Business Context and Reporting Period
Company: Broadstone Net Lease, Inc. (BNL)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Three months ended March 31, 2026
Business Overview: BNL is an industrial-focused, diversified net lease REIT owning 773 single-tenant commercial properties across 44 U.S. states and four Canadian provinces. The portfolio is approximately 99.8% leased with a weighted average remaining lease term of 9.5 years.
Key Financial Metrics
| Metric (in thousands, except per share) | Q1 2026 | Q1 2025 |
|---|---|---|
| Lease Revenues, Net | $121,401 | $108,690 |
| Net Income | $46,392 | $17,493 |
| Net Income Attributable to BNL | $46,365 | $16,743 |
| Diluted EPS | $0.24 | $0.09 |
| Net Cash Provided by Operating Activities | $76,092 | $71,459 |
| Total Debt Outstanding | $2,653,856 | $2,000,439 |
| Cash and Cash Equivalents | $20,310 | $9,605 |
| Net Debt | $2,632,177 | $1,989,406 |
| Net Debt to Annualized Adjusted EBITDAre | 6.1x | 5.1x |
Material Changes vs. Prior Comparable Period
- Revenue Growth: Lease revenues increased 11.7% year-over-year, driven by $376.4 million in acquisitions and revenue-generating capital expenditures since Q1 2025, and the stabilization of a $54.1 million build-to-suit development.
- Profitability Surge: Net income increased 165% to $46.4 million. This was primarily due to a $16.1 million decrease in impairment charges (none in Q1 2026 vs. $16.1M in Q1 2025) and a $6.7 million increase in gains on the sale of real estate.
- Expense Increases: Interest expense rose 25.8% to $25.3 million due to the issuance of $350 million in senior unsecured notes in late 2025 and increased variable-rate borrowings. Depreciation and amortization increased 5.1% due to portfolio growth.
- Investment Activity: Total investments in Q1 2026 reached $171.9 million, including $61.2 million in acquisitions and $99.4 million in build-to-suit developments.
Guidance, Outlook, and Risks
- Outlook: Management expects continued revenue and earnings support from embedded same-store net operating income growth, build-to-suit development activity, and a diversified acquisition pipeline. The company maintains an investment-grade balance sheet with a target leverage ratio generally less than 6.0x.
- Liquidity: As of March 31, 2026, the company had $591.9 million of available capacity under its $1.0 billion Revolving Credit Facility. It also has $281.0 million of remaining capacity under its At-The-Market (ATM) equity program.
- Dividends: The Board declared a quarterly distribution of $0.2925 per share for Q2 2026, payable July 15, 2026.
- Risks: Key risks include elevated interest rates impacting the cost of capital and returns on new investments, potential credit deterioration of tenants, and foreign exchange fluctuations related to Canadian investments (partially hedged via CAD borrowings).
- Unusual Items: Q1 2026 included a $1.4 million unrealized foreign exchange gain on CAD borrowings. There were no impairment charges in the current quarter, contrasting with significant charges in the prior year.
Investor Verification Checklist
- Debt Maturities: Verify the schedule of debt maturities, noting no material maturities until 2027, but significant term loan and note obligations in 2027-2029.
- Build-to-Suit Pipeline: Review the $177.3 million remaining investment commitment for in-process developments and their projected stabilization dates (mostly late 2026 to 2027).
- Interest Rate Exposure: Confirm the effectiveness of interest rate swaps (covering $816.6 million of variable debt) in mitigating rising rate risks.
- Non-GAAP Reconciliations: Review the reconciliation of Net Income to FFO ($80.7M), Core FFO ($79.3M), and AFFO ($76.9M) to understand cash flow generation excluding non-cash items.
- Subsequent Events: Note post-quarter activity including $69.0 million in new borrowings, $53.0 million in paydowns, and the sale of three properties for a $12.7 million gain.