VICTOR, N.Y.--(BUSINESS WIRE)-- #acquisitions--Broadstone Net Lease Schedules Third Quarter 2025 Earnings Release and Conference Call. ...

Core Viewpoint - Broadstone Net Lease has successfully closed a $350 million senior notes offering, indicating strong market demand and confidence in the company's financial stability [1] Group 1 - The offering consists of senior notes that are expected to enhance the company's capital structure and provide additional liquidity for future investments [1] - The proceeds from the offering will be utilized for general corporate purposes, which may include funding acquisitions and other growth initiatives [1] - This move reflects the company's strategy to optimize its financing options and support its ongoing growth trajectory in the net lease sector [1]

Group 1 - Broadstone Net Lease has announced the pricing of $350 million in senior notes due in 2032 [1] - The issuance of these senior notes is part of the company's strategy to enhance its capital structure [1] - The proceeds from the notes will be used for general corporate purposes, which may include funding acquisitions and other investments [1]

Core Insights - An active investing strategy focuses on identifying breakout stocks within a specific price range, with guidelines to sell if prices fall below the lower band and hold for gains if they exceed the upper band [1] - Selected breakout stocks for today include Sally Beauty Holdings, Inc. (SBH), Broadstone Net Lease, Inc. (BNL), and Opus Genetics, Inc. (IRD) [1] Breakout Stock Selection - Breakout stocks are identified by calculating support and resistance levels, where support is the lower bound and resistance is the upper bound of stock movements [2] - Demand is lowest at the support level, indicating traders are willing to sell, while at the resistance level, traders are inclined to buy [3] Genuine Breakout Criteria - A genuine breakout occurs when the previous resistance level becomes the new support level, validated by long-term price trends [5] - Correct identification of breakout stocks can lead to significant returns, even if initial prices seem unattractive [5] Screening Criteria - Stocks must show a percentage price change over four weeks between 10% and 20% [6] - Current price must be at least 90% of the 52-week high [6] - Stocks must have a Zacks Rank of 1 (Strong Buy) or 2 (Buy) to ensure historical outperformance [6] Selected Stocks Overview - **Sally Beauty Holdings, Inc. (SBH)**: Expected earnings growth of 8.9% for the year, currently holds a Zacks Rank 1 [9] - **Broadstone Net Lease, Inc. (BNL)**: Anticipated earnings growth of 3.5% for the current year, currently holds a Zacks Rank 2 [10] - **Opus Genetics, Inc. (IRD)**: Projected earnings growth of 74.4% for the year, currently holds a Zacks Rank 2 [11]

Group 1 - The article emphasizes the passion for investing, dividends, frugality, and passive income as a pathway to financial freedom [1] - It highlights the importance of reinvesting dividends to achieve long-term financial goals [1] - The company shares updates on stock market activities, including stocks being watched, bought, and sold [1] Group 2 - The company utilizes various platforms such as a blog, social media, and a YouTube channel to document their investment journey [1] - Followers are encouraged to stay updated on the company's investment strategies and market insights [1]

Core Insights - The triple net REIT sector is experiencing significant changes due to rising cap rates, the reintroduction of rent escalators, and improved valuations, creating new investment opportunities [2][8][40] Group 1: Factors Reviving the Triple Net Sector - Cap rates have risen considerably, now ranging from 7% to 9.5% for high-quality triple net assets, which is conducive to healthy acquisition pipelines [4][8] - Escalators have returned, with many transactions now featuring escalators of 2% to 3.5%, enhancing long-term growth potential [6][12] - Valuations are cheaper, with triple net REITs trading at an average price to AFFO of 12.9X compared to the average REIT at 16.1X, indicating a favorable investment environment [19][21] Group 2: Company-Specific Insights - W.P. Carey (WPC) has a significant acquisition pipeline with $1.1 billion in new investments at mid-9% cap rates, supported by a low cost of capital [26][30] - Broadstone Net Lease (BNL) is capitalizing on a massive build-to-suit pipeline, which is projected to enhance long-term growth due to the development of new properties at high cap rates [32][35] - Gladstone Commercial (GOOD) is leveraging in-house credit underwriting capabilities to secure high cap rate acquisitions, resulting in a current dividend yield of 9% and potential for double-digit total returns [37][39] Group 3: Market Dynamics - The demand for triple net REITs has decreased in a higher interest rate environment, but the growth potential from escalators is expected to attract investors back to the sector [40][41] - Current market valuations do not fully account for the growth potential alongside dividend yields, suggesting that multiples may re-rate higher as companies demonstrate consistent growth [41]

Group 1 - Broadstone Net Lease, Inc. (BNL) is a notable stock in the Finance sector, currently ranked 2 within the Zacks Sector Rank, which evaluates 16 different sector groups [2][3] - The Zacks Rank system indicates that BNL has a favorable earnings outlook, with a current Zacks Rank of 2 (Buy) [3] - Over the past 90 days, the Zacks Consensus Estimate for BNL's full-year earnings has increased by 0.5%, reflecting improved analyst sentiment [4] Group 2 - BNL has achieved a year-to-date return of approximately 12.2%, outperforming the average gain of 11.1% for Finance stocks [4] - BNL belongs to the REIT and Equity Trust - Residential industry, which has seen an average loss of 8.9% this year, indicating BNL's superior performance [6] - In comparison, another Finance stock, Applied Digital Corporation (APLD), has significantly outperformed the sector with a year-to-date return of 106.4% [5][7]

Group 1 - The net lease sector has faced significant challenges in recent years, with some leading figures struggling to adapt [1] - Realty Income Corporation is highlighted as a prominent example within the net lease REIT space [1]

Part I - FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements detail the company's financial position, operations, and cash flows, reflecting asset growth and a significant net income decline [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) Total assets increased to **$5.33 billion** by June 30, 2025, due to rental property investments, while liabilities rose and equity slightly decreased Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$5,326,679** | **$5,216,417** | | Investment in rental property, net | $4,454,231 | $4,340,363 | | **Total Liabilities** | **$2,290,858** | **$2,074,993** | | Unsecured revolving credit facility | $197,880 | $93,014 | | Unsecured term loans, net | $994,028 | $897,201 | | **Total Equity** | **$3,035,821** | **$3,141,424** | [Condensed Consolidated Statements of Income and Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income%20(Unaudited)) Net income significantly declined to **$37.3 million** for H1 2025, primarily due to lower real estate sale gains, despite increased lease revenues Key Income Statement Data (in thousands, except per share amounts) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Lease revenues, net | $112,986 | $105,907 | $221,677 | $211,274 | | Total operating expenses | $69,088 | $56,463 | $139,873 | $135,727 | | Gain on sale of real estate | $566 | $3,384 | $971 | $62,515 | | Net income | $19,830 | $35,937 | $37,323 | $104,114 | | Diluted EPS | $0.10 | $0.19 | $0.19 | $0.53 | [Condensed Consolidated Statements of Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity%20(Unaudited)) Total equity decreased to **$3.04 billion** by June 30, 2025, primarily due to **$116.7 million** in distributions and a decline in other comprehensive income - Distributions declared for the six months ended June 30, 2025, totaled **$116.7 million** (**$58.9 million** in Q1 and **$57.9 million** in Q2)[13](index=13&type=chunk) - Accumulated other comprehensive income decreased by **$31.6 million** during the first half of 2025, mainly due to changes in the fair value of interest rate swap agreements[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Net cash from operating activities was **$150.7 million** for H1 2025, with investing activities using **$216.6 million**, largely offset by financing inflows Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $150,739 | $145,039 | | Net cash used in investing activities | ($216,593) | ($21,423) | | Net cash provided by (used in) financing activities | $71,837 | ($124,352) | | **Net increase (decrease) in cash** | **$5,983** | **($736)** | [Notes to the Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The notes provide detailed information supporting the financial statements, including company structure, property transactions, and financing arrangements - The company is an industrial-focused, diversified net lease REIT with a portfolio of **766 commercial properties** across 44 U.S. states and four Canadian provinces as of June 30, 2025[21](index=21&type=chunk) Investment Activity - Six Months Ended June 30 | Activity | 2025 | 2024 | | :--- | :--- | :--- | | **Acquisitions** | | | | Number of Properties | 13 | 22 | | Acquisition Price | $161.3M | $217.1M | | **Dispositions** | | | | Number of Properties | 11 | 40 | | Aggregate Sale Price | $21.0M | $276.1M | | Gain on Sale | $1.0M | $62.5M | - On February 28, 2025, the company amended its credit facility and entered into a new **$500 million** unsecured term loan, using the proceeds to repay its **$400 million** 2026 term loan and reduce revolving credit facility borrowings[71](index=71&type=chunk) - As of June 30, 2025, the company has commitments to fund six build-to-suit transactions with remaining obligations of **$238.8 million**, expected to be funded through August 2026[102](index=102&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, highlighting a diversified and **99.1% leased** portfolio, AFFO growth, and strong liquidity [Overview](index=35&type=section&id=Overview) The company, an industrial-focused REIT, outlines its growth strategy centered on portfolio performance and strong liquidity - The company's growth strategy is based on four core building blocks: (1) same-store NOI growth from rent escalations and portfolio management, (2) revenue-generating capex, (3) build-to-suit developments, and (4) a diversified acquisition pipeline[116](index=116&type=chunk)[119](index=119&type=chunk) [Real Estate Portfolio Information](index=39&type=section&id=Real%20Estate%20Portfolio%20Information) The company's real estate portfolio is highly diversified and **99.1% leased**, with a long weighted average lease term and contractual rent escalations Portfolio Diversification by Property Type (% of ABR) | Property Type | % of ABR | | :--- | :--- | | Industrial | 60.7% | | Retail | 31.0% | | Other (Office, Clinical) | 8.3% | - The portfolio is occupied by **205 different tenants** across **56 industries**, with the top 10 tenants representing **21.8%** of ABR[120](index=120&type=chunk)[129](index=129&type=chunk) - Leases have a weighted average remaining term of **9.7 years**, and **97.5%** of leases by ABR have contractual rent escalations, averaging a **2.0%** annual increase[120](index=120&type=chunk)[140](index=140&type=chunk) [Results of Operations](index=47&type=section&id=Results%20of%20Operations) H1 2025 lease revenues increased, but net income sharply declined due to lower property sale gains and higher interest expense Comparison of Six Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total lease revenues, net | $221,677 | $211,274 | +4.9% | | Gain on sale of real estate | $971 | $62,515 | -98.4% | | Total operating expenses | $139,873 | $135,727 | +3.1% | | Interest expense | ($41,186) | ($36,334) | +13.4% | | **Net income** | **$37,323** | **$104,114** | **-64.2%** | - The significant decrease in net income for H1 2025 compared to H1 2024 is primarily attributable to a **$61.5 million** reduction in gains from property sales[161](index=161&type=chunk)[163](index=163&type=chunk) [Liquidity and Capital Resources](index=52&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with substantial credit facility capacity, a healthy leverage ratio, and no material debt maturities until 2027 - The company seeks to maintain a Leverage Ratio (Net Debt to Annualized Adjusted EBITDAre) of less than **6.0x**; as of June 30, 2025, this ratio was **5.3x**[165](index=165&type=chunk)[204](index=204&type=chunk) - As of June 30, 2025, the company had **$802.1 million** of available capacity under its **$1.0 billion** unsecured revolving credit facility[169](index=169&type=chunk) - The company has no material debt maturities until 2027[171](index=171&type=chunk) Contractual Obligations for Remainder of 2025 (in thousands) | Obligation Type | Amount | | :--- | :--- | | Mortgages & Term Loans | $19,015 | | Interest Expense (projected) | $41,637 | | Dividends (declared) | $58,451 | | Commitments to Fund Investments | $137,209 | | Lessee Obligations | $759 | | **Total** | **$257,071** | [Non-GAAP Measures](index=57&type=section&id=Non-GAAP%20Measures) Key non-GAAP metrics show H1 2025 AFFO increased, demonstrating core operational growth and a stable leverage profile Non-GAAP Performance Metrics (in thousands) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | FFO | $146,322 | $146,861 | | Core FFO | $152,430 | $147,073 | | AFFO | $146,120 | $141,276 | Leverage Ratios as of June 30, 2025 | Ratio | Value | | :--- | :--- | | Net Debt to Annualized EBITDAre | 5.5x | | Net Debt to Annualized Adjusted EBITDAre | 5.3x | | Pro Forma Net Debt to Annualized Adjusted EBITDAre | 5.2x | [Quantitative and Qualitative Disclosures About Market Risk](index=63&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages interest rate risk on variable-rate debt through swaps, while foreign currency risk from Canadian investments is naturally hedged - A **1%** increase or decrease in interest rates would result in a corresponding **$0.5 million** change in annual interest expense, after accounting for interest rate swaps[209](index=209&type=chunk) - A **10%** change in the USD/CAD exchange rate would lead to a **$7.3 million** unrealized foreign currency gain or loss on its Canadian dollar borrowings, which acts as a natural hedge against its Canadian investments[211](index=211&type=chunk) [Controls and Procedures](index=63&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period[212](index=212&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2025[213](index=213&type=chunk) Part II - OTHER INFORMATION [Legal Proceedings](index=64&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings expected to have a material adverse effect - The company reports no material legal proceedings[214](index=214&type=chunk) [Risk Factors](index=64&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors have been identified since the last annual and quarterly reports - No material changes to risk factors have been identified since the last annual and quarterly reports[215](index=215&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=64&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[218](index=218&type=chunk) [Other Information](index=64&type=section&id=Item%205.%20Other%20Information) No officers or directors adopted or terminated a Rule 10b5-1 trading plan or related trading arrangement during the period - No officers or directors adopted or terminated a Rule 10b5-1 trading plan[221](index=221&type=chunk) [Exhibits](index=65&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files

Financial Data and Key Metrics Changes - The company raised its full year 2025 AFFO guidance to $1.48 to $1.50 per share, reflecting a 4.2% growth at the midpoint, with a second quarter AFFO per share of $0.38, representing a 5.6% increase compared to 2024 [4][34] - Year-to-date bad debt totaled 45 basis points, and the bad debt reserve for the remainder of the year was reduced from 125 basis points to 75 basis points [34][80] Business Line Data and Key Metrics Changes - The company has invested approximately $262.2 million in new property acquisitions, build-to-suit developments, transitional capital, and revenue-generating CapEx [24] - The build-to-suit pipeline includes eight projects totaling over $370 million, expected to generate $28 million of new incremental ABR through 2026, representing a growth of 6.9% off the current ABR [15][26] Market Data and Key Metrics Changes - The company reported a 99.1% lease rate at quarter end, with only two of its 766 properties vacant, and collected 99.6% of base rents due for the quarter, a 60 basis point increase compared to Q2 2024 [31] - The company has closed $113.7 million in new property acquisitions with a weighted average initial cash cap rate of 7.2% [30] Company Strategy and Development Direction - The company is focused on a differentiated growth strategy, emphasizing build-to-suit projects and relationship-based acquisitions to mitigate competition [15][56] - The management team has successfully repositioned the portfolio, reducing clinical healthcare exposure to 2.4% of ABR, while still growing AFFO per share [6][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage through tenant credit events, citing successful resolutions in the past [8][80] - The company anticipates attractive mid-single-digit AFFO per share growth in 2026 and beyond, supported by a strong portfolio and committed pipeline [20][21] Other Important Information - The company plans to host an Investor Day on December 2, 2025, to discuss its differentiated strategy and preliminary guidance for 2026 [22] - The Board of Directors declared a $0.29 dividend per share, payable on or before October 15, 2025 [34] Q&A Session Summary Question: Plans for incremental developments in 2025 - The company still aims for $500 million in incremental developments in 2025, focusing on long-term growth [39] Question: Details on acquisitions under control - The acquisitions under control are primarily industrial deals with expected cap rates around 7%, and most are anticipated to close in the third quarter [44][45] Question: Impact of accelerated depreciation on deals - There has been excitement in the market regarding accelerated depreciation, particularly in sectors like car washes, which may drive additional deal flow [48] Question: Competition in build-to-suit projects - The company is not filtering out opportunities but is focused on maximizing the number of deals to choose from, ensuring the best risk-adjusted returns [50] Question: Insights on bad debt guidance - The reduction in bad debt guidance is due to positive resolutions with tenants like Zips, At Home, and Claire's, along with strong performance from the rest of the portfolio [79]