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Broadstone Net Lease, Inc. (BNL)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $112.99M and GAAP diluted EPS was $0.10, while AFFO per share was $0.38; management raised FY2025 AFFO guidance to $1.48–$1.50 per share at mid-point 4.2% growth .
  • Against Wall Street consensus, revenue was a modest beat, but GAAP EPS was a miss; revenue beat vs ~$110.68M consensus and EPS missed vs ~$0.18 consensus. Values retrieved from S&P Global.*
  • Operational execution remained strong: 99.1% occupancy, 99.6% rent collection (+60bps YoY), and $140.8M invested in Q2 with industrial-focused deployment and an 8.3% straight-line yield on acquisitions .
  • Balance sheet capacity intact (>$800M revolver availability), though leverage ticked up to 5.3x Net Debt/Annualized Adjusted EBITDAre; CFO reduced the bad debt reserve to 75bps for the remainder of 2025 given progress on tenant matters .
  • Catalyst: a differentiated build-to-suit pipeline (~$371M committed) expected to add ~$28M ABR through 2026 (~6.9% ABR growth), plus raised 2025 investment volume guidance ($500–$700M) .

What Went Well and What Went Wrong

What Went Well

  • Raised FY2025 AFFO guidance to $1.48–$1.50 per share (midpoint +4.2% YoY), citing strong YTD performance, tenant resolutions, and accretive investments; “steadfast commitment to delivering long-term, sustainable growth” (CEO) .
  • Investment program momentum: $140.8M invested in Q2 (industrial-weighted), with Q2 acquisitions at 7.1% initial cash cap and 8.2% straight-line yield; YTD investments $229.1M with 8.3% straight-line yield on acquisitions .
  • Portfolio health strengthened: 99.1% leased, 99.6% rent collection (+60 bps YoY), diversified tenant base (no tenant >4% ABR), and ABR WALT 9.7 years; clinical & surgical exposure reduced to 2.4% of ABR via dispositions .

What Went Wrong

  • GAAP net income declined 44.8% YoY to $19.8M ($0.10 diluted EPS) due to higher impairment provision (+$8.1M vs prior year), creating a headline EPS miss versus consensus .
  • Leverage increased: Net Debt to Annualized Adjusted EBITDAre rose to 5.3x (Pro Forma 5.2x) from 5.1x in Q1; modest deleveraging deferred amid funding of committed growth .
  • FX volatility: ~$3.4M unrealized FX loss affected Core FFO adjustments; continued macro/tariff pressures and consumer-centric tenant risk pockets monitored by management .

Financial Results

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Revenue ($USD 000s)105,907 112,130 108,690 112,986
GAAP Net Income ($USD 000s)35,937 27,607 17,493 19,830
GAAP Diluted EPS ($)0.19 0.14 0.09 0.10
FFO per diluted share ($)0.37 0.41 0.37 0.37
Core FFO per diluted share ($)0.37 0.38 0.38 0.39
AFFO per diluted share ($)0.36 0.36 0.36 0.38
Adjusted EBITDAre ($USD 000s)92,529 94,782 96,682 98,242
Adjusted EBITDAre Margin (%)87.4% 84.5% 88.9% 86.9%
Net Income Margin (%)33.9% 24.6% 16.1% 17.6%
Diluted WASO (000s)196,470 196,697 196,898 197,138

Actuals vs Consensus (Q2 2025)

MetricActualConsensusSurprise
Revenue ($USD)$112.99M $110.68M*Beat
GAAP Primary EPS ($)$0.10 $0.18*Miss
EPS (# of estimates)—3*—
Revenue (# of estimates)—5*—

Values retrieved from S&P Global.*

Segment Breakdown (Q2 2025, ABR-based)

Property Type# of PropertiesABR ($000s)% of Total ABRSF (000s)
Industrial Total215245,263 60.7% 32,694
Retail Total521125,251 31.0% 5,790
Other Total3033,668 8.3% 1,647
Total766404,182 100.0% 40,131

Key KPIs

KPIQ2 2024Q1 2025Q2 2025
Occupancy (SF)99.3% 99.1% 99.1%
Rent Collection99.0% 99.1% 99.6%
Tenants207 204 205
ABR ($M)385.5 401.3 404.2
WALT (years)10.4 10.0 9.7
Annual Rent Increases2.0% 2.0% 2.0%
Net Debt / Annualized Adj. EBITDAre5.1x 5.1x 5.3x
Revolver Availability ($M)—825.9 802.1

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
AFFO per diluted shareFY 2025$1.45–$1.49 $1.48–$1.50 Raised
Investments in real estateFY 2025$400–$600M $500–$700M Raised
DispositionsFY 2025$50–$100M $50–$100M Maintained
Core G&AFY 2025$30–$31M $30–$31M Maintained
DividendQ3 2025$0.29 per share $0.29 per share Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
Build-to-suit pipeline and ABR growthCommitments ~$306M; goal of adding $500M in 2025; straight-line yields ~8.9%; ABR uplift ~5.6% into 2026 8 in-process projects (~$371M) adding ~$28M ABR through 2026 (~6.9%); reiterated $500M goal; new partners (AGCO, Sprouts, Palmer Logistics) Improving pipeline depth
Tariffs/macroHeightened monitoring of manufacturing and consumer-centric tenants; prior tariff experience cited Continued vigilance; escalators now ~2.5–3% on new industrial deals; structured protections (GMP/lump sum, contingencies) Managed risk; pricing adaptations
Tenant credit eventsWatch list included Zips (resolved ~80% ABR recovery), Stanislaus, At Home exposure; Claire’s monitored At Home Ch.11 and Claire’s rumors: rent current; assets strategic; below-market rents position BNL favorably; bad debt reserve cut to 75bps Stabilizing outcomes
Capital allocation/equity marketsExtended revolver/term loan; forward ATM capacity; preference to fund growth internally Equity cost unattractive; continue self-funding via dispositions and build-to-suit monetization with 100bps+ value spread Self-funded growth focus
LeveragePro forma 5.0x; target inside 6x ~5.2x pro forma; willing to flex near term, not sustained at high levels Slightly higher near term
Dispositions/value recycling2024 healthcare sell-down; industrial focus Opportunistic sales (8 properties, $13.1M, 9.5% cap), pipeline allows monetization at attractive stabilized valuations Active recycling
OnshoringExpect to benefit via industrial demand and build-to-suits Continued industrial pipeline growth; larger direct relationships, competitive intensity acknowledged Tailwind

Management Commentary

  • CEO: “We are raising our full-year guidance to $1.48 to $1.50 AFFO per share, or 4.2% growth at our midpoint… our steadfast commitment to delivering long-term, sustainable growth” .
  • CEO on tenant credit: At Home (~95 bps ABR) and Claire’s (~80 bps ABR) rents are current; strategic assets with below-market rents provide optionality; confident in outcomes .
  • CFO: Reduced bad debt reserve for remainder of year to 75bps given progress; ended quarter with >$800M revolver availability and ~5.2x pro forma leverage .
  • President/COO: Build-to-suit program scaling across six developers; committed pipeline to deliver ~$28M ABR by 2026; target 100bps+ spread between development yield and stabilized value .

Q&A Highlights

  • Build-to-suit goal reaffirmed: Management still targets ~$500M incremental build-to-suit commitments in 2025; pipeline broadened by referrals and developer relationships; expect deals to stabilize 2026–2027 .
  • Regular-way acquisitions under control: ~$234.6M, primarily industrial, with cap rates ~7%, closing mostly in Q3/Q4 2025; competition fierce among private buyers .
  • Leverage philosophy: Comfortable flexing near term but aim to remain “comfortably inside 6x” over time; deleveraging as projects stabilize .
  • Pricing mechanics and escalators: New industrial escalators ~2.5–3%; risk mitigants via GMP/lump-sum contracts, contingencies, change orders to handle tariff/cost volatility .
  • Capital strategy: Equity unattractive at current yield; retain self-funded growth options through dispositions and build-to-suit monetization at ~100bps better stabilized valuations .

Estimates Context

  • Q2 2025 actual vs S&P Global consensus: Revenue $112.99M vs $110.68M consensus (Beat); GAAP EPS $0.10 vs $0.18 consensus (Miss). Values retrieved from S&P Global.*
  • Implication: Given raised FY2025 AFFO guidance and stronger top-line/NOI, sell-side may lift revenue/AFFO forecasts while trimming near-term GAAP EPS assumptions due to non-cash impairment and FX noise; build-to-suit visibility supports 2026–2027 mid-single-digit AFFO per share growth .

Key Takeaways for Investors

  • Industrial-led growth strategy is gaining traction: committed build-to-suits add ~$28M ABR through 2026, supporting mid-single-digit AFFO/share growth through 2026–2027 .
  • Expect continued internal funding of growth: leverage temporarily higher (~5.3x) but ample liquidity; management prefers recycling/monetization over dilutive equity at current valuation .
  • Tenants under watch are manageable: At Home and Claire’s are current on rent, assets are strategic with below-market rents; bad debt reserve lowered, reducing downside risk to 2025 AFFO .
  • Trading lens: Near-term stock catalysts include ongoing acquisitions closes (~$234.6M under control), build-to-suit announcements, and Investor Day (Dec 2) providing 2026 preliminary guidance; expect the market to reward visibility of embedded growth .
  • Medium-term thesis: Industrial mix (60.7% ABR) and rising escalators (2.5–3% on new industrial deals) enhance organic growth; disciplined underwriting and diversified tenants mitigate idiosyncratic risk .
  • Watch leverage trajectory and FX: As projects stabilize (and potential asset sales occur), leverage should resume downward trend; FX noise may persist but is largely non-operational .
  • Dividend stability: $0.29/share quarterly remains intact, supported by resilient AFFO and portfolio metrics .
Note: All consensus values marked with * are from S&P Global and may differ from some publicly available sources due to methodology and rounding.

Citations:

  • Q2 2025 results and guidance:
  • Investments, portfolio metrics, leverage:
  • Build-to-suit pipeline and ABR uplift:
  • Q1 2025 prior quarter context:
  • Segment/ABR breakdown:
  • Q&A details and management commentary:
  • 2024 context: