Ryan Caviola

Ryan Caviola asked if Broadstone Net Lease has seen any tailwinds from onshoring materialize over the last year, particularly in industrial development demand. He also inquired about commentary from other casual dining tenants regarding sector strengths and expansion appetite for 2026, and if Broadstone Net Lease would add to this portfolio segment.

Answer

CEO John Moragne confirmed seeing onshoring trends in the build-to-suit pipeline, with conversations about bringing production capacity to the U.S., but noted that these are slow-going decisions with long conversion timelines. Regarding casual dining, John Moragne emphasized that performance is very operator and brand-specific, with some brands struggling (like Red Lobster) and others performing exceptionally well (like J. Alexander's). He stated that Broadstone Net Lease is not actively pursuing new casual dining as a focused strategy, but would evaluate opportunistic deals.

Ryan Caviola (Green Street Advisors) asked if Broadstone Net Lease has observed any materialization of tailwinds from onshoring efforts, particularly in industrial development demand, over the past year. He also inquired about commentary from other casual dining tenants regarding sector strengths and expansion appetite, and if casual dining is a segment Broadstone Net Lease would consider adding to its portfolio.

Answer

CEO John Moragne confirmed seeing onshoring efforts reflected in the build-to-suit pipeline, with active conversations about increasing domestic production and reworking logistics chains, though he noted these are long-term processes. Regarding casual dining, he emphasized that performance is highly operator and brand-specific, citing examples like J. Alexander's doing well while others struggle. He stated that Broadstone Net Lease is not actively pursuing new casual dining as a focused strategy, but would evaluate opportunities on a case-by-case basis.

Asked about the impact of increased private capital competition on industrial net lease pricing, whether this creates disposition opportunities, and for a breakdown of the $600 million investment guidance.

Answer

Competition for traditional acquisitions is fierce, especially in industrial, which puts pressure on cap rates. This environment makes their build-to-suit pipeline more valuable, as they can create value by building at mid-7% yields and potentially selling at a 100+ bps spread. The investment guidance for the year is split approximately 60% regular-way acquisitions and 40% build-to-suit fundings.

Ryan Caviola asked about the expected impact of onshoring on Broadstone's industrial portfolio and whether competition is increasing for these types of assets.

Answer

CEO John Moragne expressed a bullish view on onshoring, stating that BNL is well-positioned to benefit through its build-to-suit strategy. He acknowledged that competition in the industrial sector remains high, especially for large-scale deals, which reinforces BNL's focus on relationship-based build-to-suit projects and individual regular-way acquisitions where competition is less intense.

Ryan Caviola asked about the expected impact of onshoring on Broadstone's industrial portfolio and whether competition is increasing for industrial properties that stand to benefit from this trend.

Answer

CEO John Moragne expressed a bullish view on onshoring, stating that BNL is well-positioned to capitalize on this long-term trend through its build-to-suit strategy. He acknowledged that competition in the industrial sector remains high, especially for large portfolio deals, which reinforces BNL's strategic focus on relationship-based build-to-suit projects and individual regular-way acquisitions.

Ryan Caviola of Green Street asked for details on the two new industries BNL entered and whether the historical 70-30 industrial-to-retail investment mix is expected to continue.

Answer

CEO John Moragne identified one new relationship as Magna Seating, an expansion in automotive services, and stressed the importance of industry diversification for risk mitigation. He confirmed that the 70-30 industrial-retail investment split has been consistent for years and is expected to be 'par for the course' going forward, though BNL remains opportunistic.

Ryan Caviola requested details on the two new industries BNL entered during the quarter and its broader strategy for industry exposure. He also asked if the historical 70-30 industrial-to-retail investment mix is expected to remain steady.

Answer

CEO John Moragne identified an expansion in automotive services as one new area and reiterated that portfolio diversification is a core risk mitigation strategy. He confirmed that the 70-30 industrial/retail investment split is 'par for the course' and likely to continue, though the company remains nimble and will pursue attractive opportunities in any of its target sectors.

Ryan Caviola asked about the decision-making process behind disposing of four vacant warehouse properties in Q4 and a fifth after quarter-end, specifically whether re-tenanting opportunities were absent or if the sales were purely opportunistic. He also sought color on the relationship with NewEra, following a $140 million healthcare acquisition and expanded capital commitments, and if healthcare is viewed as an attractive investment venue for 2026.

Answer

Head of Asset Management Brooks Gordon explained that decisions on vacant properties are based on forward-looking risk-adjusted returns; properties are leased if returns are attractive, or sold quickly if disposition opportunities are more favorable, citing the JOANN sale as an example of an opportunistic sale. CEO Jason Fox stated that healthcare is a tracked area with in-house expertise, offering competitive opportunities supported by long-term demographic trends. He clarified that W. P. Carey targets single-tenant, long-term, absolute net leases in healthcare, focusing on inpatient rehab facilities (IRF) like the NewEra and Ernest Health deals, which are well-located with strong site-level coverage and good operators, with one NewEra property already seeing an expansion.

Ryan Caviola inquired about the decision-making process behind disposing of four vacant warehouse properties in Q4 and a fifth post-quarter, specifically whether re-tenanting opportunities were absent or if sales were opportunistic. He also sought color on the healthcare acquisition with New Era for $140 million and an expansion of capital commitments, asking if healthcare is an attractive venue for 2026.

Answer

Brooks Gordon, Head of Asset Management, explained that vacancy decisions involve evaluating forward-looking risk-adjusted returns; properties are leased aggressively if returns are sufficient, but sold quickly if disposition opportunities make those returns insufficient, citing a JOANN sale as an opportunistic example. Jason Fox, CEO, stated that healthcare is a competitive but tracked area with in-house expertise, supported by long-term demographic trends. He clarified W. P. Carey targets single-tenant, long-term, absolute net leases with strong site-level coverage and reputable operators, focusing on inpatient rehab facilities (IRFs) like the New Era and Earnest Health deals, which were recently developed, well-located, and came with attractive basis and expansion opportunities.

Ryan Caviola asked for color on international competition, specifically if private capital entering the net lease space is competing on international deals or primarily staying in the U.S. He also requested an update on the Dollar General relationship, the company's view on the Dollar Store space, and potential for growth.

Answer

Jason Fox, Chief Executive Officer, noted increased competition in Europe from U.S. funds but highlighted W. P. Carey's competitive advantages, including over two and a half decades of investment, a 50-person team, deep relationships, and local expertise. Regarding Dollar General, Mr. Fox explained that acquisitions have been opportunistic, leveraging a good credit and long leases, often through the development pipeline. He views it as opportunistic pricing and while Dollar General is now a top 20 tenant, future growth would be opportunistic based on pricing.

Ryan Caviola asked for color on international competition, specifically whether private capital entering the net lease space is competing on international deals or primarily staying in the U.S. He also inquired about the relationship with Dollar General, the company's view on the dollar store space, and growth intentions for that segment.

Answer

CEO Jason Fox noted that Europe, historically less crowded, is seeing some competition from U.S. funds, but W. P. Carey's two-and-a-half-decade presence, large team, deep relationships, and expertise provide a competitive advantage. Regarding Dollar General, Mr. Fox explained that the company has an opportunistic relationship, acquiring stores primarily through the development pipeline. He views Dollar General as a good credit with long leases, taking advantage of opportunistic pricing, and while they are a top 20 tenant, future growth will be based on pricing opportunities.

Ryan Caviola asked about differences in yields between Essential Properties Realty Trust's traditional retail portfolio and industrial properties, and whether the expectation of cap rate compression applies to industrial assets as well. He also inquired if any distress in the auto sector has flowed into the portfolio and the outlook for that space.

Answer

Peter Mavoides, President and CEO, stated there's no differentiation in yields; the biggest driver is the counterparty, credit, and real estate pricing, not the property type. He expects cap rate compression across their entire opportunity set. Regarding the auto sector, Mr. Mavoides confirmed no impact, as their exposure is focused on automotive service, not retailing or parts suppliers. He views automotive service as a good industry with desirable granular, well-located real estate, expecting continued investment.

Ryan Caviola asked about differences in yields between Essential Properties Realty Trust's traditional retail portfolio and its industrial properties, and if the expectation of cap rate compression applies to industrial properties or is mostly in the retail space. He also inquired if distress in the auto sector has impacted the portfolio and the outlook for that space.

Answer

President and CEO Peter Mavoides stated there is no differentiation in yields based on asset type; the biggest drivers of cap rate differences are the counterparty's credit and real estate pricing. He expects cap rate compression across the entire opportunity set, driven by lower interest rates and more stable capital markets. Regarding the auto sector, Mr. Mavoides confirmed no impact from distress, as their exposure is primarily to automotive service, not retailing or parts suppliers. He views automotive service as a good industry and expects continued investment there.

Ryan Caviola from Green Street Advisors asked which retail sectors are most attractive for growth now that car wash exposure is near its ceiling, and also inquired about interest in industrial acquisitions.

Answer

CEO Pete Mavoides responded that he expects future investment activity to be pro-rata across their existing industries, maintaining a consistent portfolio mix. Regarding industrial properties, he confirmed the company likes the sector for sale-leasebacks with middle-market tenants, focusing on fungible assets and avoiding large, special-use properties.

Ryan Caviola from Green Street Advisors asked about the difference in pricing for net lease industrial assets between Europe and the U.S., and whether the entry into Poland completes the company's European expansion.

Answer

CEO Sumit Roy explained that European pricing is more rational due to less competition and a greater emphasis on relationships, unlike the capital-saturated U.S. market. He stated that while the core European strategy is established, the company continues to evaluate opportunities in other Western European nations and neighboring countries like Canada, though the bar for new entry is very high.

Ryan Caviola of Green Street Advisors asked how the U.S. Core Plus fund performs in a volatile economic environment and whether the uncertainty helps or hinders fundraising and competition.

Answer

CEO Sumit Roy acknowledged that the current environment is typically not conducive to raising private capital but believes Realty Income's unique platform, scale, and reputation set it apart. He expressed optimism about meeting fundraising objectives, noting that the elevated cost of debt impedes private competitors who rely on higher leverage, creating an opportunity for Realty Income's strategy.