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• AFFO: $70 million or 35 per share, a decrease of 2.7% year-over-year.

• Committed Developments: $405 million with initial cash yields in the mid to high 7% range and straight line yields exceeding 9%.

• Investment Activity: $93.9 million during the quarter, bringing year-to-date total to $381.9 million.

• Cash G&A Expenses: Approximately $7 million during the quarter; full-year guidance lowered to $31 million to $33 million.

• Leverage Ratio: Pro forma leverage of 4.9 times.

• Dividend: 29 per common share and OP unit, payable on or before January 15, 2025.

• AFFO Guidance: Reaffirmed at $1.41 to $1.43 per share.

• Bad Debt Reserve: 75 basis points for the full year.

• Unsettled Forward Equity: Approximately $39 million in estimated net proceeds.

• Warning! GuruFocus has detected 8 Warning Signs with BNL.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Broadstone Net Lease Inc (NYSE:BNL) successfully reduced its clinical healthcare exposure to approximately 4% of its asset base, achieving a key strategic goal.

• The company completed a high-quality build-to-suit development project in Sarasota, Florida, ahead of schedule and below budget, with an initial cash yield of 7.2% and a 15-year lease term.

• BNL has a committed development pipeline of $405 million with attractive initial cash yields in the mid to high 7% range and straight-line yields exceeding 9%.

• The company maintained a strong financial position with a pro forma leverage of 4.9 times and ample liquidity, including $870 million of revolver availability.

• BNL reaffirmed its AFFO guidance range of $1.41 to $1.43 per share, indicating confidence in its financial outlook despite strategic asset sales.

Negative Points

• BNL experienced a 2.7% decrease in AFFO per share year-over-year, primarily due to lower lease revenues from its healthcare simplification strategy and incremental expenses from vacant assets.

• The company faces ongoing credit risks in consumer-centric industries and clinically oriented healthcare properties, requiring vigilant tenant monitoring.

• BNL has three vacant properties generating higher operating expenses, impacting financial performance in the back half of the year.

• The traditional net lease acquisition market remains challenging, with a disconnect between pricing expectations and quality opportunities.

• BNL's remaining clinical healthcare assets may take longer to dispose of, potentially extending into 2025 and beyond, due to the need for lease extensions and tenant improvements.