Q3 2024 Broadstone Net Lease Inc Earnings Call Transcript
Key Points
- Broadstone Net Lease Inc (BNL) successfully reduced its clinical healthcare exposure to approximately 4% of its asset base, achieving a key strategic goal.
- The company completed a high-quality build-to-suit development project in Sarasota, Florida, ahead of schedule and below budget, with an initial cash yield of 7.2% and a 15-year lease term.
- BNL has a committed development pipeline of $405 million with attractive initial cash yields in the mid to high 7% range and straight-line yields exceeding 9%.
- The company maintained a strong financial position with a pro forma leverage of 4.9 times and ample liquidity, including $870 million of revolver availability.
- BNL reaffirmed its AFFO guidance range of $1.41 to $1.43 per share, indicating confidence in its financial outlook despite strategic asset sales.
- BNL experienced a 2.7% decrease in AFFO per share year-over-year, primarily due to lower lease revenues from its healthcare simplification strategy and incremental expenses from vacant assets.
- The company faces ongoing credit risks in consumer-centric industries and clinically oriented healthcare properties, requiring vigilant tenant monitoring.
- BNL has three vacant properties generating higher operating expenses, impacting financial performance in the back half of the year.
- The traditional net lease acquisition market remains challenging, with a disconnect between pricing expectations and quality opportunities.
- BNL's remaining clinical healthcare assets may take longer to dispose of, potentially extending into 2025 and beyond, due to the need for lease extensions and tenant improvements.
Hello and welcome to the Broadstone Net Lease third quarter, 2024 earnings conference call. My name is Carla and I will be your operator today. Please note that today's call is being recorded. I will now turn the call over to Brent Bele, Director of Corporate Finance and Investor Relations at Broadstone to begin, Brent. Please go ahead.
Thank you everyone for joining us today for Broadstone Net Lease's third quarter, 2024 earnings call on today's call. We will hear prepared remarks from CEO John Mireo, President and Co Ryan Albano and CFO Kevin Funnel. All three will be available for the Q&A portion of this call as a reminder, the following discussion and answers to your questions contain forward-looking statements that are subject to risk and uncertainties that can cause actual results to defer materially due to a variety of factors. We caution you not to place undue reliance on these forward-looking statements and refer you to our sec filings including our form 10
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