Broadstone(US:BNL)2025-05-01 16:02Financial Data and Key Metrics Changes - The company reported adjusted funds from operations (AFFO) of $71.8 million or $0.36 per share for Q1 2025, benefiting from recent investments and lower operating expenses [21] - The company maintained its 2025 AFFO guidance range at $1.45 to $1.49 per share, reflecting approximately 3% growth at the midpoint [9][23] - The pro forma leverage at the end of the quarter was 5.0 times net debt, with approximately $826 million available on the revolving credit facility [22] Business Line Data and Key Metrics Changes - The company invested $103.9 million in new property acquisitions, build-to-suit developments, and revenue-generating CapEx, with a weighted average initial cash cap rate of 7.2% [16] - The committed build-to-suit developments pipeline stands at approximately $305.9 million, with an expected initial cash cap rate in the 7s and straight-line yields in the mid-8s to mid-9s [6][13] - The company has $132.9 million of acquisitions under control and $4.5 million of commitments to fund revenue-generating CapEx with existing tenants [16] Market Data and Key Metrics Changes - The company reported 99.1% occupancy and 99.1% rent collection for the first quarter, indicating a resilient and diversified portfolio [9] - The company has minimal near-term rollover concerns, with only 1% of its annual base rent (ABR) remaining to be addressed for 2025 [17] Company Strategy and Development Direction - The company focuses on a differentiated strategy that includes a robust pipeline of build-to-suit projects, aiming to add at least $500 million in additional developments to its committed schedule [11][42] - The company emphasizes the importance of maintaining a flexible balance sheet and proactive portfolio management to navigate macroeconomic uncertainties [9][10] - The company is expanding its developer relationships to enhance its build-to-suit pipeline, with a recent partnership with Prologis for a $78.2 million project [7][50] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the risks presented by the current macroeconomic environment, including potential tariffs and consumer spending trends, but expressed confidence in the company's ability to manage these challenges [8][10] - The management team remains optimistic about the long-term growth potential, citing a strong pipeline and disciplined execution as key drivers for shareholder value [5][8] Other Important Information - The company has a watch list focusing on consumer-centric tenants and is closely monitoring the performance of certain tenants, including Zips and Stanislaus Surgical [18][20] - The company plans to maintain its dividend at $0.29 per share, payable to holders of record as of June 30, 2025 [23] Q&A Session Summary Question: How is the company monitoring credit risk related to industrial exposure and tariffs? - The management team is taking a top-down and bottom-up approach to assess individual tenants and industries affected by tariffs, emphasizing that manufacturing is not uniform and some tenants are well-positioned to manage these challenges [25][27] Question: What is the guidance for bad debt this year? - The company started the year with a bad debt guidance of 125 basis points and plans to maintain this figure, reassessing after Q2 [30][33] Question: What is the company's exposure to Claire's and how are they managing it? - The company owns Claire's sole distribution facility in the U.S., representing about 78 basis points of exposure, and is optimistic about their ability to navigate tariff-related challenges [36][39] Question: What is the status of the build-to-suit pipeline? - The company remains committed to its goal of $500 million in build-to-suit developments and is actively pursuing additional developer partnerships to enhance its pipeline [41][42] Question: How does the company plan to fund its existing build-to-suit pipeline? - The company has ample capacity on its credit facility and does not intend to seek permanent financing for its current projects, focusing on self-funding through its portfolio [46][48] Question: What is the nature of the relationship with Prologis? - The relationship with Prologis is expected to yield repeat business, with ongoing discussions about future projects, highlighting the importance of strong developer relationships [49][78]