Financial Data and Key Metrics Changes - The company generated adjusted funds from operations (AFFO) of $296.3 million or $1.49 per share for the full year, representing a 4.2% increase year-over-year [30] - For Q4 2025, adjusted funds from operations were $75.8 million or $0.38 per share, a 5.6% increase over Q4 2024 [30] - Lost rent totaled 31 basis points for the year, down from 67 basis points during 2024, indicating improved portfolio performance [30] Business Line Data and Key Metrics Changes - The company maintained a solid portfolio performance, ending the year 99% leased with 99.8% of rents collected [8] - Approximately $748.4 million was deployed in investments, including $429.9 million in new property acquisitions and $209.3 million in build-to-suit developments [8][21] - The weighted average initial cash capitalization rate for new property acquisitions was 7%, with a weighted average remaining lease term of 14.2 years and annual rent increases of 2.6% [9] Market Data and Key Metrics Changes - The company observed healthy activity in the transaction market, particularly within the industrial property segment, although pricing levels did not always align with targeted risk-adjusted returns [22] - The company sold 28 properties in 2025, yielding gross proceeds of $96 million at an average cash cap rate of 7.3% [23] Company Strategy and Development Direction - The company’s strategy is built on three core building blocks: solid in-place portfolio performance, a laddered pipeline of committed build-to-suit development projects, and stabilized acquisitions [6][7] - The company aims to maintain a pipeline of $350 million to $500 million in committed build-to-suit projects for the foreseeable future [21] - The focus remains on relationship-based sourcing of opportunities to mitigate traditional development risks [20] Management's Comments on Operating Environment and Future Outlook - Management reiterated 2026 AFFO guidance of $1.53-$1.57 per share, reflecting a 4% increase at the midpoint [13] - The company is optimistic about its build-to-suit strategy providing long-term growth and value creation, with approximately $350 million of high-quality developments scheduled to stabilize in 2026 [14] - Management expressed frustration with the company's relative valuation but remains focused on disciplined execution to close the gap versus peer averages [16] Other Important Information - The company raised a small amount of equity under its ATM program, totaling approximately $43 million, but does not expect to raise significant amounts at current market levels [16][32] - A quarterly dividend of $0.2925 per share was approved, reflecting a 1% increase over the prior dividend [33] Q&A Session Summary Question: Competitive landscape for build-to-suit opportunities - Management noted no significant increase in competition for deals they are pursuing, emphasizing their relationship-based sourcing strategy [38][39] Question: Project Triboro power delivery timeline - Management indicated that initial power delivery is expected in phases, with the first phase being 300 megawatts [41] Question: Use of proceeds from potential UNFI sale - Management stated that proceeds would be used opportunistically, with a focus on timing rather than mix of deployment [45] Question: Internal growth expectations for 2026 - Management indicated that a 2% annual growth rate is a reasonable assumption for internal growth [48] Question: Red Lobster exposure and potential actions - Management is actively looking to reduce exposure to Red Lobster and is in discussions for mutually beneficial solutions [52][54] Question: American Signature lease negotiations - Management confirmed that there would be no change in rent levels during negotiations for a new master lease [56] Question: Build-to-suit pipeline and project details - Management confirmed a rolling target of $350 million to $500 million in active development, primarily from repeat business [60] Question: Capital recycling and market conditions - Management noted that they are not forced sellers but are opportunistic, with a focus on accretive transactions [70] Question: Onshoring trends and industrial development demand - Management observed increased interest in onshoring within the build-to-suit pipeline, although these decisions take time [82]

Financial Data and Key Metrics Changes - The company generated adjusted funds from operations (AFFO) of $296.3 million or $1.49 per share for the full year, representing a 4.2% increase year-over-year [30] - For Q4 2025, adjusted funds from operations were $75.8 million or $0.38 per share, a 5.6% increase over Q4 2024 [30] - Lost rent totaled 31 basis points for the year, down from 67 basis points during 2024, indicating improved portfolio performance [30] Business Line Data and Key Metrics Changes - The company maintained a solid portfolio performance, ending the year 99% leased with 99.8% of rents collected [8] - The company deployed $748.4 million in investments, including $429.9 million in new property acquisitions and $209.3 million in build-to-suit developments [8][21] - The weighted average initial cash capitalization rate for new property acquisitions was 7%, with a weighted average remaining lease term of 14.2 years and annual rent increases of 2.6% [9] Market Data and Key Metrics Changes - The company observed healthy activity in the transaction market, particularly within the industrial property segment, although pricing levels did not always align with targeted risk-adjusted returns [22] - The company sold 28 properties in 2025, yielding gross proceeds of $96 million at an average cash cap rate of 7.3% [23] Company Strategy and Development Direction - The company’s strategy is built on three core building blocks: solid in-place portfolio performance, a laddered pipeline of committed build-to-suit development projects, and stabilized acquisitions [6][7] - The company aims to maintain a pipeline of $350 million to $500 million in committed build-to-suit projects for the foreseeable future [21] - The company is focused on maintaining optionality for Project Triborough, evaluating various paths for value creation, including a potential hyperscale data center campus [26] Management's Comments on Operating Environment and Future Outlook - Management reiterated 2026 AFFO guidance of $1.53-$1.57 per share, reflecting a 4% increase at the midpoint [13] - Management expressed confidence in the ability to navigate exposure to distressed tenants, citing limited financial impact from tenant situations in 2025 [10] - The company remains cautious regarding exposure to Red Lobster, evaluating strategies to gradually reduce this exposure over time [25] Other Important Information - The company raised a small amount of equity under its ATM program, totaling approximately $43 million, while maintaining a disciplined approach to capital raising [16][32] - A quarterly dividend of $0.2925 per share was approved, reflecting a 1% increase over the prior dividend [33] Q&A Session Summary Question: Competitive landscape for build-to-suit opportunities - Management noted that while others are entering the build-to-suit space, they have not seen an increase in competition for their specific deals due to their relationship-based sourcing approach [38][39] Question: Context around Project Triborough's power delivery timeline - Management indicated that the initial power delivery is expected to be in phases, with the first phase likely being around 300 megawatts [41] Question: Use of proceeds from potential UNFI sale - Management stated that proceeds would be used opportunistically, with a focus on timing and leveraging their capital structure [45][46] Question: Internal growth expectations for 2026 - Management indicated that a 2% annual growth rate is a reasonable assumption for internal growth moving forward [48] Question: Red Lobster exposure and potential actions - Management is actively looking to reduce exposure to Red Lobster, with ongoing discussions for mutually beneficial solutions [52][54] Question: American Signature lease negotiations - Management confirmed that there would be no change in rent levels during the lease negotiations, maintaining a conservative approach to bad debt assumptions [56][57] Question: Build-to-suit pipeline and project details - Management confirmed a target of $350 million to $500 million in active development projects, primarily from repeat business [60] Question: Capital recycling and market conditions - Management noted that they are not forced sellers but are opportunistic, with a focus on maintaining accretive transactions [70]

Broadstone Net Lease (NYSE:BNL) Q4 2025 Earnings call February 19, 2026 11:00 AM ET Speaker11Hello, and welcome to Broadstone Net Lease's fourth quarter 2025 earnings conference call. My name is Emily, and I'll be your operator today. Please note that today's call is being recorded. I will now turn the call over to Brent Maedl, Director of Corporate Finance and Investor Relations at Broadstone. Please go ahead.Speaker1Thank you, everyone, for joining us today for Broadstone Net Lease's fourth quarter 2025 e ...

Financial Data and Key Metrics Changes - NNN reported core FFO of $0.85 per share and AFFO of $0.86 per share for Q3 2025, representing increases of 1.2% and 2.4% year-over-year respectively [10] - Annualized base rent reached $912 million at the end of the quarter, an increase of over 7% year-over-year [10] - The company's NOI margin was 98% for the quarter, with G&A as a percentage of total revenues at about 5% [11] Business Line Data and Key Metrics Changes - NNN closed 20 deals containing 57 assets for $283 million during the quarter, with an initial cap rate of 7.3% and an average lease duration of nearly 18 years [2][7] - The company executed a high renewal rate of 92% for leases, with rental rates at 108% above prior rents [6] - Seven new properties were leased to new tenants at rates of 124% of previous rents, indicating strong demand [6] Market Data and Key Metrics Changes - The company is increasing its 2025 acquisition volume guidance to a midpoint of $900 million, which would be an all-time high for NNN [3][15] - NNN's balance sheet remains strong with $1.4 billion in liquidity and an industry-leading average debt maturity of nearly 11 years [2][8] Company Strategy and Development Direction - NNN's strategy focuses on disciplined growth, proactive management, and optimizing its portfolio to drive sustainable growth and enhance shareholder value [2][8] - The company aims to resolve more than 75% of its vacant assets by the end of Q1 2026, positioning itself for future growth [5][6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving an occupancy rate exceeding 98% by year-end, despite temporary reductions due to legal disputes with tenants [5][6] - The company raised its guidance for core FFO per share to a range of $3.36-$3.40 and AFFO per share to $3.41-$3.45, reflecting year-to-date outperformance [15] Other Important Information - NNN has maintained a healthy 70% AFFO payout ratio with a quarterly dividend of $0.60, equating to a 5.6% annualized yield [14] - The company has proactively managed risks, including the successful resolution of the At Home bankruptcy, which significantly de-risked its capital structure [12][16] Q&A Session Summary Question: Could we get more color around the outsized interest income? - Management attributed the increase in interest income to a high cash balance and better-than-expected interest rates on short-term deposits [18] Question: What is the rationale behind using equity to fund acquisitions? - The company aims for a 60/40 mix of equity and debt for funding, and current market conditions allow for accretive acquisitions despite higher costs of capital [20][21] Question: Are you seeing increased competition impacting pricing? - Management acknowledged heightened competition but emphasized that NNN's long-standing tenant relationships allow for continued execution without significant pricing pressure [26] Question: What are the bad debt assumptions now compared to earlier in the year? - The company reduced its bad debt assumption for the full year to 25 basis points, down from 60 basis points, due to limited losses and successful tenant resolutions [30] Question: What is the expected occupancy trajectory going forward? - Management expects to resolve a significant number of vacancies by year-end, aiming for improved occupancy rates as leases are renewed and assets are disposed of [32][34] Question: How does the company plan to handle debt maturity in 2026? - NNN is exploring various options for refinancing, including bank loans and bond markets, to manage upcoming debt maturities effectively [59]

Financial Data and Key Metrics Changes - The company reported net income of $1.7 million or $0.02 per diluted share for the first quarter of 2025 [12] - Core FFO for the quarter was $24.6 million or $0.30 per diluted share, and AFFO was $26.2 million or $0.32 per diluted share, representing a 3.2% increase over the previous year [12] - Total recurring G&A increased by 5% year over year to $5.1 million, but represented 11% of total revenues compared to 13% in the prior year [12] Business Line Data and Key Metrics Changes - The company completed $90.7 million of gross investments at a blended cash yield of 7.7% during the quarter [4] - The weighted average lease term for these investments was 9.2 years, with 66% of ABR from investment grade and investment grade profile tenants [5] - The top five tenant concentration declined by 70 basis points to 28.2% of ABR, with the top tenant Dollar General reduced by 50 basis points to 8.1% of ABR [6] Market Data and Key Metrics Changes - The company ended the quarter with investments in 695 properties leased to 101 tenants across 26 industries in 45 states [5] - 71% of total ABR is leased to investment grade or investment grade profile tenants, with a weighted average lease term remaining of 9.7 years [6] Company Strategy and Development Direction - The company aims to reduce tenant concentrations and diversify its portfolio while maintaining a low leverage balance sheet [4] - The management is prepared to accelerate investment activity if there is a sustained improvement in the cost of equity [5] - The focus remains on necessity, discount, and service-oriented industries, which account for 88% of ABR, to weather economic downturns [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving diversification goals and noted strong demand for properties despite economic uncertainties [8] - The company has maintained zero credit losses during COVID and continues to perform well despite negative headlines in the industry [9] - Management remains cautious about growth, emphasizing that they will not sacrifice the balance sheet for growth [11] Other Important Information - The company declared a quarterly cash dividend of $0.21 per share, payable on June 16, with an AFFO payout ratio of 66% for the first quarter [16] - Adjusted net debt was reported at $724 million, with a weighted average interest rate of 4.57% [14] Q&A Session Summary Question: Update on appetite for pharmacy and dollar stores - Management expects to reduce exposures to Dollar General and Walgreens below 5% by year-end, with strong interest from institutional buyers [18][19] Question: Expectations for ratings upgrade - Preliminary discussions for a ratings upgrade are planned for the latter half of the year, with potential savings of at least 30 basis points on debt [21][24] Question: Clarification on net investment activity - Management indicated that they would not increase acquisitions unless there is a change in equity price, maintaining a capital recycling strategy [27][28] Question: Update on Big Lots asset in Maryland - There is significant interest from retailers, and management is negotiating attractive LOIs while waiting for market dynamics to play out [34][35] Question: Impact of Walgreens take-private on risk profile - Management believes the take-private will not change the risk profile of Walgreens assets, as the focus will be on retail operations [37] Question: Expectations for portfolio changes and cap rates - Dispositions are expected to occur at mid to high 6% cap rates, while acquisitions will likely remain above 7.5% [45][46] Question: New store opening appetite - Tenants are still in growth mode, but uncertainty due to tariffs is causing some hesitation in decision-making [72][75] Question: Impact of tariffs on tenants - Tariffs have created confusion but are not expected to significantly impact tenant credit quality [103] Question: New tenant relationships in acquisitions - The company added three new tenants in the quarter, indicating ongoing diversification efforts [107]