Broadstone Net Lease Q2 2025: Key Contradictions in Bad Debt, Competition, and Capital Strategy

Bad debt guidance, pricing impact due to competition, leverage levels and capital structure goals, build-to-suit activity and strategic importance, interest in private transactions and retail market competition are the key contradictions discussed in Broadstone Net Lease's latest 2025Q2 earnings call.



Strong Financial Performance and Guidance Revision:
- Broadstone Net Lease (BNL) raised its full-year 2025 AFFO guidance to $1.48 to $1.50 per share, reflecting a 4.2% growth.
- The second-quarter AFFO per share was $0.38, representing a 5.6% growth year-over-year.
- The upward revision was driven by disciplined execution in tenant matters and investment activity, demonstrating confidence in the business and commitment to long-term sustainable growth.

Portfolio Repositioning and Tenant Credit Events:
- BNL successfully reduced its clinical healthcare exposure to 2.4% of its ABR while growing AFFO per share.
- The company managed several tenant credit events, including those at Art Van, Green Valley, and Claire's, by receiving all rent due and maintaining flexibility in lease terms.
- Effective underwriting and operational expertise enabled BNL to navigate credit events while growing AFFO per share.

Build-to-Suit Program Expansion:
- BNL has committed to $370 million in build-to-suit investments expected to add $28 million in incremental ABR by the third quarter of 2026, representing a 6.9% growth in current ABR.
- The program leverages strong tenant credit profiles and quality real estate fundamentals, providing long-term, high-quality growth opportunities.
- Relationships with developers and a focus on tailored tenant needs drive the success of this strategic investment strategy.

Regular Way Acquisition and Capital Structure:
- The company closed $133.7 million in new property acquisitions and has $234.6 million in acquisitions under control for the year.
- BNL's capital structure includes pro forma leverage of 5.2x and over $800 million available on its revolving credit facility.
- The acquisitions were funded through a mix of retained cash flow and the revolver, reflecting a balanced approach to capital utilization for growth.