Broadstone Net Lease, Inc. ((BNL)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Broadstone Net Lease, Inc. (BNL) presented a balanced view during their recent earnings call, highlighting significant achievements such as AFFO growth, portfolio simplification, and strategic planning for 2025, while also addressing challenges like tenant credit risks and specific bankruptcies affecting revenue. The company showcased a robust development strategy and strong leasing performance, countered by uncertainties in the disposition market and ongoing tenant risks.
AFFO Per Share Achievement
BNL announced achieving $1.43 of AFFO per share, reaching the top end of their guidance with a 1.4% increase compared to 2023. This accomplishment is notable given the substantial efforts in portfolio repositioning.
High Occupancy and Rent Collection
The company reported an impressive portfolio status with more than 99% occupancy and rent collection, reflecting the strength of their tenant relationships and lease structures.
Successful Portfolio Simplification
BNL has successfully reduced clinical and surgical assets to 3.2% of ABR from 9.7% at the end of 2023, effectively completing their clinical healthcare portfolio simplification strategy.
Strong Build-to-Suit Development Strategy
The company secured $227.3 million in build-to-suit developments with attractive initial cash yields and straight-line yields, which are expected to enhance future AFFO growth.
Strategic Board Appointments
BNL welcomed Rick Imperiale and Joe Saffire to the Board, bringing extensive experience in REITs and asset management, supporting the company’s strategic goals.
Zips Car Wash Bankruptcy
The bankruptcy of Zips Car Wash poses a challenge, affecting 62 basis points of ABR, with seven sites initially on the rejection list, requiring careful navigation by BNL.
Incremental Credit Risks
BNL continues to focus on tenant credit risks, particularly in consumer-centric industries and some healthcare properties, with a notable watch list including home furnishing and Stanislaus Surgical.
Uncertain Disposition Market
The company anticipates muted dispositions in 2025 due to market conditions affecting the ability to opportunistically sell clinical and office assets.
Bad Debt and Vacant Properties
BNL expects 125 basis points of bad debt in 2025 and is actively managing risks associated with vacant properties to minimize impact.
2025 Guidance and Growth Strategy
BNL’s guidance for 2025 projects AFFO between $1.45 and $1.49 per share, representing approximately 3% growth at the midpoint. The company plans significant investments between $400 million and $600 million, focusing on build-to-suit developments and acquisitions. BNL aims to add at least $500 million in new developments, with expectations for these to stabilize and commence rent payments in 2026 and 2027, supporting their long-term growth strategy.
In conclusion, Broadstone Net Lease, Inc. has shown a commendable balance of growth and risk management, achieving key milestones while preparing for future challenges. The earnings call highlighted significant strides in AFFO growth and portfolio management, despite existing market uncertainties.
