BNL - Earnings call transcript Q4 2024 | Broadstone Net Lease, Inc.

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Operator

Hello, and welcome to Broadstone Net Lease's Fourth Quarter 2024 Earnings Conference Call. My name is Emily, and I'll be your operator today. Please note that today's call is being recorded.

I will now turn the call over to Brent Maedl, Director of Corporate Finance and Investor Relations at Broadstone. ahead. go Please

Brent Maedl

for Fourth everyone, today Broadstone for Thank XXXX joining Earnings Lease's Quarter Call. Net you, us

Ryan and On today's Executive Operating Officer, President Chief Q&A All for three of remarks prepared Chief will Officer, Kevin Chief be Fennell. call, you Officer, this will John call. hear Albano; Financial and the available from portion Moragne;

are results that the discussion to of questions on differ statements, place refer which and your can due and contain uncertainties undue statements and actual to As subject answers following detailed cause this call a risks Form forward-looking a factors. to for the XXXX, to you ended reminder, materially We reliance cause during the discussion to SEC not forward-looking forward-looking such variety these statements caution this risk provided made year only more date XX, of that factors differences. of including you call. the our Any may our of as XX-K December are a filings, for to

that, to turn With call John. the over I'll

John Moragne

more more executing XX% than is total portfolio strategy. and completing a Brent, I end of achieving am care results, XXXX simplification with per XX% extremely over our leased collection of you, substantially range that and $XXX while rent than and on everyone. AFFO investments, our guidance in with at our million $X.XX the good clinical of share top proud Thank portfolio afternoon, health

BNL into respective our for Narasimhan take on Brooks-Williams dive during results and But to Shekar to a Directors. Board XXXX, of tenures dedicated further before thank want service their their our plans to I XXXX and for moment I Denise

the in Board annual since they for company's May be XXXX. has Tuesday, inception standing of been of and since member October of re-election Denise not the been meeting to has at the XXXX, of As Shekar member Board a Board a we in the announced on our May. will

company to have the on path years long-term to success, service put for we years company and our to last grateful BNL their incredibly and are particularly consistent worked their in reposition of value. current to shareholder generating as and attractive We several IPO its this the contributions post

am As insights Officer well to to to Saffire his REITs the delighted experience experience blocks in service Board the as REITs managing building previous step Joe the welcome Tuesday, Imperiale and provide I director accomplished Storage. Rick's Rick the the publicly evolution of Chief next on also as implement Board. investment Board traded the to core his BNL's Investment and Uniplan strategies built for during multiple Joe's differentiated invaluable asset extensive our we Rick's as Counsel announced upon appointments Directors. insights continue as as a investments Board at will our Further, from strategy benefit Joe acquired growth. represent will in tenure BNL's and Executive greatly of of of Life and alternative

a I case that including through believe light, resulted efforts. have neutral growth AFFO growth could substantial home We Turning to simplification AFFO undertook year repositioning had care clinical repositioning representing negative is as considered X.X% in which fantastic per the to per strategy, health compared $X.XX run. When our considering solid in portfolio the share XXXX increase all share, most generating portfolio which X.X% with is around, is portfolio results. the way to our of XXXX, last year a achievement a we

surgical our completed of X.X% clinical our As of ABR XXXX. simplification X.X% assets and our XX, reducing we December from strategy, end have at to of substantially the

medtail including reporting ] our and other and our types. growth property [ to types retail, restaurants core result, core portfolio emphasize to property As a we and updated assets, our industrial, realign

now are could permanent With assets, towards our I continued more be of the dispositions believe market. success remaining clinical respect achieved focus we do some with not turning in XXXX, our our not which value to our home we efforts intend in find achieved on emphasize growth this strategy. long-term if in to the proper can a we our do front portfolio

our and to for strategy growth. Turning XXXX plan

and We intend for goals even have the growth ambitious meet or them, in for and better positioning year exceed to BNL XXXX beyond.

differentiated our As industrial-focused an blocks. X is by a reminder, REIT as driven strategy core lease diversified building net our

weighted average First, portfolio anchored performance solid in-place escalations. annual X% by rent

than our businesses improve which tenants, helps with of grow while tenants the existing and market better our CapEx revenue-generating their Second, returns. portfolio providing quality our

laddered a and buildings most projects, fourth, enhance high-quality and those assumptions, development directly built-in that And importantly, per growth. derisked regular share our leasebacks way yields and attractive profile. constructing relationship-based build-to-suit is tenants that Third AFFO that and lease pipeline particularly and supplement provide of new sale acquisitions committed sourced are that arguably creditworthy for growth future

stabilization XXXX these $XXX.X well that adding in million revenue-generating blocks, XXXX of for $XX.X with strong XXXX, $X.X build-to-suit active in new than high-quality pipeline of stabilization approximately be XXXX developments million million and differentiated with development in are build-to-suit of core and up million of fund incremental would growth including of ABR under XXXX. more discussions $XXX scheduled tenants building during to existing reach to $XXX.X of with through commitments and acquisitions We scheduled CapEx set a and beyond investments control, for million

of reached with straight-line funded X.X%, As on we cash and saw our of in X.X% initial build-to-suit in X.X%. annual yield XXXX, XX-year at lease coupled escalations development, we when an UNFI term when rent that a a which stabilization yield we results

is strategy net for the space. Our derisked to incredibly lease unique accretive ways build-to-suit growth long-term in driving powerful tool development an

market, in relies inorganic asset way can a shifts on growth from regular in traditional lease it the times quality. While unexpected transaction volumes, at and experience rates net model cap volatility

attractive in better, to there's real through lot X% with to long-term growth above mid- facilities are economics and here. quality, range and build-to-suit line mission-critical this strategy. to or focused estate With yields credit a We average seeking construction, high differentiated development drive love BNL's straight tenant brand-new and the

capital Added can the growth focus, needle denominator. move valuation to considerable access with to our size based future, manage is our assets be, XXX to cost At we industrial pool developments attractive is more needing consistent we in points that we'll we on our of fund capital also are our that, where equity on equity no have that a And of of our our basis price for generating time to plans once the needed. increase when share plans stabilization, material should a any the rely needs our equity or through unless without and markets. reach significant believe not can XXXX capital multiple, capture we build-to-suit have raise XX foreseeable dispositions with of we to consistent it rerating of transactions growth as or we accretive use our and to for and the a there

build-to-suit announcements We are in next goals for looking the and large have development few making some our strategy exciting months. forward to

for rent build-to-suit further to in our approach. committed add this $XXX additional paying million would and is strengthening projects and XXXX year Our at schedule begin our XXXX, build-to-suit stabilize that in laddered least goal for developments to

range growth the For at XXXX, we X% to at $X.XX midpoint. share or our guidance approximately initiating AFFO $X.XX per are

XXXX. you moment. which and contributions progresses, we to underlying you revisit provide review as in XXXX Kevin growth the hope a a this As we forecasted be also our with building Later to expect our range will with guidance well year the from our year, assumptions, in able to preview and rate for expect to execution as based run blocks receive of XXXX on core we our the

rollover we strong what of will of and a we be that opportunities. growth AFFO and fortified differentiated stake to ground lead pro sheet long investment-grade as leverage the low through at investment and During as X.Xx strategy will to on attractive the and made our BNL to metrics, sustainable differentiated a BNL's We its diversified the properties risk per a with believe targeted are who XXXX, additional ample through decisions we high-quality share company decisions term for in the Most our with investors lease balance best pruned importantly, growth and strategy in capitalize that and forma in tenant are future. liquidity operating those we for established are confident put a future. credit portfolio and risk dispositions interest maintained

accomplishments our of proud for what's in XXXX. XXXX are and come to in We excited

to and as With our who that, call will portfolio as the well Ryan, provide I'll turn on over matters. acquisitions updates additional pipeline build-to-suit

Ryan Albano

for all you today. thank and joining us John, Thanks,

build-to-suit build-to-suit mid- laddered we have continued strategy. in success million necessary As We cost These high $XXX.X straight have and initial structures associated our cash traditional to to and the developments in long-term development for yields John yields projects tenants all laying the in sustained overruns. range. with attractive line with to groundwork identified place construction with the range are mid-X% for currently mentioned, delays build-to-suit and mitigate mid-X% risk in X% in the

of are term. leveraging near pipeline First relationships in relationships build to projects further should provide direct for ample and opportunity existing that and we this deepening the all, more

brings execution, grow help be projects and creative a to partners them BNL. development Our experience and secure that willingness in surety need their someone found They and of have businesses. that deep expertise and

in we additional the and our discussions at developments, projects more hope than On hard of top announced work on of provide months. coming we active of updates are million to pipeline that on build-to-suit committed $XXX in

We some regular in that way news times of than These our take expect are pool on exciting near the have acquisitions. also and work to have future. the expanding of and developer in more process traditional longer share to relationships lead front transactions

more higher better disconnect the share be fundamentals the as However, derisked than our pricing profile corresponding buildings believe and we opportunities. drive the we growth along our of quality way growth credit, where long-term and derisk outweigh These observed reduce stronger quality continue will projects to returns, ability on market the estate regular future with have consistently to higher AFFO benefits expectations transaction tenant effort. we real additional attractive of per the between a reliance and cautious

new $XX.X acquisitions $XXX.X $XXX.X yield and for of weighted X.X% lease $X acquisitions, a in million of our in average investment CapEx. term transitional million build-to-suit to weighted million, cash million average of X.X%. invested $XXX.X annual of weighted capital revenue-generating initial straight-line property in revenue-generating Turning million average developments, a rate completed average activity years, XXXX. and and We including The had X.X%, CapEx rent increase cap XX.X in weighted

weighted to and retail. properties were XX% industrial investments total to XX% Our approximately

build-to-suit year-end, to in million including initial announced funding for previously invested project. we the obtaining Subsequent control of $XX.X developments, and one land

have our earnings funded for development projects $XXX.X million of forth build-to-suit total set release a as to committed supplemental. our We remaining in be and

under million have CapEx revenue-generating $X.X acquisitions an $XXX.X of with million control of additional existing We tenants. fund to and commitments also

proceeds of weighted average tenanted million X.X% gross properties, for During on simplification portfolio XXXX, properties $XXX at completing we rate of care sold our XX substantially strategy. cash cap a health clinical

We $XXX our opportunistically muted, mentioned to the expect in we averages earlier. our million growth, historical range choose additional except fund more returning to John dispositions million to for XXXX $XX to the to to extent assets as be sell

in-place our to shifting Now portfolio.

and over our in leases. of set engaged For and an term average addressing XXXX, a XXXX, X rollover achieve our with in X.X% on concerns minimal those and X% on X of we tenants we to average for our only are XXX% With new rollovers, years. able lease expirations have near-term rate XXXX lease executed weighted roll X.X% to of ABR near-term we're lease and ABR recapture actively

are overall continue risk. operating incremental our on we of credit results pockets our and we While see strong growth remain to executing initiatives,

any in higher As on who further and construction, maintain lack see monitoring flexible of proven any the may duration consumer-centric industries to in tenant that We its arise. interest efforts capital ability of the potential portfolio due vigilant such individual events great and and rate manage our we confidence entities through to our remain structures. impact credit lengthens, diversified placed environment which the situation being limits strain our

care our some Stanislaus watch our in list clinical-oriented has focus. remain properties, health tenant, Our of remained well as as consumer-centric remaining fairly Surgical including tenants in consistent

for tenant which have space to furnishing at be and home approximately our the including speaking, ABR. of home, us in X% represents as Broadly for multiple well, focus specifically continues quarters highlighted we

recently throughout account year XX full leases, separate process announced bankruptcy. the to sites. We our XX own of their negotiating which currently for terms bankruptcy X points navigating are car received rent wash of and January, We under Wash We Car our rent of sites expect receive for ABR. master Zips basis are also the

structure. to to rejection favorable due strength the the master Although list our the includes initial of we our of X sites, lease final expect be more result

sites sales any in new eventually leases. multiple active rejected, other may that parties or For potential discussions be with interested we for are

come with vacant our focused acutely properties, property downside portfolio. We with lease managing are also our operating which than higher risk expenses on associated

whether these sale lease, We [ are costs. resolutions, working ] reduce for or carrying towards swift assets base to

With call initial the to XXXX that, results I'll update Kevin further an well as over on as financial on provide turn our guidance. to our details

Kevin Fennell

Thank you, Ryan.

During flat we from per million adjusted of a or quarter, share, generated year-over-year. operations $X.XX per the funds share result $XX.X

our year, that $X.XX benefited share, we million the early year or respect result disposition care generated $XXX the transaction in proceeds. health first For from per timely to the a portion of activity with redeploying

personnel controllable with $XX.X from totaling as million insurance Additional premiums. interest positive million and and contributions year the our [ focus ] as the came reflecting on for well core G&A expenses, for year, departures savings from BNL the lower and quarter reduced G&A expenses $X.X for continued

and of some carrying XX associated vacant million offset is of debt $X with Bad under basis partially those gains. just costs properties points

the credit us to facility, flexible and providing incremental of our $XXX opportunities. available as forma capacity maintained more respect X.Xx ample and revolving we on million our investment position sheet, With evaluate with we than leverage debt financial balance strong net pro

dividend our XX, record on of before per of dividend, our of $X.XX holders Directors as Regarding XX, Board March payable unit share OP XXXX, our XXXX. in maintained to April common or

to relative dividend peers. Our dividend represent of to an covered remains many and well attractive our continues yield

funds night of G&A in Finally, and core million, finally, from $XXX and $X.XX million. disposition $XX include: between assumptions diluted and share, details included $X.XX last to $XXX XXXX release our per operations $XX million between key earnings Adjusted guidance investment volume and between million of and and $XX million, were $XXX and our million volume

we'll activities are per points our the events investment Zips this particularly basis the of for we that within markets assumption Given and as XXXX and revisit bad and year may during debt XXX as timing, noting occur of are and that the year. results well with It's incidence year. share the front-end including mix Stanislaus, tenant our worth sensitive disposition the activity throughout amount of guidance, capital also to

will release additional now call for And the reference questions. earnings Please night's last open we up details. with that, for

Operator

Instructions] The Paolone first Anthony today [Operator from JPMorgan. question with comes

Anthony Paolone

make Great. sure I guess, understand. first clarify question, I to I just and want

that million $XXX is Or guidance, is $XXX rents? that out actually money door? net contribute of Your million investment to the that deals

John Moragne

that's Yes, the money door. out

mix we're of today that in well a regular both deals be would contribute will it So making build-to-suit way net as rent as that program. investments our

Anthony Paolone

Okay.

of much we a kind the it is years? So won't how the should because the where we to of a think about see build-to-suit this sounds based like versus until growing lot year pipeline out -- contributing actually on is income of that actually during earnings

John Moragne

Yes.

an control us. flow balance us, a what equation But of got see be wanting the that with or will this it or, deals for way after regular of million always the quarter. in not soon $XXX.X by front and quarter an So that the that and end the to deal the happens is we we end close first of of by first evidenced should as the have under

to amount in So have into we're earning the there's handful deployed we're underwriting. of quickly decent other current and assets going into contemplating fairly things a year, currently that a

this to able much to make So to will versus it come do year. year as rent later you sure the but be all will that model mix, a we be going what's are online as can in we'll stuff out paying

Anthony Paolone

-- earn that? you million, extending process? have like, this you're the it's that Okay. Or just to and capital before the is $XXX-some-odd you in on build-to-suits while Remind for carry the do you instance, anything me supplemental, during

John Moragne

interest that. capitalized a basis. to It's to there's the added Yes, component

determining we balance, the get weighted capitalize extent exceeds Basically, of benefit the revolver at use average our we we balance, it's equation over back revolver the of use and it end for of the So cost part debt. that revolver then to use this that And rent there's the a if the then and we rate. we interest. time

Anthony Paolone

like Okay. finance? future the no by kind the a fund of tenant there's current there's to like But -- not pay

John Moragne

Correct.

Anthony Paolone

just and XXX, for the at in averaged the on credit I basis Okay. then basis year. If Page uncollectible, mentioned of question the And that look at just kind as look side, XXX XXX points for supplemental points of XXXX sort guidance you last X the of well. about

kind about long-term about your of So right in the h*** am what that growth? take we I 'XX And should looking is of that off at not whole that a you're how way a 'XX? lot X% thinking think to to there's there of think organic of right terms of difference versus about

Kevin Fennell

Kevin. it's Tony,

guide I of basis form the what Valley. the points think we you're if excluding but the XX for in was looking was year, expecting 'XX, year at last were Green

So that that 'XX number includes last year. total hospital for for

versus will an year this year. XXX incremental So last be XX

Operator

from Your comes BMO. next question Eric Borden with

Eric Borden

to bit talk could back a you hoping the going Just about funding side. developments. I the about was -- little

So you million for this of current about obligations year. funding have $XXX

million [indiscernible] to to don't of You $XX have issue $XXX and equity. you dispositions about million plan

remainder, the assume So can put on that's the just revolver? we

John Moragne

Yes.

$XXX bunch got, of the there's to we've well. going a XXXX get that's funded million as So into

it's commitments. look see and So in terms out, year, if well are terms schedule as but as this you when we'll dates the at of can our of for stabilization all you it overall schedule project that in not

speaking, we've revolver these handful throughout be they'll XXXX fund with things our proceeds. XXXX. that will disposition funding got goal and So of to a half first generally those the on will continued of the be so incremental be then stabilization But

Eric Borden

for And incremental million evaluating? helpful. currently you're That's goes same $XXX that Okay. the

John Moragne

Yes.

going build-to-suit now. new So or commitments. $XXX about an is for year got the of We've goal add million right discussions active $XXX our additional on million so to

and into build-to-suit we're pretty about our fund into looking feel what ladder that We'll continue and 'XX. going in way. a pipeline we 'XX controlling it good to at own So from

not So accretive equity earnings any future capital until whether year or that's it's intending balance, on retained this dispositions, that focus. We're price raising or changes. revolver foreseeable stock the the for

Eric Borden

Okay. [ about timing between the are How to today to of that revolver? high let ] online given leverage willing leverage, are of you use then the get the That's in effect thinking road? And order you just NOI just how lag the down helpful. coming benefit the creep and

John Moragne

how we future out ladder ones comfortable we basis and mean account where that creditworthy, the I year leverage after our rating revolver mind. can that it's pro much that forma. very in are build-to-suit Yes. of agencies at there are to it with the and The have as forma so There's on into programs introduced last flows terms an think this lands about long-term pro the component leverage. well it. We'll associated with absolute getting take as consideration we cash and takes utilization also the keep look we where in us something

say could of basis. coming inside You've heard long this a time Kevin to that it. exceed a on a absolute we staying religion for got view for On back time. clear on Xx inside We've period a an with basis, of sustained

standpoint. with 'XX, that efficiency some the the difference balance at substantial would things Our But longer-term that you from provide have got with some to accretive and some utilization that would dispositions. out online make -- evaluating efficient We've in and the spot up around we'll 'XX revolver is then chunkier that play view relief But really come that. we'll X.Xx. we're with

Eric Borden

for last one me. just one And helpful. That's Okay.

the acquisitions, of the $XXX on million assets under Just control.

last on didn't since has Just remember days correctly, looking fit what changed XQ, curious given what was market I like if or product last that, for. spoke, didn't was the that the just you BNL XX over just we the

today? And of curious the currently, control days? just to over mix, changed has in I'm what's terms asset XX last what So under

John Moragne

Yes.

So towards industrial. still heavily weighted

Ryan that's X X As and least it's at us said, been XX-XX, for consistent this years at about for or point.

forward. barometer that's going to pretty for be doing So good we're probably a what going

it to one the of to over part and terms gap a it's eventually was, actually was we at fairly this of rate of just got the able thought and get right where should were a to deal, a just a there. the seller looking price It to there's weren't time in where spot. where deal, long it chunky get right it Some versus the summer, we we we spot that stuff, took

So be evaluating market our fairly this during to Ryan cautious, a say continue because remarks, of his prudent view as to we we're prepared hasn't you taking in disciplined, terms still very changed. approach heard how

kick are looking excited but there off We incredibly We're out right for more to to have now. year. it's opportunities, competitive million $XXX.X the

fighting that get. [indiscernible] you every deal So can for you're

Operator

Rana from with KeyBanc The Markets. next comes Capital question Upal

Upal Rana

the I of or to sense give just want to it possible as what a to return relates there? expect Zips Car you here to occur bankruptcy. Wash Could outcomes you us timing

John Moragne

Yes.

We've So These tied Ryan got during in assets, assets we XX talked XXXX, XX about about up them. bought that basis this remarks. points are like in his back XXXX.

for long list them lease master The structure. initial So time. we've but kind had a rejected our ignored them, completely of of X

were took was a bankruptcy strong something So not for. to going that, back the we we pretty going into stance stand that

on So of active to now. exactly right go that because decent are this. bit the going them will but know we're confident where we just in end discussions with position up wildcard, little side we're feel other always a bankruptcies a of hard pretty a to it It's having

can Our looking sideways or as as here, April go at that exit they're go depending how understanding, and to they're to accomplish. some this, don't But the hold is bankruptcies soon bankruptcy on what always and point. me negotiations trying March to

updated. we're our to much keep make everyone value we'll sites, we as hard So in and sure working be preserve that as sure possible to

Upal Rana

possibility Okay. there then is in a Great. release? [indiscernible] you'd that be selling And interested those

John Moragne

Yes.

these a leasing of you interested in of that assets. We've a buying us out assets, to the is buying the get whole reach inbound. of one about hitting assets, folks some the lot had bankruptcies great So lot of these news things are

the resolution we've opportunity themselves sell pretty our can to release with go. then reason in that resolution and we if part feeling what side else the we the So come need why Zips find to a of front much good a other do. confidence terms we good as to that's out about or we backstop But that's if this great. that's as way assets in if that's somebody got good these the of is, to not, And ability set that in to us, have of

Upal Rana

then That 'XX kind Was was was helpful. that Great. And in and the given finishing lighter related at investment the low in that activity the to of end Okay. the was investment year guidance. XQ, that else? result of resulted that of -- company a timing related? Or something

John Moragne

of environment. more just the competitive It's

We last fourth the doing ] of capital. if we're the of decisions of afraid and take a the years, and the we're doing out sure made contest that for 'XX, put that. pie disciplined making of have up post We over that sake then have, approach sure reasons going make [ for a couple not okay. to that to deals to year, this, eating means quarter investing of want and sort the right that's And just 'XX the we're of for deals. right you the bogey We're not when doing really

we timing. some came the mentioned, was at didn't I of now. As come it together summer together, deal it A but that looked

control, looking we're closing forward it. under So to and it's

Operator

question with Wedbush Jay Securities. next The Kornreich from comes

Jay Kornreich

the experiencing which tenants these can just or like despite experiencing and Going tenants? negotiation you economy. interest with further, enhanced you're and seems cap $XXX million developments you're just interest conversation, with to interest build-to-suit I'm any driving you up back rates versus the in prospective work is if to And that build-to-suit from development if year? some from the what's of rates potential changes terms comment lease last curious to uncertainty

John Moragne

Yes.

rates to but zone, talking on X.X% XX-year first. We're take upfront build-to-suits. mid-X cap returns XX-, industrial longer, cap to that X.X% sort We're lease bump. rent continuing these larger I'll the see So of in terms, XX-,

these solidly high our So Xs Xs. low sometimes Xs, are mid to on yields straight-line

to really, allocating capital. for So really us be places attractive

In here, of an terms part of interest the overall. it's

that specialized it's nearshoring, build-to-suit it absolutely out as You people of onshoring. to Folks of manufacturing causing the ] to this week to at sites a consolidate be their has need supply for builds a to pre-pandemic would of got hope are they where networks where talked of in development have out overall came pipeline, this portion manufacturing with The about location renaissance whether going we're they the returned them. pipeline, a that mission-critical build a this that's long-term you've doing, distribution part American in is is actually as or or inefficiencies they are that's something a a multiple an that [ a development it full looking XX% line JLL investment. levels, report how occurring. now need

So we're very in participate excited to it. continue to

You heard Ryan.

We expanding relationships. our are also

where of that's on are. to developers us. the we're multiple deals, presenting so right things reason we of are seeing part to as a just And additional as it many we're starting now It's individual deals individual handful individual not why see deals with that developers. There are

years. there. out work So finding we're laddering this start our with, see future out into and excited really of a name to getting We're to lot is people the

Jay Kornreich

more. I appreciate that. then And just one

care of million the how disposition of the is the that overall final much the Within the midpoint versus tranche health $XX additional of the of portfolio? dispositions of pruning guidance, to outline part at just

John Moragne

an a little terms opportunistically clinical sell of we'll guidance we It's that guidance There's are on to additional And growth. do. in to what in there what there's to assets above. pruning accretive change choose part an that fund if absolutely a some we're from general was expecting wild The some also standpoint that basis asset might a card range. be of

Operator

next comes The question from Michael Gorman BTIG. with

Michael Gorman

Just actually. a quick ones, couple of

sites? share the are XX able master Wash, you is Zips lease for to all under what coverage the On Car the

John Moragne

to It Yes. X, was before right close to want say, bankruptcy. I

Michael Gorman

then the on maybe John, Okay. Great. pipeline. build-to-suit And

on is the hearing understand competitive you tough. side still getting sectors change any inbound, you for been there As Are financing really which the set great. competitive think development nature We've I is and opportunity there, the other you're about here? more seeing in that

you're competition underwriting you curious rate side a close of different Or experiencing more things? if projects? I'm seeing think So on as these much the build-to-suit about you're how

John Moragne

Yes.

to done, the sometimes partner pony is fully the developer funding ready working economics then entitled the and to these. conversion and stuff and getting for build time So in and dog on the developer being selected. individually as the a site Getting the go, through design show long either selected, working or being a of through terms

competition assets. right say, deal in with process. long industrial is at fairway big difficult process now. say as to the participating a buyers the it. private certain in down compare increase It's we're not as the the seeing if of we is on middle The difficult we the that would mid-market amount And were a what times It's are of cases, in build-to-suit both

I a frothy seeing on little participating offers XX more and where bit in way deals it's competition we're on in some XX bids terms [ people or ] to round late deals. the think more regular of of these

it way on incredibly getting so certainly competitive it's So the on less deals, in than the was build-to-suit, more regular but past.

only thing be Now looking or is we're more the at there's build-to-suits are something there so of nice the handful going that out at like of focus, that. large, that our is a the because size of looking folks to industrial

or that doing pretty are $X million not at build-to-suits do $X it's consistent we're to range, biting on that restaurant looking million million where in space and $XXX basis. a in they're For to off the others retail more, able that

smaller, a is the competitive. still bit pool of So little it's folks but there

Michael Gorman

on of plant these making? once or and thumb are for top there commitment for facilities kind any much sense general into sense are get of open of that you're maybe tenants the helpful. to the that financial of investment the That's operating. equipment just kind these facilities I'm putting of how kind tenant's And and rule a trying is

John Moragne

Yes. facility. It the on depends

So answer. one it's to a hard little

about think there about dollars a like distribution relative build, build regular in in tens logistics box the [ there in where a may if ] ] of But for you relatively were UNFI of to you is it be our of immaterial. of If be going the additional putting cost [ just think Sarasota, they facility, much racking, something to investments. millions besides

doing. addition from in the it's significant to amount we're So investment a tenant what of

Michael Gorman

nature one or last additional I'm you missed just for about any And right investment? work in also opportunity going even appetite capital from your just now money transitional type then put given I side if and me. And there markets for transaction sorry disjointed this. the that Great. When some here, forward, more and 'XX of of think Okay. of appetite the to set to

John Moragne

Yes. to certainly open always And we're it.

is I got relationship a of think areas build-to-suits it "Hey, direct in their somewhere one existing us On grow where business the tried the transitional it's we're an someone if don't most that with, if we've way to with it. to we new that and on said, a comes place be capital, or come help be and willing deals to open would else. we We'll alternative But regular likely helping and the our entertain need it allocate long-term that more to came capital complexity, from, basis problem. we to partners would whether here." have solve basis, relationship true than allocate where we

Operator

from comes The with Michael next UBS. question Goldsmith

Michael Goldsmith

been portfolio the has Clearly, evolving.

So may be debt not bad historical fully expectations comparable.

the you normal credit the of visibility a pockets is should of expect going what basis earlier this year the year in risk based in incremental it is of points conference? about talked into So reserve those indicative forward? elevated that XXX you Or on

John Moragne

Yes, be certainly it's I'd going in say of that it's future. the hope to indicative our not is what

difference you up, yourself there's think of answered a good and early it lot Obviously, that of we in impact. in about spent saw third, year, was portfolio. things of the huge definitely that credit We've have we late where but know this faith of last there there's feel that hit an big some time huge with, pockets doesn't if quarter. have in we they We incremental year. of a risk hits the a a and about I that didn't knew late fourth it. to effort year, building something couple amount until We going it the it But were come,

hits couple Zips with and impact things on XXXX length of it bit front other minimized. a being the so end of the harder and because And fairly a of of including But year, the to it. was duration little certainly the Stanislaus

something where We'll but are the So be at this to main but behind XXX next end would the less that, wait our of the really have that driver is we that's see. the hope year, year. evaluate year, and

Michael Goldsmith

follow-up. Yes. as And then a

types, quite retail has jumped reclassification of the different a bit. the Following property

some going attractive investment. of relevant further the within use kind less and sectors retail just expand to particularly that looking going So is is where In about -- focus your there, you're looking to is curious of be? forward to to and you're maybe fund anything that

of could sense trying what that like time. get to over look a Just

John Moragne

Yes.

retail who restaurants our and into I reclassification then clear headed. of think of of behind we're the the types industrial primarily folks give where to ] is a medtail are we and with retail, picture driver [ including just and main sort assets very of asset

diversified industrial-focused We an lease REIT. net are

You for to of or particular That's terms range years. see time. asset the or us in industrial should last The change of X and what been X probably in over doing that expect subcategories retail. sort types XX-XX will we've

at time a and you in investment as got well. lot food lot of in bunch We've been spend hopper a that the distribution. has look If last the industrial, an now right that of of a production-related ] we few area [ on years

that that's the So But heavily. fairly future. we've that leaning expect more into I should consistently us see break where been into been XX-XX you think a is lot to something

Operator

next Green Allaway comes Spenser The question with from Street.

Spenser Allaway

the would bucket can what's you based today? to of As looking it the divest that describe and remind depth and just you buyer disposition relates how the us what to you're guidance, on currently just pool in composition

John Moragne

Yes.

we pursue that So And some a depends there. office the things pool on of looking the at. year open that of within buyers to we're There's the may it's accretive stuff, we'd health that the we then a portfolio on to able of still handful The over stragglers the asset. pruning to. guidance, the the other bit be extent clinical will things basis. handful little an a Certainly, opportunistic of of care be

capital. larger the bigger good that not rebound assets it was a more pockets of of market, It's stuff, market. to Smaller needs before. on need XXXX where the necessarily bit going maybe to Some a you're from fit XXXX still for the

worth institutional high to it So small large stuff. buyer individual net regional range can from

a tenant. So other existing not these than selling are looking with -- portfolio basis buildings at sort with of we're same on that related the anything

don't I last similar portfolio to seen expect year. us large from be transactions there So any what to you've

Spenser Allaway

do Okay. on inclined Or then to us as And just tend can remind efforts? on TIs as it CapEx retenanting relates providing provide relates to stance that? that? avoid to are your to [ spaces, that you or retenanting it ] you Or vacant you

John Moragne

It's that to open and totally it. we of you It what at it. lease We're avoid. about in managers estate we're return, do. we the length, the We're talking is heart. depends tenant, real economics name on not something what's what terms This the

So part outcome of finding that and of real for assets. right estate is each our the managing individual

And sometimes selling means it. that

putting little in door. means money it a to Sometimes somebody the extra get

And sometimes you do new to and get a of you that either you in. lucky, those can don't things comes get have tenant right

we'll in we're So and a we've that there turn. if that. roll means it bit, sleeves in get one And okay little take our each got doing to

Spenser Allaway

And if one on sense. Okay. I just can. That then makes health, tenant more

But coverage talk and the for the you list expectations general. probably, the about So just appreciate you watch debt bad rent 'XX. I provided in can color on

industries is? just across us remind what or changes portfolio the average the notable of And you segments any So can portfolio?

John Moragne

list watch a of for of name some ones little quarter-over-quarter consistent stuff we've with changed. things consistent really we concerned consistent. it's our on in at basis. handful in within sitting individual been We other some that related and types stuff mentioned we've by still a been the of clinical, the disclose portfolio, the X.Xx pretty here. it the on coverage hasn't been We're that The quarter-over-quarter. home restaurants. So wise, only furnishing, to It's evaluate asset pretty been It's bit it rent pretty

Operator

from The next Caitlin Sachs. Goldman Burrows question comes with

Caitlin Burrows

just It for the build-to-suit was one wondering sourcing. the works. to you there's on deals deals of came wondering of the Maybe been was talk had they could that's how if how another, past, starting any and in today bit together a which that if change or little evolving. you're like about one-off I reason I side. kind seems kind sourcing

John Moragne

Yes.

our we've done things One, as of out couple gotten there. of these, name more has a So there.

marketing happening And of. So our getting Developers very with third benefit we're that's to are their little refer we've that friends we're that the there's when needs. us some to bit we've is worked referrals. happy on a they've the got of team. organic getting expanded Two, capital

this who the [indiscernible], have of at throughout deep we the [indiscernible], relationships on operating their space. year, So pretty who from community brought had up the in end both development years it and

us those pipeline of active in a all there. put so things lot seeing to X more spot start out And have together the great of a that's

Caitlin Burrows

exactly could Got And you phrased then you it. that mentioned about think it. like I be I an there development. forget announcement how

that? a was I So if ends wondering like or comments up that further? kind sourcing Or that be that on else might something any partnership evolving of

John Moragne

aware the relationships, the of that because which folks and for development in you nature we're of getting this updated way got of that We've particularly laddering long and Yes, us. it's new make it, an of sure exciting both are a pipeline, are both it new all place opportunities what's policy happening in schedule.

and a policy docs, So land release. issue where the soon a press execute on as close have as we we we

we're So the some go hopeful these of we way, our we'll of press have releases that expect couple if in couple that things new there a to out earnings. months, them in between way next the

Caitlin Burrows

for if and any more back compare And dividend then the with will go it. to taxable Got how much Could to there's maybe order reduction income? of how in dividend. just you I'm funded your cash? And be does guess through the think retain cash? then room like funding And to 'XX I you there wondering retained investments

Kevin Fennell

the to get, retain relation part starts that So we number [ of multiply around first the as million. the a that in you think more And about these of to longer question, $XX ] build-to-suits, itself.

that's projects. these we think about a as component definitely funding So

the table certainly is on well dividend, And on covered is our not but expectation not temporary, then the reduction. make for a yield, would It's of I but that to say well little reduction. outlier dividend, terms an second towards any and of in a covered, the our bit intention

Operator

Ronald question Morgan next The with Stanley. from comes Kamdem

Ronald Kamdem

ones. two Just quick

you build-to-suit another understand that, So the if have really it the $XXX supplement. helpful is million And beyond I correctly. on pipeline, in like that which sounds

million? the of same? it the of in that supplement? I'm industrial? Is talk the that yield same? Is what of is economics. sort a Just here could about the Is economics $XXX it rent you to get sort $XXX to similar sense escalator of million trying Is the seeing the Just

John Moragne

Yes.

of our $XXX in for goal of terms the about is So conversion all hit taken That's with a that on of the publicly additional turns in got them again, the that goal there's terms and add to way We've those internally long we're and weird the setting of every build-to-suits. no to working what million committed now new guarantee million year. hit going we're to. timeline and world want course, in $XXX expecting that active or in the discussions, we are

year. top want We've this So see million of million these are to another goals the got we've We hand $XXX that on set. now. right in that $XXX

year. for And so big goals the

yields us yields The the straight-line looking mid-Xs, really to in in from the fairly vein attractive you've good in rent all of things it's consistent bump, credit, mid-Xs, industrial, discussion attractive far. that a really facilities in pretty of what solid Upfront handful seen on, pipeline sort in primarily we're new that tenant to large locations. that that mid-Xs at are same we're all bumps cash so with of within X.X% working builds X.X% but economics, active the

fundamentals real So up hold to credit. addition estate the strong in

So I the for program. attractive benefit build-to-suit investors long-term said lot there's and building out, derisked is very a in to strategy it way that to that I we're start as the be laddered in love remarks, as they see this of my going think, of

Ronald Kamdem

other on Great. and then the the includes office assets, which health right, care. of was the And second of just some my one some

to staring of some the look markets Just obviously, curious to market? start putting seller, not interesting on a the [indiscernible] those but if

John Moragne

Yes.

good So rent, bit. good term bit and office will a up collecting of of credits. lot A those will the take tenants, the holding through by probably end end

a intending stand-alone So don't a that not and on to we we're real there. basis. more any spot Certainly concerns have invest

will of XXXX, there's clinical the a and long-term this look of We'll actively in not portfolio. it If to we assets core that With a for in dispose will we're to by the despite the continue to handful hold to value of where at we going the future, any like just that and those right price. that XXXX surgical home and we them in being value and have it on rent. fire also it not invest get the those probably will assets, selling there's a reap couple can't of benefit

Operator

back hand so comments. We no I'll questions to the further the for management call have team any closing

John Moragne

today, the thank Great. We the much. season. very and appreciate Well, getting conference dialogue busy we're you into

of day. So we many in all. person look rest of you forward to the Thanks Have seeing your good in coming months. a

Operator

concludes us everyone, now our you you, today. may your joining This Thank lines. disconnect call, and for

Broadstone Net Lease (BNL) 20 Feb 252024 Q4 Earnings call transcript