Business Context and Reporting Period
Company: Broadstone Net Lease, Inc. (BNL)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Quarter and six months ended June 30, 2026
Business Overview: BNL is an industrial-focused, diversified net lease REIT investing in single-tenant commercial properties. As of June 30, 2026, the portfolio consisted of 766 properties (759 in the U.S., 7 in Canada) with approximately 41.7 million rentable square feet. The portfolio is 100% leased based on square footage with a weighted average remaining lease term of 9.3 years.
Key Financial Metrics
| Metric (in thousands) | Three Months Ended June 30, 2026 |
Six Months Ended June 30, 2026 |
|---|---|---|
| Lease Revenues, Net | $122,309 | $243,710 |
| Net Income | $40,255 | $86,647 |
| Net Income Attributable to BNL | $39,799 | $86,164 |
| Diluted EPS | $0.21 | $0.45 |
| Net Cash Provided by Operating Activities | N/A | $134,261 |
| Total Debt Outstanding | $2.69 billion | $2.69 billion |
| Cash and Cash Equivalents | $11,095 | $11,095 |
| Pro Forma Net Debt to Annualized Adj. EBITDAre | 5.9x | 5.9x |
Material Changes vs. Prior Period
- Revenue Growth: Lease revenues increased 8.3% year-over-year (YoY) for the six months ended June 30, 2026, driven by portfolio growth from acquisitions ($384.2 million) and stabilized build-to-suit developments ($184.4 million).
- Net Income Surge: Net income attributable to BNL increased 134% YoY to $86.2 million for the six-month period. This was primarily due to a $24.5 million decrease in impairment charges, a $19.1 million increase in gains on real estate sales, and higher lease revenues.
- Impairment Charges: Impairment charges dropped significantly to $3.5 million for the six months ended June 30, 2026, compared to $28.1 million in the prior year period. The current period charges related to changes in long-term hold strategy for six properties.
- Interest Expense: Interest expense increased 23.9% YoY to $51.0 million, attributed to the completion of $350 million in senior unsecured notes in late 2025 and increased variable-rate borrowings to fund investments.
- Dispositions: The Company sold 10 properties in the first half of 2026, recognizing a gain of $20.1 million, compared to 11 properties sold in the prior year with a gain of $0.97 million.
Guidance, Outlook, and Risks
Management Commentary: Management expects continued revenue and earnings growth driven by embedded same-store NOI growth, development activity, and a diversified acquisition pipeline. Despite elevated interest rates compressing returns on new investments, the Company maintains an investment-grade balance sheet (BBB/Baa2) and a Pro Forma Net Debt to Annualized Adjusted EBITDAre ratio of 5.9x.
Liquidity: As of June 30, 2026, the Company had $542.1 million of available capacity under its unsecured revolving credit facility. The Company has $163.8 million in commitments to fund build-to-suit transactions expected to be drawn through November 2027.
Subsequent Events:
- On July 28, 2026, the Company amended its credit facilities to reduce SOFR-based margins (term loans to 0.900% and revolving to 0.800%) based on its investment-grade ratings.
- The Company added a new $300 million senior unsecured delayed draw term loan maturing in January 2030.
- Subsequent to period end, the Company sold 1.63 million shares under its ATM program for estimated net proceeds of $33.9 million (unsettled).
Risks:
- Interest Rate Risk: Exposure to floating-rate debt, though partially mitigated by $800.4 million in interest rate swaps.
- Foreign Currency Risk: Exposure to Canadian dollar fluctuations, partially hedged by CAD-denominated borrowings.
- Market Conditions: Elevated interest rates and pricing expectations may constrain transaction volumes and accretion levels.
Investor Verification Checklist
- Debt Maturities: Verify the impact of the $150 million Series A notes maturing in April 2027 and the $200 million term loan maturing in August 2027.
- Development Pipeline: Review the $163.8 million remaining investment commitment for build-to-suit projects and their projected stabilization dates (July 2026 – November 2027).
- Impairment Strategy: Confirm the rationale for the $3.5 million impairment charge and assess if further strategy changes could trigger additional charges.
- ATM Program Capacity: Monitor the utilization of the remaining $237.3 million capacity under the ATM program and the settlement of forward sale agreements.
- Dividend Coverage: Verify that AFFO ($155.1 million for six months) continues to support the quarterly distribution of $0.2925 per share.