that often have renewal options.
Biggest changeDiversification by Industry Tenant Industry # of Properties ABR (’000s) ABR as a % of Total Portfolio Square Feet (’000s) SF as a % of Total Portfolio Restaurants 257 $ 54,839 13.9 % 1,231 3.1 % Packaged Foods & Meats 35 48,033 12.1 % 5,541 14.1 % Food Distributors 7 26,576 6.7 % 2,534 6.4 % Healthcare Facilities 48 23,990 6.1 % 852 2.2 % Auto Parts & Equipment 46 20,739 5.2 % 3,168 8.0 % Specialty Stores 36 18,594 4.7 % 1,637 4.2 % Distributors 27 17,820 4.5 % 2,757 7.0 % Home Furnishing Retail 17 12,281 3.1 % 1,692 4.3 % Specialized Consumer Services 46 12,157 3.1 % 716 1.8 % Metal & Glass Containers 8 10,696 2.7 % 2,206 5.6 % Industrial Machinery 20 9,910 2.5 % 1,949 5.0 % General Merchandise Stores 96 9,819 2.5 % 880 2.2 % Forest Products 8 9,612 2.4 % 2,284 5.8 % Healthcare Services 17 9,507 2.4 % 507 1.3 % Electronic Components 2 7,129 1.8 % 466 1.2 % Other (40 industries) 93 103,779 26.3 % 10,591 26.9 % Untenanted properties 2 — — 343 0.9 % Total 765 $ 395,481 100.0 % 39,354 100.0 % 8 Diversification by Geographic Location State/ Province # of Properties ABR (’000s) ABR as a % of Total Portfolio Square Feet (’000s) SF as a % of Total Portfolio State/ Province # of Properties ABR (’000s) ABR as a % of Total Portfolio Square Feet (’000s) SF as a % of Total Portfolio TX 67 $ 37,815 9.6 % 3,615 9.2 % MS 12 4,120 1.0 % 607 1.5 % MI 52 36,422 9.2 % 4,019 10.2 % LA 5 3,786 1.0 % 211 0.5 % FL 30 25,527 6.5 % 1,661 4.3 % SC 14 3,519 0.9 % 323 0.8 % CA 17 24,293 6.1 % 2,282 5.8 % NE 6 3,363 0.9 % 509 1.3 % IL 29 22,756 5.8 % 2,364 6.0 % WA 14 3,289 0.8 % 148 0.4 % WI 30 19,568 4.9 % 1,945 4.9 % IA 4 2,884 0.7 % 622 1.6 % OH 49 16,677 4.2 % 1,582 4.0 % NM 9 2,749 0.7 % 107 0.3 % MN 21 15,958 4.0 % 2,500 6.4 % UT 3 2,748 0.7 % 280 0.7 % TN 48 15,148 3.8 % 1,084 2.8 % CO 4 2,589 0.7 % 126 0.3 % IN 28 14,091 3.6 % 1,852 4.7 % MD 3 2,112 0.5 % 205 0.5 % AL 52 12,394 3.1 % 863 2.2 % CT 2 1,898 0.5 % 55 0.1 % GA 34 12,055 3.0 % 1,576 4.0 % MT 7 1,602 0.4 % 43 0.1 % NC 29 10,485 2.7 % 1,038 2.6 % DE 4 1,162 0.3 % 133 0.3 % PA 22 10,002 2.5 % 1,836 4.7 % ND 2 1,024 0.3 % 24 0.1 % KY 23 9,127 2.3 % 927 2.4 % VT 2 432 0.1 % 24 0.1 % MO 19 8,941 2.3 % 1,260 3.2 % WY 1 338 0.1 % 21 0.1 % OK 25 8,908 2.3 % 1,006 2.6 % NV 1 277 0.1 % 6 0.0 % AZ 7 8,792 2.2 % 747 1.9 % OR 1 136 0.0 % 9 0.0 % NY 24 6,724 1.7 % 514 1.3 % SD 1 81 0.0 % 9 0.0 % MA 3 6,692 1.7 % 444 1.1 % Total U.S. 758 $ 387,763 98.1 % 38,925 98.9 % AR 9 6,675 1.7 % 277 0.7 % BC 2 4,535 1.1 % 253 0.6 % KS 10 5,530 1.4 % 643 1.6 % ON 3 1,944 0.5 % 101 0.3 % WV 17 5,100 1.3 % 884 2.2 % AB 1 914 0.2 % 51 0.1 % VA 15 5,056 1.3 % 178 0.5 % MB 1 325 0.1 % 24 0.1 % NJ 3 4,918 1.2 % 366 0.9 % Total Canada 7 $ 7,718 1.9 % 429 1.1 % Grand Total 765 $ 395,481 100.0 % 39,354 100.0 % 9 Our Leases We typically lease our properties pursuant to long-term net leases with initial terms of 10 years or more that often have renewal options.
When evaluating whether a property acquisition would contribute to our overall portfolio’s diversification, we take into account the percentage a single property, tenant, or brand would represent in our overall portfolio, as well as geographic concentrations, both by the metropolitan statistical area and by state.
When evaluating whether a property acquisition would contribute to our overall portfolio’s diversification, we take into account the total percentage a single property, tenant, or brand would represent in our overall portfolio, as well as geographic concentrations, both by the metropolitan statistical area and by state.
In addition, these same entities may seek financing through similar channels to us, and may have a higher target leverage profile. Competition from these REITs and other third-party real estate investors may limit the number of suitable investment opportunities available to us.
In addition, these same entities may seek financing through similar channels as us, and may have a higher target leverage profile. Competition from these REITs and other third-party real estate investors may limit the number of suitable investment opportunities available to us.
We look for industrial assets where the real estate is mission critical to the tenant’s operations, where the property sits on an essential or strategic location for the tenant, and where it would be difficult or more expensive for the tenant to relocate.
We predominantly look for industrial assets where the real estate is mission critical to the tenant’s operations, where the property sits on an essential or strategic location for the tenant, and where it would be difficult or more expensive for the tenant to relocate.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K under the heading Non-GAAP Measures , which includes discussion of the definition, purpose, and use of these non-GAAP measures as well as a reconciliation of each to the most comparable GAAP measure. 5 Our Real Estate Investment Portfolio The following charts summarize our portfolio diversification by property type, tenant, brand, industry, and geographic location as of December 31, 2023.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K under the heading Non-GAAP Measures , which includes discussion of the definition, purpose, and use of these non-GAAP measures as well as a reconciliation of each to the most comparable GAAP measure. 5 Our Real Estate Investment Portfolio The following charts summarize our portfolio diversification by property type, tenant, brand, industry, and geographic location as of December 31, 2024.
Approximately 3% of the properties in our portfolio are subject to leases without at least one renewal option. The following chart sets forth our lease expirations based upon the terms of the leases in place as of December 31, 2023. 10 The following table presents certain information based on lease expirations by year.
Approximately 3% of the properties in our portfolio are subject to leases without at least one renewal option. The following chart sets forth our lease expirations based upon the terms of the leases in place as of December 31, 2024. 10 The following table presents certain information based on lease expirations by year.
For all investments, we seek to maintain our portfolio’s diversification by property type, geography, tenant, and industry in an effort to reduce fluctuations in income caused by under-performing individual real estate assets or adverse economic conditions affecting an entire industry or geographic region.
For all investments, we seek to maintain our portfolio’s diversification by property type, geography, tenant, and industry in an effort to reduce fluctuations in income caused by under-performing individual real estate assets or adverse economic conditions affecting an entire industry or geographic region. • Diversified Portfolio .
We strive to provide our employees with a work environment that is free from discrimination and harassment, that respects and honors their differences and unique life experiences, and that enables employees the opportunity to develop and excel in their role and reach their full potential.
We strive to provide our employees with a work environment that is free from discrimination and harassment, that respects and honors their differences and unique life experiences, and that enables employees the opportunity to develop and excel in their roles and reach their full potential.
We target properties that are an integral part of the tenants’ businesses and are therefore opportunities to secure long-term net leases through which our tenants are able to retain operational control of their strategically important locations, while allocating their debt and equity capital to fund core business operations rather than real estate ownership. • Diversified Portfolio .
We target properties that are an integral part of the tenants’ businesses and are therefore opportunities to secure long-term net leases through which our tenants are able to retain operational control of their strategically important locations, while allocating their debt and equity capital to fund core business operations rather than real estate ownership. • Diversified Investment Strategy.
Our escalations provide us with a source of organic revenue growth and a measure of inflation protection. Additional information on lease escalation frequency and weighted average annual escalation rates as of December 31, 2023 is displayed below.
Our escalations provide us with a source of organic revenue growth and a measure of inflation protection. Additional information on lease escalation frequency and weighted average annual escalation rates as of December 31, 2024 is displayed below.
Our community engagement efforts are led by our employees through a dedicated committee that is responsible for engaging with community organizations, planning and organizing various opportunities for employees to make a difference through volunteer giving and service, and facilitating corporate donation and fundraising drives.
Our community engagement efforts are supported by a committee that is responsible for engaging with community organizations, planning and organizing various opportunities for employees to make a difference through volunteer giving and service, and facilitating corporate donation and fundraising drives.
(2) Generally associated with investment grade tenants. 11 The escalation provisions of our leases (by percentage of ABR) as of December 31, 2023, are displayed in the following chart: If requested by a tenant, we may, subject to the tenant’s history, creditworthiness, and other relevant considerations, agree to reimburse the tenant for property expansion or improvement costs, 100% of which it leases from us.
(b) Generally associated with investment grade retail tenants. 11 The escalation provisions of our leases (by percentage of ABR) as of December 31, 2024, are displayed in the following chart: If requested by a tenant, we may, subject to the tenant’s history, creditworthiness, and other relevant considerations, agree to reimburse the tenant for property expansion or improvement costs, 100% of which it leases from us.
As of December 31, 2023, leases contributing 97.3% of our ABR provided for increases in future ABR, generally ranging from 1.5% to 3.0% annually, with an ABR weighted average annual minimum increase equal to 2.0% of base rent. Generally, our rent escalators increase rent on specified dates by a fixed percentage.
As of December 31, 2024, leases contributing 97.4% of our ABR provided for increases in future ABR, generally ranging from 1.5% to 3.0% annually, with an ABR weighted average annual increase equal to 2.0% of base rent. Generally, our rent escalators increase rent on specified dates by a fixed percentage.
In exchange for such reimbursement, we generally receive contractually specified rent that increases proportionally with our funding. Generally, the rent will increase proportionally with our funding, which typically allows us to achieve a consistent cash yield on our funding throughout improvement.
In exchange for such reimbursement, we generally receive contractually specified rent that increases proportionally with our funding, which typically allows us to achieve a consistent cash yield on our funding throughout improvement.
Because substantially all of our properties are leased under long-term leases, we are not currently required to perform significant ongoing leasing activities on our properties. As of December 31, 2023, the ABR weighted average remaining term of our leases was approximately 10.5 years.
Because substantially all of our properties are leased under long-term leases, we are not currently required to perform significant ongoing leasing activities on our properties. As of December 31, 2024, the ABR weighted average remaining term of our leases was approximately 10.2 years.
Our commitment to our employees is central to our ability to continue to deliver strong performance and financial results for our stockholders and other stakeholders. We are as passionate about our people as we are about real estate.
At Broadstone, we are as passionate about our people as we are about real estate. The commitment to our employees is central to our ability to continue to deliver strong performance and financial results for our stockholders and other stakeholders.
We also invest in our properties with existing tenants through revenue generating capital expenditures, whereby we agree to fund certain capital expenditures in exchange for increased rents that often include rent escalations and terms consistent with that of the underlying lease.
We also make additional investments in our properties with existing tenants through revenue generating capital expenditures, whereby we agree to fund certain capital expenditures in exchange for increased rents that often include rent escalations and terms consistent with that of the underlying lease.
As of December 31, 2023, our portfolio was approximately 99.4% leased with an ABR weighted average remaining lease term of approximately 10.5 years, excluding renewal options. • Standard Contractual Base Rent Escalation . Approximately 97.3% of our leases have contractual rent escalations, with an ABR weighted average minimum increase of 2.0%. • Extensive Tenant Financial Reporting .
As of December 31, 2024, our portfolio was approximately 99.1% leased with an ABR weighted average remaining lease term of approximately 10.2 years, excluding renewal options. • Standard Contractual Base Rent Escalation . Approximately 97.4% of our leases have contractual rent escalations, with an ABR weighted average increase of 2.0%. • Extensive Tenant Financial Reporting .
Lease Escalation Frequency % of ABR Weighted Average Annual Minimum Increase (1) Annually 80.0 % 2.1 % Every 2 years 0.1 % 1.8 % Every 3 years 2.3 % 3.0 % Every 4 years 1.1 % 2.4 % Every 5 years 7.2 % 1.7 % Every 6 years 0.1 % 1.7 % Other escalation frequencies 6.5 % 1.6 % Flat (2) 2.7 % — Total/ABR Weighted Average 100.0 % 2.0 % (1) Represents the ABR weighted average annual minimum increase of the entire portfolio as if all escalations occurred annually.
Lease Escalation Frequency % of ABR Weighted Average Annual Increase (a) Annually 79.5 % 2.1 % Every 2 years 0.1 % 1.8 % Every 3 years 2.2 % 2.9 % Every 4 years 1.0 % 2.4 % Every 5 years 8.1 % 1.6 % Every 6 years 0.1 % 1.7 % Other escalation frequencies 6.4 % 1.5 % Flat (b) 2.6 % — Total/ABR Weighted Average 100.0 % 2.0 % (a) Represents the ABR weighted average annual increase of the entire portfolio as if all escalations occurred annually.
Within these sectors, we have meaningful concentrations in manufacturing, distribution and warehouse, food processing, casual dining, clinical, quick service restaurants, and general merchandise. • Geographic Diversification : Our properties are located in 44 U.S. states and four Canadian provinces, with no single geographic concentration exceeding 9.7% of our ABR. • Tenant and Industry Diversification : Our properties are occupied by approximately 220 different commercial tenants who operate 208 different brands that are diversified across 53 differing industries, with no single tenant accounting for more than 4.1% of our ABR. • Strong In-Place Leases with Significant Remaining Lease Term .
Within these sectors, we have meaningful concentrations in manufacturing, distribution and warehouse, food processing, general merchandise, casual dining, and quick service restaurants. • Geographic Diversification : Our properties are located in 44 U.S. states and four Canadian provinces, with no single geographic concentration exceeding 9.6% of our ABR. • Tenant and Industry Diversification : Our properties are occupied by 202 different commercial tenants who operate 190 distinct brands that are diversified across 55 varying industries, with no single tenant accounting for more than 4.1% of our ABR. • Strong In-Place Leases with Significant Remaining Lease Term .
We intend to continue to be organized and operate in such a manner. In order to qualify as a REIT, we are required under the Code, among other things, to distribute annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain.
In order to qualify as a REIT, we are required under the Code, among other things, to distribute annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain.
As of December 31, 2023, our portfolio comprised approximately 38.3 million rentable square feet of operational space, was highly diversified based on property type, geography, tenant, and industry, and was cross-diversified within each ( e.g., property-type diversification within a geographic concentration): • Property Type : We are diversified across industrial, healthcare, restaurant, retail, and office property types.
As of December 31, 2024, our portfolio comprised approximately 39.4 million rentable square feet of operational space, was highly diversified based on property type, geography, tenant, and industry, and was cross-diversified within each ( e.g., property-type diversification within a geographic concentration): • Property Type : We are primarily diversified across industrial and retail property types.
We seek to create and cultivate an inclusive and engaging work environment for our employees, which allows us to attract, engage, and develop top talent to manage our business.
We seek to create an inclusive and dynamic culture for our employees, which allows us to attract, engage, and develop top talent to manage our business.
As of December 31, 2023, master leases contributed 69.0% of the ABR associated with multi-site tenants (406 of 675 properties), and 41.5% of our overall ABR (406 of our 796 properties). As of December 31, 2023, approximately 99.4% of our portfolio, representing all but two of our properties, was subject to a lease.
As of December 31, 2024, master leases contributed 69.1% of the ABR associated with multi-site tenants (394 of 656 properties), and 41.4% of our overall ABR (394 of our 765 properties). As of December 31, 2024, approximately 99.1% of our portfolio, representing all but two of our properties, was subject to a lease.
We underwrite restaurant properties primarily based on the fundamental value of the underlying real estate, site level performance, corporate owned location or experienced multi-unit franchise operators, and whether the property is subject to a master lease with multiple operating locations. 12 • Retail.
We underwrite retail properties primarily based on the fundamental value of the underlying real estate, site level performance, corporate owned location or experienced multi-unit franchise operators, and whether the property is subject to a master lease with multiple operating locations. We place emphasis on retail investments located in highly trafficked retail corridors with strong demographic attributes.
Additionally, if we were to lose REIT status we would face significant tax consequences that would substantially reduce our cash available for distribution to our stockholders. 16 Company Information Our filings with the SEC, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as well as our proxy statements, are accessible free of charge at http://investors.bnl.broadstone.com as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
Company Information Our filings with the SEC, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as well as our proxy statements, are accessible free of charge at http://investors.bnl.broadstone.com as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
Investment Guidelines We seek to acquire, finance, and develop primarily freestanding, single-tenant commercial real estate properties located in the United States that are under lease and fully occupied at the time of acquisition or development completion.
(d) Includes leases that have been executed but rent has not yet commenced. 12 Investment Guidelines We seek to acquire, finance, and develop primarily freestanding, single-tenant commercial real estate properties located in the United States that are under lease and fully occupied at the time of acquisition or development completion.
These efforts allow us to offer numerous opportunities for employees to prioritize community involvement and is further encouraged by providing employees with dedicated time off per year to focus on community service and volunteering for causes of personal interest. We believe that the initiatives described above help us attract, hire, engage, and retain employees.
These efforts allow us to offer numerous opportunities for employees to prioritize community involvement and is further encouraged by providing employees with dedicated paid time off per year to focus on community service and volunteering for causes of personal interest.
Ryerson & Son, Inc Distribution & Warehouse 11 7,780 2.0 % 1,599 4.2 % Jack’s Family Restaurants LP* Quick Service Restaurants 43 7,456 1.9 % 147 0.3 % J. Alexander’s, LLC * Casual Dining 16 6,207 1.6 % 131 0.3 % Axcelis Technologies, Inc.
Ryerson & Son, Inc Distribution & Warehouse 11 7,897 2.0 % 1,599 4.1 % Jack’s Family Restaurants LP * Quick Service Restaurants 43 7,605 1.9 % 147 0.4 % Tractor Supply Company General Merchandise 23 6,449 1.6 % 462 1.2 % J. Alexander’s, LLC * Casual Dining 16 6,300 1.6 % 131 0.3 % Axcelis Technologies, Inc.
We compete for tenants to occupy our properties in all of our markets with other owners and operators of commercial real estate. We compete based on a number of factors that include location, rental rates, security, suitability of the property’s design to prospective tenants’ needs, and the manner in which the property is operated and marketed.
We compete based on a number of factors that include location, rental rates, tenant quality, suitability of the property’s design to prospective tenants’ needs, and the manner in which the property is operated and marketed.
The presence of contamination, or the failure to properly remediate contamination, on a property may adversely affect the ability of the owner, operator or tenant to sell or rent that property or to borrow using the property as collateral, and may adversely impact our investment in that property.
The presence of contamination, or the failure to properly remediate contamination, on a property may adversely affect the ability of the owner, operator or tenant to sell or rent that property or to borrow using the property as collateral, and may adversely impact our investment in that property. 15 Some of our properties contain, have contained, or are adjacent to or near other properties that have contained or currently contain storage tanks for the storage of petroleum products or other hazardous or toxic substances.
Compliance with existing and new laws and regulations may require us or our tenants to spend funds to remedy environmental problems. If we or our tenants were to become subject to significant environmental liabilities, we could be materially and adversely affected.
Compliance with existing and new laws and regulations may require us or our tenants to spend funds to remedy environmental problems.
While we consider these criteria when evaluating investment opportunities, we may also pursue opportunistic investments that do not meet one or more of these factors if we assess that a transaction presents compelling risk-adjusted returns. We intend to primarily acquire portfolios and assets over time that will not result in any one tenant representing more than 5% of ABR.
While we consider these criteria when evaluating investment opportunities, we may also opportunistically pursue investments that do not meet one or more of these factors if we assess that a transaction presents compelling risk-adjusted returns.
These laws may impose liability for improper handling or a release into the environment of ACM and may provide for fines to, and for third parties to seek recovery from, owners or operators of real properties for personal injury or improper work exposure associated with ACM. 15 When excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time.
These laws may impose liability for improper handling or a release into the environment of ACM and may provide for fines to, and for third parties to seek recovery from, owners or operators of real properties for personal injury or improper work exposure associated with ACM.
We employ numerous strategies and initiatives to nurture and nourish our employees and their dependents physical, mental, and emotional well-being, including, among other things, competitive compensation programs including performance-based bonuses and equity programs for all, employee benefits (with 100% employer-paid healthcare options), 401(k) with employer match and immediate vesting, generous paid time off programs with an annual corporate shutdown week, paid caregiver leave, on-site flu vaccinations, employer-paid legal services, access to an employee assistance program, fringe benefits to make both the Broadstone and home office environments more comfortable including flexibility in work locations and schedules, and access to other health and wellness events and resources. • Employee Development and Engagement – We strive to create an engaging work experience that allows for career development and related opportunities.
These include: competitive compensation programs including performance-based bonuses and equity programs for all, employee benefits (with 100% employer-paid healthcare options), 401(k) with employer match and immediate vesting, generous paid time off programs with an annual corporate shutdown week, paid caregiver leave, employer-paid legal services, access to an employee assistance program, several company-paid and supplemental insurance programs, fringe benefits to make both the Broadstone and home office environments more comfortable including flexibility in work locations and schedules, and access to other health and wellness events and resources. • Employee Development and Engagement – Our diverse backgrounds and experiences help drive our performance and contribute to our company’s growth.
Indoor exposure to airborne toxins or irritants above certain levels can be alleged to cause a variety of adverse health effects and symptoms, including allergic or other reactions.
Indoor air quality issues can also stem from inadequate ventilation, chemical contamination from indoor or outdoor sources, and other biological contaminants such as pollen, viruses, and bacteria. Indoor exposure to airborne toxins or irritants above certain levels can be alleged to cause a variety of adverse health effects and symptoms, including allergic or other reactions.
We also maintain property coverage on all untenanted properties and other property coverage as may be required by our lenders, which are not required to be carried by our tenants under our leases. 14 Government Regulation General Our investments are subject to various laws, ordinances, and regulations, including, among other things, fire and safety requirements, zoning regulations, land use controls, and environmental controls relating to air and water quality, noise pollution, and indirect environmental impacts.
Government Regulation General Our investments are subject to various laws, ordinances, and regulations, including, among other things, fire and safety requirements, zoning regulations, land use controls, and environmental controls relating to air and water quality, noise pollution, and indirect environmental impacts. We believe that we have all permits and approvals necessary under current law to operate our investments.
As any future increase in CPI is unknowable at this time, we have not included an increase in the rent pursuant to these leases in the weighted average annual minimum increase presented.
As of December 31, 2024, leases contributing 4.8% of our ABR provide for rent increases equal to the lesser of a stated fixed percentage or the change in CPI. As any future increase in CPI is unknowable at this time, we have not included an increase in the rent pursuant to these leases in the weighted average annual increase presented.
We look for industrial properties that are located in close proximity to major transportation thoroughfares such as airports, ports, railways, major freeways or interstate highways. • Restaurant . We focus our restaurant investments primarily in single-tenant quick service restaurant and casual dining properties, with an emphasis on restaurants that are located in strong retail markets.
In both circumstances, we look for industrial properties that are located in close proximity to major transportation thoroughfares such as airports, ports, railways, major freeways or interstate highways. • Retail.
Tax Regulation We elected to be taxed as a REIT under the Internal Revenue Code of 1986, (as amended, the “Code”) beginning with our taxable year ended December 31, 2008. We believe that as of such date we have been organized and have operated in a manner to qualify for taxation as a REIT for U.S. federal income tax purposes.
We believe that as of such date we have been organized and have operated in a manner to qualify for taxation as a REIT for U.S. federal income tax purposes. We intend to continue to be organized and operate in such a manner.
FFO, Core FFO, AFFO, Net Debt, and Annualized Adjusted EBITDAre are performance measures that are not calculated in accordance with accounting principles generally accepted in the United States of America (“GAAP”). We present these non-GAAP measures as we believe certain investors and other users of our financial information use them as part of their evaluation of our historical operating performance.
FFO, Core FFO, AFFO, Net Debt, Pro Forma Net Debt, Annualized Adjusted EBITDAre, and Pro Forma Net Debt to Annualized Adjusted EBITDAre are performance measures that are not calculated in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
Flex and R&D 1 6,126 1.6 % 417 1.1 % Salm Partners, LLC* Food Processing 2 6,062 1.5 % 368 1.0 % Red Lobster Hospitality & Red Lobster Restaurants LLC* Casual Dining 18 6,060 1.5 % 147 0.4 % Hensley & Company* Distribution & Warehouse 3 5,989 1.5 % 577 1.5 % Dollar General Corporation General Merchandise 60 5,977 1.5 % 562 1.5 % Total Top 10 Tenants 169 76,952 19.6 % 8,482 22.2 % BluePearl Holdings, LLC** Animal Health Services 13 5,693 1.4 % 165 0.4 % Krispy Kreme Doughnut Corporation Quick Service Restaurants/ Food Processing 27 5,538 1.4 % 156 0.4 % Outback Steakhouse of Florida LLC* 1 Casual Dining 22 5,454 1.4 % 140 0.4 % Tractor Supply Company General Merchandise 21 5,360 1.4 % 417 1.1 % Big Tex Trailer Manufacturing, Inc.* Automotive/ Distribution & Warehouse/ Manufacturing/ Corporate Headquarters 17 5,056 1.3 % 1,302 3.4 % Nestle’ Dreyer’s Ice Cream Company 2 Cold Storage 1 4,611 1.2 % 309 0.8 % Carvana, LLC* Industrial Services 2 4,590 1.2 % 230 0.6 % Arkansas Surgical Hospital Surgical 1 4,588 1.2 % 129 0.3 % Klosterman Bakery* Food Processing 11 4,568 1.1 % 549 1.4 % Chiquita Holdings Limited Food Processing 1 4,420 1.1 % 335 0.9 % Total Top 20 Tenants 285 $ 126,830 32.3 % 12,214 31.9 % 1 Tenant’s properties include 20 Outback Steakhouse restaurants and two Carrabba’s Italian Grill restaurants. 2 Nestle’s ABR excludes $1.6 million of rent paid under a sub-lease for an additional property, which will convert to a prime lease no later than August 2024. * Subject to a master lease. ** Includes properties leased by multiple tenants, some, not all, of which are subject to master leases.
Flex and R&D 1 6,263 1.6 % 417 1.1 % Nestle’ Dreyer's Ice Cream Company Cold Storage 2 6,219 1.6 % 503 1.3 % Salm Partners, LLC * Food Processing 2 6,170 1.6 % 427 1.0 % Total Top 10 Tenants 114 86,431 21.9 % 9,236 23.5 % Hensley & Company * Distribution & Warehouse 3 6,109 1.5 % 577 1.5 % Dollar General Corporation General Merchandise 60 5,992 1.5 % 562 1.4 % BluePearl Holdings, LLC ** Animal Services 13 5,846 1.5 % 159 0.4 % Red Lobster Hospitality & Red Lobster Restaurants LLC * Casual Dining 18 5,563 1.4 % 147 0.4 % Outback Steakhouse of Florida LLC * (a) Casual Dining 22 5,544 1.4 % 140 0.4 % Krispy Kreme Doughnut Corporation Quick Service Restaurants/ Food Processing 27 5,538 1.4 % 156 0.4 % Big Tex Trailer Manufacturing Inc. * Automotive/Distribution & Warehouse/Manufacturing/Office 17 5,157 1.3 % 1,302 3.3 % Arkansas Surgical Hospital, LLC Clinical & Surgical 1 4,702 1.2 % 129 0.3 % Carvana, LLC * Industrial Services 2 4,672 1.2 % 230 0.6 % Jelly Belly Candy Company Distribution & Warehouse/Food Processing/General Merchandise 5 4,648 1.2 % 575 1.4 % Total Top 20 Tenants 282 $ 140,202 35.5 % 13,213 33.6 % (a) Tenant’s properties include 20 Outback Steakhouse restaurants and two Carrabba’s Italian Grill restaurants. * Subject to a master lease. ** Includes properties leased by multiple tenants, some, not all, of which are subject to master leases.
We offer numerous opportunities for our employees to engage in personal and professional development, including educational support and opportunities for tuition assistance and reimbursement, participation in industry conferences and networking events, individual leadership and management training, access to an online learning library, in-office library with a curated collection of personal and professional development books, , town hall meetings with our CEO and senior leadership team, group trainings (e.g., underwriting, real estate fundamentals, cyber security, computer skills, safety, ethics, harassment prevention, and DE&I related content), and peer mentorship opportunities.
We leverage and enhance our collective strengths through collaboration and development initiatives by offering numerous opportunities for our employees to engage in personal and professional growth, including educational support and eligibility for tuition assistance and reimbursement, participation in industry conferences and networking events, individual leadership training, access to an online learning library, town hall meetings with our CEO and senior leadership team, sponsorship of employees through a women’s resource group, and peer mentorship opportunities.
The percentages below are calculated based on our ABR of $392.2 million as of December 31, 2023.
These portfolio statistics exclude transitional capital investments. The percentages below are calculated based on our ABR of $395.5 million as of December 31, 2024.
Principal Executive Offices Our principal executive offices are located at 207 High Point Drive, Suite 300, Victor, New York 14564, and our telephone number is (585) 287-6500. Insurance Our tenants are generally required to maintain liability and property insurance coverage for the properties they lease from us pursuant to net leases.
Insurance Our tenants are generally required to maintain liability and property insurance coverage for the properties they lease from us pursuant to net leases.
As of December 31, 2023, our portfolio includes 796 properties, with 789 properties located in 44 U.S. states and seven properties located in four Canadian provinces. We focus on investing in real estate that is operated by creditworthy single tenants in industries characterized by positive business drivers and trends.
We focus on investing in real estate that is operated by creditworthy single tenants in industries characterized by positive business drivers and trends.
We seek to provide a collaborative, creative workplace where people with unique talents can flourish, where their opinions are valued, and where their contributions are rewarded. 13 As part of our commitment to our employees, we are focused on the following: • Employee Total Rewards and Wellness – Our employees are our most valuable assets, and their individual and group contributions drive our performance and success.
We seek to provide a collaborative, creative workplace where people with unique talents can flourish, where their opinions are valued, and where their contributions are rewarded.
It also may result in higher prices, lower yields, and a narrower spread of yields over our borrowing costs, making it more difficult for us to acquire new investments on attractive terms.
It also may result in higher prices, lower yields, and a narrower spread of yields over our borrowing costs, making it more difficult for us to acquire new investments on attractive terms. 13 Human Capital As of December 31, 2024, we employed 73 full-time employees, comprised of talented professionals engaged in origination, underwriting, closing, accounting and financial reporting, property and asset management, capital markets, and other corporate activities essential to our business.
We are currently focused primarily on investing in the industrial, restaurant, retail, and consumer-centric healthcare and veterinary property types, and target specific acquisition opportunities within each property type in a highly selective manner. • Industrial .
We intend to primarily acquire portfolios and assets over time that will not result in any one tenant representing more than 5% of ABR on a sustained basis. We are currently focused primarily on investing in the industrial and retail property types, and target specific acquisition opportunities within each property type in a highly selective manner. • Industrial .
We focus on e-commerce resistant industries where the presence of a physical location is important to the end consumer and mission critical to the tenant. Our retail investments are primarily in single-tenant, net leased retail establishments in the general merchandise, automotive, and home furnishings industries, with an emphasis on market presence and necessity-based shopping.
We are primarily focused on long-term, fee simple, ownership of properties leased to national or large regional retailers operating in e-commerce resistant industries where the presence of a physical location is important to the end consumer and mission critical to the tenant.
Year # Properties # Leases ABR (’000s) ABR as a % of Total Portfolio Square Feet (’000s) SF as a % of Total Portfolio 2024 5 5 $ 4,817 1.2 % 482 1.3 % 2025 19 21 7,105 1.8 % 394 1.0 % 2026 34 36 17,843 4.5 % 1,153 3.0 % 2027 29 30 24,903 6.3 % 2,079 5.4 % 2028 36 37 23,144 5.9 % 1,930 5.0 % 2029 73 74 23,921 6.1 % 2,754 7.2 % 2030 93 93 53,364 13.6 % 4,985 13.0 % 2031 33 33 8,724 2.2 % 805 2.1 % 2032 62 63 32,285 8.2 % 3,469 9.1 % 2033 50 50 19,398 4.9 % 1,593 4.2 % 2034 35 35 8,916 2.3 % 780 2.0 % 2035 19 19 13,947 3.6 % 2,021 5.3 % 2036 87 87 27,227 6.9 % 2,781 7.3 % 2037 20 20 16,284 4.2 % 1,110 2.9 % 2038 39 39 13,868 3.5 % 1,226 3.2 % 2039 11 11 8,125 2.1 % 928 2.4 % 2040 31 31 5,877 1.5 % 312 0.8 % 2041 38 38 16,507 4.2 % 1,363 3.6 % 2042 58 58 44,324 11.3 % 4,803 12.5 % 2043 12 12 12,107 3.1 % 795 2.1 % Thereafter 10 10 9,515 2.6 % 2,284 6.0 % Untenanted properties 2 — — — 224 0.6 % Total 796 802 $ 392,201 100.0 % 38,271 100.0 % Substantially all of our leases provide for periodic contractual rent escalations.
Year # of Properties # of Leases ABR (’000s) ABR as a % of Total Portfolio Square Feet (’000s) SF as a % of Total Portfolio 2025 15 16 $ 4,680 1.2 % 251 0.6 % 2026 23 24 11,793 3.0 % 915 2.3 % 2027 28 30 25,762 6.5 % 2,257 5.7 % 2028 29 28 19,824 5.0 % 1,793 4.6 % 2029 61 36 18,519 4.7 % 2,596 6.6 % 2030 88 53 48,477 12.3 % 4,777 12.1 % 2031 31 26 8,181 2.1 % 835 2.1 % 2032 61 46 32,450 8.2 % 3,479 8.8 % 2033 49 23 18,949 4.8 % 1,409 3.6 % 2034 38 27 14,253 3.6 % 1,245 3.2 % 2035 20 16 15,184 3.8 % 2,116 5.4 % 2036 89 23 29,729 7.5 % 2,877 7.3 % 2037 26 12 23,883 6.0 % 1,870 4.8 % 2038 39 35 13,972 3.5 % 1,226 3.1 % 2039 11 7 21,208 5.4 % 1,758 4.5 % 2040 31 5 5,987 1.5 % 312 0.8 % 2041 39 8 16,919 4.3 % 1,367 3.5 % 2042 58 13 44,037 11.1 % 4,803 12.2 % 2043 12 5 11,014 2.8 % 796 2.0 % 2044 2 2 910 0.2 % 44 0.1 % Thereafter 9 2 9,750 2.5 % 2,285 5.8 % Total leased properties 759 437 395,481 100.0 % 39,011 99.1 % In-process developments 4 4 — — — — Untenanted properties 2 2 — — 343 0.9 % Total properties 765 443 $ 395,481 100.0 % 39,354 100.0 % Substantially all of our leases provide for periodic contractual rent escalations.
Approximately 93.8% of our tenants, based on ABR, provide financial reporting, of which 86.0% are required to provide us with specified financial information on a periodic basis, and an additional 7.8% of our tenants report financial statements publicly, either through SEC filings or otherwise. 4 2023 Highlights Operating Highlights • Invested $165.6 million, including $97.2 million in three development funding opportunities, and $68.4 million in four property acquisitions and revenue generating capital expenditures in eight existing properties at a weighted average initial cash capitalization rate of 7.2%, with a weighted average remaining lease term of 15.5 years and minimum annual rent increases of 1.8%. • Sold 14 properties at a weighted average cash capitalization rate of 6.0%, for gross proceeds of $200.1 million, recognizing a $35.0 million gain over original purchase price. • Maintained strong occupancy throughout the year, ending with 99.4%. • Collected 99.8% of base rents due during the year. • Generated net income of $163.3 million or $0.83 per diluted share. • Generated funds from operations (“FFO”) of $298.6 million or $1.52 per diluted share. • Generated core funds from operations (“Core FFO”) of $298.9 million or $1.52 per diluted share. • Generated adjusted funds from operations (“AFFO”) of $277.7 million or $1.41 per diluted share. • Ended the year with total outstanding debt and Net Debt of $1.9 billion and a Net Debt to Annualized Adjusted EBITDAre ratio (“Leverage Ratio”) of 5.0x.
As a result, we updated our core property types to industrial, retail, and other to align with the composition of our remaining portfolio. • Maintained strong occupancy levels throughout the year, ending with 99.1%. • Collected 99.1% of base rents due during the year for all properties under lease. • Generated net income of $169.0 million or $0.86 per diluted share. • Generated funds from operations (“FFO”) of $300.7 million or $1.52 per diluted share. • Generated core funds from operations (“Core FFO”) of $295.5 million or $1.50 per diluted share. • Generated adjusted funds from operations (“AFFO”) of $282.0 million or $1.43 per diluted share, representing a 1.4% increase compared to 2023. • Ended the year with total outstanding debt and Net Debt of $1.9 billion, Pro Forma Net Debt of $1.9 billion, a Net Debt to Annualized Adjusted EBITDAre ratio (“Leverage Ratio”) of 5.0x, and a Pro Forma Net Debt to Annualized Adjusted EBITDAre ratio of 4.9x.
Removed
Diversification by Property Type 6 Property Type # Properties ABR (’000s) ABR as a % of Total Portfolio Square Feet (’000s) SF as a % of Total Portfolio Industrial Manufacturing 80 $ 65,675 16.8 % 12,178 31.8 % Distribution & Warehouse 45 51,859 13.2 % 9,212 24.1 % Food Processing 33 46,630 11.9 % 5,442 14.2 % Flex and R&D 6 16,061 4.1 % 1,157 3.0 % Industrial Services 23 11,877 3.0 % 607 1.6 % Cold Storage 4 9,978 2.5 % 724 1.9 % Untenanted 1 — 0.0 % 122 0.3 % Industrial Total 192 202,080 51.5 % 29,442 76.9 % Healthcare Clinical 52 27,570 7.0 % 1,090 2.9 % Healthcare Services 29 11,853 3.0 % 478 1.2 % Animal Health Services 27 11,054 2.8 % 405 1.1 % Surgical 12 10,675 2.7 % 329 0.9 % Life Science 9 8,011 2.1 % 550 1.4 % Healthcare Total 129 69,163 17.6 % 2,852 7.5 % Restaurant Casual Dining 100 27,167 7.0 % 662 1.7 % Quick Service Restaurants 148 25,966 6.6 % 502 1.3 % Restaurant Total 248 53,133 13.6 % 1,164 3.0 % Retail General Merchandise 132 25,018 6.4 % 1,865 4.9 % Automotive 64 11,790 3.0 % 757 1.9 % Home Furnishings 13 7,265 1.9 % 797 2.1 % Child Care 2 726 0.1 % 20 0.1 % Retail Total 211 44,799 11.4 % 3,439 9.0 % Office Strategic Operations 6 10,450 2.7 % 632 1.7 % Corporate Headquarters 7 8,527 2.2 % 409 1.1 % Call Center 2 4,049 1.0 % 287 0.7 % Untenanted 1 — 0.0 % 46 0.1 % Office Total 16 23,026 5.9 % 1,374 3.6 % Total 796 $ 392,201 100.0 % 38,271 100.0 % 7 Diversification by Tenant Tenant Property Type # Properties ABR (’000s) ABR as a % of Total Portfolio Square Feet (’000s) SF as a % of Total Portfolio Roskam Baking Company * Food Processing 7 $ 15,917 4.1 % 2,250 5.9 % AHF, LLC * Distribution & Warehouse/ Manufacturing 8 9,378 2.4 % 2,284 6.0 % Joseph T.
Added
As of December 31, 2024, our portfolio includes 765 properties, with 758 properties located in 44 U.S. states and seven properties located in four Canadian provinces.
Removed
As of December 31, 2023, leases contributing 5.2% of our ABR provide for rent increases equal to the lesser of a stated fixed percentage or the change in CPI.
Added
We expect to achieve growth in revenues and earnings through our four core building blocks, which are (1) embedded same store net operating income growth through best-in-class portfolio rent escalations, stable rent collections, minimal credit losses, strong lease rollover outcomes, and accretive recycling, (2) revenue generating capital expenditures with existing tenants, (3) build-to-suit developments, and (4) a diversified acquisition pipeline.
Removed
We underwrite retail properties primarily based on the fundamental value of the underlying real estate, site level performance, corporate owned location or experienced multi-unit franchise operators, and whether the property is subject to a master lease with multiple operating locations. • Consumer-Centric Healthcare .
Added
We invest in real estate through property acquisitions, revenue generating capital expenditures, build-to-suit developments, and transitional capital. Our investments in these alternatives fluctuate from time to time depending on macroeconomic conditions and business or market trends. Our strong relationships with brokers, developers, and tenants provides access to, off-market and marketed investment opportunities.
Removed
We focus on consumer-centric healthcare real estate such as pet supplies and services, dialysis, dental care, and eye care. We primarily focus on properties with multiple alternative retail uses located in densely populated areas that are easily accessible to consumers.
Added
Off-market transactions are characterized by a lack of a formal marketing process and a lack of widely disseminated marketing materials. Marketed transactions are often characterized by extensive buyer competition.
Removed
The services typically offered at these properties are not significantly affected by economic conditions or the regulatory environment and are often recession resilient.
Added
Approximately 94.2% of our tenants, based on ABR, provide financial reporting, of which 85.6% are required to provide us with specified financial information on a periodic basis, and an additional 8.6% of our tenants report financial statements publicly, either through SEC filings or otherwise. 4 2024 Highlights Operating Highlights • Invested $404.8 million, including $234.3 million in new property acquisitions, $115.3 million in five build-to-suit developments, $52.2 million in transitional capital, and $3.0 million in revenue generating capital expenditures in one existing property.
Removed
We underwrite consumer-centric healthcare properties based on the underlying real estate fundamentals, site level performance with an emphasis on market presence, corporate owned location or experienced multi-unit franchise operators, and whether the property is subject to a master lease with multiple operating locations. Competition The commercial real estate market is highly competitive.
Added
The new property acquisitions and revenue generating capital expenditures had a weighted average initial cash capitalization rate of 7.3%, weighted average remaining lease term of 10.8 years, weighted average annual rent increase of 2.4%, and a weighted average straight-line yield of 8.1%. • Substantially completed our clinical healthcare simplification strategy by selling 58 properties at a weighted average cash capitalization rate of 7.8%, for gross proceeds of $364.0 million.
Removed
Human Capital As of December 31, 2023, we employed 74 full-time employees, comprised of professional employees engaged in origination, underwriting, closing, accounting and financial reporting, portfolio and asset management, capital markets, and other corporate activities essential to our business.
Added
We present these non-GAAP measures as we believe certain investors and other users of our financial information use them as part of their evaluation of our historical operating performance. See Item 7.
Removed
As a result, we are focused on and invest in our team’s overall health, wellness, and engagement.
Added
Diversification by Property Type 6 Property Type # of Properties ABR (’000s) ABR as a % of Total Portfolio Square Feet (’000s) SF as a % of Total Portfolio Industrial Manufacturing 80 $ 69,835 17.7 % 12,319 31.3 % Distribution & Warehouse 49 69,247 17.5 % 10,446 26.6 % Food Processing 34 49,613 12.5 % 5,736 14.6 % Flex and R&D 10 22,088 5.6 % 1,606 4.1 % Industrial Services 29 14,880 3.8 % 725 1.8 % Cold Storage 3 10,046 2.5 % 723 1.8 % In-process Developments 3 — — — — Untenanted 2 — — 343 0.9 % Industrial Total 210 235,709 59.6 % 31,898 81.1 % Retail General Merchandise 138 29,427 7.4 % 2,196 5.6 % Casual Dining 102 27,381 6.9 % 674 1.7 % Quick Service Restaurants 151 26,617 6.7 % 514 1.3 % Automotive 65 12,069 3.1 % 764 1.9 % Animal Services 27 11,326 2.9 % 419 1.1 % Home Furnishings 13 7,386 1.9 % 797 2.0 % Healthcare Services 18 6,014 1.5 % 220 0.6 % Education 5 3,246 0.8 % 128 0.3 % In-process Developments 1 — — — — Retail Total 520 123,466 31.2 % 5,712 14.5 % Other Office 14 23,642 6.0 % 1,311 3.3 % Clinical & Surgical 21 12,664 3.2 % 433 1.1 % Other Total 35 36,306 9.2 % 1,744 4.4 % Total 765 $ 395,481 100.0 % 39,354 100.0 % 7 Diversification by Tenant Tenant Property Type # of Properties ABR (’000s) ABR as a % of Total Portfolio Square Feet (’000s) SF as a % of Total Portfolio Roskam Baking Company, LLC * Food Processing 7 $ 16,236 4.1 % 2,250 5.7 % United Natural Foods, Inc.
Removed
We strive to foster transparent and open communication and dialogue between our senior leaders and our employee base and develop opportunities for social connectedness through fun family friendly gatherings and various employee appreciation events. • Diversity, Equity, and Inclusion (“DE&I”) – We are committed to providing equal opportunity in all aspects of employment.
Added
Distribution & Warehouse 1 13,680 3.5 % 1,016 2.6 % AHF, LLC * Distribution & Warehouse/Manufacturing 8 9,612 2.4 % 2,284 5.8 % Joseph T.
Removed
We believe that diverse backgrounds and experiences help drive our performance and contribute to our company’s growth. To that end, we value and advance diversity, equity, and inclusion in our workplace and of the people with whom we work.
Added
Transitional Capital In addition to investing in new property acquisitions, revenue generating capital expenditures, and build-to-suit developments, we may, from time to time, invest in transitional capital opportunities, including preferred equity interests and real estate lending opportunities. Such investments are intended to be shorter in duration, offering an alternative source of financing.
Removed
Our cross-functional DE&I committee spearheads our ongoing efforts to deepen our commitment to this important initiative and drive our diversity-related education, including trainings on topics such as inclusive culture and leadership, unconscious bias, and inclusive hiring.
Added
The following table presents our transitional capital investments at December 31, 2024: December 31, 2024 Transitional Capital: Type Preferred Equity Investment (’000s) (a) $ 52,200 Stabilized cash capitalization rate (b) 8.0 % Annualized initial cash NOI yield 7.6 % Remaining term (years) (c) 2.5 Property type Retail Center Underlying property metrics Number of retail spaces 28 Rentable square footage (“SF”) (’000s) 332 Weighted average remaining lease term (years) 4.0 Occupancy rate (based on SF) (d) 98.7 % Quarterly rent collection 90.7 % (a) Agreement includes commitment to fund up to an additional $7.8 million of preferred capital.
Removed
The committee also focuses on employee engagement, policy reviews, enhanced recruitment and onboarding initiatives, monetary donations to external DE&I focused organizations and programs, and sponsorship of employees through a resource group.
Added
(b) Represents stated yield with unpaid amounts accruing with preferential payment. (c) Agreement contains two one-year extension options subject to a 0.50% extension fee. Repayment at end of term subject to a $3.5 million repayment fee.
Removed
DE&I is a critical business imperative that requires ongoing focus and commitment; therefore, our efforts to promote greater diversity, equity, and inclusion within and beyond our workplace have been instituted as a regular reporting item for our employees and our Board of Directors. • Community Engagement – We believe in our responsibility to help and be a force for social good in the communities we call home and do so through various corporate giving and philanthropic endeavors.
Added
For all investments, we seek to maintain our portfolio’s diversification by property type, geography, tenant, and industry in an effort to reduce fluctuations in income that can be caused by underperforming investments or adverse economic conditions affecting an entire industry or geographic region.
Removed
We believe that we have all permits and approvals necessary under current law to operate our investments.
Added
We believe these characteristics translate into a higher degree of confidence in the long-term occupancy of our assets and the corresponding payment of contractual rental cash flows both during the initial term and over subsequent renewal periods.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

70 edited+8 added−8 removed278 unchanged
Biggest changeRis k Factors Summary Risk Factors You should carefully consider the matters discussed in the “Risk Factors” section beginning on page 18 of this Annual Report on Form 10-K for factors you should consider before investing in our common stock: • Single-tenant leases involve significant risks of tenant default and tenant vacancies, which could materially and adversely affect us. • We have limited opportunities to increase rents under our long-term leases with tenants, which could impede our growth and materially and adversely affect us. • Our growth depends upon future acquisitions of properties, and we may be unable to identify or complete suitable acquisitions of properties, which may impede our growth, and our future acquisitions may not yield the returns we seek. • An increase in market interest rates could increase our interest costs on existing and future debt and could adversely affect our stock price, and a decrease in market interest rates could lead to additional competition for the acquisition of real estate, which could adversely affect our results of operations. • We may not be able to effectively manage our growth and any failure to do so could materially and adversely affect us. • Our portfolio is concentrated in certain states, and any adverse developments and economic downturns in these geographic markets could materially and adversely affect us. • Our portfolio is concentrated in certain property types and any adverse developments relating to one or more of these property types could materially and adversely affect us. • We may be unable to renew leases, re-lease properties as leases expire, or lease vacant spaces on favorable terms or at all, which, in each case, could materially and adversely affect us. • We could face potential material adverse effects from the bankruptcies or insolvencies of our tenants. • Global and U.S. financial markets and economic conditions such as inflation may materially and adversely affect us and the ability of our tenants to make rental payments to us pursuant to our leases. • As of December 31, 2023, we had approximately $1.9 billion principal balance of indebtedness outstanding, which may expose us to the risk of default under our debt obligations. • Market conditions could adversely affect our ability to refinance existing indebtedness on acceptable terms or at all, which could materially and adversely affect us. • Our Revolving Credit Facility and term loan agreements contain various covenants which, if not complied with, could accelerate our repayment obligations, thereby materially and adversely affecting us. • We are a holding company with no direct operations and rely on funds received from the OP to pay liabilities. • Failure to qualify as a REIT would materially and adversely affect us and the value of our common stock. • The market price and trading volume of shares of our common stock may be volatile. • We may not be able to make distributions to our stockholders at the times or in the amounts we expect, or at all. 18 Risk Factors The following are some of the risks and uncertainties that could cause our actual results to differ materially from those presented in our forward-looking statements.
Biggest changeRis k Factors Summary Risk Factors You should carefully consider the matters discussed in the “Risk Factors” section beginning on page 18 of this Annual Report on Form 10-K for factors you should consider before investing in our common stock: • Single-tenant leases involve significant risks of tenant default and tenant vacancies, which could materially and adversely affect us. • We have limited opportunities to increase rents under our long-term leases with tenants, which could impede our growth and materially and adversely affect us. • Our growth depends upon future acquisitions of properties, and we may be unable to identify or complete suitable acquisitions of properties, which may impede our growth, and our future acquisitions may not yield the returns we seek. • An increase in market interest rates could increase our interest costs on existing and future debt and could adversely affect our stock price, and a decrease in market interest rates could lead to additional competition for the acquisition of real estate, which could adversely affect our results of operations. • Our portfolio is concentrated in certain states, and any adverse developments and economic downturns in these geographic markets could materially and adversely affect us. • Our portfolio is concentrated in certain property types and any adverse developments relating to one or more of these property types could materially and adversely affect us. • We may be unable to renew leases, re-lease properties as leases expire, or lease vacant spaces on favorable terms or at all, which, in each case, could materially and adversely affect us. • We could face potential material adverse effects from the bankruptcies or insolvencies of our tenants. • We may engage in development or expansion projects, including speculative development projects, which would subject us to additional risks that could negatively impact our operations. • Global and U.S. financial markets and economic conditions, such as inflation, may materially and adversely affect us and the ability of our tenants to make rental payments to us pursuant to our leases. • As of December 31, 2024, we had approximately $1.9 billion principal balance of indebtedness outstanding, which may expose us to the risk of default under our debt obligations. • Our Revolving Credit Facility and term loan agreements contain various covenants which, if not complied with, could accelerate our repayment obligations, thereby materially and adversely affecting us. • We are a holding company with no direct operations and rely on funds received from the OP to pay liabilities. • Failure to qualify as a REIT would materially and adversely affect us and the value of our common stock. • The market price and trading volume of shares of our common stock may be volatile. • We may not be able to make distributions to our stockholders at the times or in the amounts we expect, or at all. 18 Risk Factors The following are some of the risks and uncertainties that could cause our actual results to differ materially from those presented in our forward-looking statements.
In addition, any distributions will be authorized at the sole discretion of our Board of Directors, and the form, timing, and amount, if any, will depend upon a number of factors, including our actual and projected results of operations, FFO, AFFO, liquidity, cash flows and financial condition, the revenue we actually receive from our properties, our operating expenses, our debt service requirements, our capital expenditures, prohibitions and other limitations under our financing arrangements, our REIT taxable income, the annual REIT distribution requirements, applicable law, and such other factors as our Board of Directors deems relevant.
In addition, any distributions will be authorized at the sole discretion of our Board of Directors, and the form, timing, and amount, if any, will depend upon a number of factors, including our actual and projected results of operations, FFO, Core FFO, AFFO, liquidity, cash flows and financial condition, the revenue we actually receive from our properties, our operating expenses, our debt service requirements, our capital expenditures, prohibitions and other limitations under our financing arrangements, our REIT taxable income, the annual REIT distribution requirements, applicable law, and such other factors as our Board of Directors deems relevant.
Some of the factors that could negatively affect our share price or result in fluctuations in the market price or trading volume of shares of our common stock include: • actual or anticipated declines in our quarterly operating results or distributions; • actual or anticipated tenant defaults, bankruptcies, or vacancies, or speculation in the press or investment community about actual or anticipated tenant defaults, bankruptcies, or vacancies; • changes in government regulations; • changes in laws affecting REITs and related tax matters; • the announcement of new contracts by us or our competitors; • reductions in our FFO, Core FFO, AFFO, or earnings estimates; 35 • publication of research reports about us or the real estate industry; • increases in market interest rates that lead purchasers of shares of our common stock to demand a higher yield; • future equity issuances, or the perception that they may occur, including issuances of common stock upon exercise or vesting of equity awards or redemption of OP Units; • changes in market valuations of similar companies; • adverse market reaction to any increased indebtedness we incur in the future; • additions or departures of key management personnel; • actions by institutional stockholders; • differences between our actual financial and operating results and those expected by investors and analysts; • changes in analysts’ recommendations or projections; • speculation in the press or investment community; and • the realization of any of the other risk factors presented herein.
Some of the factors that could negatively affect our share price or result in fluctuations in the market price or trading volume of shares of our common stock include: • actual or anticipated declines in our quarterly operating results or distributions; • actual or anticipated tenant defaults, bankruptcies, or vacancies, or speculation in the press or investment community about actual or anticipated tenant defaults, bankruptcies, or vacancies; • changes in government regulations; • changes in laws affecting REITs and related tax matters; • the announcement of new transactions by us or our competitors; • reductions in our FFO, Core FFO, AFFO, or earnings estimates; 35 • publication of research reports about us or the real estate industry; • increases in market interest rates that lead purchasers of shares of our common stock to demand a higher yield; • future equity issuances, or the perception that they may occur, including issuances of common stock upon exercise or vesting of equity awards or redemption of OP Units; • changes in market valuations of similar companies; • adverse market reaction to any increased indebtedness we incur in the future; • additions or departures of key management personnel; • actions by institutional stockholders; • differences between our actual financial and operating results and those expected by investors and analysts; • changes in analysts’ recommendations or projections; • speculation in the press or investment community; and • the realization of any of the other risk factors presented herein.
This potential illiquidity may limit our ability to modify quickly our portfolio in response to changes in economic or other conditions, including tenant demand. Such occurrences could materially and adversely affect us. 22 We may experience a higher number of tenant defaults because we lease most of our properties to tenants who do not have an investment grade credit rating.
This potential illiquidity may limit our ability to modify quickly our portfolio in response to changes in economic or other conditions, including tenant demand. Such occurrences could materially and adversely affect us. We may experience a higher number of tenant defaults because we lease most of our properties to tenants who do not have an investment grade credit rating.
A bankruptcy proceeding could hinder or delay our efforts to collect past due balances and ultimately preclude collection of these sums, resulting in a decrease or cessation of rental payments, which could materially and adversely affect us. 23 Our properties may be subject to impairment charges. We routinely evaluate our real estate investments for impairment indicators.
A bankruptcy proceeding could hinder or delay our efforts to collect past due balances and ultimately preclude collection of these sums, resulting in a decrease or cessation of rental payments, which could materially and adversely affect us. Our properties may be subject to impairment charges. We routinely evaluate our real estate investments for impairment indicators.
A tenant’s failure to provide appropriate information may interfere with our ability to accurately evaluate a potential tenant’s credit risk or determine an existing tenant’s default risk, the occurrence of either could materially and adversely affect us. We could face potential material adverse effects from the bankruptcies or insolvencies of our tenants.
A tenant’s failure to provide appropriate information may interfere with our ability to accurately evaluate a potential tenant’s credit risk or determine an existing tenant’s default risk, the occurrence of either could materially and adversely affect us. 22 We could face potential material adverse effects from the bankruptcies or insolvencies of our tenants.
If sufficient sources of external financing are not available to us on cost effective terms, we could be forced to limit our planned business activities or take other actions to fund our business activities and repayment of debt such as selling assets or reducing our cash distributions.
If sufficient sources of external financing are not available to us on cost effective terms, we could be forced to limit our planned business activities or take other actions to fund our business activities and repayment of debt such as selling assets or reducing or maintaining our cash distributions.
Moreover, we have entered into separate indemnification agreements with each of our directors and executive officers. As a result, we and our stockholders may have more limited rights against these persons than might otherwise exist under common law, which could reduce our stockholders’ and our recovery against such persons.
Moreover, we have entered into separate indemnification agreements with each of our directors and officers. As a result, we and our stockholders may have more limited rights against these persons than might otherwise exist under common law, which could reduce our stockholders’ and our recovery against such persons.
From time to time the Financial Accounting Standards Board (“FASB”), and the SEC, which create and interpret appropriate accounting standards, may change the financial accounting and reporting standards or their interpretation and application of these standards that will govern the preparation of our financial statements. These changes could materially and adversely affect our reported financial condition and results of operations.
From time to time the Financial Accounting Standards Board (“FASB”), and the SEC, which create and interpret accounting standards, may change the financial accounting and reporting standards or their interpretation and application of these standards that will govern the preparation of our financial statements. These changes could materially and adversely affect our reported financial condition and results of operations.
If we are unable to adequately recognize and effectively respond to such developments and governmental, societal, investor, and consumer expectations relating to our corporate responsibility and sustainability efforts, we may miss corporate opportunities, become subject to additional scrutiny, incur unexpected and significant costs, or experience damage to our reputation.
If we are unable to adequately recognize and effectively respond to such developments and conflicting governmental, societal, investor, and consumer expectations relating to our corporate responsibility and sustainability efforts, we may miss corporate opportunities, become subject to additional scrutiny, incur unexpected and significant costs, or experience damage to our reputation.
In addition, a decision by any governmental agency not to issue a required permit or substantial delays in the permitting process could cause the incurrence of penalties, delay us from receiving rental payments, result in us receiving reduced rental payments, or prevent us from pursuing the development or expansion project altogether.
A decision by any governmental agency not to issue a required permit or substantial delays in the permitting process could cause the incurrence of penalties, delay us from receiving rental payments, result in us receiving reduced rental payments, or prevent us from pursuing the development or expansion project altogether.
Further, there can be no assurance that our tenants, or the guarantor of a lease, could or would satisfy their indemnification obligations under their leases. 25 Our ability to effectively monitor and respond to the rapid and ongoing developments and expectations regarding our corporate responsibility and sustainability efforts, may impose unexpected costs or result in reputational or other harm that could have a material adverse effect on our business.
Further, there can be no assurance that our tenants, or the guarantor of a lease, could or would satisfy their indemnification obligations under their leases. 25 Our ability to effectively monitor and respond to the rapid and ongoing developments and often conflicting expectations regarding our corporate responsibility and sustainability efforts may impose unexpected costs or result in reputational or other harm that could have a material adverse effect on our business.
Natural disasters, pandemics or epidemics, terrorist attacks, other acts of violence or war, or other catastrophic events ( e.g. , hurricanes, floods, earthquakes, or other types of natural disasters or wars or other acts of violence) could cause damage to our properties, materially interrupt our business operations (or those of our tenants), cause consumer confidence and spending to decrease, or result in increased volatility in the U.S. and worldwide financial markets and economy.
Natural disasters ( e.g. , hurricanes, floods, earthquakes, wildfires, or other types of natural disasters), pandemics or epidemics, terrorist attacks, other acts of violence or war, or other catastrophic events could cause damage to our properties, materially interrupt our business operations (or those of our tenants), cause consumer confidence and spending to decrease, or result in increased volatility in the U.S. and worldwide financial markets and economy.
Tait, the Company’s founder, and certain members of her family, which has a potential liability of up to $10 million based on values as of December 31, 2023. These restrictions could limit our ability to sell certain assets or the OP (or our interest in the OP) at a time or on terms that would be favorable absent such restrictions.
Tait, the Company’s founder, and certain members of her family, which has a potential liability of up to $10 million based on values as of December 31, 2024. These restrictions could limit our ability to sell certain assets or the OP (or our interest in the OP) at a time or on terms that would be favorable absent such restrictions.
In connection with certain UPREIT transactions and the Company’s internalization, we have entered or will enter into tax protection agreements under which we have agreed to indemnify members of the OP against adverse tax consequences if we were to sell, convey, transfer, or otherwise dispose of our assets in taxable transactions, with specific exceptions and limitations.
In connection with certain UPREIT transactions and the Company’s internalization, we have entered or may enter into tax protection agreements under which we have agreed to indemnify members of the OP against adverse tax consequences if we were to sell, convey, transfer, or otherwise dispose of our assets in taxable transactions, with specific exceptions and limitations.
We may be adversely affected by changes in CDOR reporting practices, the methods by which CDOR is determined, or the use of alternative reference rates. As of December 31, 2023, we had approximately C$100 million of debt outstanding for which the interest rate was tied to the Canadian Dollar Offered Rate (“CDOR”).
We may be adversely affected by changes in CDOR reporting practices, the methods by which CDOR is determined, or the use of alternative reference rates. As of December 31, 2024, we had approximately C$100 million of debt outstanding for which the interest rate was tied to the Canadian Dollar Offered Rate (“CDOR”).
If interest rates continue to increase, so could our interest costs for any new debt and our existing variable-rate debt obligations. Absent a simultaneous increase in acquisition yields, this increased cost could make the financing of any acquisition more expensive and lower our current and future period earnings.
If interest rates increase, so could our interest costs for any new debt and our existing variable-rate debt obligations. Absent a simultaneous increase in acquisition yields, this increased cost could make the financing of any acquisition more expensive and lower our current and future period earnings.
An additional 7.8% of our ABR is received from tenants who are not required to provide us with specified financial information under the terms of our lease, but whose financial statements are available publicly, either through SEC filings or otherwise.
An additional 8.6% of our ABR is received from tenants who are not required to provide us with specified financial information under the terms of our lease, but whose financial statements are available publicly, either through SEC filings or otherwise.
These covenants require us to, among other things, maintain certain financial ratios, including leverage, fixed charge coverage, and debt service coverage, among others. As of December 31, 2023, we believe we were in compliance with all of our loan covenants.
These covenants require us to, among other things, maintain certain financial ratios, including leverage, fixed charge coverage, and debt service coverage, among others. As of December 31, 2024, we believe we were in compliance with all of our loan covenants.
As a result, we cannot provide any assurance that we will be able to successfully execute our growth strategy. Any failure to grow through acquisitions as a result of the significant competition we face could materially and adversely affect us.
As a result, we cannot provide any assurance that we will be able to successfully execute our investment strategy. Any failure to grow through acquisitions as a result of the significant competition we face could materially and adversely affect us.
Accordingly, decreases in the demand for restaurant, retail, and/or office properties may have a greater adverse effect on us than if we had fewer investments in these industries. It also may be difficult and expensive to re-tenant a property designed for a particular property type with a new tenant that operates in an industry requiring a different property type.
Accordingly, decreases in the demand for industrial or retail properties may have a greater adverse effect on us than if we had fewer investments in these industries. It also may be difficult and expensive to re-tenant a property designed for a particular property type with a new tenant that operates in an industry requiring a different property type.
Risks Related to Debt Financing As of December 31, 2023, we had approximately $1.9 billion principal balance of indebtedness outstanding, which may expose us to the risk of default under our debt obligations. As of December 31, 2023, we had approximately $1.9 billion principal balance of indebtedness outstanding.
Risks Related to Debt Financing As of December 31, 2024, we had approximately $1.9 billion principal balance of indebtedness outstanding, which may expose us to the risk of default under our debt obligations. As of December 31, 2024, we had approximately $1.9 billion principal balance of indebtedness outstanding.
As a result of all these factors, our failure to qualify as a REIT also could impair our ability to execute our growth strategy and raise capital, and could materially and adversely affect the trading price of our common stock.
As a result of all these factors, our failure to qualify as a REIT also could impair our ability to execute our investment strategy and raise capital, and could materially and adversely affect the trading price of our common stock.
Additionally, as of December 31, 2023, we had entered into interest rate swaps totaling C$100 million that fix the CDOR component of our debt through various tenors.
Additionally, as of December 31, 2024, we had entered into interest rate swaps totaling C$100 million that fix the CDOR component of our debt through various tenors.
Changes in the volume of real estate transactions, the availability of acquisition financing, capitalization rates, interest rates, competition, or other factors may negatively impact our acquisition opportunities in 2024 and beyond.
Changes in the volume of real estate transactions, the availability of acquisition financing, capitalization rates, interest rates, competition, or other factors may negatively impact our acquisition opportunities in 2025 and beyond.
In addition, in order to meet the REIT Requirements, or to avert the imposition of a 100% tax that applies to certain gains derived by a REIT from dealer property or inventory, we hold some of our assets through a TRS that is subject to U.S. federal, state and local corporate taxes.
In addition, in order to meet the REIT Requirements, or to avert the imposition of a 100% tax that applies to certain gains derived by a REIT from dealer property or inventory, we have held, and may continue to hold, some of our assets through a TRS that is subject to U.S. federal, state and local corporate taxes.
From 2015 to 2023, we acquired an average of $580.0 million of new properties per year, with a low of $100.0 million and a high of $1.0 billion. Our ability to continue to grow requires us to identify and complete acquisitions that meet our investment criteria and depends on general market and economic conditions.
From 2015 to 2024, we acquired an average of $560.0 million of new properties per year, with a low of $100.0 million and a high of $1.0 billion. Our ability to continue to grow requires us to identify and complete acquisitions that meet our investment criteria and depends on general market and economic conditions.
Accordingly, our performance is subject to risks generally attributable to the ownership of commercial real property, including: • changes in supply and demand for single-tenant space in the industrial, healthcare, restaurant, retail, and office sectors; • increased competition for real property investments targeted by our investment strategy; • changes in consumer trends and preferences that affect the demand for products and services offered by our tenants; • inability to lease or sell properties upon expiration or termination of existing leases and renewal of leases at lower rental rates; • the subjectivity of real estate valuations and changes in such valuations over time; • the potential risk of functional obsolescence of properties over time; and • competition from other properties.
Accordingly, our performance is subject to risks generally attributable to the ownership of commercial real property, including: • changes in supply and demand for single-tenant space in the industrial, retail, and other sectors; • increased competition for real property investments targeted by our investment strategy; • changes in consumer trends and preferences that affect the demand for products and services offered by our tenants; • inability to lease or sell properties upon expiration or termination of existing leases and renewal of leases at lower rental rates; • the subjectivity of real estate valuations and changes in such valuations over time; • the potential risk of functional obsolescence of properties over time; • competition from other properties; and • changes in regulation that affect us or the commercial real estate market in general.
Our results of operations depend on our ability to continue to successfully lease our properties, including renewing expiring leases, re-leasing properties as leases expire, leasing vacant space, optimizing our tenant mix, or leasing properties on more economically favorable terms. As of December 31, 2023, five leases representing approximately 1.2% of our ABR will expire during 2024.
Our results of operations depend on our ability to continue to successfully lease our properties, including renewing expiring leases, re-leasing properties as leases expire, leasing vacant space, optimizing our tenant mix, or leasing properties on more economically favorable terms. As of December 31, 2024, 16 leases representing approximately 1.2% of our ABR will expire during 2025.
As of December 31, 2023, we were party to tax protection agreements covering three properties. Based on values as of December 31, 2023, taxable sales of the applicable properties would trigger liability under the agreements of approximately $10.4 million. In addition, in connection with the Company’s internalization, we entered into a tax protection agreement with Amy L.
As of December 31, 2024, we were party to tax protection agreements covering two properties. Based on values as of December 31, 2024, taxable sales of the applicable properties would trigger liability under the agreements of approximately $10.4 million. In addition, in connection with the Company’s internalization, we entered into a tax protection agreement with Amy L.
Management has recorded impairment charges related to certain properties in each of the years ended December 31, 2023, 2022, and 2021, and may record future impairments based on actual results and changes in circumstances. See “Critical Accounting Polices – Long-Lived Asset Impairment” in Item 7.
Management has recorded impairment charges related to certain properties in each of the years ended December 31, 2024, 2023, and 2022, and may record future impairments based on actual results and changes in circumstances. See “Critical Accounting Policies – Long-Lived Asset Impairment” in Item 7.
We can provide no assurance that any of our markets will grow, will not experience adverse developments, or that underlying real estate fundamentals will be favorable to owners and operators of industrial, healthcare, restaurant, retail, and office properties.
We can provide no assurance that any of our markets will grow, will not experience adverse developments, or that underlying real estate fundamentals will be favorable to owners and operators of industrial, retail, and other properties.
We depend on the ability of our tenants to meet their obligations to pay rent to us due under our lease for substantially all of our revenue. As of December 31, 2023, only approximately 15.3% of our ABR came from tenants who had an investment grade credit rating. A substantial majority of our properties are leased to unrated tenants.
We depend on the ability of our tenants to meet their obligations to pay rent to us due under our lease for substantially all of our revenue. As of December 31, 2024, only approximately 17.4% of our ABR came from tenants who had an investment grade credit rating. A substantial majority of our properties are leased to unrated tenants.
The ability of our tenants to meet their obligations to us, including their obligations to pay rent, maintain certain insurance coverage, pay real estate taxes, and maintain the properties in a manner so as not to jeopardize their operating licenses or regulatory status depends on the performance of their business and industry, as well as general market and economic conditions, which are outside of our control.
The ability of our tenants to meet their obligations to us, including their obligations to pay rent, maintain certain insurance coverage, pay real estate taxes, and maintain the properties in a manner so as not to jeopardize their operations depends on the performance of their business and industry, as well as general market and economic conditions, which are outside of our control.
Many of these laws and regulations, including the California Consumer Protection Act, contain detailed requirements regarding collecting and processing personal information, restrict the use and storage of such information, and govern the effectiveness of consumer consent. Any of the above risks could materially and adversely affect us.
Many of these laws and regulations, including the California Consumer Protection Act, contain detailed requirements regarding collecting and processing personal information, restrict the use and storage of such information, and govern the effectiveness of consumer consent. Any of the above risks could materially and adversely affect us. Changes in accounting standards may materially and adversely affect us.
Alternatively, we may not be able to re-lease or sell the property without such improvements or may be required to reduce the rent or selling price significantly. Recently, supply chain disruptions in the construction and building industry have resulted in increased costs and significant delays for building renovation and maintenance projects.
Alternatively, we may not be able to re-lease or sell the property without such improvements or may be required to reduce the rent or selling price significantly. Supply chain disruptions and price fluctuations in the construction and building industry could result in increased costs and significant delays for building renovation and maintenance projects.
As a result, any adverse developments in one or more of our concentrated property types could materially and adversely affect us. If one or more of our top 10 tenants, which together represented approximately 19.6% of our ABR as of December 31, 2023, suffers a downturn in their business, it could materially and adversely affect us.
As a result, any adverse developments in our concentrated property types could materially and adversely affect us. If one or more of our top 10 tenants, which together represented approximately 21.9% of our ABR as of December 31, 2024, suffers a downturn in their business, it could materially and adversely affect us.
We may experience significant costs in connection with re-leasing a significant number of our properties, which could materially and adversely affect us. As of December 31, 2023, two of our properties, representing approximately 0.6% of our portfolio, were unoccupied. We may experience difficulties in leasing this vacant space on favorable terms or at all.
We may experience significant costs in connection with re-leasing a significant number of our properties, which could materially and adversely affect us. As of December 31, 2024, two of our properties, representing approximately 0.9% of our portfolio, were unoccupied. We may experience difficulties in leasing these vacant spaces on favorable terms or at all.
As of December 31, 2023, our top 10 tenants together represented 19.6% of our ABR. Our largest tenant is Roskam Baking Company, which leases seven properties that in the aggregate represent approximately 4.1% of our ABR.
As of December 31, 2024, our top 10 tenants together represented 21.9% of our ABR. Our largest tenant is Roskam Baking Company, which leases seven properties that in the aggregate represent approximately 4.1% of our ABR.
Similarly, these changes could materially and adversely affect our tenants’ reported financial condition or results of operations and affect their preferences regarding leasing real estate as well as their ability to provide accurate or complete financial information to us.
Similarly, these changes could materially and adversely affect our tenants’ reported financial condition or results of operations and affect their preferences regarding leasing real estate as well as their ability to provide accurate or complete financial information to us. Certain provisions of our leases or loan agreements may be unenforceable, which could materially and adversely affect us.
The Company leases industrial, healthcare, restaurant, retail, and office commercial properties under long-term lease agreements.
The Company leases industrial, retail, and other commercial properties under long-term lease agreements.
Our methods, however, may not adequately assess the risk of an investment and, if our assessment of credit quality proves to be inaccurate, we may be subject to defaults and investors may view our cash flows as less stable.
Our methods, however, may not adequately assess the risk of an investment and, if our assessment of credit quality proves to be inaccurate, we may be subject to defaults and investors may view our cash flows as less stable. We also rely on information from our tenants to evaluate credit risk and conduct ongoing risk management.
In addition to our internal information systems, we also rely on third-party service providers that may have access to such information in connection with providing necessary information technology and security and other business services to us.
In addition to our internal information systems, we also rely on third-party service providers that may have access to such information in connection with providing necessary information technology, security, and other business services to us. If we fail to assess and identify cybersecurity risks associated with our operations, we may become increasingly vulnerable to such risks.
We may acquire properties or portfolios of properties through tax deferred contribution transactions, which could result in stockholder dilution and limit our ability to sell such assets. In the future, we may acquire properties or portfolios of properties through tax deferred contribution transactions in exchange for OP Units, which may result in stockholder dilution.
In the future, we may acquire properties or portfolios of properties through tax deferred contribution transactions in exchange for OP Units, which may result in stockholder dilution.
For those leases that contain rent escalators based on CPI changes, our rent increases during periods of low inflation or deflation may be less than what we otherwise could achieve in the market. As a result, the long-term nature of our leases could impede our growth and materially and adversely affect us.
For those leases that contain rent escalators based on CPI changes, our rent increases during periods of low inflation or deflation may be less than what we otherwise could achieve in the market.
For example, the market for restaurant, retail, and office properties has been, and could continue to be, adversely affected by weakness in the national, regional, and local economies, the adverse financial condition of some large restaurant and retail companies, the ongoing consolidation in the restaurant and retail industries, the widespread practice of telecommuting, the adverse changes in consumer spending and consumer preferences for particular goods, services, or store-based retailing, and the excess amount of restaurant, retail and office space in a number of markets.
In addition, the market for retail properties has been, and could continue to be, adversely affected by weakness in the national, regional, and local economies, the adverse financial condition of some large brands and companies, adverse changes in consumer spending and consumer preferences for retailing, and the excess amount of retail space in a number of markets.
If we are unable to achieve growth through acquisitions, it could materially and adversely affect us. 19 We may be unable to sell a property at the time we desire on favorable terms or at all, which could limit our ability to access capital through dispositions and could adversely affect our cash flow, financial condition, and results of operations.
We may be unable to sell a property at the time we desire on favorable terms or at all, which could limit our ability to access capital through dispositions and could adversely affect our cash flow, financial condition, and results of operations. Real estate investments generally cannot be sold quickly.
We may be unable to renew leases, re-lease properties as leases expire, or lease vacant spaces on favorable terms or at all, which, in each case, could materially and adversely affect us.
Accordingly, our ability to access capital through dispositions of properties may be limited, which could limit our ability to fund future capital needs. 21 We may be unable to renew leases, re-lease properties as leases expire, or lease vacant spaces on favorable terms or at all, which, in each case, could materially and adversely affect us.
If we are not able to successfully manage the risks associated with such new transaction structures, it could have an adverse effect on our business, results of operations, and financial condition. The departure of any of our key personnel with long-standing business relationships could materially and adversely affect us.
If we are not able to successfully manage the risks associated with such new transaction structures, it could have an adverse effect on our business, results of operations, and financial condition. Security breaches and other technology disruptions could compromise our information systems and expose us to liability, which could materially and adversely affect us.
Our portfolio is also concentrated in certain property types and any adverse developments relating to one or more of these property types could materially and adversely affect us. As of December 31, 2023, approximately 51.5% of our ABR came from industrial properties, 17.6% from healthcare properties, 13.6% from restaurant properties, 11.4% from retail properties, and 5.9% from office properties.
Our portfolio is also concentrated in certain property types and any adverse developments relating to these property types could materially and adversely affect us. As of December 31, 2024, approximately 59.6% of our ABR came from industrial properties and 31.2% from retail properties. Any adverse developments in these property types could materially and adversely affect us.
As of December 31, 2023, master leases contributed to approximately 69.0% of our ABR associated with multi-site tenants (406 of 675 multi-site tenant properties), and approximately 41.5% of our overall ABR (406 of our 796 properties).
As of December 31, 2024, master leases contributed to approximately 69.1% of our ABR associated with multi-site tenants (394 of 656 multi-site tenant properties), and approximately 41.4% of our overall ABR (394 of our 765 properties).
There are rapid and ongoing developments and changing expectations relating to corporate responsibility and sustainability matters as governmental entities, investors, employees, and other stakeholders have begun to focus increasingly on such practices. With this increased focus, public reporting regarding corporate responsibility and sustainability efforts is becoming more broadly expected.
There are rapid and ongoing developments and often conflicting expectations relating to corporate responsibility and sustainability matters as governmental entities, investors, employees, and other stakeholders have begun to focus increasingly on such practices.
Our success depends to a significant degree upon the continued contributions of certain key personnel including, but not limited to, members of our executive management team.
The departure of any of our key personnel with long-standing business relationships could materially and adversely affect us. Our success depends to a significant degree upon the continued contributions of certain key personnel including, but not limited to, members of our executive management team.
Substantially all of our leases provide for periodic rent escalations, but these built-in increases may be less than what we otherwise could achieve in the market. Most of our leases contain rent escalators that increase rent at a fixed amount on fixed dates, which may be less than prevailing market rates over the lease duration.
Most of our leases contain rent escalators that increase rent at a fixed amount on fixed dates, which may be less than prevailing market rates over the lease duration.
We face significant competition for acquiring properties from both publicly traded REITs and private investors that have greater resources than we do, which could materially and adversely affect us.
As a result, if any such risks of a less diversified portfolio are realized, we could be materially and adversely affected. 20 We face significant competition for acquiring properties from both publicly traded REITs and private investors that have greater resources than we do, which could materially and adversely affect us.
Accordingly, our ability to access capital through dispositions of properties may be limited, which could limit our ability to fund future capital needs. We may not be able to obtain acquisition financing or obtain other capital from third-party sources on favorable terms or at all, which could materially and adversely affect our growth prospects and our business.
If we are unable to achieve growth through acquisitions, it could materially and adversely affect us. 19 We may not be able to obtain acquisition financing or obtain other capital from third-party sources on favorable terms or at all, which could materially and adversely affect our growth prospects and our business.
A tenant failure or default under a master lease could reduce or eliminate rental revenue from multiple properties and reduce the value of such properties.
A tenant failure or default under a master lease could reduce or eliminate rental revenue from multiple properties and reduce the value of such properties. The default of a tenant that leases multiple properties from us or its decision not to renew its master lease upon expiration could materially and adversely affect us.
We face risks associated with security breaches through cyber-attacks or cyber-intrusions, malware, computer viruses, attachments to e-mails, persons inside our organization or persons with access to systems inside our organization, and other significant disruptions of our IT networks and related systems.
Information security risks, including risks associated with security breaches through cyber-attacks or cyber-intrusions, malware, computer viruses, attachments to e-mails, persons inside our organization or persons with access to systems inside our organization, and other significant disruptions of our IT networks and related systems, have increased in recent years due to the increased technological sophistication and activities of perpetrators of cyber-attacks, including by computer hackers, foreign governments, and cyber terrorists.
Certain provisions of our leases or loan agreements may be unenforceable, which could materially and adversely affect us. Our rights and obligations with respect to the leases at our properties, mortgage loans, or other loans are governed by written agreements.
Our rights and obligations with respect to the leases at our properties, mortgage loans, or other loans are governed by written agreements.
In such circumstances, if we are not able to offset the decrease in yields by obtaining lower interest costs on our borrowings, our results of operations will be adversely affected. 20 Security breaches and other technology disruptions could compromise our information systems and expose us to liability, which could materially and adversely affect us.
In such circumstances, if we are not able to offset the decrease in yields by obtaining lower interest costs on our borrowings, our results of operations will be adversely affected. As we continue to acquire properties pursuant to our investment strategy, our portfolio may become less diversified, which could materially and adversely affect us.
If our portfolio becomes less diverse, our business may become subject to greater risk, including tenant bankruptcies, adverse industry trends, and economic downturns in a particular geographic area. As a result, if any such risks of a less diversified portfolio are realized, we could be materially and adversely affected.
In pursuing our investment strategy, we may acquire properties that cause our portfolio to become less diversified. If our portfolio becomes less diverse, our business may become subject to greater risk, including tenant bankruptcies, adverse industry trends, and economic downturns in a particular geographic area.
We also rely on information from our tenants to determine a potential tenant’s credit risk as well as for on-going risk management. As of December 31, 2023, approximately 86.0% of our ABR is received from tenants that are required to provide us with specified financial information on a periodic basis.
As of December 31, 2024, approximately 85.6% of our ABR is received from tenants that are required to provide us with specified financial information on a periodic basis.
Information security risks generally have increased in recent years due to the increased technological sophistication and activities of perpetrators of cyber-attacks. Our business involves the storage and transmission of numerous classes of sensitive and confidential information and intellectual property, including tenants’ information, private information about our stockholders and our employees, and financial and strategic information about us.
Our business involves the storage and transmission of sensitive and confidential information and intellectual property, including tenants’ information, private information about our stockholders and our employees, and financial and strategic information about us.
If we fail to assess and identify cybersecurity risks associated with our operations, we may become increasingly vulnerable to such risks. Additionally, the measures we have implemented to prevent security breaches and cyber incidents may not be effective.
Additionally, the measures we have implemented to prevent security breaches and cyber incidents may not be effective.
The default of a tenant that leases multiple properties from us or its decision not to renew its master lease upon expiration could materially and adversely affect us. We have limited opportunities to increase rents under our long-term leases with tenants, which could impede our growth and materially and adversely affect us.
We have limited opportunities to increase rents under our long-term leases with tenants, which could impede our growth and materially and adversely affect us. We typically lease our properties pursuant to long-term net leases with initial terms of 10 years or more that often have renewal options.
As of December 31, 2023, approximately 35.2% of our ABR came from properties in our top five states: Texas (9.7%), Michigan (8.4%), Illinois (6.2%), Wisconsin (5.9%), and California (5.0%). These geographic concentrations could adversely affect our operating performance if conditions become less favorable in any of the states or markets within which we have a concentration of properties.
These geographic concentrations could adversely affect our operating performance if conditions become less favorable in any of the states or markets within which we have a concentration of properties.
If any of these events were to occur, there may be a material adverse effect on our business. We may engage in development or expansion projects or enter into new transaction structures, including speculative development projects and real estate lending opportunities, which would subject us to additional risks that could negatively impact our operations.
We may enter into new transaction structures, including real estate lending opportunities and joint ventures, which would subject us to additional risks that could negatively impact our operations. We may explore and enter into new transaction structures, including real estate lending opportunities and joint ventures, that may or may not be closely related to our current business.
We may engage in development or expansion projects, which could require us, our tenants, or any development partners to raise additional capital or obtain zoning, occupancy, or other required governmental permits and authorizations. Development and expansion projects are subject to a number of risks, including construction delays and cost overruns that may increase anticipated project costs.
We may engage in development or expansion projects, which are subject to a number of risks, including construction delays, supply chain disruptions and inflation, price fluctuation of materials, and cost overruns that may increase anticipated project costs.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of real estate impairment charges. Changes in accounting standards may materially and adversely affect us.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of real estate impairment charges. We may engage in development or expansion projects, including speculative development projects, which would subject us to additional risks that could negatively impact our operations.
Competition for tenants could decrease or prevent increases in the occupancy and rental rates of our properties, which could materially and adversely affect us. 21 Our portfolio is concentrated in certain states, and any adverse developments and economic downturns in these geographic markets could materially and adversely affect us.
Our portfolio is concentrated in certain states, and any adverse developments and economic downturns in these geographic markets could materially and adversely affect us. As of December 31, 2024, approximately 37.2% of our ABR came from properties in our top five states: Texas (9.6%), Michigan (9.2%), Florida (6.5%), California (6.1%), and Illinois (5.8%).
Removed
We typically lease our properties pursuant to long-term net leases with initial terms of 10 years or more that often have renewal options. As of December 31, 2023, the ABR weighted average remaining term of our leases was approximately 10.5 years, excluding renewal options.
Added
As of December 31, 2024, the ABR weighted average remaining term of our leases was approximately 10.2 years, excluding renewal options. Substantially all of our leases provide for periodic rent escalations, but these built-in increases may be less than what we otherwise could achieve in the market.
Removed
Real estate investments generally cannot be sold quickly.
Added
Conversely, during times when inflation is greater than the increases in rent provided by our leases, rent increases will not keep up with the rate of inflation and may fail to keep pace with rising costs. As a result, the long-term nature of our leases could impede our growth and materially and adversely affect us.
Removed
The risk of a security breach or disruption, particularly through cyber-attack or cyber-intrusion, including by computer hackers, foreign governments, and cyber terrorists, has generally increased as the number, intensity, and sophistication of attempted attacks and intrusions from around the world have increased.
Added
For example, the demand for industrial space in the United States is generally related to the level of economic output and consumer demand. Accordingly, reduced economic output and/or consumer demand may lead to lower occupancy rates or decreased demand for our industrial properties.
Removed
As we continue to acquire properties pursuant to our growth strategy, our portfolio may become less diversified, which could materially and adversely affect us. In pursuing our growth strategy, we may acquire properties that cause our portfolio to become less diversified.
Added
Such development or expansion projects could also require us, our tenants, or any development partners to raise additional capital or obtain zoning, occupancy, or other required governmental permits and authorizations.
Removed
We face significant competition for tenants, which could materially and adversely affect us, including our occupancy, rental rates, results of operations, and business. We compete with numerous developers, owners, and operators of properties, many of which own properties similar to ours in the same markets in which our properties are located.
Added
We also rely on third-party construction managers and/or engineers to monitor certain construction activities. If we engage or partner with a developer, we rely on the developer to monitor construction activities and our interests may not be aligned.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Company also receives a quarterly cyber risk rating from an external enterprise risk management service provider and our VP, Information Systems & Solutions and Director, Information Technology meet to discuss the rating and potential enhancements to our cybersecurity program. The cyber risk rating reports are also shared with the Audit Committee on a quarterly basis.
Biggest changeOur VP, Information Systems & Solutions and Director , Information Technology also meet with the cybersecurity solutions team at our managed security service provider on a quarterly basis to review and discuss the Company’s cybersecurity vulnerability score and key risk indicators, including security alerts, specific vulnerabilities, and remediation cadence, as well as peer comparisons and enhancements to the Company’s cybersecurity program.
For example, our VP, Information Systems & Solutions and Director, Information Technology receive periodic reporting from our managed security service provider and meet regularly to discuss reported activity and assess any recommendations.
For example, our VP, Information Systems & Solutions and Director, Information Technology receive monthly reporting from our managed security service provider and meet regularly to discuss reported activity.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeWhile funds used in this benchmark typically target institutional investors and have characteristics that differ from us (including differing fees), we feel that the MCSI US REIT Index is an appropriate and accepted index for the purpose of evaluating returns on investments in direct real estate funds. 40 December 31, 2018 2019 2020 2021 2022 2023 Broadstone Net Lease 100.00 105.25 101.16 134.21 92.93 105.94 S&P 500 100.00 131.49 155.68 200.37 164.08 207.21 MSCI US REIT Index 100.00 125.84 116.31 166.39 125.61 142.87 Prior to our IPO in September 2020 and the listing of our common stock on the NYSE, we sold shares of common stock in a private offering at a share price established by the committee of our Board of Directors comprised of our independent directors (“Independent Directors Committee”) based on the net asset value of our portfolio, input from management and third-party consultants, and such other factors the Independent Directors Committee deemed necessary.
Biggest changeWhile funds used in this benchmark typically target institutional investors and have characteristics that differ from us (including differing fees), we feel that the MCSI US REIT Index is an appropriate and accepted index for the purpose of evaluating returns on investments in direct real estate funds. 40 December 31, 2019 2020 2021 2022 2023 2024 Broadstone Net Lease 100.00 96.11 127.51 88.30 100.66 99.57 S&P 500 100.00 118.40 152.39 124.79 157.59 197.02 MSCI US REIT Index 100.00 92.43 132.23 99.82 113.54 123.47 Prior to our IPO in September 2020 and the listing of our common stock on the NYSE, we sold shares of common stock in a private offering at a share price established by the committee of our Board of Directors comprised of our independent directors (“Independent Directors Committee”) based on the net asset value of our portfolio, input from management and third-party consultants, and such other factors the Independent Directors Committee deemed necessary.
The graph assumes that $100 was invested on December 31, 2018, in each of shares of our common stock, the S&P 500 and the MCSI US REIT Index, and that all dividends were reinvested. There can be no assurance that the performance of our shares will continue in line with the same or similar trends depicted in the graph below.
The graph assumes that $100 was invested on December 31, 2019, in each of shares of our common stock, the S&P 500 and the MCSI US REIT Index, and that all dividends were reinvested. There can be no assurance that the performance of our shares will continue in line with the same or similar trends depicted in the graph below.
Equity Compensation Plan Information The information concerning our Equity Compensation Plan will be included in the Proxy Statement to be filed relating to our 2024 Annual Meeting of Stockholders and is incorporated herein by reference.
Equity Compensation Plan Information The information concerning our Equity Compensation Plan will be included in the Proxy Statement to be filed relating to our 2025 Annual Meeting of Stockholders and is incorporated herein by reference.
Item 5. Market for Registrant’s Common Equity, Related Stoc kholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the New York Stock Exchange under the ticker symbol “BNL.” Stockholders As of February 20, 2024, there were approximately 502 holders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stoc kholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the New York Stock Exchange under the ticker symbol “BNL.” Stockholders As of February 14, 2025, there were approximately 471 holders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

88 edited+44 added−17 removed98 unchanged
Biggest changeIn the future, the SEC, Nareit or another regulatory body may decide to standardize the allowable adjustments across the REIT industry and in response to such standardization we may have to adjust our calculation and characterization of Core FFO and AFFO accordingly. 51 The following table reconciles net income (which is the most comparable GAAP measure) to FFO, Core FFO and AFFO: For the Year Ended December 31, (in thousands, except per share data) 2023 2022 2021 Net income $ 163,312 $ 129,475 $ 109,528 Real property depreciation and amortization 158,346 154,673 131,999 Gain on sale of real estate (54,310 ) (15,953 ) (13,523 ) Provision for impairment on investment in rental properties 31,274 5,535 28,208 FFO $ 298,622 $ 273,730 $ 256,212 Net write-offs of accrued rental income 4,458 1,326 1,938 Lease termination fees (7,500 ) (2,469 ) (35,000 ) Gain on insurance recoveries — (341 ) — Cost of debt extinguishment 3 308 368 Severance and executive transition costs 1,622 401 1,304 Change in fair value of earnout liability — — 5,539 Other expenses (income) (a) 1,678 (5,690 ) 62 Core FFO $ 298,883 $ 267,265 $ 230,423 Straight-line rent adjustment (26,736 ) (21,900 ) (20,304 ) Adjustment to provision for credit losses (10 ) (5 ) (38 ) Amortization of debt issuance costs 3,938 3,692 3,854 Amortization of net mortgage premiums (78 ) (104 ) (132 ) Loss on interest rate swaps and other non-cash interest expense 1,884 2,514 698 Amortization of lease intangibles (5,846 ) (4,809 ) (3,208 ) Stock-based compensation 5,972 5,316 4,669 Deferred taxes (282 ) 204 — AFFO $ 277,725 $ 252,173 $ 215,962 (a) Amount includes $1.7 million, ($5.6) million, and ($0.1) million of unrealized foreign exchange loss (gain) for the years ended December 31, 2023, 2022, and 2021, respectively, primarily associated with our Canadian dollar denominated Revolver Credit Facility borrowings.
Biggest changeIn the future, the SEC, Nareit or another regulatory body may decide to standardize the allowable adjustments across the REIT industry and in response to such standardization we may have to adjust our calculation and characterization of Core FFO and AFFO accordingly. 53 The following table reconciles net income (which is the most comparable GAAP measure) to FFO, Core FFO and AFFO: For the Year Ended December 31, (in thousands, except per share data) 2024 2023 2022 Net income $ 168,989 $ 163,312 $ 129,475 Real property depreciation and amortization 155,844 158,346 154,673 Gain on sale of real estate (73,153 ) (54,310 ) (15,953 ) Provision for impairment on investment in rental properties 49,001 31,274 5,535 FFO $ 300,681 $ 298,622 $ 273,730 Net write-offs of accrued rental income 2,676 4,458 1,326 Other non-core income from real estate transactions (a) (2,070 ) (7,500 ) (2,469 ) Gain on insurance recoveries — — (341 ) Cost of debt extinguishment — 3 308 Severance and employee transition costs 385 1,622 401 Other (income) expenses (b) (6,201 ) 1,678 (5,690 ) Core FFO $ 295,471 $ 298,883 $ 267,265 Straight-line rent adjustment (21,652 ) (26,736 ) (21,900 ) Adjustment to provision for credit losses (17 ) (10 ) (5 ) Amortization of debt issuance costs 3,932 3,938 3,692 Amortization of net mortgage premiums — (78 ) (104 ) Non-capitalized transaction costs 951 — — Loss on interest rate swaps and other non-cash interest expense 209 1,884 2,514 Amortization of lease intangibles (c) (4,413 ) (5,846 ) (4,809 ) Stock-based compensation 7,355 5,972 5,316 Deferred taxes 155 (282 ) 204 AFFO $ 281,991 $ 277,725 $ 252,173 (a) Amount includes $1.2 million of lease termination fees and $0.9 million in income for the settlement of a permanent land easement for an insignificant portion of two of our properties during the year ended December 31, 2024.
If, and when, such events or changes in circumstances are present, an impairment exists to the extent the carrying value of the long-lived asset or asset group exceeds the sum of the undiscounted cash flows expected to result from the use of the long-lived asset or asset group and its eventual disposition.
If, and when, such events or changes in circumstances are present, an impairment exists to the extent the carrying value of the long-lived asset or asset group exceeds the sum of the undiscounted cash flows expected to result from the use of the long-lived asset or asset group and its eventual disposition.
Refer to Non-GAAP Measures below for further details concerning our calculation of non-GAAP measures and reconciliations to the comparable GAAP measure. Liquidity/REIT Requirements Liquidity is a measure of our ability to meet potential cash requirements, including our ongoing commitments to repay debt, fund our operations, acquire properties, make distributions to our stockholders, and other general business needs.
Refer to Non-GAAP Measures below for further details concerning our calculation of non-GAAP measures and reconciliations to the comparable GAAP measure. Liquidity/REIT Requirements Liquidity is a measure of our ability to meet potential cash requirements, including our ongoing commitments to repay debt, fund our operations, acquire and develop properties, make distributions to our stockholders, and other general business needs.
If one or 55 more of these criteria are met, the lease will generally be classified as a sales-type lease, unless the lease contains a residual value guarantee from a third party other than the lessee, in which case it would be classified as a direct financing lease under certain circumstances.
If one or more of these criteria are met, the lease will generally be classified as a sales-type lease, unless the lease contains a residual value guarantee from a third party other than the lessee, in which case it would be classified as a direct financing lease under certain circumstances.
The applicable facility fee is 0.20% per annum. 2026 Unsecured Term Loan Borrowings under the 2026 Unsecured Term Loan are subject to interest at variable rates based on one-month adjusted SOFR plus a margin based on our credit rating ranging between 0.85% and 1.65% based on our credit rating. 2027 Unsecured Term Loan and 2029 Unsecured Term Loan Borrowings under the 2027 Unsecured Term Loan and 2029 Unsecured Term Loan bear interest at variable rates based on one-month adjusted SOFR plus a margin based on our credit rating ranging between 0.80% and 1.60% per annum for the 2027 Unsecured Term Loan, and 1.15% and 2.20% per annum for the 2029 Unsecured Term Loan. 2027 Senior Unsecured Notes - Series A The 2027 Senior Unsecured Notes - Series A are payable interest only semiannually during their term, bear interest at a fixed rate of 4.84% per annum, and mature in April 2027. 2028 Senior Unsecured Notes - Series B and 2030 Senior Unsecured Notes - Series C The 2028 Senior Unsecured Notes - Series B and 2030 Senior Unsecured Notes - Series C are payable interest only semiannually during their term, and bear interest at fixed rates of 5.09% per annum and 5.19% per annum, respectively.
The applicable facility fee is 0.20% per annum. 2026 Unsecured Term Loan Borrowings under the 2026 Unsecured Term Loan are subject to interest at variable rates based on one-month adjusted SOFR plus a margin based on our credit rating ranging between 0.85% and 1.65% based on our credit rating. 2027 Unsecured Term Loan and 2029 Unsecured Term Loan Borrowings under the 2027 Unsecured Term Loan and 2029 Unsecured Term Loan bear interest at variable rates based on daily simple adjusted SOFR plus a margin based on our credit rating ranging between 0.80% and 1.60% per annum for the 2027 Unsecured Term Loan, and 1.15% and 2.20% per annum for the 2029 Unsecured Term Loan. 2027 Senior Unsecured Notes - Series A The 2027 Senior Unsecured Notes - Series A are payable interest only semiannually during their term, bear interest at a fixed rate of 4.84% per annum, and mature in April 2027. 2028 Senior Unsecured Notes - Series B and 2030 Senior Unsecured Notes - Series C The 2028 Senior Unsecured Notes - Series B and 2030 Senior Unsecured Notes - Series C are payable interest only semiannually during their term, and bear interest at fixed rates of 5.09% per annum and 5.19% per annum, respectively.
Our interest rate risk management strategy is intended to stabilize cash flow requirements by maintaining interest rate swap agreements to convert certain variable-rate debt to a fixed rate. The interest rate swap agreements, designated and qualifying as cash flow hedges, are reported at fair value.
Our interest rate risk management strategy is intended to stabilize cash flow requirements by maintaining interest rate swap agreements to convert certain variable-rate debt to a fixed rate. 58 The interest rate swap agreements, designated and qualifying as cash flow hedges, are reported at fair value.
GAAP net income includes items such as gain or loss on sale of real estate and provisions for impairment, among others, which can vary from quarter to quarter and impact period-over-period comparisons. 46 Liquidity and Capital Resources General We acquire real estate using a combination of debt and equity capital and with cash from operations that is not otherwise distributed to our stockholders, and proceeds from dispositions of real estate properties.
GAAP net income includes items such as gain or loss on sale of real estate and provisions for impairment, among others, which can vary from quarter to quarter and impact period-over-period comparisons. 48 Liquidity and Capital Resources General We acquire real estate using a combination of debt and equity capital and with cash from operations that is not otherwise distributed to our stockholders, and proceeds from dispositions of real estate properties.
The decrease in net cash (used in) provided by financing activities during the year ended December 31, 2023 as compared to the year ended December 31, 2022, mainly reflects a decrease in our total outstanding borrowings in 2023.
The decrease in net cash provided by financing activities during the year ended December 31, 2023 as compared to the year ended December 31, 2022, mainly reflects a decrease in our total outstanding borrowings in 2023 compared to 2022.
Accordingly, we have excluded these commitments from the contractual commitments table above. Derivative Instruments and Hedging Activities We are exposed to interest rate risk arising from changes in interest rates on the floating-rate borrowings under our unsecured credit facilities. Borrowings pursuant to our unsecured credit facilities bear interest at floating rates based on SOFR or CDOR plus an applicable margin.
Accordingly, we have excluded these commitments from the contractual commitments table above. Derivative Instruments and Hedging Activities We are exposed to interest rate risk arising from changes in interest rates on the floating-rate borrowings under our unsecured credit facilities. Borrowings pursuant to our unsecured credit facilities bear interest at floating rates based on SOFR or CORRA plus an applicable margin.
Based on values as of December 31, 2023, taxable sales of the applicable properties would trigger liability under the three agreements of approximately $20.4 million. Based on information available, we do not believe that the events resulting in liability as detailed above have occurred or are likely to occur in the foreseeable future.
Based on values as of December 31, 2024, taxable sales of the applicable properties would trigger liability under the three agreements of approximately $20.4 million. Based on information available, we do not believe that the events resulting in liability as detailed above have occurred or are likely to occur in the foreseeable future.
Significant judgment is made to determine if and when impairment should be taken. Management’s assessment of impairment as of December 31, 2023 was based on the most current information available to management. Certain of our properties may have fair values less than their carrying amounts.
Significant judgment is made to determine if and when impairment should be taken. Management’s assessment of impairment as of December 31, 2024 was based on the most current information available to management. Certain of our properties may have fair values less than their carrying amounts.
While we believe the assumptions used to estimate the fair value of our reporting unit are reasonable, changes in these assumptions may have a material impact on our financial results. Based on the results of our annual goodwill impairment test on November 30, 2023, our annual goodwill impairment test date, we concluded that goodwill was not impaired.
While we believe the assumptions used to estimate the fair value of our reporting unit are reasonable, changes in these assumptions may have a material impact on our financial results. Based on the results of our annual goodwill impairment test on November 30, 2024, our annual goodwill impairment test date, we concluded that goodwill was not impaired.
We manage our leverage profile using a ratio of Net Debt to Annualized Adjusted EBITDAre, each discussed further below, which we believe is a useful measure of our ability to repay debt and a relative measure of leverage, and is used in communications with our lenders and rating agencies regarding our credit rating.
We manage our leverage profile using a ratio of Net Debt to Annualized Adjusted EBITDAre, and Pro Forma Net Debt to Annualized Adjusted EBITDAre, each discussed further below, which we believe is a useful measure of our ability to repay debt and a relative measure of leverage, and is used in communications with our lenders and rating agencies regarding our credit rating.
(d) Our Revolving Credit Facility contains two six-month extension options subject to certain conditions, including the payment of an extension fee equal to 0.0625% of the revolving commitments. 48 Revolving Credit Facility Our Revolving Credit Facility has a $1.0 billion capacity with a maturity date of March 2026 and contains two six-month extension options, subject to certain conditions, including an extension fee equal to 0.0625%.
(d) Our Revolving Credit Facility contains two six-month extension options subject to certain conditions, including the payment of an extension fee equal to 0.0625% of the revolving commitments. 50 Revolving Credit Facility Our Revolving Credit Facility has a $1.0 billion capacity with a maturity date of March 2026 and contains two six-month extension options, subject to certain conditions, including an extension fee equal to 0.0625%.
We use cash on hand and borrowings under our Revolving Credit Facility to initially fund acquisitions, which are subsequently repaid or replaced with proceeds from our equity and debt capital markets activities as well as proceeds from dispositions.
We use cash on hand and borrowings under our Revolving Credit Facility to initially fund investments, which are subsequently repaid or replaced with proceeds from our equity and debt capital markets activities as well as proceeds from dispositions.
Debt Covenants We are subject to various covenants and financial reporting requirements pursuant to our debt facilities, which are summarized below. As of December 31, 2023, we believe we were in compliance with all of our covenants on all outstanding borrowings.
Debt Covenants We are subject to various covenants and financial reporting requirements pursuant to our debt facilities, which are summarized below. As of December 31, 2024, we believe we were in compliance with all of our covenants on all outstanding borrowings.
Unsecured Indebtedness and Capital Markets Activities as of and for the Year Ended December 31, 2023 The following table sets forth our outstanding Revolving Credit Facility, unsecured term loans and senior unsecured notes at December 31, 2023.
Unsecured Indebtedness and Capital Markets Activities as of and for the Year Ended December 31, 2024 The following table sets forth our outstanding Revolving Credit Facility, unsecured term loans and senior unsecured notes at December 31, 2024.
For each of the previous three years, we paid dividends out of our cash flows from operations in excess of the distribution amounts required to maintain our REIT qualification. 49 Contractual Obligations The following table provides information with respect to our contractual commitments and obligations as of December 31, 2023 (in thousands).
For each of the previous three years, we paid dividends out of our cash flows from operations in excess of the distribution amounts required to maintain our REIT qualification. Contractual Obligations The following table provides information with respect to our contractual commitments and obligations as of December 31, 2024 (in thousands).
At December 31, 2023 and 2022, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation.
At December 31, 2024 and 2023, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation.
We target properties that are an integral part of the tenants’ businesses and are therefore opportunities to secure long-term net leases. Through long-term net leases, our tenants are able to retain operational control of their strategically important locations, while allocating their debt and equity capital to fund core business operations rather than real estate ownership. • Diversified Portfolio .
We target properties that are an integral part of the tenants’ businesses and are therefore opportunities to secure long-term net leases through which our tenants are able to retain operational control of their strategically important locations, while allocating their debt and equity capital to fund core business operations rather than real estate ownership. • Diversified Investment Strategy.
You should not consider our Adjusted EBITDAre and Annualized Adjusted EBITDAre as alternatives to net income or cash flows from operating activities determined in accordance with GAAP. 52 The following table reconciles net income (which is the most comparable GAAP measure) to EBITDA, EBITDAre, and Adjusted EBITDAre.
You should not consider our Adjusted EBITDAre and Annualized Adjusted EBITDAre as alternatives to net income or cash flows from operating activities determined in accordance with GAAP. The following table reconciles net income (which is the most comparable GAAP measure) to EBITDA, EBITDAre, Adjusted EBITDAre, and Pro Forma Adjusted EBITDAre.
Rental Rates Our ability to grow rental revenue from our existing portfolio will depend on our ability to realize the rental escalations built into our leases. As of December 31, 2023, leases contributing approximately 97.3% of our ABR provided for increases in future ABR, generally ranging from 1.5% to 3.0% annually, with an ABR weighted average minimum increase of 2.0%.
Rental Rates Our ability to grow rental revenue from our existing portfolio will depend on our ability to realize the rental escalations built into our leases. As of December 31, 2024, leases contributing approximately 97.4% of our ABR provided for increases in future ABR, generally ranging from 1.5% to 3.0% annually, with an ABR weighted average increase of 2.0%.
To the extent our properties become vacant and are not subject to a lease, we would forego rental income while remaining responsible for the payment of property taxes and maintaining the property until it is re-leased, which could negatively impact our operating results. Our portfolio was 99.4% occupied as of December 31, 2023.
To the extent our properties become vacant and are not subject to a lease, we would forego rental income while remaining responsible for the payment of property taxes and maintaining the property until it is re-leased, which could negatively impact our operating results. Our portfolio was 99.1% occupied as of December 31, 2024.
(b) Interest expense is projected based on the outstanding borrowings and interest rates in effect as of December 31, 2023. This amount includes the impact of interest rate swap agreements. (c) Amounts include dividends declared as of December 31, 2023 of $0.285 per common share and OP Unit. Future undeclared dividends have been excluded.
(b) Interest expense is projected based on the outstanding borrowings and interest rates in effect as of December 31, 2024. This amount includes the impact of interest rate swap agreements. (c) Amounts include dividends declared as of December 31, 2024 of $0.29 per common share and OP Unit. Future undeclared dividends have been excluded.
Net Debt, Net Debt to Annualized EBITDAre and Net Debt to Annualized Adjusted EBITDAre We define Net Debt as gross debt (total reported debt plus debt issuance costs) less cash and cash equivalents and restricted cash.
Net Debt, Pro Forma Net Debt, Net Debt to Annualized EBITDAre, Net Debt to Annualized Adjusted EBITDAre, and Pro Forma Net Debt to Annualized Adjusted EBITDAre We define Net Debt as gross debt (total reported debt plus debt issuance costs) less cash and cash equivalents and restricted cash.
We believe that this ratio provides investors and analysts with a measure of our performance that includes our operating results unaffected by the differences in capital structures, capital investment cycles and useful life of related assets compared to other companies in our industry.
EBITDA is a measure commonly used in our industry. We believe that this ratio provides investors and analysts with a measure of our performance that includes our operating results unaffected by the differences in capital structures, capital investment cycles and useful life of related assets compared to other companies in our industry.
The ATM Program provides for forward sale agreements, enabling us to set the price of shares upon pricing the offering while delaying the issuance of shares and the receipt of the net proceeds.
The ATM Program provides for forward sale agreements, which enable us to set the price of shares upon pricing the offering, while delaying the issuance of shares and the receipt of the net proceeds.
Changes in capitalization rates, interest rates, or other factors may impact our acquisition opportunities in the future. Market conditions may also impact the total returns we can achieve on our investments. Our investment volume also depends on our ability to access third-party debt and equity financing.
Changes in capitalization rates, interest rates, or other factors may impact our acquisition opportunities in the future. Market conditions may also impact the total returns we can achieve on our investments. Our investment volume also depends on our ability to access third-party debt and equity financing or our ability to recycle capital through property dispositions.
Lease Renewals and Occupancy As of December 31, 2023, the ABR weighted average remaining term of our portfolio was approximately 10.5 years, excluding tenant renewal options, and leases for five properties, or 1.2% of ABR, will expire during 2024. Approximately 3% of the properties in our portfolio are subject to tenant leases without at least one renewal option.
Lease Renewals and Occupancy As of December 31, 2024, the ABR weighted average remaining term of our portfolio was approximately 10.2 years, excluding tenant renewal options, and 16 leases, or approximately 1.2% of ABR, will expire during 2025. Approximately 3% of the properties in our portfolio are subject to tenant leases without at least one renewal option.
Short-term Liquidity Requirements Our short-term liquidity requirements consist primarily of funds necessary to pay for our operating expenses, including our general and administrative expenses as well as interest payments on our outstanding debt, to pay distributions, to fund our acquisitions that are under control or expected to close within a short time period, and to pay for commitments to fund development opportunities, tenant improvements, and revenue generating capital expenditures.
Short-term Liquidity Requirements Our short-term liquidity requirements consist primarily of funds necessary to pay for our operating expenses, including our general and administrative expenses as well as interest payments on our outstanding debt, to pay distributions, to fund our acquisitions that are under control or expected to close within a short time period, and to pay for commitments to fund build-to-suit developments, tenant improvements, revenue generating capital expenditures, and transitional capital investments.
As of December 31, 2023, our portfolio was approximately 99.4% leased with an ABR weighted average remaining lease term of approximately 10.5 years, excluding renewal options. • Standard Contractual Base Rent Escalation . Approximately 97.3% of our leases have contractual rent escalations, with an ABR weighted average minimum increase of 2.0%. • Extensive Tenant Financial Reporting .
As of December 31, 2024, our portfolio was approximately 99.1% leased with an ABR weighted average remaining lease term of approximately 10.2 years, excluding renewal options. • Standard Contractual Base Rent Escalation . Approximately 97.4% of our leases have contractual rent escalations, with an ABR weighted average increase of 2.0%. • Extensive Tenant Financial Reporting .
“Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. 56
“Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. 59
Our Canadian investments are recorded at their historical exchange rates, and therefore are not impacted by changes in the value of the Canadian dollar. 50 Cash Flows Cash and cash equivalents and restricted cash totaled $20.6 million, $60.0 million, and $27.8 million at December 31, 2023, 2022, and 2021, respectively.
Our Canadian investments are recorded at their historical exchange rates, and therefore are not impacted by changes in the value of the Canadian dollar. Cash Flows Cash and cash equivalents and restricted cash totaled $16.0 million, $20.6 million, and $60.0 million at December 31, 2024, 2023, and 2022, respectively.
We compute Core Funds From Operations (“Core FFO”) by adjusting FFO, as defined by Nareit, to exclude certain GAAP income and expense amounts that we believe are infrequently recurring, unusual in nature, or not related to its core real estate operations, including write-offs or recoveries of accrued rental income, lease termination fees, gain on insurance recoveries, the change in fair value of our earnout liability, cost of debt extinguishments, unrealized and realized gains or losses on foreign currency transactions, severance and executive transition costs, and other extraordinary items.
We compute Core Funds From Operations (“Core FFO”) by adjusting FFO, as defined by Nareit, to exclude certain GAAP income and expense amounts that we believe are infrequently recurring, unusual in nature, or not related to its core real estate operations, including write-offs or recoveries of accrued rental income, gain on insurance recoveries, lease termination fees and other non-core income from real estate transactions, cost of debt extinguishment, unrealized and realized gains or losses on foreign currency transactions, severance and employee transition costs, and other extraordinary items.
Within these sectors, we have meaningful concentrations in manufacturing, distribution and warehouse, food processing, casual dining, clinical, quick service restaurants, and general merchandise. • Geographic Diversification : Our properties are located in 44 U.S. states and four Canadian provinces, with no single geographic concentration exceeding 9.7% of our ABR. • Tenant and Industry Diversification : Our properties are occupied by approximately 220 different commercial tenants who operate 208 different brands that are diversified across 53 differing industries, with no single tenant accounting for more than 4.1% of our ABR. • Strong In-Place Leases with Significant Remaining Lease Term .
Within these sectors, we have meaningful concentrations in manufacturing, distribution and warehouse, food processing, general merchandise, casual dining, and quick service restaurants. • Geographic Diversification : Our properties are located in 44 U.S. states and four Canadian provinces, with no single geographic concentration exceeding 9.6% of our ABR. • Tenant and Industry Diversification : Our properties are occupied by 202 different commercial tenants who operate 190 distinct brands that are diversified across 55 varying industries, with no single tenant accounting for more than 4.1% of our ABR. • Strong In-Place Leases with Significant Remaining Lease Term .
As of December 31, 2023, our portfolio comprised approximately 38.3 million rentable square feet of operational space, was highly diversified based on property type, geography, tenant, and industry, and was cross-diversified within each ( e.g., property-type diversification within a geographic concentration): • Property Type : We are diversified across industrial, healthcare, restaurant, and retail property types.
As of December 31, 2024, our portfolio comprised approximately 39.4 million rentable square feet of operational space, was highly diversified based on property type, geography, tenant, and industry, and was cross-diversified within each ( e.g., property-type diversification within a geographic concentration): • Property Type : We are primarily diversified across industrial and retail property types.
Indications of a tenant’s inability to continue as a going concern, changes in our view or strategy relative to a tenant’s business or industry, or changes in our long-term hold strategies, could each be indicative of an impairment triggering event.
Indications of a tenant’s inability to continue as a going concern, plans to vacate the property upon lease expiration, changes in our view or strategy relative to a tenant’s business or industry, or changes in our long-term hold strategies, could each be indicative of an impairment triggering event.
We have no material debt maturities until 2026, as detailed in the table below. 47 We expect to meet our long-term liquidity requirements primarily from borrowings under our Revolving Credit Facility, future debt and equity financings, and proceeds from limited sales of our properties.
We have no material debt maturities until 2026, as detailed in the table below. 49 We expect to meet our long-term liquidity requirements primarily from borrowings under our Revolving Credit Facility, future debt and equity financings, as well as proceeds from dispositions.
Approximately 60.6% of our ABR was derived from leases that will expire after 2030, and no more than 13.6% of our ABR was derived from leases that expire in any single year up to 2030.
Approximately 67.3% of our ABR was derived from leases that will expire after 2030, and no more than 12.3% of our ABR was derived from leases that expire in any single year up to 2030.
Adjusted EBITDAre and Annualized Adjusted EBITDAre are not measurements of performance under GAAP, and our Adjusted EBITDAre and Annualized Adjusted EBITDAre may not be comparable to similarly titled measures of other companies.
EBITDA and EBITDAre are not measures of financial performance under GAAP, and our EBITDA and EBITDAre may not be comparable to similarly titled measures of other companies.
We compute Adjusted Funds From Operations (“AFFO”), by adjusting Core FFO for certain non-cash revenues and expenses, including straight-line rents, amortization of lease intangibles, adjustment to provision for credit losses, amortization of debt issuance costs, amortization of net mortgage premiums, (gain) loss on interest rate swaps and other non-cash interest expense, deferred taxes, stock-based compensation, and other specified non-cash items.
We compute Adjusted Funds From Operations (“AFFO”), by adjusting Core FFO for certain revenues and expenses that are non-cash or unique in nature, including straight-line rents, amortization of lease intangibles, adjustment to provision for credit losses, amortization of debt issuance costs, amortization of net mortgage premiums, non-capitalized transaction costs such as acquisition costs related to deals that failed to transact, loss on interest rate swaps and other non-cash interest expense, deferred taxes, stock-based compensation, and other specified non-cash items.
We expect our cash provided by operating activities, as discussed below, will be sufficient to pay for our current obligations including interest and mortgage amortization. We expect to pay for commitments to fund investments and our dividends declared using our Revolving Credit Facility.
We expect our cash provided by operating activities, as discussed below, will be sufficient to pay for our current obligations including interest and mortgage amortization. We expect to pay for commitments to fund investments and our dividends declared using our Revolving Credit Facility. As of December 31, 2024, we have $907.0 million of available capacity under our Revolving Credit Facility.
In addition to United States Dollars (“USD”), borrowings under the Revolving Credit Facility can be made in Pound Sterling, Euros or Canadian Dollars (“CAD”) up to an aggregate amount of $500.0 million.
In addition to USD, borrowings under the Revolving Credit Facility can be made in Pound Sterling, Euros or CAD up to an aggregate amount of $500.0 million.
Other income (expenses) The change in other income during the year ended December 31, 2023 was primarily $1.7 million of unrealized foreign exchange loss recognized on the remeasurement of our $100 million CAD Revolving Credit Facility borrowings, compared to a $5.6 million unrealized foreign exchange gain recognized during the year ended December 31, 2022.
Other income (expenses) The increase in other income (expenses) during the year ended December 31, 2024 was primarily due to a $6.2 million unrealized foreign exchange gain recognized on the quarterly remeasurement of our $100 million Canadian Dollars (“CAD”) Revolving Credit Facility borrowings, compared to a $1.7 million unrealized foreign exchange loss recognized during the year ended December 31, 2023.
As of December 31, 2023, master leases contributed 69.0% of the ABR associated with multi-site tenants (406 of 675 properties), and 41.5% of our overall ABR (406 of our 796 properties). Interest Expense We anticipate that we will continue to incur debt to fund future investment activity, which will increase the amount of interest expense we incur.
As of December 31, 2024, master leases contributed 69.1% of the ABR associated with multi-site tenants (394 of 656 properties), and 41.4% of our overall ABR (394 of our 765 properties). 44 Interest Expense We anticipate that we will continue to incur debt to fund future investment activity, which will increase the amount of interest expense we incur.
Assumptions used in the income approach to value the buildings include: capitalization and discount rates, lease-up time, market rents, make ready costs, land value, and land improvement value.
Specifically, the “if vacant” value of buildings and equipment is calculated using an income approach. Assumptions used in the income approach to value the buildings include: capitalization and discount rates, lease-up time, market rents, make ready costs, land value, and land improvement value.
Goodwill Goodwill represents the excess of the amount paid over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination and it assigned to one or more reporting units.
The remaining impairments recognized during the year ended December 31, 2024 were immaterial. 57 Goodwill Goodwill represents the excess of the amount paid over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination and it assigned to one or more reporting units.
(in thousands, except interest rates) Outstanding Balance Interest Rate Maturity Date Revolving Credit Facility $ 90,434 Applicable reference rate + 0.85% (a) Mar. 2026 (d) Unsecured term loans: 2026 Unsecured Term Loan 400,000 one-month adjusted SOFR + 1.00% (b)(c) Feb. 2026 2027 Unsecured Term Loan 200,000 one-month adjusted SOFR + 0.95% (c) Aug. 2027 2029 Unsecured Term Loan 300,000 one-month adjusted SOFR + 1.25% (c) Aug. 2029 Total unsecured term loans 900,000 Unamortized debt issuance costs, net (4,053 ) Total unsecured term loans, net 895,947 Senior unsecured notes: 2027 Senior Unsecured Notes - Series A 150,000 4.84% Apr. 2027 2028 Senior Unsecured Notes - Series B 225,000 5.09% Jul. 2028 2030 Senior Unsecured Notes - Series C 100,000 5.19% Jul. 2030 2031 Senior Unsecured Public Notes 375,000 2.60% Sep. 2031 Total senior unsecured notes 850,000 Unamortized debt issuance costs and original issuance discount, net (4,691 ) Total senior unsecured notes, net 845,309 Total unsecured debt $ 1,831,690 (a) At December 31, 2023, the balance includes $100 million CAD borrowings remeasured to $75.4 million USD, and was subject to the one-month Canadian Dollar Offered Rate of 5.46%.
(in thousands, except interest rates) Outstanding Balance Interest Rate Maturity Date Revolving Credit Facility $ 93,014 Applicable reference rate + 0.85% (a) Mar. 2026 (d) Unsecured term loans: 2026 Unsecured Term Loan 400,000 one-month adjusted SOFR + 1.00% (b) Feb. 2026 2027 Unsecured Term Loan 200,000 daily simple adjusted SOFR + 0.95% (c) Aug. 2027 2029 Unsecured Term Loan 300,000 daily simple adjusted SOFR + 1.25% (c) Aug. 2029 Total unsecured term loans 900,000 Unamortized debt issuance costs, net (2,799 ) Total unsecured term loans, net 897,201 Senior unsecured notes: 2027 Senior Unsecured Notes - Series A 150,000 4.84% Apr. 2027 2028 Senior Unsecured Notes - Series B 225,000 5.09% Jul. 2028 2030 Senior Unsecured Notes - Series C 100,000 5.19% Jul. 2030 2031 Senior Unsecured Public Notes 375,000 2.60% Sep. 2031 Total senior unsecured notes 850,000 Unamortized debt issuance costs and original issuance discount, net (3,936 ) Total senior unsecured notes, net 846,064 Total unsecured debt $ 1,836,279 (a) At December 31, 2024, a balance of $23.5 million was subject to daily simple SOFR.
As of December 31, 2023, we had 32 interest rate swaps outstanding with an aggregate notional amount of $975.4 million. Under these agreements, we receive monthly payments from the counterparties equal to the related variable interest rates multiplied by the outstanding notional amounts.
As of December 31, 2024, we had 30 effective and nine forward-starting interest rate swaps with an aggregate notional amount of $1.4 billion. Under the effective swap agreements, we receive monthly payments from the counterparties equal to the related variable interest rates multiplied by the outstanding notional amounts.
(b) Reflects an adjustment to give effect to all dispositions during the quarter as if they had been sold as of the beginning of the quarter. (c) Amounts include $0.2 million of employee severance and ($0.1) million of forfeited stock-based compensation for the three months ended December 31, 2023.
(b) Reflects an adjustment to give effect to all dispositions during the quarter as if they had been sold as of the beginning of the quarter. (c) Amount includes $0.2 million accelerated lease intangible amortization and $0.1 million of severance and employee transition costs for the three months ended December 31, 2024.
If our strategy, or one or more of the assumptions described above, changes in the future, we may have to recognize an impairment.
Significant judgment is made as to if and when impairment should be taken. If our strategy, or one or more of the assumptions described above, changes in the future, we may have to recognize an impairment.
Information is also presented with respect to Annualized EBITDAre and Annualized Adjusted EBITDAre: For the Three Months Ended December 31, (in thousands) 2023 2022 2021 Net income $ 6,797 $ 36,773 $ 32,226 Depreciation and amortization 39,278 45,606 33,476 Interest expense 18,972 23,773 16,997 Income taxes (268 ) 105 457 EBITDA $ 64,779 $ 106,257 $ 83,156 Provision for impairment of investment in rental properties 29,801 — 207 Gain on sale of real estate (6,270 ) (10,625 ) (3,732 ) EBITDAre $ 88,310 $ 95,632 $ 79,631 Adjustment for current quarter acquisition activity (a) 153 1,283 2,002 Adjustment for current quarter disposition activity (b) (156 ) (440 ) (180 ) Adjustment to exclude non-recurring expenses (income) (c) 128 — — Adjustment to exclude net write-offs of accrued rental income 4,161 — — Adjustment to exclude gain on insurance recoveries — (341 ) — Adjustment to exclude realized/unrealized foreign exchange loss 1,453 796 — Adjustment to exclude cost of debt extinguishments — 77 — Adjustment to exclude lease termination fees — (1,678 ) — Adjusted EBITDAre $ 94,049 $ 95,329 $ 81,453 Annualized EBITDAre $ 353,240 $ 382,528 $ 318,526 Annualized Adjusted EBITDAre $ 376,196 $ 381,316 $ 325,812 (a) Reflects an adjustment to give effect to all investments during the quarter as if they had been made as of the beginning of the quarter.
Information is also presented with respect to Annualized EBITDAre, Annualized Adjusted EBITDAre, and Pro Forma Annualized Adjusted EBITDAre: For the Three Months Ended December 31, (in thousands) 2024 2023 2022 Net income $ 27,607 $ 6,797 $ 36,773 Depreciation and amortization 42,987 39,278 45,606 Interest expense 19,565 18,972 23,773 Income taxes 527 (268 ) 105 EBITDA $ 90,686 $ 64,779 $ 106,257 Provision for impairment of investment in rental properties 17,690 29,801 — Gain on sale of real estate (8,197 ) (6,270 ) (10,625 ) EBITDAre $ 100,179 $ 88,310 $ 95,632 Adjustment for current quarter acquisition activity (a) 28 153 1,283 Adjustment for current quarter disposition activity (b) (11 ) (156 ) (440 ) Adjustment to exclude non-recurring expenses (income) (c) 348 128 — Adjustment to exclude net write-offs of accrued rental income 120 4,161 — Adjustment to exclude gain on insurance recoveries — — (341 ) Adjustment to exclude realized/unrealized foreign exchange (gain) loss (4,699 ) 1,453 796 Adjustment to exclude cost of debt extinguishments — — 77 Adjustment to exclude other income from real estate transactions (d) (1,183 ) — (1,678 ) Adjusted EBITDAre $ 94,782 $ 94,049 $ 95,329 Estimated revenues from developments (e) 334 — — Pro Forma Adjusted EBITDAre $ 95,116 $ 94,049 $ 95,329 Annualized EBITDAre $ 400,716 $ 353,240 $ 382,528 Annualized Adjusted EBITDAre $ 379,128 $ 376,196 $ 381,316 Pro Forma Annualized Adjusted EBITDAre $ 380,464 $ 376,196 $ 381,316 (a) Reflects an adjustment to give effect to all investments during the quarter as if they had been made as of the beginning of the quarter.
(d) Amounts include acquisitions under control, defined as under contract or executed letter of intent, and commitments to fund revenue generating capital expenditures and development opportunities. At December 31, 2023, investment in rental property of $120.5 million, was pledged as collateral against our mortgages.
(d) Amounts include acquisitions under control, defined as under contract or executed letter of intent, and commitments to fund revenue generating capital expenditures, and both current build-to-suit developments and under control build-to-suit developments. 51 At December 31, 2024, investment in rental property with a book value of $117.8 million, was pledged as collateral against our mortgages.
In addition, although we attempt to limit our total floating-rate debt exposure, changes in the interest rate environment could either increase or decrease our weighted average interest rate in the future. As of December 31, 2023, 99.2% of our debt was fixed, with $30 million of interest rate swap notional maturing in the fourth quarter of 2024.
In addition, although we attempt to limit our total floating-rate debt exposure, changes in the interest rate environment could either increase or decrease our weighted average interest rate in the future. As of December 31, 2024, 97.2% of our $1.9 billion of debt is fixed through fixed rates and $939.5 million of interest rate swap notional.
The as-if-vacant value is then allocated to land and land improvements, buildings, and equipment based on comparable sales and other relevant information with respect to the property, as estimated by management. Specifically, the “if vacant” value of buildings and equipment is calculated using an income approach.
The estimated fair value of the tangible assets of an acquired property is determined by valuing the property as if it were vacant. The as-if-vacant value is then allocated to land and land improvements, buildings, and equipment based on comparable sales and other relevant information with respect to the property, as estimated by management.
As detailed in the contractual obligations table below, we have approximately $214.1 million of expected obligations due throughout 2024, primarily consisting of $118.7 million of commitments to fund investments, $55.9 million of dividends declared, $37.2 million of interest expense due, and $2.3 million of mortgage amortization.
As detailed in the contractual obligations table below, we have approximately $300.4 million of expected obligations due throughout 2025, primarily consisting of $169.0 million of commitments to fund investments, $57.2 million of dividends declared, $54.1 million of projected interest expense, and $20.2 million of mortgage amortization.
During the year ended December 31, 2023, we recognized gains of $54.3 million on the sale of 14 properties, compared to gains of $16.0 million on the sale of eight properties during the year ended December 31, 2022.
During the year ended December 31, 2024, we recognized a gain of $73.2 million on the sale of 58 properties, compared to a gain of $54.3 million on the sale of 14 properties during the year ended December 31, 2023.
Any changes to our debt structure or debt financing associated with property investments, could materially influence our operating results depending on the terms of any such debt. Our current investment grade credit ratings are ‘BBB’ from S&P Global Ratings (“S&P”) and ‘Baa2’ from Moody’s Investors Service (“Moody’s”), which allow us to take advantage of the lower cost of debt.
Our current investment grade credit ratings are ‘BBB’ from S&P Global Ratings (“S&P”) and ‘Baa2’ from Moody’s Investors Service (“Moody’s”), which allow us to take advantage of the lower cost of debt.
If the operating conditions mentioned above deteriorate or if our expected holding period for assets changes, subsequent tests for impairments could result in additional impairment charges in the future. 54 Inputs used in establishing fair value for real estate assets generally fall within Level 3 of the fair value hierarchy, which are characterized as requiring significant judgment as little or no current market activity may be available for validation.
Inputs used in establishing fair value for real estate assets generally fall within Level 3 of the fair value hierarchy, which are characterized as requiring significant judgment as little or no current market activity may be available for validation.
The table below shows information concerning cash flows for the years ended December 31, 2023, 2022, and 2021: For the Year Ended December 31, (in thousands) 2023 2022 2021 Net cash provided by operating activities $ 271,074 $ 255,914 $ 244,937 Net cash provided by (used in) investing activities 24,338 (859,643 ) (582,304 ) Net cash (used in) provided by financing activities (334,820 ) 636,000 254,408 (Decrease) increase in cash and cash equivalents and restricted cash $ (39,408 ) $ 32,271 $ (82,959 ) The increase in net cash provided by operating activities during the years ended December 31, 2023 and 2022 was mainly due to growth in our real estate portfolio and associated incremental net lease revenues.
The table below shows information concerning cash flows for the years ended December 31, 2024, 2023, and 2022: For the Year Ended December 31, (in thousands) 2024 2023 2022 Net cash provided by operating activities $ 276,253 $ 271,074 $ 255,914 Net cash (used in) provided by investing activities (59,703 ) 24,338 (859,643 ) Net cash (used in) provided by financing activities (221,189 ) (334,820 ) 636,000 (Decrease) increase in cash and cash equivalents and restricted cash $ (4,639 ) $ (39,408 ) $ 32,271 The increase in net cash provided by operating activities during the year ended December 31, 2024 as compared to 2023 was mainly due to a decrease in interest expense.
Equity Capital Resources Our equity capital is primarily provided through our at-the-market common equity offering program (“ATM Program”), as well as follow-on equity offerings. Under the terms of our ATM Program we may, from time to time, publicly offer and sell shares of our common stock having an aggregate gross sales price of up to $400 million.
Equity Capital Resources Our equity capital is primarily provided through our at-the-market common equity offering program (“ATM Program”), as well as follow-on equity offerings. During May 2024, we replaced our prior ATM Program with a new ATM Program with the same aggregate gross sales price of up to $400.0 million.
The increase in net cash provided by investing activities during the years ended December 31, 2023 and 2022 was mainly due to increased disposition volume. The increase in net cash used in investing activities in 2022 as compared to 2021 was driven by an increase in investing activities.
The increase in net cash used in investing activities during the year ended December 31, 2024 as compared to 2023 was mainly due to increased investment volume, partially offset by proceeds from disposition activity.
Factors That Impact Our Result of Operations Our results of operations and financial condition are affected by numerous factors, many of which are beyond our control.
(h) Revenue on additional fundings will receive a cash capitalization rate of 6.8%. Factors That Impact Our Result of Operations Our results of operations and financial condition are affected by numerous factors, many of which are beyond our control.
The following table summarizes our impairment charges resulting primarily from changes in our long-term hold strategy with respect to the individual properties: Year Ended December 31, (in thousands, except number of properties) 2023 2022 2021 Number of properties 4 3 7 Carrying value prior to impairment charge $ 62,720 $ 12,721 $ 48,604 Fair value 31,446 7,186 20,396 Impairment charge $ 31,274 $ 5,535 $ 28,208 During the year ended December 31, 2023, we recognized an impairment charge of $26.4 million on a healthcare property due to changes in our tenant’s ability to perform under the lease agreement, leading to a change in management’s long-term hold strategy and desire to sell in the near term.
The following table summarizes our impairment charges resulting primarily from changes in our long-term hold strategy with respect to the individual properties: Year Ended December 31, (in thousands, except number of properties) 2024 2023 2022 Number of properties 18 4 3 Carrying value prior to impairment charge $ 146,811 $ 62,720 $ 12,721 Fair value 97,810 31,446 7,186 Impairment charge $ 49,001 $ 31,274 $ 5,535 During the year ended December 31, 2024, we recognized impairment of $49.0 million, resulting from changes in our long-term hold strategy with respect to the individual properties.
The increase in net cash provided by financing activities during the year ended December 31, 2022 as compared to the year ended December 31, 2021, mainly reflects an increase in net proceeds from equity and debt offerings in 2022 to fund growth in our real estate portfolio.
The increase in net cash provided by operating activities during the year ended December 31, 2023 as compared to 2022 was mainly due to growth in our real estate portfolio and associated incremental net lease revenues.
These factors were partially offset by a $25.7 million increase in the provision for impairment of investment in rental properties and a $7.1 million decrease in other income (expenses).
These are offset by an increase in the provision for impairment of investment in rental properties of $17.7 million and an $11.1 million decrease in lease revenues.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the heading “ Results of Operations—Year Ended December 31, 2022 Compared to Year Ended year ended December 31, 2021 .” 44 Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Lease revenues, net Year Ended December 31, Increase/(Decrease) (in thousands) 2023 2022 $ % Revenues: Contractual rental amounts billed for operating leases $ 388,073 $ 359,317 $ 28,756 8.0 % Adjustment to recognize contractual operating lease billings on a straight-line basis 27,154 22,353 4,801 21.5 % Write-off of accrued rental income (4,266 ) (1,326 ) 2,940 > 100.0 % Variable rental amount earned 2,277 1,507 770 51.1 % Earned income from direct financing leases 2,752 2,856 (104 ) (3.6 ) % Interest income from sales-type leases 58 58 — — % Operating expenses billed to tenants 20,363 19,779 584 3.0 % Other income from real estate transactions 7,414 3,069 4,345 > 100.0 % Adjustment to revenue recognized for uncollectible rental amounts billed, net (937 ) (100 ) (837 ) % Total Lease revenues, net $ 442,888 $ 407,513 $ 35,375 8.7 % The increase in Lease revenues, net was primarily due to recognizing a full year of rental revenue for all property acquisitions made during 2022 partially offset by the reductions of revenues associated with property dispositions.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the heading “ Results of Operations—Year Ended December 31, 2023 Compared to Year Ended year ended December 31, 2022 .” Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Lease revenues, net Year ended December 31, Increase/(Decrease) (in thousands) 2024 2023 $ % Contractual rental amounts billed for operating leases $ 388,074 $ 388,073 $ 1 — % Adjustment to recognize contractual operating lease billings on a straight-line basis 22,163 27,154 (4,991 ) (18.4 ) % Net write-offs of accrued rental income (2,556 ) (4,266 ) 1,710 40.1 % Variable rental amount earned 2,999 2,277 722 31.7 % Earned income from direct financing leases 2,748 2,752 (4 ) (0.1 ) % Interest income from sales-type leases 58 58 — — % Operating expenses billed to tenants 20,693 20,363 330 1.6 % Other income from real estate transactions 2,039 7,414 (5,375 ) (72.5 ) % Adjustment to revenue recognized for uncollectible rental amounts billed, net (4,418 ) (937 ) (3,481 ) > (100.0) % Total Lease revenues, net $ 431,800 $ 442,888 $ (11,088 ) (2.5 ) % The decrease in Lease revenues, net was primarily due to a decrease in lease termination fee income (classified as other income from real estate transactions in the table above), which fluctuates from period to period, coupled with a decrease in realizable revenues associated with certain clinical healthcare properties.
As of December 31, 2023, we had total debt outstanding and Net Debt of $1.9 billion each, and a Leverage Ratio of 5.0x. Net Debt and Annualized Adjusted EBITDAre are non-GAAP financial measures, and Annualized Adjusted EBITDAre is calculated based upon EBITDA, EBITDAre, and Adjusted EBITDAre, each of which is also a non-GAAP financial measure.
Net Debt, Pro Forma Net Debt, and Annualized Adjusted EBITDAre are non-GAAP financial measures, Annualized Adjusted EBITDAre, and Pro Forma Net Debt to Annualized Adjusted EBITDAre are calculated based upon EBITDA, EBITDAre, Adjusted EBITDAre, and Pro Forma Adjusted EBITDAre each of which is also a non-GAAP financial measure.
We expect to source debt capital from unsecured term loans from commercial banks, revolving credit facilities, private placement senior unsecured notes, and public bond offerings.
Long-term Liquidity Requirements Our long-term liquidity requirements consist primarily of funds necessary to repay debt and invest in additional revenue generating properties and build-to-suit developments. We expect to source debt capital from unsecured term loans from commercial banks, revolving credit facilities, private placement senior unsecured notes, and public bond offerings.
Net Income and Net earnings per diluted share Year Ended December 31, Increase/(Decrease) (in thousands, except per share data) 2023 2022 $ % Net income $ 163,312 $ 129,475 $ 33,837 26.1 % Net earnings per diluted share 0.83 0.72 0.11 15.3 % The increase in net income is primarily due to a $38.4 million increase in the gain on sale of real estate, together with revenue growth of $35.4 million.
Net Income and Net earnings per diluted share Year Ended December 31, Increase/(Decrease) (in thousands, except per share data) 2024 2023 $ % Net income $ 168,989 $ 163,312 $ 5,677 3.5 % Net earnings per diluted share 0.86 0.83 0.03 3.6 % The increase in net income is primarily due to an $18.8 million increase in the gain on sale of real estate together with a $7.9 million increase in other income (expenses), and $6.0 million decrease in interest expense.
These generally include tangible assets, consisting of land and land improvements, buildings and other improvements, and equipment, and identifiable intangible assets and liabilities, including the value of in-place leases and acquired above-market and below-market leases.
These generally include tangible assets, consisting of land and land improvements, buildings and other improvements, and equipment, and identifiable intangible assets and liabilities, including the value of in-place leases and acquired above-market and below-market leases. 56 We use multiple sources to estimate fair value, including information obtained about each property as a result of our pre-acquisition due diligence and our marketing and leasing activities.
To mitigate the impact of inflation on our fixed revenue streams, we have implemented limited escalation clauses in our leases. As of December 31, 2023, substantially all of our leases had contractual rent escalations, with an ABR weighted average minimum increase of 2.0%.
As of December 31, 2024, substantially all of our leases had contractual rent escalations, with an ABR weighted average increase of 2.0%.
You should not unduly rely on this measure as it is based on assumptions and estimates that may prove to be inaccurate. Our actual reported EBITDAre for future periods may be significantly different from our Annualized Adjusted EBITDAre.
We then annualize quarterly Adjusted EBITDAre and Pro Forma Adjusted EBITDAre by multiplying them by four (“Annualized Adjusted EBITDAre” and “Annualized Pro Forma Adjusted EBITDAre”). You should not unduly rely on this measure as it is based on assumptions and estimates that may prove to be inaccurate.
As of December 31, 2023, our portfolio includes 796 properties, with 789 properties located in 44 U.S. states and seven properties located in four Canadian provinces. We focus on investing in real estate that is operated by creditworthy single tenants in industries characterized by positive business drivers and trends.
We focus on investing in real estate that is operated by creditworthy single tenants in industries characterized by positive business drivers and trends.
Operating Expenses Year Ended December 31, Increase/(Decrease) (in thousands) 2023 2022 $ % Operating expenses: Depreciation and amortization $ 158,626 $ 154,807 $ 3,819 2.5 % Property and operating expense 22,576 21,773 $ 803 3.7 % General and administrative 39,425 37,375 $ 2,050 5.5 % Provision for impairment of investment in rental properties 31,274 5,535 $ 25,739 > 100.0 % Total operating expenses $ 251,901 $ 219,490 $ 32,411 14.8 % Depreciation and amortization The increase in depreciation and amortization during the year ended December 31, 2023 was primarily due to properties acquired in the previous year having a full year’s worth of depreciation in the current year, offset by net dispositions for the year ended December 31, 2023.
Operating Expenses Year ended December 31, Increase/(Decrease) (in thousands) 2024 2023 $ % Operating expenses Depreciation and amortization $ 156,179 $ 158,626 $ (2,447 ) (1.5 ) % Property and operating expense 24,741 22,576 2,165 9.6 % General and administrative 37,986 39,425 (1,439 ) (3.6 ) % Provision for impairment of investment in rental properties 49,001 31,274 17,727 56.7 % Total operating expenses $ 267,907 $ 251,901 $ 16,006 6.4 % Depreciation and amortization The decrease in depreciation and amortization for the year ended December 31, 2024 was primarily due to properties sold in the previous year not having a full year of depreciation in the current year, offset by a full year’s worth of depreciation from property investments made in the previous year as well as partial depreciation from property investments made in the current year.
Such cash flows include expected future operating income, as adjusted for trends and prospects, as well as the effects of demand, competition, and other factors. Significant judgment is made as to if and when impairment should be taken.
Such cash flows include expected future operating income, as adjusted for trends and prospects, as well as the effects of demand, competition, and other factors. An impairment loss is measured as the amount by which the carrying amount of the long-lived asset or asset group exceeds its fair value.
Results of Operations Discussion of our Results of Operations for the year ended December 31, 2022 compared to the year ended December 31, 2021 was previously filed in our Annual Report on Form 10-K for the year ended December 31, 2022. See Item 7.
Outside of gains on sale of real estate and impairments, we do not expect our healthcare portfolio simplification strategy to materially impact our results of operations or financial position. 46 Results of Operations Discussion of our Results of Operations for the year ended December 31, 2023 compared to the year ended December 31, 2022 was previously filed in our Annual Report on Form 10-K for the year ended December 31, 2023.
We are focused on a disciplined and targeted investment strategy, together with active asset management that includes selective sales of properties.
You should not consider our EBITDA and EBITDAre as alternatives to net income or cash flows from operating activities determined in accordance with GAAP. 54 We are focused on a disciplined and targeted investment strategy, together with active asset management that includes selective sales of properties.
Approximately 11.8% of our rent escalators are based on an increase in the CPI over a specified period and 2.7% of our leases are flat leases, meaning they do not provide for rent increases during their terms. 42 Property Dispositions From time to time, we strategically dispose of properties, primarily when we believe the risk profile has changed and become misaligned with our then current risk-adjusted return objectives.
Property Dispositions From time to time, we strategically dispose of properties, primarily when we believe the risk profile has changed and become misaligned with our then current risk-adjusted return objectives.
Year of Maturity Revolving Credit Facility (a) Mortgages Term Loans Senior Notes Interest Expense (b) Dividends (c) Commitments to Fund Investments (d) Total 2024 $ — $ 2,260 $ — $ — $ 37,241 $ 55,906 $ 118,728 $ 214,135 2025 — 20,195 — — 93,301 — 2,000 115,496 2026 90,434 16,843 400,000 — 96,933 — — 604,210 2027 — 1,596 200,000 150,000 51,009 — — 402,605 2028 — 38,278 — 225,000 71,620 — — 334,898 Thereafter — — 300,000 475,000 46,712 — — 821,712 Total $ 90,434 $ 79,172 $ 900,000 $ 850,000 $ 396,816 $ 55,906 $ 120,728 $ 2,493,056 (a) Our Revolving Credit Facility contains two six-month extension options subject to certain conditions, including the payment of an extension fee equal to 0.0625% of the revolving commitments.
Year of Maturity Revolving Credit Facility (a) Mortgages Term Loans Senior Notes Interest Expense (b) Dividends (c) Commitments to Fund Investments (d) Total 2025 $ — $ 20,195 $ — $ — $ 54,095 $ 57,209 $ 168,950 $ 300,449 2026 93,014 16,843 400,000 — 69,809 — 70,735 650,401 2027 — 1,596 200,000 150,000 40,487 — — 392,083 2028 — 38,279 — 225,000 65,599 — — 328,878 2029 — — 300,000 — 17,906 — — 317,906 Thereafter — — — 475,000 16,722 — — 491,722 Total $ 93,014 $ 76,913 $ 900,000 $ 850,000 $ 264,618 $ 57,209 $ 239,685 $ 2,481,439 (a) Our Revolving Credit Facility contains two six-month extension options subject to certain conditions, including the payment of an extension fee equal to 0.0625% of the revolving commitments.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeBorrowings pursuant to our Revolving Credit Facility and other variable-rate debt bear interest at rates based on the applicable reference rate plus an applicable margin, and totaled $1.0 billion as of December 31, 2023, of which $975.4 million was swapped to a fixed rate by our use of interest rate swaps.
Biggest changeBorrowings pursuant to our Revolving Credit Facility and other variable-rate debt bear interest at rates based on the applicable reference rate plus an applicable margin, and totaled $1.0 billion as of December 31, 2024, of which $939.5 million was swapped to a fixed rate by our use of interest rate swaps.
Further information concerning our interest rate swaps can be found in Note 11 in our Consolidated Financial Statements contained elsewhere in this Annual Report on Form 10-K. Our fixed-rate debt includes our senior unsecured notes, mortgages, and variable-rate debt converted to a fixed rate with the use of interest rate swaps.
Further information concerning our interest rate swaps can be found in Note 9 in our Consolidated Financial Statements contained elsewhere in this Annual Report on Form 10-K. Our fixed-rate debt includes our senior unsecured notes, mortgages, and variable-rate debt converted to a fixed rate with the use of interest rate swaps.
Our fixed-rate debt had a carrying value and fair value of approximately $1.9 billion and $1.7 billion, respectively, as of December 31, 2023. Changes in market interest rates impact the fair value of our fixed-rate debt and interest rate swaps, but they have no impact on interest incurred or on cash flows.
Our fixed-rate debt had a carrying value and fair value of approximately $1.9 billion and $1.7 billion, respectively, as of December 31, 2024. Changes in market interest rates impact the fair value of our fixed-rate debt and interest rate swaps, but they have no impact on interest incurred or on cash flows.
Taking into account the effect of our interest rate swaps, a 1% increase or decrease in interest rates would have a corresponding $0.2 million increase or decrease in interest expense annually. With the exception of our interest rate swap transactions, we have not engaged in transactions in derivative financial instruments or derivative commodity instruments.
Taking into account the effect of our interest rate swaps, a 1% increase or decrease in interest rates would have a corresponding $0.5 million increase or decrease in interest expense annually. With the exception of our interest rate swap transactions, we have not engaged in transactions in derivative financial instruments or derivative commodity instruments.
A 10% increase or decrease in the exchange rate between the Canadian dollar and USD would have a corresponding $7.5 million increase or decrease in unrealized foreign currency gain or loss.
A 10% increase or decrease in the exchange rate between the Canadian dollar and USD would have a corresponding $7.0 million increase or decrease in unrealized foreign currency gain or loss.
Our Canadian investments are recorded at their historical exchange rates, and therefore are not impacted by changes in the value of the Canadian dollar. 57
Our Canadian investments are recorded at their historical exchange rates, and therefore are not impacted by changes in the value of the Canadian dollar. 60
A 1% increase in market interest rates would have resulted in a decrease in the fair value of our fixed-rate debt as of approximately $65.9 million as of December 31, 2023.
A 1% increase in market interest rates would have resulted in a decrease in the fair value of our fixed-rate debt as of approximately $35.7 million as of December 31, 2024.

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