Broadstone Net Lease (BNL) Q3 2024 earnings summary

Executive summary

• Achieved 2024 goals by reducing healthcare exposure below 10% of ABR, selling 56 properties for $357.4M YTD, and securing over $400M in build-to-suit developments.

• Portfolio comprised 773 properties across 44 U.S. states and 4 Canadian provinces, 99% leased with a weighted average remaining lease term of 10.3 years as of September 30, 2024.

• Portfolio highly diversified by property type, tenant, industry, and geography, with no tenant exceeding 4% of ABR and no region over 9.5%.

• Build-to-suit pipeline totals over $400M in committed developments, with major projects for Sierra Nevada and UNFI.

• Challenging macroeconomic conditions impacted acquisition volumes and earnings growth, but strong liquidity and rent escalations support future growth.

Financial highlights

• Q3 2024 AFFO was $70.2M or $0.35 per share, down 2.7% year-over-year; net income was $37.3M ($0.19 per share).

• Lease revenues, net, for Q3 2024 were $108.4M, down 1% year-over-year; nine-month lease revenues, net, were $319.7M, down 5.4%.

• Year-to-date investment activity reached $381.9M, including $69.3M in new acquisitions at a 7.2% cap rate.

• Gain on sale of real estate for the nine months ended September 30, 2024, was $65.0M, up from $48.0M in the prior year period.

• Provision for impairment of investment in rental properties was $31.3M YTD, primarily related to healthcare asset sales.

Outlook and guidance

• 2024 AFFO per share guidance reaffirmed at $1.41–$1.43.

• Real estate investments expected between $400–$600M (revised from $400–$700M); dispositions between $350–$450M.

• Modest AFFO per share growth expected for 2024, with more robust growth anticipated in 2025 and 2026 as build-to-suit projects come online.

• Cash G&A expenses forecasted at $31–$33M, slightly reduced from prior guidance.

• Nearly all planned healthcare dispositions for 2024 completed, with proceeds redeployed into core industrial, retail, and restaurant assets.